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Analysis of Barnes & Noble’s Objection to DOJ Settlement on Agency...

Introduction

I wasn’t going to do anything other than mention that Barnes & Noble objected to the proposed settlement between the government and three publishers: Hachette, HarperCollins and Simon & Schuster but the adulatory statements of those publishing insiders about the statement really irked me and therefore, I had to post. For instance, Mike Shatzkin, a paid consultant to traditional publishers said this “BN’s response to DoJ (thanks David Boies) is a must-read. Obliterates the govt’s case. tinyurl.com/cysszov”. Publishers Weekly tweeted this “MobyLives: B&N joins forces with superstar attorney to explain the obvious to the DOJ in a blunt, exhilarating letter pwne.ws/KOwlFs”

Here is a link to said blunt, exhilarating letter.

What neither Shatzkin or Dennis Johnson of Moby Lives evidences is actual knowledge or understanding of the case. Barnes & Noble’s letter primarily argues, for a number of reasons addressed before, that the DOJ should not preclude parties from entering into Agency agreements as the Proposed Settlement would require.  That’s the only legal argument that they make. The problem with this is that Barnes & Noble should know that Agency without MFN has no teeth because no one signs an Agency agreement without MFN. They are like peas and carrots. In sum, what B&N is asking for would not result in what it what it truly wants and that is further erosion of Amazon’s hold over the ebook market.

Yes, David Boies is a well known attorney and a competent one, but the letter has no actual legal argument against what Judge Cotes has said that the suit is about: an illegal collusive agreement.

Comment Period

We are currently in what is called the “comment period”, a 60 day period in which anyone can comment on the proposed settlement.  According to the DOJ, over 200 comments have already been received and the DOJ expects more.  (ENDORSED LETTER addressed to Judge Denise L Cote from Daniel McCuaig dated 6/7/2012 re: Accordingly, tl1e United States asks that the Court excuse publication of the public comments in the Federal Register and, instead, allow comments to be posted on the Antitrust Division website in conjunction with Federal Register publication of the internet address at which comments can be read and downloaded. ENDORSEMENT: Granted)

David Boies and Barnes & Noble are hamstrung a bit. They certainly can’t argue that Barnes & Noble knew about a lack of agreement or lack of collusive behavior because that would suggest that Barnes & Noble is more involved in the alleged collusive behavior than is already alleged. They don’t address the alleged actions of punishment that Barnes & Noble carried out against Random House, at the request of David Shanks. They have to be careful about what to say in order to avoid being dragged into the lawsuit itself.

Summary of BN’s Argument

What Barnes and Noble did, instead, was argue four essential points.

  1. The settlement engages in unprecedented governmental influence into a previously unregulated business.  ” The proposed settlement, particularly its overreaching regulatory provisions, warrants an exacting review because of its potential impact on the national economy and culture, including the future of copyrighted expression and bookselling in general, not only electronic books (“e-books”). “
  2. The lifeblood of brick and mortar stores is predicated on publishers being able to price ebooks at the level the publisher deems fit.
  3. Prices are actually coming down and not up.
  4. Consumers will have less choice.

BN Gained Marketshare Because of Agency and MFN

There is no question that Barnes & Noble benefited directly from the Agency pricing model.  If you recall, I wrote about that here in September 2011.

But it wasn’t Apple and the iBookstore that was the beneficiary of Agency pricing and it wasn’t small independent retailers like Books on Board or Kobo.  The major beneficiary was Barnes & Noble.  At the end of 2009, retail book sales were plummeting.  B&N had already started to replace some of its book inventory with Toys & Games. In previous quarters, B&N was reporting a consistent pattern of brick and mortar retail loss.  (-4.8% in 2010; -5% in 2009*; -5.4% in 2008)

Retail sales had fallen by 3% but digital sales, along with device sales, were shoring up BN’s bottom line.  It could be argued that BN’s entire existence was saved by Agency pricing.  But in a Sherman Section 1 case, Barnes & Noble’s success is viewed as fruit from the poisonous tree, if I can mix my legal metaphors.

