The Department of Justice and Publishing

If you're reaction to the Department of Justice is a bit of “what?” and “huh?” here's plenty of explanation and education.

First, you can read the documents filed by the Department of Justice (pdf) in New York's Southern District court. The documents explain the case, the processes of print and ebook publishing, and allegations that caused the suit to be filed. Point of note: references to “horizontal conspiracy” create mental images that are unintentionally silly.

(I went and looked for a few links to explain the basics of antitrust, and I discovered a strange phenomenon. Many of the pages that explain the basics also feature a dude in a suit with a douchebag smile and an oddly awkward pose. So here, unintended hilarity with some anti-trust basics.)

Meanwhile, back at the ranch, Jane at Dear Author also explains much of the case and the possible consequences.

Jane also has the settlement reached with HarperCollins, Simon & Schuster, and Hachette, which requires that agency pricing will be eliminated for two years, pending approval by the court.

Macmillan, via this statement from John Sargent, vows to fight the suit, saying “Other publishers have chosen to settle. That is their decision to make. We have decided to fight this in court.”

Once settlement approval is all set and done, they have seven days to comply.

Amazon has offered a very succinct statement to Laura Hazard Owens in response:

“This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books.” — Amazon statement on Hachette, Simon & Schuster and HarperCollins’ settlement with the Department of Justice

(Coincidence that the response is tweet-able? I think not.)

The tweet stream on my laptop is divided between Romantic Times tweets and publisher news about the DoJ, which is fascinating in a incongruous kind of way. The most interesting responses for me are those that cast Amazon as evil, Apple is evil, the publishers are evil. There's no good guy/bad guy scenario.

What does this mean for readers? More changes! Soon prices on some ebook romances will go down from some publishers, and retailers like Amazon but also AllRomance, Fictionwise, and BooksonBoard will be able to set prices, rebates, and promotions on books from those publishers that have settled. From my perspective, it seemed so limited a strategy to restrict the abilities of an independent online digital book seller who wants to feature and discount a book, all to send a frozen fish of outrage to for that terrible, horrible, no good very bad digital $9.99 bestseller. In a nutshell, the price of ebooks will be changing again, and different groups will be creating the change. We shall see what happens next. 



General Bitching...

Comments are Closed

  1. 1
    LauraN says:

    I don’t know much about antitrust, but I clicked on the “unintended hilarity” link, and I am definitely anti trusting that guy.  His thumbs up is surely misleading.

  2. 2
    Beggar1015 says:

    Call me a pessimist but I still forsee that we’ll be paying too much for ebooks.

  3. 3
    Susan says:

    I’m gonna hold my breath until I get a partial refund on all those ebooks I paid the inflated prices for.  (In 30 seconds, call 911 for me!)

    Agree with @Beggar1015—sadly, I’m still not betting on a win situation for readers.

  4. 4
    MissB2U says:

    I’m not clear on, well ok all of this.  What has Barnes and Noble had to say about prices for Nookbooks?  I have a kid starting college this fall and my ebook budget is about to get trimmed.  With a chainsaw.

  5. 5
    Tamazon says:

    The gist of it is that price fixing is against the law and is not beneficial to Americans. It stifles competition.

  6. 6
    Ghengis Mom says:

    I’m also not convinced that I’ll see any savings and I’ll just keep buying the full-priced ebooks as half-priced used books instead.

    I still don’t understand this from STLToday “New e-books from Macmillan and the other publishers investigated by the Justice Department often are priced initially between $12.99 and $14.99, with Amazon making a point of noting that the price was set by the publisher. Ironically, publishers usually make less money off the agency model than the traditional one because they receive a smaller percentage of the proceeds.”

    Read more:…

    How are they not making money off of ebooks? How? Why do they get a smaller percentage? I understand retail. I do not understand this. They should be making a killing off pricing something the same as they would a product that have to manufacture, print, ship, and store.

