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And now we wait

The Department of Justice has published the 868 comments in response to the proposed settlement with three of the five publishers named in the price fixing suit it filed earlier against the original Big Five publishers and Apple. I’m not surprised to find that the vast majority of responses were opposing the proposed settlement. After all, the average reader isn’t even aware of the lawsuit. Beyond that, most authors who will be impacted by the outcome of this and who are still under contract with the named publishers aren’t going to say anything for fear of having their contracts dropped by the publishers. To publicly come out and say your employer — and, yes, that’s exactly what publishers are to writers under the current set up — is full of crap is to commit what some (publishers and agents) might see as professional suicide.

What does surprise me, and pleasantly so, is that the DoJ is sticking to its guns. Without going into politics too much, this is an election year and, well, you get what I’m saying. I won’t say more because this isn’t a political blog and I’m not going to make it one.

Without rehashing — too much — what I’ve said before, I’m not a fan of the agency model. However, I also admit that there is nothing inherently wrong with it. My issues come with how the agency model was put in place by the original Big 5 and Apple. Long before the DoJ filed its lawsuit, rumors had abounded about how Steve Jobs had required the publishers adopt the agency model if they wanted to be included in the new iBookstore. (Remember, all this came about at the same time the iPad hit the market). It was just all too coincidental to my mind. Five major publishers all demanding the same pricing model at the same time? And at a time when Amazon’s newest and potentially biggest competitor in the e-book market, comes online? Hmmmm.

But I had another issue with the agency pricing model as well. Publishing was already in trouble. Book sales had been declining for awhile. The economy wasn’t as strong as it could be and that meant there was less money available for people to spend on “extras”. So, in response to this, these publishers demanded a pricing model that would put less money in their pockets? A struggling industry shouldn’t be finding ways to cut their revenue. It should find ways to maximize revenue. But then, that’s just me. I like making money.

My biggest issue with agency pricing was that it was a knee-jerk reaction by the publishers not only to Steve Jobs’ demand for it (assuming he actually made that demand) but also to their fear of Amazon. Instead of realizing that the decline of brick and mortar bookstores began long before Amazon even existed, they saw Amazon as the big evil. They forgot about how the big box stores moved into the market in the 1980s and 1990s and drove most of the smaller, locally owned bookstores out of business. They forgot how these same big box stores then used their clout to demand changes in their purchasing contracts with the publishers, redoing things like return policies, etc. They didn’t look at how these same big box stores — and the publishers themselves — failed to embrace the e-book market from the beginning. In short, they let the market get away from them and now, panicked, are trying to stop the flood.

If you read the responses to the DoJ’s proposed settlement, you’ll find a number of them talking about how there might have been collusion and, okay, that’s not nice, but it was necessary. Something has to be done to stop Amazon before it monopolizes the e-book market. Amazon was undercutting the competition. It was killing the e-book industry and now, with agency pricing, we have competition.

Sorry, what we have isn’t competition. Competition would be giving us a market where we can shop around for the best price for our dollar. Under agency pricing publishers set the price for their titles and, guess what, it is the same price everywhere. Where is the competition?

Another argument put forth by those opposed to the proposed settlement is that the settlement will mean an increase in e-book prices. They postulate that the removal of agency pricing will give Amazon a monopoly and that Amazon will then implement its evil plan to raise prices.

The problem with these arguments, and all arguments saying Amazon might do something at some unspecified point in the future, is that it is speculation. There is no proof to support these arguments. The United States is based on laws and, fortunately, we don’t tend to punish people or businesses based on something they might do at some unspecified point in the future.

Another problem is that these arguments ignore the fact that Amazon is not by any means a monopoly yet. There are a number of different e-book outlets available to the public. It isn’t Amazon’s problem that Barnes & Noble and other booksellers didn’t climb onto the bandwagon as early as they could have when it comes to e-books and e0-book readers. I understand the fear these folks have. They are playing catch up now and grasping at straws to do so. However, instead of paying millions of dollars in legal fees to fight Amazon, they should be investing these dollars in finding ways to reach out to the public and win them over to their own e-book platform or e-book reader hardware.