Unprecedented Regulation

First argument by BN is that this settlement which requires the abandonment of agency for two years is harmful.  BN notes accurately that the agency model is not under scrutiny by the DOJ and therefore agency models should be permitted regardless.  It is true that DOJ and even Justice Cotes does not appear to be troubled by agency. For the DOJ, the target was Agency plus Most Favored Nation clauses which prevents a publisher from pricing something lower at one retailer versus another.  However, agency does not work without MFN’s.  So what does BN say about MFN clauses? Nothing.  There is absolutely zero reference in the letter about the issue MFNs.  It mentions in two places that the DOJ’s suit includes  MFNs but does not challenge the DOJ on this issue.  This shows the unserious nature of this letter.  The DOJ clearly despises MFNs as the settlement prevents any MFN clauses for the entire term of the settlement which is five years.

Agency Has Increased Competition

Second, BN argues that agency has positively increased competition in three ways. First, it has introduced new players to the ebook market; second, it has helped to staunch erosion of brick and mortar stores; and third, it has increased innovation.

The end loser of this unnecessary and burdensome regulatory approach will be the American public, who will experience higher overall average e-book and hardback prices and less choice, both in how to obtain books and in what books are available. Barnes & Noble has witnessed how agency contracts have created competition by making publishers—where there are many players and where competition is abundant—responsible for pricing and price competition. In just two years, the result of agency contracts has been significant, as competition at all levels of the e-book distribution chain has increased.

Of course, BN does not have any evidence to support any of its claims other than its own existence and success in the ebook market.  In arguing that agency has increased ebook retail competition, BN’s points to itself and Apple but names no other individual retailers that have sprung up to offer ebook services during the Agency period (that is because none have).

It points to the fact that agency has allowed competitors to innovate, as if innovation would have stagnated if there was price only competition.  Again, it points to its own array of devices.

At the same time, the agency model has enabled innovation, with e-book distributors developing new products to differentiate themselves. Agency has encouraged new participants to invest in e-books. Barnes & Noble, for example, has introduced multiple versions of its e- reader, the NOOK; a self-publishing platform, PubIt!; and lending and Read-in-Store programs.

Surely, BN is not arguing that it would have released the Classic Nook and nothing else?   Or that the only thing that it would compete against Amazon would be on price?  Innovation regardless of price competition would happen regardless. One needs only look to Sony to see that it innovated and revised its digital device even before Agency. Sony introduced the e-ink, the e-ink touchscreen, and the e-ink touchscreen with light before the Kindle was even released. Six of Sony’s 10 models were introduced before 2010 and the onset of Agency pricing.  Both the Kobo and the BN Nook were in the works before the onset of Agency pricing.

Barnes and Noble also argues that physical bookstores will be harmed if agency pricing were to go away.  This again is misleading because of the failure to note the importance of the MFN clauses, but let’s that aside for a moment.  The Antitrust laws are not designed to help one business (Barnes & Noble) or one business model (hardcover retail sales).

Prices Have Come Down

Third, BN argues that prices have come down and shows this little chart.

Barnes & Noble Price Chart

Click for larger image

I mentioned how unserious this letter was previously, right? Because this chart says absolutely nothing.  Does BN include the basis for such data?  No. They just make up the chart and toss it into the letter.  Average ebook prices are declining, yo! Is there a division between non agency priced books and agency priced books?  Are they taking into account that once Agency pricing was put in place that Apple set the floor and ceiling for pricing of books?  Remember, Apple required the price of digital books to coincide with a physical book price. Let’s review those numbers:

  • Anything under $22.00 is capped at $9.99
  • $22.01-$24.00, the maximum ebook price is $10.99;
  • $24.01-$25.00 is $11.99;
  • $25.01-$27.50 is $12.99;
  • $27.51-$30.00 is $14.99;
  • $30.01-$35.00 is $16.99;
  • $35.01-$40.00 is $19.99.

No wonder the price of Agency hardcovers declined.  It doesn’t take a rocket scientist to see that the decline was in part due to the alleged illegal conspiracy.  The lockstep pricing is actually one of the best parts of the DOJ’s suit to show collusion.

Lack of Consumer Choice

Lastly, BN argues that below cost pricing will lead to ebook distributors leaving the market and “content diversity” will suffer.  This presumes that there is content diversity now.

