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Wednesday Links: DOJ Sues Apple, Macmillan, and Possibly Others

“The broad language around what constitutes a cybersecurity threat leaves the door wide open for abuse. For example, the bill defines “cyber threat intelligence” and “cybersecurity purpose” to include “theft or misappropriation of private or government information, intellectual property, or personally identifiable information.”

People familiar with the situation confirmed to me that at least two big-six houses refused to sign new annual contracts, though I have not yet been able to confirm all six. Amazon is still fulfilling customer orders, these sources said, but is not promoting big-six houses’ books on the site or in marketing materials in ways it once did.

Book publishers traditionally paid bricks-and-mortar bookstores co-op fees on print books in order to ensure promotion of those books in stores. The concept is murkier when applied to e-books being sold via websites. Publishers have accepted co-op on e-books as the price of doing business with Amazon, but now the company appears to be requesting much higher co-op fees.”

“Amazon is picking up its literary largess during an especially charged season in the company’s relationships with the rest of the book world. For the first time, the “Big Six” publishers — HarperCollins, Random House, Hachette, Simon & Schuster, Penguin and Macmillan — have refused to sign Amazon’s latest annual contract. The main sticking point is exorbitant increases in “co-op promotional fees” for e-books that the publishers see as an illegal gouge by another name. One person familiar with the details of the proposed 2012 contracts that Amazon has submitted to major New York publishers described them as “stupifyingly draconian.” In some cases, he said, Amazon has raised promotional fees by 30 times their 2011 cost. In saying no, the big publishers are following in the footsteps of the Independent Publishing Group, a major indie distributor representing dozens of small presses that refused Amazon’s increases earlier this winter and soon saw the “Buy” buttons on more than 4,000 of their titles promptly delinked.”

 

Onto the next big news.  Department of Justice is holding a press conference today at noon to announce news regarding the investigation into price fixing by five of the Big 6 publishers and Apple.  Word is that at least three are interested in settling: HarperCollins, Simon & Schuster, and Hachette with Penguin still in talks.  It is unknown how many of the publishers the suit will implicate.

The lawsuit purportedly concerns two issues.  First, price collusion and second, a most favored nation clause.  The MFN clause allows retailers, like Apple and Amazon, to ensure that no one has a lower price for a product that is for sale on their site.  The price collusion issue undoubtedly comes from Apple’s setting the floor and ceiling of the price variables.

Mark Coker, the owner of Smashwords, also put out the pricing guidelines, as required by Apple.   Even if you don’t have an iThing or plan to own one, Apple pricing scheme is being adopted by five of the Big 6 and will likely inform the prices at other retailers (this is one thing Amazon is fighting for – the right not to be outpriced by Apple).

Full right to price without Apple restrictions exists for:

  • Books that do not have a print equivalent.
  • Hardcover list prices that exceed $40 in print
  • Mass market or trade paperbacks list prices that exceed $22

For Mass Markets or Trade Paperbacks

  • For any book with a print equivalent list priced at $22 or less, the cap is $9.99
  • This is for the first year only
  • After the first year, price can be anything UNLESS APPLE DEEMS IT UNREALISTIC

For Hardcovers

  • 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.

It is Apple that has decreed that books fall within certain guidelines and the publishers have followed them.  Thus, it isn’t actually the publishers who are setting the prices independently.  That may actually be the downfall of the publishers but probably not Apple.

John Sargeant has come out with a pre emptive statement (again addressed to artists, authors and illustrators) that there was no collusion involved:

But the terms the DOJ demanded were too onerous. After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model. We also felt the settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.

When Macmillan changed to the agency model we did so knowing we would make less money on our e book business. We made the change to support an open and competitive market for the future, and it worked. We still believe in that future and we still believe the agency model is the only way to get there.

It is also hard to settle a lawsuit when you know you have done no wrong. The government’s charge is that Macmillan’s CEO colluded with other CEO’s in changing to the agency model. I am Macmillan’s CEO and I made the decision to move Macmillan to the agency model. After days of thought and worry, I made the decision on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, and I see no reason to go back on it now.

