(Edited to add: Welcome to everyone coming over from Instapundit!)
That sound you hear is a mix of the themes from Jaws and Psycho. Or maybe just It’s a Mad, Mad, Mad, Mad World. I’m beginning to think it is the latter. At least when it comes to the reactions from a certain part of the publishing industry to the Department of Justice’s anti-trust/price fixing suit against Apple and five of the big six publishers.
Let me state once again, the filings by the DoJ do not challenge the legality of agency pricing. In fact, if I remember correctly, there is language in the filings saying that the agency model might be used later. The issue is whether or not Apple and the other defendants colluded in price fixing.
But that seems to be conveniently overlooked by many who are opposed to the DoJ stepping in. The latest comes from Oren Teicher, CEO for American Booksellers Association. This is from an email he sent to ABA members last week:
I’m writing today to share news about a step that every independent bookseller in the United States can take to advance the argument that the agency model must be preserved to help maintain diversity and competition in our industry.
First, as I said above, the agency pricing model isn’t at issue here. It is the way it was entered into. Second, I still have concerns about how this model can help maintain diversity and competition in the industry when the publishers themselves admit they are making less money under it than they did under the previous model. Less money for the so-called producers of e-books when they are already facing money problems is not a good thing, especially as the share of e-book sales v. hard copy sales is increasing. No, the only ones agency pricing helped was Apple. Finally, this statement completely overlooks the fact that Google is ending its relationship with indie bookstores. So, where are they turning now to become e-book retailers? And why has there been no hue and cry from ABA about this?
As ABA made clear in a meeting with DOJ on March 19, we could not believe more strongly that the agency model has been good for our channel, good for all bricks-and-mortar bookstores, good for publishing, and, most importantly, good for readers and book buyers. Since its introduction, the agency model has corrected a distortion in the market fostered by below-cost pricing, predominantly led by Amazon.com, the ultimate result of which is, we believe, to reduce or to eliminate competition among both retailers and publishers.
Fine, but it is the method the agency model was forced on Amazon and the other retailers that is at issue. Read the pleadings. Then communicate accurate information to your members. Let’s take the last sentence to another level. If the DoJ allows a violation of antitrust law to stand in this case, what is to prevent citrus farmers from banding together and demanding something similar from their distributors. No longer can we use coupons for a discount on our favorite OJ in the stores (try using coupons on e-book sites for any of the agency model e-books. You’ll be told you can’t.) No more specials or sales of one brand in one local store but not in another. It is a slippery slope ABA is suggesting the DoJ start on and, let’s face it, we’ve seen the results of these sort of slopes before.
Since the introduction of the agency model many more independent booksellers are selling e-books, and those sales have shown steady growth. The agency model has lowered prices to indie bookstore customers, and indies themselves have seen significantly increased price competition among publishers in regard to promotions, discounts, and special offers, all of which have allowed bricks-and-mortar bookstores to offer customers a wider array of titles at a greater value.
And most of those have been able to sell e-books through Google. See my comment above. That is going away because it wasn’t making Google money. So where is the outcry there?
And what publishers are they talking about? Because, according to the agency model terms, Publisher A is required to sell his e-books at the same price everywhere. So where are all these specials, and discounts, etc., coming from? Oh, I know where they are coming from. Small presses and individual authors WHO ARE NOT PART OF AGENCY PRICING. At least that is my assumption since this email doesn’t list specifics.
Deeply discounted books were among the key components in the fuel stoking Amazon’s engines of growth. It’s frankly somewhat stunning that DOJ would accept the possible upending of an industry as important to the cultural and intellectual life of our nation as bookselling and publishing so that one retailer could pursue a policy that is nearly certain to result in monopolization of the e-book market.
So, let’s ignore the law and let certain parts of the industry — and, let’s not forget, a direct competitor to Amazon — do as it wants. The next step would be, I assume, to pass laws to prevent Amazon from doing anything to its own benefit. After all, that would help prevent it from pursuing a “a policy that is nearly certain to result in monopolization of the e-book market.” Color me not impressed. No, color me scared. This is the sort of thinking that stifles a market, whether they want to believe it or not.
Before the introduction of the agency model, Amazon had a 90 percent market share in e-books, when they were selling below cost, a price far lower than indie booksellers could purchase e-books from publishers. Today Barnes & Noble, Google, Apple, Kobo, along with indies and others have joined the market, which has become far more competitive and diverse.
And why is that? Barnes & Noble was late getting into the e-book market, first as a seller and then as a provider of hardware to read their e-books on. Apple was busy in the music market until it developed the iPad — oh, wait, that’s when agency pricing came into effect. And let’s not forget that Apple is a named co-defendant. The late, not-so-lamented Borders suffered from the same lack of foresight as these others did, but they compounded it by using Amazon as their online bookstore for a long while instead of building their own online presence.
Amazon is not pure. I have never said they were. However, the leadership at Amazon saw something worthwhile in e-books and went after it. These poor publishers and booksellers didn’t. They thought e-books were a fad that would disappear in time. Don’t believe me, talk to anyone who happened to work with Jim Baen more than a decade ago when Baen Books started offering digital versions of some of their titles. Mr. Baen may no longer be with us, but others are. They can tell you how Baen talked until he was blue in the face and people told him he was wrong, e-books would never catch on.