Unable to compete with below-cost pricing, e-book distributors will drop from the e-book space. Content diversity in that situation can only suffer. See Scott Turow, President, Author’s Guild, Apple Antitrust Suit Would Aid Amazon, Bloomberg, Mar. 21, 2012 (“if we reinstate the status quo before Apple’s agency-model breakthrough, then bookstores and publishers are going to be the first casualties. Right behind them will be readers, who will see the diversity of titles and authors diminish while leading titles get more expensive”).  Consumers will also have limited choice in where they buy their books: online retailers such as Amazon or large, multipurpose brick-and-mortar stores such as Costco, Wal-Mart, and Target, which offer only mass-market selections.

Nonetheless, Amazon’s low cost pricing may lead others to leave the market, but Amazon had been low pricing for two years, between late 2007 and 2010. During that time, other entrants were coming into the marketplace including BN, Kobo, Google.  Apple wanted in only Agency and Sony already existed.  The uncomfortable facts are that there were several players that were preparing to enter the digital book market in spite of Amazon’s low cost pricing.

Customers also have limited choice where to buy books because of Borders’ demise which can’t be placed on Amazon’s low pricing of ebooks and the decline of Barnes & Noble stores predating 2008.  Physical book retailing has become more and more difficult in the recent years and not simply because of Amazon and digital books.

Conclusion

BN’s legal argument, surrounded by a lot of puffery, is that the two year prohibition on agency pricing is unprecedented regulation of a nascent market.  Agency pricing works only if there is an MFN clause.  Agency would only work for BN if MFNs existed else another retailer, with more power, could exact lower price points than BN.  Of course, if BN knows that its retail partners would never treat them disparately than another retail partner then BN is fine because they have, in essence, an unspoken MFN.  And given the closeness between BN and the publishers that may very well be the case.  However, Agency with no MFN helps only those who can exact the same price points and not every retailer will be able to do that (heck, All Romance can’t even bring 5 of the big 6 to their store!) Allowing Agency with no MFN has no pro competitive consequences except for the largest players in the market.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

27 Comments

  1. Barb in Maryland
    Jun 12, 2012 @ 09:39:39

    Fascinating Jane. Thank you.
    Just one teeny question–MFN= ???

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  2. Rosario
    Jun 12, 2012 @ 09:53:45

    @Barb in Maryland: Most Favoured Nation. It’s a term borrowed from international trade, where if a country decides to give another preferential treatment (in effect, making it the “most favoured nation”), then it’s forced to give the same treatment to others. In publishing, if I’ve understood correctly, it means that if a publisher offers advantageous conditions to one retailer, then it must offer the same ones to the others.

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  3. Angela
    Jun 12, 2012 @ 10:02:37

    I love the chart! I laughed out loud when I saw the chart.

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  4. Lynnd
    Jun 12, 2012 @ 10:10:15

    “If you have the law, hammer the law. If you have the facts, hammer the facts. If you have neither the law nor the facts, hammer the table”. Sounds to me like B & N is doing some mighty hard table-hammering :-) – looks impressive but usually the judge can see right through the puffery.

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  5. Barb in Maryland
    Jun 12, 2012 @ 10:30:16

    @Rosario–
    Thanks! I am familiar with the term and what is usually means. I was just having a bit of total brain fade over decoding the acronym. All is very clear now. (Well, as clear as these cases can be…..*g*).

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  6. SAO
    Jun 12, 2012 @ 10:32:14

    If the lifeblood of bricks and mortar stores is in the publishers setting prices, then, why haven’t they bled to death centuries ago?

    Or does B&N mean publishers need to be able to set prices because that would allow them to subsidize print books with profits from lower-cost digital sales, in which case, isn’t that preventing readers from getting the advantage of innovation that lead to lower prices?

    Yes, books are cultural products, but wall art survived the invention of the printing press and music has survived the iPod and the result has been that more people to have access to music and wall art.

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  7. Carrie
    Jun 12, 2012 @ 10:35:15

    Thank you for your excellent and continuing coverage of the DOJ suit and the evolution of epublishing. Before I started reading here a few months ago, I had to spend hours searching the web for articles I could make sense of, and still didn’t have as clear an idea of what was going on as I do now. Your summaries and insight are invaluable to us laymen.

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  8. Jane
    Jun 12, 2012 @ 10:51:33

    @Carrie – I am glad that it is helpful.

