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E-book Price-Fixing Update

September 7, 2012 By Mark Leave a Comment

A settlement has been approved in the federal government’s suit against Apple and five of the largest publishing companies, all of which were charged with colluding to fix the price of e-books:

For the next two years, the settling publishers may not agree to contracts with e-book retailers that restrict the retailer’s “discretion over e-book pricing,” the court said. For five years, the publishers are not allowed to make contracts with retailers that include a most-favored nation clause. “The time limits on these provisions suggest that they will not unduly dictate the ultimate contours of competition within the e-books industry as it develops over time,” Judge Cote wrote.

It’s not often that such obvious abuses are so quickly corrected by regulators. There is now no floor under the price of e-books, which means publishing will have to adapt and evolve that much faster, as opposed to conspiring against consumers.

To the extent that this seems to empower Amazon as a mass-market e-tailer, Amazon will ultimately face its own price pressures as content inevitably decreases in price. (Which may be why Amazon seems to be relying so heavily on advertising on its Kindle e-readers for revenue.)

Context and previous Ditchwalk commentary here. Additional cranky commentary here.

— Mark Barrett

Filed Under: Publishing Tagged With: HarperCollins, Macmillan, self-publishing, Simon & Schuster

Where Were We?

April 11, 2012 By Mark Leave a Comment

Two years ago, when the major publishing houses got together with Apple and conspired to fix e-book prices, they did so not because Apple was sexy and Steve Jobs was a benevolent god and the iPad was about to launch, but because Amazon was the devil.

Somehow, in the intervening era of Apple-mania, that narrative has been skewed. But that skewing is about to snap back with a vengeance:

The government’s decision to pursue major publishers on antitrust charges has put the Internet retailer Amazon in a powerful position: the nation’s largest bookseller may now get to decide how much an e-book will cost, and the book world is quaking over the potential consequences.

This is, in fact, exactly what drove the publishing industry en-mass into Apple’s price-fixing arms two years ago. Because if Amazon can sell e-books at prices below what the publishing industry sets — as a loss leader for the Kindle, or simply as a way to stab the publishing industry in the heart until it begs for mercy — the publishing industry effectively loses control of its product. And that’s the last thing quarterly shareholders want to hear.

— Mark Barrett

Filed Under: Publishing Tagged With: HarperCollins, Macmillan, Publishing, Simon & Schuster

Publishing is for Professionals

April 11, 2012 By Mark Leave a Comment

Despite public acceptance of self-publishing as a viable means of expression, the traditional publishing industry continues to claim that it is the final arbiter of what’s good and right and culturally relevant. Today the U.S. Justice Department agreed that self-publishing authors pale in comparison with their industrial counterparts:

The U.S. Department of Justice filed a lawsuit against Apple and several book publishers Wednesday morning, claiming they worked together to artificially prop up prices for e-books. .

The publishers sued were Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster. The suit was filed in a district court in New York.

“Apple facilitated the publisher defendants’ collective effort to end retail price competition by coordinating their transition to an agency model across all retailers,” according to the complaint.

Real publishers illegally conspire with giant, anti-competitive, ruthless, monopolistic media companies like Apple to fix prices and screw their own customers in pursuit of profits. Self-publishing authors don’t do any of that, and probably never will.

— Mark Barrett

Filed Under: Publishing Tagged With: HarperCollins, Macmillan, professionals, Publishing, Simon & Schuster

E-Book Price Fixing

March 8, 2012 By Mark 3 Comments

In March of 2010, in the face of growing downward price pressure from e-books and open competition on pricing from online retailers like Amazon and Apple, the publishing industry took control of the price of its own products. It did so by abruptly and collectively by abandoning the long-time industry-norm of wholesale pricing and adopting instead what is called the agency model, in which retailers get a percentage of any sale rather than being allowed to set the price of goods themselves. (Like real estate agents and stock brokers, retailers who embrace the agency model never own the products they sell, they simply collect a fee for uniting buyer and seller.)

Fully two years later the federal government is signalling that the price-fixing party may be over:

Among the reported gripes the Justice Department has with the way Apple and publishers are doing business is a move toward setting standard prices and giving Apple a 30% cut of revenue for e-books sold on its devices. The business model, which Apple rolled out with the launch of its first iPad tablet in 2010, differs from what publishers offer to traditional bookstores, which is to sell books to retailers for about half of the suggested cover price and let the booksellers charge whatever they’d like.

As e-books have become more popular and brick-and-mortar bookstores have struggled, the industry has moved to the “agency model” Apple dictated with the iPad and, the Justice Department believes, publishers have acted in concert to replicate Apple’s model with Amazon and others. Publishers have denied such collusion, the report said.

So now you know. If you want to openly conspire to set prices in order to protect your market and limit competition at the expense of the consumer you will only be able to get away with doing so for two years, plus however long it takes the government to drag you into court, prove anything, and penalize you with a slap-on-the-wrist settlement in which you ultimately offer consumers a small price break they will almost certainly never take you up on for products they probably don’t want to buy anyway.

Or, you can avoid the icky, scummy feeling of being a money-grubbing liar by self-publishing your own books.

— Mark Barrett

Filed Under: Publishing Tagged With: HarperCollins, Macmillan, self-publishing, Simon & Schuster