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Breaking News: Judge Cote approves DOJ settlement with 3 Publishers

I haven’t read but the last entry but a) I’m not surprised she ruled quickly. I thought she would (hey, I was only off a week) and b) I’m also not surprised it was in favor of settlement.  I’ll have far more tomorrow but the PDF is here if you want to read it.

Timeline now:

  • The judge approves the settlement.
  • Within 7 days, the Settling Defendants (Hachette, HarperCollins, and Simon & Schuster) will need to sever their contracts with Apple.
  • Within 30 days, the Settling Defendants will need to bring their pricing arrangements in line with the terms dictated in the Settlement Agreement.
  • Within 30 days, contracts that restrict an ebook retailers ability to set the price of an ebook or a most favored nation clause must be broken. Amazon would be a retailer with whom publishers have an MFN clause.
  • Publishers must designate an Antitrust Compliance Officer to train the employees of the publishers in how to abide by the rules set forth in the agreement; to conduct an audit; provide quarterly reports of compliance to the DOJ, and to maintain a log of communications between “officers and directors” and others if the communication involves selling of ebooks.

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

57 Comments

  1. library addict
    Sep 06, 2012 @ 14:45:19

    Good news. Looking forward to your post tomorrow.

    I only wish Penguin were part of the settlement since so many of my fave authors write for them.

  2. DS
    Sep 06, 2012 @ 15:21:43

    So much for the graphic amicus brief.

  3. Rebecca
    Sep 06, 2012 @ 16:37:19

    As someone who loves bookstores and physical books, I’m quite disappointed that e-book consumers were the only consumers the DOJ gives a darn about.

    And for those of you who say you shouldn’t have to spend more money on e-books to support print books/bookstores – well why should I lose what I like for YOUR benefit? Readers who prefer print books and bookstores hardly have the monopoly on selfishness.

  4. Anne V
    Sep 06, 2012 @ 16:49:25

    I don’t think you should lose what you like for my benefit, but at the end of the day, the market is going to make the decision for both of us. However, I can’t see why ebooks should subsidize physical bookstores. I like them too, but the formats need to stand or fall on their own merits.

    I don’t think this is about ebooks vs. physical books so much as it’s about the big 6 publishers not recognizing how new technology was going to disrupt their business model, moving slowly, making poor choices and getting busted for that.

  5. Rebecca
    Sep 06, 2012 @ 16:59:30

    I genuinely believe, and I’m not the only one that feels this way, that Amazon was creating unreasonable expectations of cost in order to grow their market share and gain a monopoly, and this has led to entitlement among many readers to permanently get e-books at a price that was below cost . They didn’t price that way because of competition. They set an artificially low price at the start in order to grab an entire market. If the format should have to stand and fall on its own merits, then see how e-books do when they aren’t absurdly priced below cost. How can the “market decide” when Amazon refuses to budge from an artificially low, below cost, price?

    I am honestly heartbroken by this court decision. It is so important to me that my future children have bookstores, and now I am terrified they won’t. I actually feel like crying. That is how much books and bookstores (the physical kind) mean to me and to many other people. Apparently our needs as consumers don’t matter to the DOJ though. Only the “need” to get e-books below cost matters, apparently.

  6. Hannah E.
    Sep 06, 2012 @ 17:17:56

    @Rebecca: Since most of the ebooks I purchase are from small online publishers, I tend to spend as much or more for each ebook as I would spend for a similar book in a brick and mortar bookstore. I buy ebooks because I prefer them, not because they’re cheaper, and I think an increasing number of people my age and younger feel the same way. Amazon and the DOJ settlement don’t deserve blame for that.

  7. Bonie
    Sep 06, 2012 @ 17:25:09

    @library addict:

    The new JD Robb ebook is $14.99 at Amazon. That’s the highest price yet, I believe. I’m so pissed about this, I can’t see straight.

  8. Darlynne
    Sep 06, 2012 @ 17:57:19

    @Rebecca: You, as a print book buyer, have always been able to receive discounted prices on any physical book, no matter the publisher. If a bookseller offered a discount coupon–as B&N, for example, is doing now–you could buy any print book you wanted at a discounted price. B&N members automatically get 10% off (more for bestsellers), IIRC, any print title they buy. Can you show me the same situation currently for ebooks from these publishers? No, because the publishers wouldn’t let them.

  9. Anne V
    Sep 06, 2012 @ 18:09:20

    What’s more important to me than having bookstores around is that libraries continue to exist – more than brick and mortar bookstores, I think libraries are crucial for readers, for communities and for schools. libraries are where I learned to love books, and I have seen the lives of many children and adults changed by bog-standard library stuff like story hour, adult literacy programs and reference librarians. Libraries have a title base that is pretty much unmatched by most brick and mortar bookstores, which is invaluable in a literate society.

    I, like Hannah E., prefer ebooks as a format. My vision is impaired, and I really struggle reading physical books because of size and font and kerning issues. Ebooks restored reading to me as a form of recreation. I am very grateful for that. Also, I read fast and travel a lot of and physical books are a hassle.

    I think making this about Amazon is an oversimplification. The entry of Amazon into the marketplace forced some issues that publishers had been struggling to ignore and slow down changes around, and they lucked out when Apple did their iBooks thing and they could collude around agency pricing. Sure, Amazon is okay with driving down pricing in order to increase adoption of their devices and gain market share. They’re a business. Market share is what they’re about. Bad decisions by publishers have increased Amazon’s market share, not decreased it.

    Publishers have whiffled around for so long obsessing over DRM that they’ve effectively GIVEN the market to Amazon. That’s not Amazon’s fault. Amazon’s not the white knight here, but the big 6 having no sense is not Amazon’s fault. That’s bad judgment on the part of some otherwise smart people who really don’t seem to have grasped how disruptive the technology would be, and who are now in increasingly awkward and indefensible positions w/r/t customers. I am really frustrated with big publishing – it makes me frantic to watch the choices that are being made, and I am offended by the disingenuousness of their arguments. Good people – good authors, good editors, good books, good readers – are getting short shrift and it’s no fun.

    I don’t believe that ebooks as priced by Amazon were truly below publisher cost. I believe that they were in a range that made it necessary for those publishers to revisit their pricing models and revenue streams and business models and rather than do that proactively and efficiently, they took advantage of the startup of iBooks and this suit has bitten them in the bums, so to speak.