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  9. Jane
    Jun 12, 2012 @ 11:06:09

    @SAO – I believe BN is arguing that print book ecosystem can only be profitable if ebook prices are controlled by the publishers which would not permit discounting or allow Amazon to gain ebook marketshare or attract readers to ebooks with low priced discounting. Kind of like what BN did with its hardcovers to attract readers away from independent booksellers.

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  10. Lynnd
    Jun 12, 2012 @ 11:26:23

    @Jane: I think the DOJ should retain you for their legal team on this one :-).

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  11. Estara
    Jun 12, 2012 @ 12:40:40

    I second Carrie’s and Lynnd’s comments.

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  12. Kaetrin
    Jun 12, 2012 @ 20:01:43

    I hope the DOJ reads DA! :)

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  13. Jane
    Jun 12, 2012 @ 20:12:47

    @Lynnd: Ha! I have the utmost respect for all the lawyers involved. Barnes & Noble’s attorneys included. Obviously they are making the best argument they have. Part of me felt like they were writing it for investors and not for the DOJ.

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  14. Richard Adin
    Jun 13, 2012 @ 05:13:33

    Nice argument, Jane, but I think you have missed at least 1 major point in B&N’s argument: The DOJ and the courts are ill-equipped to enforce the settlement agreement. A key term of the agreement that is frequently overlooked by commentators is the requirement that ebooksellers like Amazon will be required to at least breakeven across a publisher’s entire ebook line. No ebookseller will be permitted to sell at a loss.

    Yes, Amazon could sell Stephen King’s latest novel at $1 and take a serious loss on the King book, but if doing so would mean that it would suffer a loss over the whole Simon & Schuster (I believe that is King’s publisher) line, then Amazon would not be permitted to sell the King book for $1. But how would the DOJ enforce this? First, Amazon is not a party to the lawsuit so cannot be compelled to turn over the data needed to make this determination to anyone — not the DOJ, not the court, not the publisher. Second, the malfeasance is collusion not agency pricing, and not agency pricing with MFN. MFN is a common clause and has not been ruled illegal by the Supreme Court. (Haven’t you ever wondered why Kindles and Nooks, for example, are identically priced in every store that sells them and when one has a $20 off sale, so does every other store?) In fact, the court has ruled that a wholesaler who offers volume discounts has to offer the same volume discounts to all buyers, essentially a MFN action.

    Third, courts do not declare that as punishment for illegal behavior it is OK to prevent the party from doing legal behavior. This is the essence of Boies’ argument. Instead, courts increase fines and take steps to proscribe the illegal action while allowing the legal action to continue. This is what happened in the Microsoft and IBM antitrust cases, and what I expect will happen here.

    One other thing. You write about how Sony’s introduction of readers was not dependant on agency pricing. That’s true but is also a comparison of apples and oranges. Sony is and was primarily a device maker, not a bookseller. Even you have complained about how unprofessional its ebookstore is. But B&N is primarily a bookstore, not a gadget maker. For B&N, survival of the book business is paramount; for Sony, survival of the device business is paramount (and note that whereas in previous years Sony would introduce 2 or 3 models, it is now down to introducing 1 model and there are no rumors of another on the way).

    I also note that you did not mention that part of Boies’ argument, which has not been disputed by anyone except a few bloggers who do not have access to real data, is that before agency pricing Amazon had 90% of the ebook market and after agency pricing its share had declined to 60%. A significant drop. And you did not mention that even if the settling 3 publishers are banned from agency pricing, no other publisher is banned from using it. If Random House and Macmillan and Smashwords continue to use agency pricing, the settling publishers will be at a competitive disadvantage, which is another reason the court may not go along with that part of the settlement. There are lots or problems with the proposed settlement, regardless of whether you like agency or not, none of which are really addressed in your analysis but which are part and parcel of the B&N and Smashwords responses.

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  15. Jane
    Jun 13, 2012 @ 09:42:16

    @Richard Adin: I don’t believe that the DOJ is ill equipped to police the settlement. The term you refer to is not key to the settlement at all. That term of the settlement agreement is the one agency relationship that is permitted, as an example. It doesn’t require any reseller to adopt this measure and frankly without MFNs, what retailer would adopt this model?