Better yet, look at how publishers still look at e-books. These same publishers who are so strongly advocating the agency pricing model, at the loss of income, also advocate the use of DRM. They want to limit the number of devices on which you can read an e-book you’ve purchased. Oh, wait, according to them, you don’t buy the e-book. You only buy a license to read it. And, just in case you hadn’t realized it, you are also prone to illegal acts so they’ll add the DRM so you can’t give the e-book away or put it up on a pirate site. Doesn’t that just make you feel all warm and fuzzy about how these publishers who are crying foul when it comes to Amazon?
Poor iddle publishers.
The United States of America is a nation of laws. If we don’t like a law, we need to act to have it amended or overturned. There are ways to do this. Asking that the Department of Justice, the enforcer of federal laws, ignore something because you are afraid an entity might do something you don’t like in the future is foolishness. Ignoring other factors that lead to the state of your industry goes beyond foolishness. It is putting a nail in your own coffin. Look beyond your boogeyman to find the real problems.
Publishing and bookselling are glass houses right now. It isn’t wise to start throwing stones, especially if you don’t know where they will land.
Edited to add:
Another clear indicator of just how little importance the industry truly puts in e-books comes from Publishers Weekly. PW’s facebook post links to the weekly print book sales figures with this comment: a quick way to check the industry’s pulse. In other words, e-books don’t have an impact on the “pulse” of the industry. Maybe that’s why the defib paddles are being prepared. By the way, when you follow the link, you see that sales are down pretty much across the board for print sales. And remember, even though they aren’t saying it now, the initial reason for publishers going to agency pricing was to prevent the “cannibalization” of hard copy sales.
TO: All
RE: Heh
$16 for paper edition.
$14 for Kindle edition.
No trees used. No printing. No handling & shipping.
Something’s ‘amiss’.
You can claim that it’s not about the pricing. But the ‘modelling’ of the pricing is ‘suspect’.
We’ll see what comes out in court.
Regards,
Chuck(le)
[The Truth will out…..]
P.S. I don’t buy many Kindle or other eBooks at this time due to the outrageous pricing of most of them. But I’d like to start moving my extensive library to the eBook format.
I’m looking forward to the day when I can replace my Tom Clancy library, and others, with something I can carry in my iPad.
And that is the source of another sense of outrage where I’m concerned, especially when these publishers say that it costs as much to make an e-book as it does a hard copy book — when they are putting them both out at the same time.
Here’s a question I don’t think has been answered: Who cares?
Who cares if publishers collude to keep their prices high? Who is hurt?
The authors? The authors of other books? The other publishers and writers who can cut the price of their books?
You have authors making money like they never did before under the New York model. Some of them are commercial writers who are making more self-publishing than they ever did.
Colluding and price-fixing are terrible when it’s used to force unfair deals on a group. A railroad controlled by the Vanderbilts and the Goulds could set prices unfair to the farmers, who had only the choice of signing with them or letting their crops rot in the fields.
That’s not the case here. A writer can sign with a major publisher, a small press or go indy, and they are still viable models in the current situation.
In fact, the agency model (with collusion) could even fail if their writers find it easier to go elsewhere.
So, again, I ask: Why should the government spend its limited resources on this?
Simple answer, so a precedent isn’t set. I don’t know how much you know about the law, but many a court case is decided on precedent. If you ignore price setting under one set of circumstances, or because you think it costs too much, it can then be argued that the same set of circumstances apply the next time an allegation of price fixing occurs.
As for your question about who is hurt if the publishers collude to keep their prices higher, that’s an easy one. First, readers are hurt. They can’t buy as many books as they’d like. That, in turn, hurts the authors because they aren’t selling as many books.
You also comment that authors can choose to sign with legacy publishers or go off on their own. That’s true, if that author doesn’t have a contract that has been written in the last year or two. There are these not-so-author friendly clauses that have been put into many contracts that prevent authors from selling to other publishers or to self-publish without approval. It’s not even a right of first refusal in some situations. And, yes, the five publishers named in the law suit have used similar clauses in their contracts.
So there’s another line of harm.
Then again, maybe I’m just one of those who believe we have laws for a reason and there are better ways to deal with laws we don’t agree with than to ignore them. Legal precedents can lead to things we don’t necessarily want.
Here’s a question I don’t think has been answered: Who cares?
Rather a lot of readers who gave ebooks negative reviews based solely on the book being overpriced, and the authors who received those reviews, for starters.
Who cares if publishers collude to keep their prices high? Who is hurt?
By this logic, the government should also not be bothering to prosecute drug users or anyone else engaging in “victimless” crimes. Except, of course, that there are laws on the books saying these things may not be done, and there are people who are hurt because price fixing distorts all manner of things while defrauding purchasers – meaning there are more victims here than the drug user who at most harms only him or herself.
The authors? The authors of other books? The other publishers and writers who can cut the price of their books?