  10. Rebecca
    Sep 06, 2012 @ 18:10:11

    I don’t care about discounting at this point – I’m happily paying more to do everything I can to help bookstores survive. If you don’t like that certain publishers/authors want e-books to cost more to support print surviving as well – don’t buy from them. That’s another way the market can decide. But it’s their product and it should be their decision. As e-books are not a physical good that changes ownership from producer to retailer, it makes no sense to me that the retailer should then be able to destroy the value of something it never owned in the first place.

  11. Courtney Milan
    Sep 06, 2012 @ 18:24:07

    Rebecca,

    Consider this: if the settlement were not approved, and the settling defendants were forced to pay treble damages for their illegal conduct, they might have been bankrupted. This settlement is the beset thing for publishing that can happen, given a backdrop of criminal conduct. This lawsuit is so potentially damaging that the settling defendants are paying $70 million rather than face potential damages.

    The settlement isn’t about choosing between business as usual and no agency pricing. It’s about choosing between potential bankruptcy and agency pricing. If you love books, support the settlement, and look for other, legal ways for publishers to support bookstores. More than a majority of the publishers in question prefer the settlement to litigation.

    If the publishers in question had cared about the future of books and bookstores, they should have sued Amazon on the grounds of monopolization instead of engaging in illegal collusion for price. Blaming the court for enforcing the law is irrational. Be mad at the publishers that colluded, not at the law that called them out on it.

    The publishers here engaged in illegal, criminal acts. If you want books in the future, pray the settlement holds.

  12. Rebecca
    Sep 06, 2012 @ 18:52:43

    Except no one has admitted fault (that isn’t a condition of the settlement) and no one been has convicted, yet you use the statement “illegal, criminal acts” as if that were the case.

    And no, I will be continuing to blame Amazon, as well as the government for favoring some consumers over other consumers, and taking actions that will harm consumers who do not wish to do business with Amazon in the future. It’s not the job of antitrust laws to give consumers absurd, below cost prices. Amazon is the one who set this absurd below cost price – not the free market. Fair competition cannot exist when no one can realistically compete with a predatory pricer.

  13. Jane Litte
    Sep 06, 2012 @ 19:05:07

    @Rebecca: I think its interesting that publishers and others have convinced some portion of the public that the demise of brick & mortar stores is the result of the rise of ebooks. I don’t see any evidence of that. Before Amazon introduced the Kindle in 2009(?) Borders was already in a free fall; B&N had closed its mall stores; and indie booksellers (who don’t serve romance readers in large part anyway) were closing regularly. In fact, many indie booksellers blame the rise of big box stores like B&N and Borders for doing them in. The ABA sued publishers and B&N in the 90s, I believe, for engaging in collusive behavior allowing the big box stores greater discounts than the indies.

    So the demise, if one exists, of standalone bookstores as a result of the rise of digital books is largely anecdotal and falls apart with scrutiny.

    As for the criminal liability to which Courtney refers, have you read the allegations (that are not denied by the settling defendants)? http://dearauthor.com/features/industry-news/doj-lawsuit-update-where-windowing-becomes-important/ Because those are actions of willful collusion which could expose the individuals to criminal prosecution.

  14. Rebecca
    Sep 06, 2012 @ 19:12:34

    The Kindle was first sold in 2007. Yes, Borders had worse management than Barnes & Noble does, but Amazon certainly played a part in the loss of Borders and I still feel extremely sad anytime I walk or drive by a former Borders location. I just hope I don’t have to feel that way about Barnes & Noble in a few years. :(

  15. Jane Litte
    Sep 06, 2012 @ 19:26:26

    @Rebecca: I had to look it up. November 2007 was the date that the first Kindle launched. It then remained out of stock until well into 2008. In 2006, I wrote up this news article: http://dearauthor.com/features/industry-news/borders-breaking-up-with-amazon/

    Barnes & Noble has 15 percent of the book market
    Borders has 13 percent
    Amazon.com has 10 percent

    In June 2008, Borders begun cutting staff by 20%. It’s financial troubles were deep at this point. http://dearauthor.com/features/industry-news/borders-cuts-20-of-corporate-staff/

    In January of 2009, when ebooks were in their infancy still, Borders was in danger of being delisted from the Stock Exchange http://dearauthor.com/features/industry-news/borders-in-danger-of-being-delisted/

    Peter Osnos wrote an article for the Atlantic about the Borders demise: http://www.theatlantic.com/business/archive/2011/01/what-went-wrong-at-borders/69310/

    Meanwhile, the mall business was drying up, and Walden eventually all but disappeared. The role of the Ann Arbor-based experts in selection was gradually diminished. A series of expensive marketing roll-outs and loyalty programs never gained necessary traction. Most damaging was the management turnover, especially at high levels. CEOs and other executives flowed through the Ann Arbor offices, cutting staff, rounding up financing from private equity investors, and promising to catch up with the digital age. But Borders always seemed a step behind where they needed to be. Borders stores took on a generic quality as executives and investors lacked the knowledge and patience to address the chains’ mounting problems. I’m sure there is more to this story (especially in the financial and real estate areas) than I know, but what really hurt Borders from the perspective of a book person like me was that the chain was no longer in the hands of true book retailers.

    Ebooks and ebook pricing had very little to do with Borders’ demise, a slide which began well before the advent of ebooks and far before ebooks even became a player in the publishing industry.

  16. JJ
    Sep 06, 2012 @ 19:51:39

    @Rebecca:

    I totally understand your love of bookstores but bookstores were disappearing long before the Kindle.

    I think the story of the lawsuit is that the publishers were too slow to adapt to or recognize the changes happening in their own industry. As a result, they made some very poor decisions including at least one that was illegal. They were caught and the DOJ went to work on it.

    Referring you to paragraph 30 of the original filing- When Amazon launched it’s Kindle device, it offered newly released and bestselling ebooks for $9.99. At that time, Publisher Defendants routinely wholesaled these ebooks for the $9.99 price, which was typically less than the wholesale price of the hardcover versions of the same titles, reflecting publisher cost savings associated with the electronic format.

    If that paragraph is true, Amazon was not pricing below cost when selling newly released and bestselling books for $9.99.