    The DOJ has a long standing beef with MFNs. I’d argue that the MFNs and not Agency pricing is what caused the DOJ to pursue this matter.

    Barnes & Noble is arguing for that it should be allowed Agency contracts. Fine, but what is the net result of this? If Amazon doesn’t take Agency and BN does, where does that place BN? Let me repeat, Agency without MFNs is not a good business deal for the retailers and they all know this (thus the MFNs in the first place).

    The focus on Agency and the legalities of it, within the confine of the settlement agreement, is a red herring. If the court okays Agency (and the reason that the cooling off period is there is because the DOJ *is* attempting to punish illegal behavior which is the alleged collusive agreement) but does not permit MFNs, there is no reason to do Agency.

    The reason that I don’t mention Boies’ argument about Agency leading to a decline in Amazon marketshare is because having a monopoly is not illegal. I covered that issue in my Antitrust Primer. Amazon’s acquisition of a monopoly in the ebook market through device innovation, better customer service, and low pricing is not deemed to be illegal and is not punished through Antitrust law.

    What is punishable is a Section 1 violation of an illegal collusive agreement. I agree the settlement is flawed but Barnes & Noble is asking for one thing and that is to be allowed to enter into Agency agreements. But what is the end result of that if there is no MFN allowed?

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  16. SAO
    Jun 13, 2012 @ 11:18:28

    @ Richard Adin

    A key point for you seems to be that Amazon’s market dominance was reduced. Amazon got there by providing great service to customers. The publishers could have dealt with the predominance of the Kindle by creating their own standard and only selling e-books that met it. Amazon would then be forced to allow the Kindle to read the new standard and all the Kindle owners wouldn’t be tied to Amazon.

    But instead of thinking strategically, to compete, the publishers colluded to raise prices and that’s what they’re getting nailed for. Entirely deserved.

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  17. Len Feldman
    Jun 13, 2012 @ 11:53:27

    The adulation of David Boies by Mike Shatzkin and others is, increasingly, seriously misplaced. Boies and his firm just lost a massive lawsuit that it filed on behalf of Oracle against Google, in which Oracle demanded $2 billion or so because of portions of the Android operating system that it claimed had been taken from Java. Boies also lost an earlier case where SCO tried to sue IBM for use of its code, and the court found that SCO didn’t even own the code it was suing over. So, relying on his legal arguments is a little like relying on a used car salesman when he tells you that everything works in the car he’s trying to sell you–caveat emptor.

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  18. Fbone
    Jun 13, 2012 @ 13:47:35

    @Len Feldman: In both those cases a jury decided the outcome. And we all know how some juries reach their decisions.

    That is why anything can happen in the DOJ case. Jurors can and will look at the whole picture even what is not stated in the courtroom. Even selecting jurors in this case will be very difficult.

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  19. Richard Adin
    Jun 14, 2012 @ 07:30:31

    @Len Feldman: As a former practicing attorney, I know to separate the skills of the lawyer from the jury-derived results. I once had a juror tell me that the jury voted to convict a woman because she didn’t cry during her trial and thus showed no remorse. As regards the facts, the jury felt the prosecutor hadn’t proved his case but that the fact that the case was broguht combined with the lack of crying was sufficient to warrant a conviction.

    There is also the matter of what the judge allows a jury to hear. In the woman’s case mentioned above, the judge refused to allow an expert witness to testify on her behalf. In chambers and off the record, the judge said he had to make sure the jury convicted her because it was an election year and the public wouldn’t understand an acquittal and he wouldn’t get reelected.

    Plus lawyers do not win every case they handle and the reasons they lose are myriad and not necessarily a reflection oof their skill or expertise. David Boies is viewed by his peers as one of the best lawyers in the country. Clarence Thomas may not vote Boies way, but then it might be because his wife would lose too much money or represents people with an opposite view or it might be that Clarence really believes the law is not as Boies suggests. We’ll never know the real reason.

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  20. Lynnd
    Jun 14, 2012 @ 10:02:44

    @Richard Adin: The response from B & N is to a settlement negotiated between three of the five publishers in the law suit – if it’s lke any other settlement, fault or liability will never be admitted, but if they really thought they had a good shot of succeeding at trial, they likely would not have entered into the settlement agreement in the first place.