The situation for Apple and other publishers isn’t helped by Apple’s anti competitive move to require that 30% of all sales that occur through an iOS approved app would flow to Apple. This would render a loss for every book sold through the Amazon, nook, or other book apps.  My guess is the DOJ’s success will depend on how the market is measured. Is the market measured by the totality of devices that can implicate ereaders? Apple holds the reigns there.  How about the entire book market?  That would be the big 6.  The actually ebook market today? Amazon.

DOJ_complaint

DOJ Settlement

A. For two years, Settling Defendants shall not restrict, limit, or impede an E-book Retailer’s ability to set, alter, or reduce the Retail Price of any E-book or to offer price discounts or any other form of promotions to encourage consumers to Purchase one or more E-books, such two-year period to run separately for each E-book Retailer, at the option of the Settling Defendant, from either:

1. the termination of an agreement between the Settling Defendant and the E-book Retailer that restricts, limits, or impedes the E-book Retailer’s ability to set, alter, or reduce the Retail Price of any E-book or to offer price discounts or any other form of promotions to encourage consumers to Purchase one or more E-books; or

2. the date on which the Settling Defendant notifies the E-book Retailer in writing that the Settling Defendant will not enforce any term(s) in its agreement with the E-book Retailer that restrict, limit, or impede the E-book Retailer from setting, altering, or reducing the Retail Price of one or more E-books, or from offering price discounts or any other form of promotions to encourage consumers to Purchase one or more E-books.

Each Settling Defendant shall notify the Department of Justice of the option it selects for each E-book Retailer within seven days of making its selection.

B. For two years after the filing of the Complaint, Settling Defendants shall not enter into any agreement with any E-book Retailer that restricts, limits, or impedes the E-book Retailer from setting, altering, or reducing the Retail Price of one or more E-books, or from offering price discounts or any other form of promotions to encourage consumers to Purchase one or more E-books.

C. Settling Defendants shall not enter into any agreement with an E-book Retailer relating to the Sale of E-books that contains a Price MFN.

D. Settling Defendants shall not retaliate against, or urge any other E-book Publisher or E-book Retailer to retaliate against, an E-book Retailer for engaging in any activity that the Settling Defendants are prohibited by Sections V.A, V.B, and VI.B.2 of this Final Judgment from restricting, limiting, or impeding in any agreement with an E-book Retailer. After the expiration of prohibitions in Sections V.A and V.B of this Final Judgment, this Section V.D shall not prohibit any Settling Defendant from unilaterally entering into or enforcing any agreement with an E-book Retailer that restricts, limits, or impedes the E-book Retailer from setting, altering, or reducing the Retail Price of any of the Settling Defendant’s E-books or from offering price discounts or any other form of promotions to encourage consumers to Purchase any of the Settling Defendant’s E-books.

E. Settling Defendants shall not enter into or enforce any agreement, arrangement, understanding, plan, program, combination, or conspiracy with any E-book Publisher (including another Publisher Defendant) to raise, stabilize, fix, set, or coordinate the Retail Price or Wholesale Price of any E-book or fix, set, or coordinate any term or condition relating to the Sale of E-books.

This Section V.E shall not prohibit a Settling Defendant from entering into and enforcing agreements relating to the distribution of another E-book Publisher’s E-books (not including the E-books of another Publisher Defendant) or to the co-publication with another E-book Publisher of specifically identified E-book titles or a particular author’s E-books, or from participating in output-enhancing industry standard-setting activities relating to E-book security or technology.

When does this begin?

Within seven days after entry of this Final Judgment, each Settling Defendant shall terminate any agreement with Apple relating to the Sale of E-books that was executed prior to the filing of the Complaint.

Settling Defendants shall notify the Department of Justice in writing at least sixty days in advance of the formation or material modification of any joint venture or other business arrangement relating to the Sale, development, or promotion of E-books in the United States in which a Settling Defendant and at least one other E-book Publisher (including another Publisher Defendant) are participants or partial or complete owners. Such notice shall describe the joint venture or other business arrangement, identify all E-book Publishers that are parties to it, and attach the most recent version or draft of the agreement, contract, or other document(s) formalizing the joint venture or other business arrangement. Within thirty days after a Settling Defendant provides notification of the joint venture or business arrangement, the Department of Justice may make a written request for additional information. If the Department of Justice makes such a request, the Settling Defendant shall not proceed with the planned formation or material modification of the joint venture or business arrangement until thirty days after substantially complying with such additional request(s) for information. The failure of the Department of Justice to request additional information or to bring an action under the antitrust laws to challenge the formation or material modification of the joint venture shall neither give rise to any inference of lawfulness nor limit in any way the right of the United States to investigate the formation, material modification, or any other aspects or activities of the joint venture or business arrangement and to bring actions to prevent or restrain violations of the antitrust laws.