  7. 7
    Tam B. says:

    I just did a little checking on e-book pricing (ever the optimist) and noticed that for example; Nora Roberts books – the prices have gone up. ($21+ for the Next Always, $13+ for back catalogue trilogy titles) and that the JD Robb bundles were no longer available.  (I’m in the Aust area.)

    I hope that this is just the last grab for dollars before they come down and not an indication of the new pricing structure.

    How can publishers believe that insanely high pricing nets them a profit.  I won’t spend that much on an e-book.  I’ll simply borrow it from the library instead.  Yet if they had the books at more reasonable prices I’d likely buy a lot to have them in e-book format.

  8. 8
    Vuir says:

    Physical books are sold to Amazon (for example) at a set price.  Amazon then discounts that book heavily, making a small profit.

    Ebooks are sold by Amazon (for example) at a price set by the publisher, under the Agency Model.  30% of this price goes to the Publisher, 70% to Amazon.

    30% of the ebook list price is less than the price Amazon pays the publisher for the physical book.

    In the case of physical books, Amazon gets a much smaller profit margin.  In the case of ebooks, (profit-wise) the publisher suffers.

  9. 9
    slimlove says:

    Actually, based on my experience (I work in publishing), that’s not quite how it works.

    In order to drive sales for the Kindle, Amazon buys ebooks the way they buy print books – at the wholesale price the publisher sets – then sells them at whatever price they want (like $9.99), and eats the difference if that’s less than what they paid for the book.

    The agency model, adopted by Apple, gives publishers the right to set the price, but Apple takes a 30% share of the sale price. The agreement also includes a “most favored nation” clause – meaning that publishers can’t sell the book elsewhere for less than they’re selling it through Apple. That’s what the comments on Amazon about “this price is set by the publisher” mean.

    So why commit to this agency model if, by and large, publishers make less money from it? To undercut Amazon’s pricing model, which publishers worry will lead readers to expect cheap ebooks. To the reader, ebooks *should* be cheap, because they’re easier to produce and distribute, you don’t have to warehouse them, etc., right? And that’s all true, ebooks are cheaper to produce. But they still cost money to make, even if it’s less money. Publishers don’t price high just for the hell of it. They set prices to recoup their costs – royalties, overhead (acquisitions and editing, etc.). As much as many publishers have cut back on those kinds of costs over the past few years, you can’t jettison them entirely, not if you want people to keep reading your books.

    This is all part and parcel of the shifting publishing game. Right now we’re still caught in the middle – ebooks don’t yet dominate the field, but it’s clear they will in the future, and most publishers are still trying to adapt their business models to that reality.

    FYI, I don’t work for any of the publishers named in the suit. In fact, my employer doesn’t sell books through Apple at all, because we weren’t willing to accept the agency model.

  10. 10
    Jessica C says:

    It seems almost as though the publishers want the ebook industry to go away.  For whatever reason (maybe the ebook sellers) the publishers/book industry don’t make enough to keep everybody happy, especially consumers. Large overpriced hardbound books have been antiquated for quite a while. Like anything else where the middle man/sellers/agencies charge too much, prices go to high, and the model changes (like self publishing, and on-demand printing).

  11. 11
    Helena Sapphire says:

    Ebooks price gouging done by the big 6 interferes with free market. As of now, prices of ebooks are not set according to the demand and supply.  It is set according to the whims and fancy of the executives at the big 6.

  12. 12
    nancymolszwski says:

    Very interesting article!!

  13. 13
    Alison says:

    I’d like to bring this conversation back to what is the most puzzling thing about this entire issue.  What the hell does douche-bag guy have in his pants???  Something long and square judging by the bulge in his crotch!

  14. 14
    ECSpurlock says:

    I’m sorry, but the way I see it, this isn’t about money, it’s about power. If Amazon can break, and then bankrupt, the big 6, they can squash all the indies at their leisure. Then they can move on from controlling prices to controlling what is published and by whom.

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