    With respect to the argument about Amazon having 90% of the market at the time that Agency was implemented, I would argue that this was entirely due to the fact that they were first out of the gate with a good product. We can’t really say if that would have changed naturally or not as more viable purchasing options for ebooks and more ebook readers (including the iPad) became available BECASUE the market was never permitted to develop freely as a result of the (alleged) illegal collusion of the publishers being sued. As Jane noted, having a monopoly because you were innovative and offer a good product that the majority wants at a price they are willing to pay is not illegal. The solution to that is for competitors to come up with something better, not to collude to manipulate the market.

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  21. Richard Adin
    Jun 14, 2012 @ 10:48:43

    @Lynnd: There are two things to remember as regards the decision to settle: (1) going to trial is ALWAYS a crapshoot. It has nothing to do with liable/not liable or guilty/not guilty — it has to do with who is the most persuasive and wht the judge allows the jury to hear, as well as to where the jury’s sympathies lie. (2) Going to trial in a case like this is exceedingly expensive. Companies often decide to settle without admitting guilt/liability because it is financially cheaper to do so than to gamble on the crapshoot of trial. Consider in this case that if at least 1 member of the jury is someone who is an ebooker who is angry at the publishers for any reason, that juror could convince others that regardless of the facts, the publishers ought to be chastised. Considering how so many ebookers look at the agency pricing system and at the big publishers, I know I wouldn’t want anyone on the jury who has ever read or bought an ebook. Ultimately, the decision whether to settle or not settle has little to do with the merits of the case or the defense; it has to do with gambling odds and minimization of financial loss.

    As to Amazon having 90% of the market because they were the first out the gate with a good product, that isn’t altogether true. The Sony Readers were the first out the gate and were significantly better devices than the first Kindles. And it was pretty clear before agency pricing that the market wasn’t going to adjust Amazon’s penetration as long as Amazon was willing to sell bestsellers below cost. If Amazon had such a superior product, nothing would have changed with Agency pricing: Amazon would still have had the superior product and should have retained its market share. That it lost market share is an indicator that its product was not superior in the absence of price undercutting.

    Agency pricing gave Amazon the opportunity to compete in the ebook market on a price-neutral/level field. No competitor could sell an ebook for less than Amazon nor could Amazon sell an ebook for less than its competitors. That meant that Amazon won or lost buy reason of other factors, such as superior product, customer service, etc. Yet on a level playing field (price-wise) Amazon lost market share and others gained it.

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  22. Lynnd
    Jun 14, 2012 @ 12:43:35

    @Richard Adin: I agree that Sony had better devices, but they were more expensive than the Kindle and their ebookstore was truly awful to shop at and working with Digital Editions was and is a PITA. I don’t know how many times I had try to get support to reset my device so I can read my ADE files (and the operative word there is “try” – Adobe’s support for ADE was non-existant). Amazon was the first one that came out with the total package, a device that worked, a purchasing environment that was seamless and good customer service (and I’m not an Amazon fan – I own a Kobo because I don’t want to be tethered to Amazon by virtue of their exclusive DRM)

    This is analagous to the tablet computer market. How many companies (including Apple) tried to introduce a tablet computer before the iPad. IMO Apple has been so successful with the iPad because of the total package it was able to put out – the hardware works and they have the apps that people want at a mostly reasonable price. Should there be a suit against Apple because because the iPad is stomping all over the competition in the absence of evidence that they have done something illegal to gain that dominant market share?

    As for the settlement issue, there is always inherent risk in any litigation; however, the fact that they settled so early suggests that their evaluation of their chances of success (or getting a better deal if they carried on further) was very low (and given the allegations of the collusive behaviour that Jane has outlined, I can see why they would come to that conclusion). Either that or the agency model isn’t working for them and they just wanted to get out anyway without losing too much face among their co-conspirators.

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  23. Courtney Milan
    Jun 14, 2012 @ 15:02:58

    I’m just catching up with news after a few days without real internet access.

    @Richard Adin: The reason why Boies lost the SCO case wasn’t because there was a foolish jury. He lost that because it was a massive stinker of a case, and there was no way to win it. It was just a question of whether he could claw anything–however tiny–out of the inevitable loss.

    No doubt in my mind that Boies is a great lawyer. But he’s not trying to win this. He’s trying to delay the settlement–nothing else.