Each Settling Defendant shall furnish to the Department of Justice (1) within seven days after entry of this Final Judgment, one complete copy of each agreement, executed, renewed, or extended on or after January 1, 2012, between the Settling Defendant and any E-book Retailer relating to the Sale of E-books, and, (2) thereafter, on a quarterly basis, each such agreement executed, renewed, or extended since the Settling Defendant’s previous submission of agreements to the Department of Justice.

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

69 Comments

  1. Karenmc
    Apr 11, 2012 @ 10:35:45

    I’ve been PO’d since April 1 two years ago, when Fictionwise became useless to me as a buyer. I’ll be closely watching how the DOJ suit plays out.

  2. Lisa J
    Apr 11, 2012 @ 10:55:29

    I’m really hoping that the DoJ suit will mean the end of Agency pricing, but I’m guessing that’s just not going to happen. Oh well, I’ve missed books by some of my favorite authors that I would still like to buy, but I’ve found new authors in the past couple of years.

  3. Caitie F
    Apr 11, 2012 @ 10:55:36

    You know what I don’t get about any of this? Where are the anti-monopoly suits against Amazon? Let’s pick on the publishers and not the retailer that is effing us all over like crazy.

  4. Mikaela
    Apr 11, 2012 @ 11:01:27

    “For any book with a print equivalent list priced at $22 or less, the cap is $9.99″

    Am I the only one that finds it ironic that a lot of the new releases from BerkleyTrade is 12.99? Doesn’t that mean that the publishers are already breaking their agreement with Apple? Or is 9.99 the minimum price?

  5. Kerry
    Apr 11, 2012 @ 11:23:35

    @Caitie F: “the retailer that is effing us all over like crazy”

    Speak for yourself. Amazon both saves me and makes me loads of money. If I’m getting screwed by them, it’s in the best sense of the word. *cue the Barry White*

  6. Jane
    Apr 11, 2012 @ 11:24:54

    @Lisa J: The settling defendants will have to end agency pricing for two years.

  7. J.N. Duncan
    Apr 11, 2012 @ 11:33:51

    So, back to $9.99 ebooks. Great news! For Amazon at least, who can afford to loss lead on books like nobody else in the industry. Not so good for every single other book retailer who can’t afford to eat money in order to make it. As if that pill isn’t bitter enough to swallow for publishers, they get to deal with Amazon jacking co-op through the roof. So…books should sell for less AND you should pay more in order to sell them. That’s nice. Publishers get to pay more to have their product devalued. I’m all for getting to buy my products for less money, but at the expense fucking over the industry? Not so much. Oh, but wait! I don’t need that industry anymore, because I can do it myself at Amazon. I can make just as much money or more through their system. Who the hell needs bookstores when I can make the money right here? Because, hey, it’s always about the money, and I can rake it in with my $1 books. Who cares if Amazon is using me to wave those cheap books at consumers to get them in the door to buy their kindles and movies and clothing. If I can make money here, NOTHING else matters.

    Ok, a little overkill there to make my point, but still, DoJ you suck. I don’t think you really get the stakes or the publishing industry in general, but hey, suing corporations in the name of consumer protection is always a good feather in the political cap.

  8. Keishon
    Apr 11, 2012 @ 11:35:15

    J, what happens after two years though? Do they go right back to the agency model? and when does this settlement go into effect? and where can I sign up for that class action lawsuit. Thanks!

  9. Jane
    Apr 11, 2012 @ 11:39:21

    @Keishon: Yes, the publishers can go back to agency pricing after two years. The class action, if approved, would include you and then you would be sent an opt out notice.

    @J.N. Duncan: Hopefully, in the future, publishers will innovate instead of trying to sustain a print publishing business model through inappropriate pricing collusion.

  10. Keishon
    Apr 11, 2012 @ 11:39:21

    @J.N. Duncan: I guess the consumer doesn’t matter? after all we are the ones buying the ebooks right? I fail to see how the agency model inspired competition. All it did was sustain an archaic model that is not even relevant but don’t mind me, I’m just a consumer.