    I will add that I’m not a disinterested party here. Electronic readers have been a life changer for those who are visually impaired. My mother still thanks me every time she starts a new book for giving her the best gift ever, the ability to read again. I tell her to thank the people who made such a device successful while also telling her how much I enjoy being able to discuss books with her once again. I knew she was miserable about the inability to read but did not recognize how much I missed our discussions.

  17. Rebecca
    Sep 06, 2012 @ 20:07:29

    And that’s great for the people who need e-books – but I think the agency pricing structure is more likely to preserve both print and e-books, and Amazon’s pricing is more likely to make e-books cheaper but eventually kill print (or at least make it significantly harder to get than it is now). If print was gone, I would be unable to read new releases and eventually go through my TBR at some point – because I just can’t enjoy reading e-books. I’ve tried and there’s just something I hate about it, something that is missing that I need.

  18. Nadia Lee
    Sep 06, 2012 @ 20:43:58

    Jane,

    I’m not surprised that the judge finally OK’d it. Now I must wait until the books I want from the settling defendants goes on sale! I promised to buy some nonfic for Hero Material. :)

  19. Anne V
    Sep 06, 2012 @ 20:54:59

    It’s not either ebooks or physical books. The decisions publishers make in the next few years will determine that.

    I worked at Borders as a bookseller for 16 months 2003-4. When I was hired, our store had a title base of ~120k books. 16 months later, we had a title base of ~28k books and a whole lot of stationary and stuffed animals. It was very sad to watch the reading members of store management get pushed out by the merchandisers from corporate, and the towers of remainders be replaced by towers of stuffed animals. ARCs disappeared from the break room, they eliminated the special orders for staff reading program. All of this, mind you, before they were officially in trouble.

    For the last 15 years, I’ve lived mostly in rural communities – places I felt lucky the supermarket carried Harlequin Presents. The options for getting books (and toys and shampoo more exotic than Pert! and first aid supplies and music) were driving >100 miles to wal-mart or mail order from Amazon. I vividly remember trying to order books from DK for a kindergarten class I was volunteering in, and having them refuse to ship to such a small town. Amazon had the books there 3 days later.

  20. jmc
    Sep 06, 2012 @ 21:53:06

    @Rebecca: I love bookstores. I love physical books. I do not love the condescending treatment I’ve received at bricks & mortar stores, B&N, Borders, BAMM, and local indies. I do not love being told that a book is in stock, only to be unable to find it on the shelf or have a disinterested staff person say they can’t find it but if I want to order it, a new copy will be in stock in several days and I can come back then. I do not love going to the bookstore on release day only to find that the new releases aren’t available either because they weren’t ordered or because they are still in a box that no one wants to unpack.

    None of those things are a function of ebooks or Amazon’s pricing, and have everything to do with the culture of bookstores, big box and indies, and how they are run.

    I do not love paying more for ebooks because publishers have mismanaged their marketing and technology development and need to underwrite their print books via inflated ebook costs. And I disagree that agency pricing would support both print and ebooks: too many readers I know stopped buying agency books altogether rather than pay the inflated price. Rather than force a certain price point, the publishers directed business elsewhere. We still bought books, but not from the agency publishers.

  21. Christine Roehrich
    Sep 06, 2012 @ 22:27:57

    I am another former bookseller from Borders(actually Waldenbooks) and I always view the big publishers commitment to brick and mortar with amusement. They could have saved Borders-they consistently pushed for a fast liquidation instead of a sale-I agree that the Borders management was abysmal but they basically stood by and let them drown. They refused to accept the reorganization plan and any sale to possible bidders. If they cared so much about traditional bookstores they would have done more.

  22. Kaetrin
    Sep 06, 2012 @ 22:38:20

    @Rebecca: Amazon wasn’t a party to this action. If you want to be angry with Amazon that’s your right of course, but *this* settlement wasn’t about Amazon (despite the best efforts of certain publishers, Apple & others to make it so) – it was about illegal collusion between publishers & Apple – price fixing. I honestly think the role of Amazon (if any) in the demise of bookstores is a separate discussion altogether.

    As it happens, Agency pricing led me to buy MORE from Amazon, not less, because my preferred booksellers couldn’t offer the rewards/loyalty programmes they had previously and so shopping elsewhere became a better option.

  23. Andrea
    Sep 06, 2012 @ 22:38:51

    Physical books will not go away. Physical books will be vastly more likely to be print on demand, but they’re not going anywhere.

  24. Courtney Milan
    Sep 06, 2012 @ 22:44:04

    It’s not the job of antitrust laws to give consumers absurd, below cost prices.

    Welcome to the Chicago School of antitrust. It’s been all the rage for lo, these last 20 years, and it says:

    If consumers wanted something other than absurd, low cost prices, they would buy it. You may not take away an absurd, low cost price on the theory that it is not good for consumers, because consumers get to decide for themselves what they want.

    And we can quibble about whether they were guilty, but do you seriously not think that the agency-publishers discussed agency publishing with each other, and agreed to go into it in concert? If your answer to that is yes, they engaged in criminal behavior. Period.

    Your only defense is that you’re blaming Amazon–but whether Amazon is at fault is a question of whether the agency-publishers engaged in an act of illegal vigilante white collar crime, or whether they engaged in straight-up white-collar crime.

    Bad behavior on someone else’s part is not a justification for price fixing.

  25. Andrea
    Sep 06, 2012 @ 22:49:47

    If it’s any help, I’ve heard repeatedly that while the big box stores are struggling, smaller specialty shops have shown some gains (partially because the big box stores are no longer undercutting them out of existence).

    I really enjoy the idea of having two things which are likely to show up in the next five years: 1. Cafe-bookstores where you order a book with your coffee and they print the damn thing out and give it to you. 2. POD machines at airport terminals.

    It costs more to print a book individually than it does to do a run of 10,000, but not gobsmackingly more when you remove all the overheads of returns, warehousing, etc. I certainly want print copies of all my books – and I can get that very easily.

    We’re not in a situation where ebooks mean we lose physical books. We’re in a situation where the delivery system for them changes a little.

  26. Rebecca
    Sep 06, 2012 @ 23:12:04

    If consumers wanted something other than absurd, low cost prices, they would buy it. You may not take away an absurd, low cost price on the theory that it is not good for consumers, because consumers get to decide for themselves what they want.