    I started to give a longer explanation, but it ended up long enough that this is the best I can do:

    http://www.courtneymilan.com/ramblings/2012/06/14/what-david-boies-is-doing/

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  24. Kaetrin
    Jun 14, 2012 @ 20:17:23

    Considering how so many ebookers look at the agency pricing system and at the big publishers, I know I wouldn’t want anyone on the jury who has ever read or bought an ebook.

    @Richard Adin While I don’t disagree with the concept that going to court is always a gamble, your above comment is telling. Ebook readers don’t like Agency pricing (ok, let’s call it what it is – Retail Price Maintenance) because it raised the cost of ebooks. RPM also meant that the smaller ebook retailers like Fictionwise and Books on Board and All Romance eBooks couldn’t offer unilateral rewards programmes/coupon deals and they lost business as a result – effectively pushing MORE business to Amazon. If there was no (or a limited) rewards programme to woo the customers to keep buying from Fictionwise or BoB, then the one click buy at Amazon became more attractive (I speak from personal experience and have seen many many comments to that effect here and at other reader blogs). DA Jane said that only other day that All Romance eBook STILL can’t sell books from 5 of the big 6 publishers. During the initial implementation of the RPM, it took some months for retailers like BoB to have access to the 5 publishers’ books, which also meant that customers looked elsewhere. RPM is illegal. The collusive action of the publishers was illegal*. Is it any wonder than ebook readers are angry about it? Damn right the publishers wouldn’t want an ebook reader on the jury. And you know what? There are a lot of us. And we’re pissed.

    *allegedly (cough cough)

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  25. Richard Adin
    Jun 15, 2012 @ 05:12:29

    @Kaetrin: Just one point: RPM is not illegal. The Supreme Court has upheld it. It used to be illegal until the the conservative Supreme Court regained power in the Bush administration. RPM is now acceptable. Collusion is illegal but remember that even under the settlement, RPM (or agency pricing) is not prohibited except for 2 years and only for the 3 settling publishers. The settlement will not assuage ebooker anger over agency pricing.

    As for the cost of ebooks going up under agency pricing, I haven’t found that to be true. The books I read are actually less expensive. What it boils down to is that some books are more expensive, some are less, and some didn’t change. What is lacking in the argument is a comprehensive pricing study, not that such a study would alter any views regardless of what it demonstrated. Prople, including myself, only care about their niches (the micro view) and not about the macro view. No one has come forward with proof that agency pricing has increased ebook prices EXCEPT in limited areas, such as New York Times bestsellers that are no longer discounted to $9.99.

    The loss of program rewards and coupon deals may have resulted in paying more for an ebook than would have been paid with such deals in place, but, again, no objective studies that I am aware of have been conducted to prove or disprove that point.

    Besides, although I like to pay as little as I can for a product, I think most of the anger is a result of the idea that the consumer is “entitled” to these discounts. I wonder why no sense of entitlement extends to buying the devices themselves? Ever notice how the price of a Kindle or a Nook is the same no matter where you buy it and if it goes on sale for $30 off, it is on sale for $30 off at every place that sells it? I find the sense of disparity in perspective intriguing — it is OK for Amazon to dictate the price of the Kindle everywhere and to prevent, say, Staples from unilaterally discounting it, but it is not OK for Macmillan to do the same with its books.

    Fictionwise was doomed regardless. Not only was its sale to B&N the first nail in its coffin, but its exceedingly poor customer service was the final nail. I used to buy a lot of books at Fictionwise (at least $20-$25 a week) but stopped because of the lousy customer service and the continuing problems with purchases and the poor browsing experience.

    I have never dealt with BoB, and so cannot comment on it.

    ReplyReply

  26. Agency pricing and MFNs are like peas and carrots or why the DOJ settlement won’t disallow discounting
    Jun 17, 2012 @ 09:30:30

    [...] recent days, we’ve seen the statements of Barnes & Noble, paid industry consultant Mike Shatzkin, and the American Booksellers Association make an argument [...]

  27. Price Fixing Lawsuits Against Publishers Summarized with Timeline of Events
    Jul 08, 2012 @ 14:34:29

    [...] Analysis of BN’s objections to the settlement. What Barnes and Noble did, instead, was argue four essential points. [...]

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