  11. Mireya
    Apr 11, 2012 @ 11:44:57

    All I have to say is … can I have some Advil please? I feel totally dumbfounded. How does this translate to readers in other words, how does this affect readers. As of right now, I am already annoyed by the prices, and I absolutely refuse to pay more than $8.99 for an e-book… now it’s going to be $9.99 permanently once all is said and done? Then I guess I’ll never touch books by some of my favorite authors again, unless I can borrow them or outright find them at a discount. I am so sick of being screwed from all sides…

  12. Keishon
    Apr 11, 2012 @ 11:52:04

    @Mireya: $9.99 is usually equivalent to hardcover pricing and is used by Amazon. I would suspect that those $7.99 ebook prices could be potentially marked down to $6.99 or less but not by much is my understanding of this whole deal. Also, and Jane or others can correct me, it would also allow coupons, discounts that we enjoyed before agency pricing but this is only for two years for those publishers who settled. Who knows what the outcomes will be for the case against the other publishers if they were to lose which I strongly hope that they will. Since I can’t edit this comment I apologize if for any errors or misunderstandings in advance or if this has already been answered and if I am wrong I stand corrected.

  13. Jane
    Apr 11, 2012 @ 11:55:21

    @Mireya: For 2 years, the settling defendants: Hachette, HarperCollins, S&S, cannot restrict the retailers ability to discount. Likely, Amazon will discount the heck out of books to prove that they are, indeed, serving the needs of the customer.

  14. CK
    Apr 11, 2012 @ 12:01:48

    I used to hate agency pricing with a royal purple passion. Now? I don’t care. It changed the way I buy books. It didn’t get me to buy mmpp or hardcovers, instead it got me looking to new authors/smaller publishers. By the time an ebook price lowered (if it did at all), I just didn’t care. Apathy = lost sale.

    I’m not sure where the Amazon ‘monopoly’ exists. I buy books from Amazon, BN, ARe, BoB, Samhain, and others. My house has Nook & Kindle & Calibre (priceless).

    Also, there is nothing preventing publishers from selling their books on their own websites…except the fact that they don’t want to put the effort to create their own infrastructure and that they don’t see readers as their consumers. So yeah, here’s the world smallest violin playing just for them and their fight against Amazon’s ‘draconian’ contracts.

  15. Janine
    Apr 11, 2012 @ 12:02:33

    @Jane:

    The class action, if approved, would include you and then you would be sent an opt out notice.

    I’m confused and need more clarification. Forgive my ignorance but here are my questions:

    1) Opt out of the settlement? If so does that mean you get no money?

    2) Does it mean that if you opt out, in two years time you have a case again and can sue once more if the publishers revert to agency pricing? Or will agency pricing be approved of by the DOJ for everyone (whether they opt in or out) starting in 2014?

    3) Also, am I reading correctly that the two year return to pre-agency pricing starts in a week?

  16. Carin
    Apr 11, 2012 @ 12:03:22

    If I understand right, the price listing in this post is the old list Apple put out that agency pricing is based on, right? And the DoJ settlement doesn’t set price points, it just says for two years the publishers taking the settlement can’t set consumer price, they have to sell books to the seller, and the seller determines how much they’ll price them.

    If I’m understanding it right, I’m kind of excited. Imagine being able to use coupons again! I’d love that.

    I’ll admit to not knowing where to stand on Amazon. They do give us books for cheap, and if they always did that, yay for them. The fear, I guess, is that if they are so dominant, and now agency pricing is gone, then Amazon could (for the short term) underprice books, even taking a loss on them, until they have put their competitors out of business. At that point the fear is they’d jack the prices back up and set whatever price they wanted, because the competition was out of business. I don’t want that to happen, but I do want reasonably priced books. These are interesting ebook times.

  17. Linda Hilton
    Apr 11, 2012 @ 12:08:02

    I’m gonna go out on a really stupid limb here. As 1.) an author who has been shafted by one of the Big Six regarding e-publication and as 2.) a voracious reader who is always looking for bargains that don’t screw authors (see #1), I find all of this totally incomprehensible and totally reprehensible, because it appears that Apple, Amazon, the Agency model, the Agency entities, and eventhe DOJ are entirely on the side of the publishers and distributors and don’t give two shits about the creators of the product and the consumers of that product.