    And plenty of people were buying agency e-books at the no longer below cost price. Those that didn’t like the price should have voted with their wallets, not whined to the government that they deserved to keep below-cost pricing forever. That’s not a model the government should encourage long-term, how is it good for competition when other businesses have no hope of competing except to take losses? Many will not be able to do that and then you are stuck with only the company that can even if you hate them and it disgusts you to give them your money and there you go, government-sanctioned monopoly.

  27. BRNZ
    Sep 06, 2012 @ 23:18:53

    I have followed this discussion with interest, and I note that from my POV as someone who lives not only in another country, but one about as far away from the US as you can get, that you have NO IDEA about book prices for print books.

    A book that someone in the US can walk into a bookstore (any store) and pay $6-7 US for will cost me anything from $20-35 here for a standard sized paperback!!! Thats about $24-43 US. Trade are more than that and Hardbacks more again – when Cryoburn, Lois McMaster Bujolds latest hardback came out it was $65 NZ!!!

    Don’t even get me started on reference and specialty books either.

    So when Amazon came out and later Book Depository I embraced them with a white hot passion. It made books affordable for me to be able to buy them new, sometimes (deliciously) I even buy hardbacks! About every 6 months I log on to BD and with my $100 limit I pre order all the books I can for that amount, and then they arrive as they are released.

    I resisted ebooks for a long time because of the DRM issues ETC but I got a Kindle for Xmas and its fantastic. Books are even more affordable, some are free. Yet I still have issues because of the stupid geograhical restrictions, where I *can* buy the dead tree edition but not the digital kind.

    So for many parts of the rest of the world, Amazon and the likes are a godsend, providing books at a more affordable price, shipping english printed books to all sorts of foreign countries who can’t easily get them, and anything that improves that quality of service can only be a good thing.

  28. library addict
    Sep 07, 2012 @ 00:00:07

    @Bonie: Sadly, that’s not new. $14.99 is what I paid that for The Witness as well as the last two In Deaths (New York to Dallas, Celebrity in Death). Treachery in Death was $12.99. And I waited until Indulgence came out in paperback and the price dropped before I bought it in digital.

  29. Stephanie
    Sep 07, 2012 @ 01:57:20

    @Rebecca: I’ve tracked this conversation all night because you amaze me. Not one person has agreed with you yet but you keep coming back and defending yourself and vilifying Amazon. Bless your heart.

    Here’s the thing: you have painted ebook readers as pirates who want nothing less than the cheapest prices for their ebooks. You’ve stated that it’s created a group of “entitled” readers. You’ve blamed Amazon and ebook readers for whining to the government about the cost of ebooks. Really? I mean honestly?

    I’m going to walk you through a cost analysis and you tell me what it better for the publishers: I buy a brand spanking new hardcover. I’ll even get it from a brick and mortar store. With a coupon let’s say I pay $17 dollars for this book. I love it so much I let my mom, the two girls at work, my best friend and my sister in law borrow it. Then I take it to a used book store and get $5 in in store credit for it. Total cost to me per read? $17 – $5 UBS credit = $12. $12/5 readers = $2.40 for each read. Now I purchase the same book in ebook form. Let’s use your “lower than cost, monopolizing price” of $9.99. I read it and then there it sits on my kindle forever after. I tell the 5 people listed above about the great book I read and they buy their own copies. Tell me which worked out better for the publisher?

    Another question: is it fair to you that someone pay $16 for a new paperback when the ebook version is $8? No? Then why in the world is this acceptable when the roles are reversed and it’s the ebook that is $16 and the physical book is on sle for $8? The thing that most ebook readers want is an equal playing field for ebooks. That’s why ebook readers are cheering this lawsuit. I’m sure if it had been Amazon, rather than Apple, who was price fixing with the publishers you’d be demanding that the government do something.

    As far as ebook readers “whining” to the government: if you’ve read any of the amazing articles Jane has put together, then you already know that about 25% of the responses received during the timeframe for civillian comment for this lawsuit were actual ebook readers. The rest were indie bookstores, authors and author’s guilds. I’m pulling that from memory. I’m not going to bother linking it because it doesn’t appear that you’ll read it.

    I’m sure you’ll have some “Amazon is evil” defense to come back with. But instead of just saying something please leave links leading to your information source. I like to educate myself on both sides of a debate. Good for you for sticking to your guns.

    In the end I don’t begrudge you your preference for physical book reading nor how brick and mortar stores discount and have member pricing. It’s not your fault. It’s not the brick and mortar store’s fault. It’s not Amazon’s fault. You can vilify them and ebook readers until you’re blue in the face. At the end of the day it’s the publisher’s and Apple’s fault. They have illegally colluded to avoid competition and to bully Amazon AND other online ebook retailers including Barnes & Noble. Both Jane and Courtney Milan have left links and explanations to try and explain this. If you can’t see that something illegal has indeed been done; then you will never agree with the other commenters here.

    I have typed this all from my phone at 2 am. I apologize for any spelling errors.

  30. Stumbling Over Chaos :: Leaves’ll be fallin’ when linkity comes callin’
    Sep 07, 2012 @ 02:03:44

    [...] A settlement between the DoJ and three publishers has been approved. [...]

  31. Lorenda Christensen
    Sep 07, 2012 @ 02:29:34

    Am I the only one who has used Amazon to buy print books too? I guess I don’t understand why Amazon has to be evil when they are offering both products. Yes, one is more expensive than another, but they are made with different resources. I understand this is a very simplified example, but to me it’s the same thing as choosing between flooring – should I go with real hardwood, or PERGO. What does one having a lower price have to do with it? You say you can’t read ebooks, and that’s perfectly okay. Buy a different product. It’s not like having ebooks in stock means they don’t have paper, and I don’t think that’s changing anytime soon. They still sell vinyl records for goodness sakes.

  32. Ros
    Sep 07, 2012 @ 08:32:16

    I like bookshops. Real life, on the high street, browse for happy hours bookshops.

    But if they are dying, which I agree, in many ways they seem to be, the only reason is this: too many people prefer to buy their books elsewhere. They prefer to buy discounted print books from Amazon or the Book Depository. They prefer to buy cheap piled high books from Walmart or wherever else they shop. Customers will choose where they prefer to buy their books, and they have every right to choose somewhere that is not a bookshop. It’s partly price but it’s also convenience. It’s much more convenient to order a book online from home, or to chuck one in with your groceries than it is to go to a separate bookshop.