Publishers Weekly has the right of it here: Observing that “there is no mistaking the fear that many of the commenters have of the prospect of competing with Amazon on price,” the DoJ noted that low prices and fierce rivalries are among the core ambitions of free markets and that contrary to many commenters views, “the goal of antitrust law is to use rivalry to keep prices low for consumers’ benefit. Employing antitrust law to drive prices up would turn the Sherman Act on its head.”

The consumers’ benefit. That is what the publishers and those opposed to the DoJ settlement have forgotten. Oh, they make lip service to it, but if you really look at what they are saying, they are worried about the publishers and big box stores. They want things to continue as they have for years. The problem is that things have been broken for years and no one was doing anything about it. No one in the industry wanted to change business models because this one worked — once. Now, instead of trying to put the genie back in the bottle — and that just isn’t going to happen — they should be looking to embrace this new tech and the new demands of it instead of playing Chicken Little.

From The Bookseller: Responding to Barnes & Noble’s comments, the DoJ asserted that Barnes & Noble was “worried that it will make less money after the conspiracy than it collected while the conspiracy was ongoing” and that that was not a matter for the court to consider. Many of the benefits B&N attributes to collusive pricing could be achieved in other ways, such as lowering costs, the DoJ said.

Like I said, change the business model and cut the fat from the budget and see what happens. But no, they’d rather break the law themselves in order to hamstring Amazon and not worry about anyone else (the consumer) who might be harmed in the process.

But I think the most ludicrous comment against the proposed settlement comes from the Authors Guild. Basically, it argues that price fixing should be allowed in publishing because of the “cultural role books play in society.” WTF?!?!?!

It is important to remember that the basis of the DoJ’s suit isn’t that agency model pricing is wrong. It is that colluding to force agency model pricing onto the market is. It is also important to remember that breaking the law because you are scared of what might happen sometime in the future isn’t justified, not in a case like this. Finally, the Sherman Anti-Trust Act was written to protect the consumer, not to protect businesses from poor business practices.

And now we wait to see what the court says. While we do, you can read the DoJ’s response to the comments here.

 

 

9 Comments
  1. Thomas P #

    The wheels of justice grind slowly but surely forward…

    July 24, 2012
  2. The poor da’lings just hate losing control over who fails and who succeeds. Poor lam’kins.

    July 24, 2012
    • Why, Sarah deah, are yew doin’ a South’n accent? It’s mighty fine, Ah must say. An’ yew are entireleh raht.

      July 24, 2012
      • I’ll have you know in my head I have a southern accent. It’s not my fault the mouth doesn’t cooperate.

        July 25, 2012
        • Is that south of Lisbon, south of the Mason-Dixon line, or just south of Denver?

          July 25, 2012
          • NEVER of Lisbon. Actually my accent in Portuguese once got me ordered out of a bus in Lisbon because someone wouldn’t transport “Northern Bastards” — same as the civil war in the States, about the same time, different reasons, but ultimately if you reverse sides, animus close.
            No, I was naturalized in NC and lived there for the first eight years I spent in the States. If it had been physically possible for me to acquire the accent, I’d have done so. It’s how I hear myself in my head.

            July 25, 2012
            • Aha! Thet wad bay na-uwth kay-a-line-uh, rait, shu-ga? My aunt on my father’s side grew up in rural Ohio, then married and went to live in South Carolina, which is where I remember her mostly. And she acquired a rich Southern accent. Most people assumed she had grown up somewhere in that area. Thanks for reminding me!

              July 25, 2012
  3. TXRed #

    The Wall Street Journal today has several letters taking apart Sen. Chuck Schumer’s editorial last week. Schumer opined that the DoJ needs to drop the case. The readers disagree, politely, logically, and firmly.

    July 24, 2012

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