    In the old days of print only books and brick and mortar stores, everyone sold the same product and customers were free to choose where they shopped. Some preferred Waldenbooks for one reason, others liked B. Dalton, some went to their local independent. It was all determined by personal preference, either based on service, convenience, friends with the owner, whatever. The product remained the same, and pricing was reasonably competitive.

    Readers paid the asking price, and if they were cheap or poor, they went to the library or the used book store. Some writers weren’t happy about the latter, but they lived with it because that’s the way it was. Some writers weren’t happy because the publishers held the keys to the kingdom as far as who got published and who didn’t, but they lived with it because that’s the way it was.

    Along comes digital publishing, Amazon, Apple, Smashwords, and so on. This proves great for authors, especially those who couldn’t get published by the Capital P Publishers. Given the way some of the publishing platforms developed, an author can self-publish with minimal investment and let the readership decide if the book is going to be worth reading or not.

    But the publishers and the booksellers see trouble on the horizon. They could become redundant. They start doing everything they can to keep readers from having access to lots of inexpensive reading material. The production costs involved in digital publishing are WAY lower than print publishing — no paper, no ink, no transportation, no warehousing, no returns — but digital publishing means (ultimately) the end of brick and mortar bookstores.

    Bookstar is gone. Borders is gone. Barnes & Noble is iffy. That means the distribution model is in the process of a major transition and that transition is to digital publishing.

    Apple is not a publisher. They’re a manufacturer of a reading device, and through their propietary software, they control the distribution of the publishers’ product onto the reading device. They require a specific format for product to be read on their device and they take a cut of each book sold for that application. They’re the troll beneath the bridge that the Billy Goats Gruff are crossing to get to the greener grass. The publishers want to sell ebooks for that device, which is very popular. But Apple, wanting to control the traffic on that very lucrative bridge, told the publishers they couldn’t cross unless they promised they wouldn’t let the goats cross on any other cheaper bridge.

    Who lost? Readers, who were forced to pay higher prices for ebooks than were justified. Authors, who saw their royalties based on “net” proceeds to the publisher.

    Is Amazon out of line for raising its co-op fees? Probably. Is Apple out of line for being greedy and overly protective of its IP? Probably. The thing is, if somehow the ebook product were standardized the way the print book product was/is, none of this would have happened.

    So, you like the Kindle device better than the Nook device, and I prefer the Nook to the Kindle or vice versa. Our friend prefers the iThing. If there were standardization, all three of us could use our preferred device but still buy the same damn book, the same damn file, and we could buy it from B&N, Amazon, the publishers’ website, wherever we wanted. (And when we were done reading and didn’t want it any more, we could upload our copy to a used ebook store site and get credit for it toward another used e-book.)

    Maybe I’m really crazy on this one, but I just don’t understand why someone hasn’t pointed out how much all of this wrangling and price fixing and agency pricing and all the rest hurts the parties that ought to be the most important — the writers and the readers. It just seems like both of us have been left out completely.

    And feel free to tell me I’m full of crap and wishing for ponies and don’t understand the legalities. I figure all three are probably true anyway. But I thought I’d throw it out there anyway.

  18. Moriah Jovan
    Apr 11, 2012 @ 12:08:41

    Readers and authors are irrelevant to this entire debate, I see.

    SSDD.

  19. Ridley
    Apr 11, 2012 @ 12:09:05

    When Macmillan changed to the agency model we did so knowing we would make less money on our e book business. We made the change to support an open and competitive market for the future, and it worked.

    Since Macmillan is a corporation with a duty to generate profits for investors, this should arch everyone’s eyebrows. There’s no such thing as altruism in business.

  20. Jane
    Apr 11, 2012 @ 12:09:10

    @Janine: Most class action lawsuits end up with very little money going to the end consumer. It is likely that the consumer would only get a few cents for every “overpriced” book. Opting out of a settlement means that you would get to pursue your own expensive lawsuit against publishers for collusion. This is in regards to the civil suit.

    A consent decree approved by the federal district court does not result in ANY monies flowing to the consumer because this is not a civil suit resulting in damages. Any money payout (and there isn’t any here) would be considered a fine.