    Some people are also choosing to buy ebooks rather than print books. I don’t think this is the major factor in bookshops losing sales, but it is certainly a factor. Again, that is their right as customers.

    If enough people want to buy print books at bookshops, those shops will not go out of business. If they are canny enough to provide premium services that customers value and cannot be provided by online retailer, they will not go out of business. But there is no special snowflake law that protects these shops any more than specialist butchers or specialist bakers or any other kind of shop that has competition from big businesses. And nor ought there to be.

    In any case, I can’t see AT ALL what that has to do with this case of publishers illegally colluding to keep ebook prices high.

  33. Sandra
    Sep 07, 2012 @ 10:35:21

    Rebecca,

    From the online edition of the WSJ in an article published yesterday: (http://online.wsj.com/article/SB10000872396390443819404577635534214396076.html)

    However, the judge, in a 45-page opinion made public Thursday, said the alleged victims in this case are consumers, not brick-and-mortar bookstores.

    “And although the birth of a new industry is always unsettling, there is a limited ability for anyone to foresee how the market will evolve,” the judge said. “What is clear, however, is the need for industry players to play by the antitrust rules when confronted with new market forces. It is not the place of the court to protect these bookstores and other stakeholders from the vicissitudes of a competitive market.”

    ———–
    Why should I, as an e-reader, subsidize your reading habits? Once the book is prepared for press, the costs beyond the split off point are significantly less for e-books than they are for print. This is basic cost accounting, and I’m sure the publishers have reams of cost accountants on staff. So they know exactly what each format costs to produce.

    Yet I pay as much for an e-book version of a MMPB as you do for paper. But I have none of the same rights. I don’t own my book. I can’t loan it or resell it or leave it behind in the company breakroom. I can’t even throw an unsatisfactory book at the wall without risk of breaking my nook — or my wall.

    The selling price of print books are driven by the economics of supply and demand, even at Amazon. E-readers were denied that option under agency pricing. The publishers illegally colluded to set prices artificially high to protect other revenue streams they perceived as threatened, when what they should have been doing was exploring and embracing new sources of revenue.

    It’s true that some print booksellers may be harmed. But they’re also harmed by every other source of entertainment out there. That’s the nature of business, limited time and limited disposable income. Do we ban movie theaters, sports venues, TV, video games, amusement parks, because people who participate might otherwise be spending their money in a “threatened” bookstore?

    I’m an e-reader, despite the ownership drawback, for a number of reasons. The nearest BAMM is 20 miles away, B&N even further. The only local bookstores are Walmart and a couple of UBS’s. Our local library is small, and thanks to budget cuts understaffed, understocked, and open limited hours. I like the instant gratification of being able to click and read at 2AM. I like having my library with me at all times. I like that my spare bedroom can now serve it’s intended purpose, rather than as overflow book storage.

    I still buy paper copies of some of my keeper books. I regularly haunt the UBS’s for backlists not available in digital. I like the feel of well-made paper books, and there are many gorgeous covers out there that don’t render well in e-ink. I hit the remainder bins regularly for non-genre books like history and biography and books that are color- and photo- intense.

    But for everyday reading, give me my nook. And I buy many more books now than I ever did when I bought paper. The publishers ought to be on their knees thanking me for keeping them in business. B&N ought to be thanking me for subsidizing their brick and mortar gift stores. You want to read print — go right ahead. But don’t try to deny me the right to read in a format of my choosing, at a price I deem reasonable.

  34. Susan
    Sep 07, 2012 @ 18:44:11

    @Lorenda Christensen: I, too, still buy print books from Amazon. And I often get a discount on the new ones, such as the buy 4 for the price of 3 deal. (Don’t see that with ebooks.) And I also buy A LOT of used books from their marketplace dealers.

    Rebecca frequently shows up during these discussions of the DOJ lawsuit to opine that Amazon is the devil. Print books–bought from bricks and mortar stores only, apparently–are speshul to her so everyone else bears the moral and financial responsibility to ensure that she has access to print books in the exact way she wants. Like a true zealot, she is unswayed by facts, disregards everyone else’s positions without consideration, and puts her needs and desires above everyone else’s. . . and Federal law. Sorry that I can’t see it.

  35. Rebecca
    Sep 07, 2012 @ 19:41:51

    Well, you apparently think it’s the government’s responsibility to ensure that you have access to e-books in the exact way you want. Instead of voting with your wallet if you disagree with a specific publisher’s practices, you insist the government solve your problem for you. If you don’t want your e-book money to support print books – don’t buy from agency publishers. If a publisher I previously purchased from was working or “conspiring” with Amazon, I would simply no longer buy anything from them – if I had to read it I’d use the library but they wouldn’t get one cent of my money.

    It seems the pro e-book side has plenty of zealots that refuse to consider the harm to people who dislike e-books as long as they get cheaper prices. I am sure you would not at all appreciate your tax dollars being used to destroy Amazon, e-books, or anything else you apparently value this much. Yet I should just lie over and take it and shut up when my tax dollars are being used to destroy what I value the most. Nope, not doing that. Sorry, you are just going to have to accept that not everyone thinks e-books or Amazon are good and not everyone thinks the government should pick and chose which customers matter and throw everyone that doesn’t care for Amazon & e-books under the bus.

    I don’t want to take away your e-books. But it should not be the responsibility of taxpayers to ensure you get e-books at a below-cost price. Don’t like it, vote with your wallet like everyone except entitled e-book readers does.

  36. Rebecca
    Sep 07, 2012 @ 19:49:33

    Yet I pay as much for an e-book version of a MMPB as you do for paper. But I have none of the same rights. I don’t own my book. I can’t loan it or resell it or leave it behind in the company breakroom. I can’t even throw an unsatisfactory book at the wall without risk of breaking my nook — or my wall.

    The selling price of print books are driven by the economics of supply and demand, even at Amazon. E-readers were denied that option under agency pricing. The publishers illegally colluded to set prices artificially high to protect other revenue streams they perceived as threatened, when what they should have been doing was exploring and embracing new sources of revenue.