Yes. Their books are priced higher than they should be, so don’t sell as well – meaning that the author’s earnings are reduced. Authors of other books, if locked into the same price-fixing arrangements, ditto. Since this encompassed all of the established industry, that meant that the only freedom in pricing came from small presses and independents – most of whom have nothing like the flexibility or budget of the big players.
You have authors making money like they never did before under the New York model. Some of them are commercial writers who are making more self-publishing than they ever did.
Those who’ve been able to escape the big publishers, yes. The rest – the vast majority – not so much.
Colluding and price-fixing are terrible when it’s used to force unfair deals on a group. A railroad controlled by the Vanderbilts and the Goulds could set prices unfair to the farmers, who had only the choice of signing with them or letting their crops rot in the fields.
And a book store industry controlled by two chains or book distribution controlled by two companies, or publishing controlled by a handful of media corporations that dictate terms to authors and readers is fair to whom? The authors “crops” never make to the market, so readers don’t get the books they want.
That’s not the case here. A writer can sign with a major publisher, a small press or go indy, and they are still viable models in the current situation.
Whoooeee. What planet are you living on? For at least five years now, contract boilerplate includes the slavery clause that says the author can’t publish ANYTHING else under ANY pen name in ANY genre until the book in contract is published.
In fact, the agency model (with collusion) could even fail if their writers find it easier to go elsewhere.
The agency model is not what’s being prosecuted. The collusion is.
So, again, I ask: Why should the government spend its limited resources on this?
Because any time any organization conspires to cheat producers and consumers, if there is no government action the next such conspiracy will be bolder and engaged in with more confidence – and the government will have a harder time making it stick because “you ignored so & so doing the same thing” has a certain legal weight.
The issue is whether or not Apple and the other defendants colluded in price fixing.
Is there any evidence supporting this accusation? All I’ve ever heard about it is that Apple said the publishers could set whatever price they wanted, and Apple’s cut would be a percentage.
The DoJ’s pleadings have a lot of allegations that purport to show collusion occurred. It is going to be interesting to see what comes out at trial — assuming it gets that far.
Yes, THERE IS EVIDENCE. Apparently Steve Jobs talked about it at length. Please, do keep up.
The entire point of the investigation was to decide if there was enough evidence to justify laying charges – so yes. There is evidence. The filings chronicle a ridiculous number of lunch meetings, emails and so forth – and the emails are quite openly describing the arrangement as one to raise ebook prices.
Read Kris Rusch’s blog (not right now, it’s been hit by malware – but give it a few days then try it). There’s no shortage of evidence and she points to some of the worst of it. Also take a look at The Passive Guy. Lots of evidence.
Well, my first source for e-books is Baen books. My second source is Amazon.com. My third source is Gutenberg for the old classics. I HAVE NO FOURTH SOURCE. That’s it. I love the Baen model, where if I buy the hardback I get the CD with the ebook for free. In essence, I am happy to pay once. But I have no intention of paying twice. And many books I start with the ebook, but I do like the feel and smell of a new publisher edition, enough so to keep me buying my favorites in hardback. And I no longer have my membership at Books a Million or Barnes and Noble. I swapped them for Amazon Prime, and now I have no worries about the local bookstore having the book on the release dates, the book arrives at my door on the release date.
Authors (and publishers and agents too) need to take Robert Heinlein’s advice to heart. They are competing for my beer money and boat gas money and night at the movies money. If they price themselves out of competition, they will lose out. And if any of them get greedy, they will lose out and have to get what RAH described as a real job.
Amazon so far is the second best thing (Jim Baen being the first, thanks Jim for not only putting SF back in the gutter where it belongs, but for the ebook stimulus when no one else had the imagination for it) to happen to READERS, and if some writers and publishers can’t adapt, then they can find some different readers, and see how that works out for them, long term.
Jim Baen could have taught the legacy publishers a lot of things, if they’d simply have listened.
As I understand the “agency model”, it says that Apple and Amazon are supposed to get a fixed percentage of the price that I pay for an e-book. As a result, they have no incentive to negotiate for a lower price.
As a consumer, I benefit when Amazon negotiates prices down and passes some of that savings to me. Heck – I’m happy if they take a loss.
Actually, it is that publishers can’t sell their titles at a lower price anywhere else. Yes, the resellers get a fixed percentage of that, but the point is that they can’t have sales, or promotions, or anything else that might entice a buyer to come to their store over another. In other words, if the book is offered at $14.99 in iBookstore, it has to list at that price — or higher — everywhere else. Since B&N and Amazon and most other resellers also have been forced into signing the agency agreements, that means there is no difference in price anywhere. In other words, price fixing.
If the buggy whip manufacturers and livery stable operators had had access to as powerful a central government as we have now, in 1890, it would only be this year that Obama would announce, with great pride, that government research had finally succeeded in producing a marvelous new invention: the horseless carriage. It would of course be completely green, powered by 5000 gerbils on a belt, hit a top speed of 25 MPH and have a range of 15 miles, and be priced at $45,000 including tax rebates. (But you can easily afford it, because the Federal Reserve will lend you the money at 0.01% interest.)
Oh my, what a picture that paints in my head 😉