    You don’t own it – and guess what, Amazon doesn’t own it either (unless it’s an Amazon-published title). Digital goods are not the same as physical goods. They cannot truly be purchased wholesale. They never really change hands. The “book” remains owned by the original publisher and is licensed to the “buyer.” If anything, wholesale is totally crazy for digital goods and agency absolutely makes the most sense – why should the “retailer” be permitted to destroy the value and drive down the price of something they don’t own and haven’t purchased, that remains the property of the author and/or publisher? It’s not like a physical book where you own that specific physical copy forever.

    And obviously e-books have some advantage to you – portability, accessibility, space, or some other reason – or you wouldn’t be buying them. So why are the advantages you feel the e-book gives you worth less than whatever paper gives but e-books don’t, so that the e-book price always has to be lower?

    It’s also a bit funny to talk about supply for something that has no actual supply.

  37. Sandra
    Sep 07, 2012 @ 22:20:15

    @Rebecca: I’m not saying that e-book prices always have to be lower than print prices. What I am saying is that print book prices are driven by free market forces. Last time I checked, the US was still a free market economy. With agency pricing, the publishers illegally (meaning they BROKE US laws that have been in place for over 100 years) subverted the free market forces for their own benefit. They did not allow the market to dictate the price of e-books.

    And yes, there are advantages to e-books that make it sometimes worth paying a little more for them. Does that mean that I should demand to pay less for a paperback, because I can’t have the instant gratification of buying and reading what I want when I want? Because I have to pay storage costs in the form of space that could be used for other purposes? Because it’s an inconvenience and may cost me additional luggage fees to haul a bag of books around on vacation?

    Cost wise, it costs less to produce an e-book than it does to produce a paperback. Just as it costs less to produce a paperback than it does a hardcover. Would you pay hardcover prices for a paperback? Why should I be required to pay hardcover, or trade, or even MMPB prices for something that it cost the publisher less to manufacture?

    Using your argument — It’s also a bit funny to talk about supply for something that has no actual supply – it logically follows that once the publisher creates the first digital copy, each additional copy doesn’t cost anything, so they could give them away without a loss. After all, those e-books don’t really exist, so how can they charge for them?

  38. Rebecca
    Sep 07, 2012 @ 22:25:26

    Would you pay hardcover prices for a paperback? Why should I be required to pay hardcover, or trade, or even MMPB prices for something that it cost the publisher less to manufacture?

    If I wanted it badly enough, yes I would. If I didn’t want it that badly, I’d just pass on it and forget about it. If I thought the content was worth the price though, I wouldn’t be that bothered that it was PB instead of HC for the price. I’ve sometimes done this when purchasing a book I really wanted that isn’t available in the US and expensive to order from another country.

  39. Meoskop
    Sep 08, 2012 @ 14:30:24

    @Rebecca: Well, if we’re climbing on the My Tax Dollars horse I wish My Tax Dollars weren’t subsidizing profitable companies, killing civilians in multiple countries or shoring up the thin blue line that means you can murder women like Rekia Boyd without punishment. Since I’m reasonably certain I pay more tax dollars than you do, I get to be more upset about where My Tax Dollars go then you do, right? I can vote with my wallet? I am perfectly happy to have My Tax Dollars go to consumer protection. Maybe the government can issue charts and we can all specify where our specific tax dollars go. Run the budget on a crowd sourcing model where our income tax determines our vote in the nation. You’re ok with only having the amount of protection you, personally, can purchase, right? I mean, asking for something you didn’t pay for is the ultimate expression of entitlement.

  40. Ann Somerville
    Sep 08, 2012 @ 21:33:12

    @Rebecca:

    The problem with your stand is that I can’t eat your determination to only buy print books. My Samhain issued ebook outsell the print versions something like 100 to 1. Why? Because they’re cheaper, easy to carry, can be sent to countries which prohibit homosexual content, and can be read on the toys people own like iPads.

    Buying paper books in Australia and boycotting ebooks is like standing in a strong wind and tearing up $50 notes. If you have so much money and sensibility that this seems like a useful activity, then fine. But it sounds like a waste of time to me, and all I’m doing is propping up a heavily protected and wildly unfair system here.

    If you really believe that bricks and mortar shops are so precious, then you and your mates need to start buying more of those paper books you love (I bet you love the smell, right?) And by more, I mean, hundreds more than you are now.

    But I bet you and people like you don’t buy in those numbers – whereas ebook buyers *do*. And therein is the simple, economic fact.

    By the way, bricks and mortar stores here in my state are horrible. They stock more toys and tie products than actual books, and the books are largely big glossly celebrity products like cookbooks, selling as remainders. They sell coffee and food, which people then consume over what books there are in the store, and so the products on the shelves are all dogeared and dirty. If I wanted to buy something someone else already read, then I would go to a used book store, and not pay wildly inflated prices for a ‘new’ book.

    If it wasn’t for ebooks, I would never buy *any* books here. That’s how dire it is.

  41. Rebecca
    Sep 08, 2012 @ 21:54:15

    Actually I’d guess I do in fact buy that much. I buy tons of paper books. Tons and tons of them. I wouldn’t even be able to tell you how many I’ve bought this year or how many are in the house, it’s too many to count. I actually ran out of space so the ones I didn’t like are being given away – but I wouldn’t trade my collection or being surrounded by the books I love reading so much for anything. But even if the price of printed books went up, it still would not make me willing to read e-books, anymore than I am suddenly going to wake up one day and feel like eating fish, which I’ve never liked. And yes, I’ve tried. The library has a table of e-readers (not sure where they got the money for so many e-readers that never actually get used, since they are for trying out only and can’t be moved, but anyway…..), B&N has tables of e-readers, holding it and reading from the screen was just plain unpleasant and it was too odd to not have pages to turn. *Shrug* Just doesn’t work for me, regardless of cost.

  42. Ann Somerville
    Sep 08, 2012 @ 23:22:41

    @Rebecca:

    Can you at least empathise a little with those of us who can’t afford to buy (or even find) ‘tons and tons’ of paper books, let alone store them? Or with those of us for whom ebooks on iPads and laptops have become an absolute boon because of aged eyes? Or those of us who resent forests being cut down to produce books which are then pulped?

    I have become increasingly germphobic as I get older and so using library books or buying used books is no longer an option because I cringe at the idea, and am physically revolted by the touch and the smell (which is so sad since I grew up in the library practically and used to haunt UBS.) Ebooks mean I can afford new books of the kind of want to read, without needing to build an extension or move.

    Ebooks don’t work for you and that’s fine. But that doesn’t mean those of us who like them, read them and publish them are from Satan.

    Oh and if you don’t like Amazon, there are other places you can buy non-DRM books from.

    Print books will survive only if people want them enough, and buy them enough. If people only get nostalgic about them but don’t actually buy them because of the cost and inconvenience, then they’ll go the way of horse-drawn transport – which still exists, but only where it still serves a purpose. Things change, and the only way to avoid change is to stop living.

  43. Rebecca
    Sep 08, 2012 @ 23:56:38

    And I could see that if they raised the prices to $50 or something but $12.99-$14.99 for e-book of a new release hardcover, I don’t see how that is unreasonable. And there are plenty of cheaper e-books available as well, so it’s not like it’s pay $14.99 or read NOTHING. I don’t think I’ve seen a romance novel from an agency publisher that cost nearly that much unless the print was hardcover.

  44. Ann Somerville
    Sep 09, 2012 @ 00:36:49

    @Rebecca:

    “$12.99-$14.99 for e-book of a new release hardcover, I don’t see how that is unreasonable.”

    You can’t? When ebooks can’t be resold or lent easily? And they don’t cost so much to produce? I wouldn’t pay that for a novel.

    Anyway, it’s not the *amount* that’s at issue, as I understand it. It’s the manipulation so that retailers can’t *choose* to sell the books cheaper, and so let the customers decide what price they prefer. You may be happy to subsidise publishers by paying for hardcovers at full whack, but when hardcovers of novels here in Aus usually run to $50 and over, I sure am not.

    I still don’t understand why you think publishers should be allowed to do something illegal and prop up their business, but Amazon is apparently evil because their business model is ‘pile it high and sell it cheap’ (which is completely legal)? You are angry because you think choice is being taken away from you, but customers in a pricing cartel don’t have a choice either. Publishers can make money from ebooks and print legitimately. They don’t have to break the law.

    By the way, I still have no idea how you think your tax dollars are being used in this equation at all, except to enforce the law of your land. Which I’d have thought would be generally considered a good thing by a citizen.

  45. Rebecca
    Sep 09, 2012 @ 01:35:07

    Because it’s not Amazon’s product. It doesn’t belong to them the same way physical goods bought wholesale do and I wish the publishers had instead realized this years ago and NEVER allowed Amazon to do what they did in the first place. But by getting involved, the DOJ is just handing Amazon back their monopoly on a silver platter. Cheap prices aren’t the be all end all for everyone. Even if a monopoly keeps prices cheap, it still screws over the customers who don’t want to buy from them for non-price related reasons and now have no other choices. I’d rather pay more to avoid funding Amazon’s business practices, which I feel are unethical.

    And when the law in question, enforced in this manner, has such a good chance of causing irreparable harm that will be extremely hard to reverse if Amazon gets what they want within the 2 year period, and when it privileges e-book consumers over other book consumers to this degree, with zero consideration of the potential impact on other consumers – you bet I don’t want my tax dollars used. Especially to aid a company that does everything it freaking can to avoid taxes, ironically enough.

  46. Ann Somerville
    Sep 09, 2012 @ 01:58:24

    @Rebecca:

    “Because it’s not Amazon’s product. It doesn’t belong to them the same way physical goods bought wholesale do”

    Uh, you don’t seem to understand the concept of digital products at all. And why is Amazon evil and Apple isn’t when it ‘sells’ music through iTunes?

    “I wish the publishers had instead realized this years ago and NEVER allowed Amazon to do what they did in the first place.”

    I’m so glad they didn’t listen to you then because 3rd party retailers are important sources of goods to most people. Why is a digital retailer evil, and a bricks and mortar one isn’t? Before you go on at me about Amazon not ‘owning’ anything – they have to pay for the distributions of the files, the hosting of the files, the entire merchant processing of payments, as well as marketing. Oh and they created that thingie…what was it? Oh yeah, the Kindle. Which made ebooks suddenly profitable.

    I could sell my books direct to the public from my website. I don’t because I can’t afford the hosting, the security and the merchant payment. Smashwords and Amazon take care of all that for a reasonable fee. That’s why I grant them a license to distribute my stuff. You may not think their services are worth anything but I assure you as an author with self-published books to sell, they really are.

    “I’d rather pay more to avoid funding Amazon’s business practices, which I feel are unethical.”

    Good for you. I don’t buy Nestlé products even though they include some of my formerly favourite foods. But I don’t get up in the grill of anyone with a tin of Milo in their shopping cart and lecture them about breastfeeding in Africa because guess what? It’s their personal choice. Not mine.

    You want to start a holy war against Amazon? Go ahead. Just don’t expect those of us who don’t agree with you to take the King’s shilling and trot along with you on a crusade we have no interest in.

    “you bet I don’t want my tax dollars used.”

    Too bad. I have to pay US taxes on my sales and they get used for all kinds of things I disagree with. This one might even end up costing me money. I have no idea. But consumer choice is too important for companies to be allowed to screw around with it without punishment.

    “Especially to aid a company that does everything it freaking can to avoid taxes, ironically enough. ”

    Amazon isn’t even party to this case, and the law which is being broken isn’t called the “Let’s make Jeff Bezos an even richer fat bastard than he is now” statute. The law against price fixing and cartels is there to protect all consumers in all sorts of areas. We don’t get to apply laws selectively based on what Rebecca wants.

    You’re getting close to Violet Elizabeth Bott territory now. No one here has said they want physical book stores to close, but you’re the only one saying you want all of us to pay more for ebooks because of feelings. Your selfishness is not much of an argument.

  47. Ann Somerville
    Sep 09, 2012 @ 02:33:59

    I may as well use the fact I have a comment in moderation to point out that Jane is only in favour of this settlement because she and Ridley and Kat Kennedy all work for the Big Six, and use their minions at Goodreads to destroy the careers of virtuous and talented authors to um…

    Er…the site that shall not mentioned by nice people forgot to tell me what Jane and Ridley and Kat got out of it. Something really, really good I hope!

    Anyway, that’s why Jane is shilling for the Big 6 and is against this settlement….

    Oh wait.

    I think I may have found the flaw in “Athena’s” argument. I’m sure she can explain why Jane is both in thrall to the Big 6 and also against them at the same time. And exactly how much she pays Goodreads to keep the poor, hardworking and talented self-published authors down.

  48. Rebecca
    Sep 09, 2012 @ 13:22:24

    I’m so glad they didn’t listen to you then because 3rd party retailers are important sources of goods to most people. Why is a digital retailer evil, and a bricks and mortar one isn’t?

    Not saying that retailer websites wouldn’t have any digital stuff available – just that the agency model should have been used from the very beginning. I’m pretty sure most MP3 sales are agency as well though I’d have to double check that. (Hmm, upon edit, I actually think I am thinking of apps rather than MP3s, not sure. But books are definitely not the only digital product to use agency.)

    No one here has said they want physical book stores to close, but you’re the only one saying you want all of us to pay more for ebooks because of feelings. Your selfishness is not much of an argument.

    You should pay more because that’s what the owner has decided is a condition of paying to read their book. If you don’t wish to support such things, buy non agency titles only.

    But consumer choice is too important for companies to be allowed to screw around with it without punishment.

    Unfortunately, there’s a very good chance this lawsuit and settlement will permanently take away consumer choices from those consumers who prefer not to buy from Amazon. So now you see how it feels!

  49. Jane Litte
    Sep 09, 2012 @ 15:58:50

    @Rebecca – Mp3s are not priced via agency. Google and Amazon regularly discount music. Agency isn’t the problem, Rebecca. It’s the illegal collusion. I know you don’t care that companies broke the law, but the issue is not about agency pricing but collusion. The reason that ebooks weren’t priced via agency is that publishers didn’t believe that ebooks were really an important market until Amazon built it.

    And I’m not sure how consumer choice is being limited by the DOJ’s settlement but your paradigm obviously is different than mine.

  50. cleo
    Sep 09, 2012 @ 16:53:08

    @Sandra:

    But for everyday reading, give me my nook. And I buy many more books now than I ever did when I bought paper. The publishers ought to be on their knees thanking me for keeping them in business. B&N ought to be thanking me for subsidizing their brick and mortar gift stores.

    Amen. I thought I bought a lot of print books, but that was nothing compared to what I spend on ebooks. I bought my Nook about a year ago, and in that time I’ve acquired almost 400 ebooks (some were freebies but most weren’t) – and I know that’s just the minor leagues compared to others readers.

  51. Ann Somerville
    Sep 09, 2012 @ 18:05:16

    @Rebecca:

    “You should pay more because that’s what the owner has decided is a condition of paying to read their book.”

    So I guess you never use coupons or loyalty cards, never shop in sales, do price matching, look for the best deals – or buy second hand.

    In fact, you will probably say you don’t. In which case it means you are very economically privileged (which you must be to have the money to be able to buy and store hundreds of paper books every year) and so have little in common with most people reading this discussion.

    “If you don’t wish to support such things, buy non agency titles only.”

    And where will leave your precious publishers…sorry, ‘bookstores’…when people vote with their wallet and they go broke?

    “Unfortunately, there’s a very good chance this lawsuit and settlement will permanently take away consumer choices from those consumers who prefer not to buy from Amazon.”

    Yeah? Funny, that’s what everyone said when the Net Book Agreement ended in the UK.

    The collapse of the Agreement strengthened large bookstore chains and reduced book prices. It also paved the way for the large supermarket chains to take a chunk of the book business, typically offering a small number of best-selling titles at deeply discounted prices. As of 2009, 500 independent bookshops had closed since the demise of the agreement. [4] An early example of the changes in the book publishing markets following the termination of the agreement was the entry of the US-owned booksellers Borders into the British high street, following their purchase of Books Etc. This was the first non-British company to enter the UK books market.

    However, market concentration and a demise of independent bookshops have also taken place in economies such as Germany and France where a fixed book price agreement is still in place.[5] The loss in small business was smaller than predicted by many commentators and the number of titles published in the UK has increased despite claims to the otherwise when the NBA was dissolved.[6] Also, the volume of books sold in the UK has increased by about 30% between 1995 and 2006.[7]

    “So now you see how it feels!”

    Honey, I don’t have choice *now*. I guess what I said about bookstores in my area went right over your head. If Amazon opened here in Australia, I’d be ecstatic.

  52. rebecca
    Sep 09, 2012 @ 18:19:03

    Plenty of people are buying agency publisher ebooks so they are obviously fine paying that price – if they were not, then they shouldn’t have bought those books. If I don’t like the price of something, whether its discounted or not discounted, I just do not buy it. I don’t cry that it is unfair and the price should be forcibly lowered.

  53. Ann Somerville
    Sep 09, 2012 @ 18:42:49

    @rebecca:

    Your arguments are taking on the flavour of religious fervour, so I’m taking myself out of this discussion. I can’t bear fundamentalists of any stripe.

  54. Meoskop
    Sep 10, 2012 @ 00:07:46

    @rebecca: What part of price fixing eludes you? The price is NOT being forcibly lowered. The entire point is that the price is determined between the customer and the store, not fixed across all stores. Isn’t the free market what America is all about? Why do you hate the free market, Rebecca?

  55. Rebecca
    Sep 10, 2012 @ 00:42:48

    What free market? The $9.99 price was an artificial price point set by a would-be monopolist. Had nothing to do with the free market.

  56. Sandra
    Sep 10, 2012 @ 06:32:09

    @Rebecca: You know, I really shouldn’t keep feeding the troll, but…

    What free market? The $9.99 price was an artificial price point set by a would-be monopolist. Had nothing to do with the free market.

    It was a free market. Amazon CHOSE to set that price point. Other retailers had the option of matching Amazon’s price or not, as they CHOSE. Buyers had the option of seeking out the best price. They had the option of using coupons and rebates.

    Now, neither retailers nor consumers have a CHOICE in the matter. They pay what the publisher dictates they will pay or they don’t buy. That is NOT how a free market works.

  57. Kaetrin
    Sep 11, 2012 @ 01:19:00

    Well, lookee here –

    http://www.the-digital-reader.com/2012/09/10/amazon-now-cutting-prices-on-ex-agency-ebooks-bn-is-matching-the-prices/#.UE7MulFHn1E

    Agency is ending and Amazon doesn’t universally have the cheapest prices. Maybe the end of illegal collusion by the settling publishers will NOT result in Amazon ruling the world after all?

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