    Opting out, again, refers only the civil suit that Keishon asked about previously. You, as a consumer, have no standing to opt out/in to a DOJ lawsuit. That is a suit brought by the government and there is no civil remedy there.

    No, agency pricing will have to cease within 7 days of the settlement being approved. The Final Judgment will not be “filed” until it receives approval by the court.

    @Carin: Yes, the pricing chart was an old one that Apple instituted when agency pricing, or as I like to call it, Retail Price Maintenance, was enforced back in 2010.

  21. Mikaela
    Apr 11, 2012 @ 12:10:06

    My guess is that the discounts will vary between 12-20 per cent. That is a guess, based on the current range of Kobo’s and Books on board’s discounts on Agency titles for Non-US readers. ( Kobos discounts varies more than Books on board’s but then they offer coupons regularly)

  22. Janine
    Apr 11, 2012 @ 12:22:08

    @Jane: Thanks so much for explaining.

  23. Jane
    Apr 11, 2012 @ 12:31:05

    Let me clarify, compliance with the settlement must be met within 30 days of the entry of the Final Judgment aka approval of the settlement, but the Apple agreements must be severed within 7 days of the approval of the settlement.

  24. Roslyn Holcomb
    Apr 11, 2012 @ 12:34:55

    Well Linda, I’m out there on that stupid limb with you. As a writer I didn’t like Fictionwise, because the discounts cut into my royalties like a mofo, though I can certainly understand why consumers liked it. I would imagine that the discounts did make trying a new author easier, but I don’t think that gained many new readers, but I could be wrong.

    For the life of me I can’t understand why someone cannot come up with a way to allow ebooks to be resold. I just find it baffling in a time when we see new technology coming along faster than we can keep up with it, I just don’t get it. As for publishers selling from their own sites in competition with Amazon, as I’ve said before, this doesn’t seem viable. I base that belief on my own royalty statements. People like one stop shopping. The overwhelming bulk of my books are purchased at Amazon and to a lesser, but still strong degree, ARe. I probably have a thousand ebooks on my iThing right now, and other than my own I have no idea who published them.

  25. Roslyn Holcomb
    Apr 11, 2012 @ 12:45:45

    Oh, and I really am not particularly inclined one way or another toward agency pricing. Most of the books I buy are from independent pubs, epubs or self pubs. I might buy an agency book once or twice a year, and that’s only when I can’t get it at Paper Back Swap. As an author I’m either epubbed or self pubbed, so I don’t care in that regard either. I’ve used Apple products for more than thirty years. Won’t buy any other type computer, and my attachment to my iThing is almost primal. But they’re notorious for behaving this way, and that was BEFORE they became the 800 pound gorilla they are now. I like Amazon as both a consumer and as an author, but they too are imfamous for their sharp elbows. Bottom line? I see two mammoth corporations having a pissing contest, and as usual we the consumers and the content creators are the only ones getting wet (and not in a good sexy way).

  26. Dabney
    Apr 11, 2012 @ 12:58:11

    @Linda Hilton: My thoughts exactly. Thanks for articulating them so well.

  27. Linda Hilton
    Apr 11, 2012 @ 13:23:08

    @Roslyn Holcomb: “One-stop shopping.” Indeed. That’s why we had bookstores in the first place, so we as readers could look over all the products from all the publishers. That didn’t stop us from having our favorite retailers. As in, C-O-M-P-E-T-I-T-I-O-N.

    And look, if there’s a way to strip DRM and thus void any copyright protection on the “file” that one has downloaded (and again, maybe I’m misunderstanding this because I don’t know how to strip DRM or even what stripping it means in terms of how the file itself is affected) then it means that there are devices that can swap the files between a Nook and a PC and a Kindle and an iThing, right? I mean, if I bought a reasonably priced copy of The Greatest Effing Romance The World Has Ever Seen and it had an identity code that kept it from being replicated/duplicated but still allowed me to download it, share it with/between various reading devices that I own, trade it in for credit, I think I’d be far less inclined to illegally share it. And as an author who could get 35-70% royalty per copy, I would be FAR FAR FAR less grudging of those who did swap than when my “publisher” was giving me 4 effing percent. (And who knows? With the technology to encode a digital ID, maybe there’d be a way to get residual royalties????)

    yeah, I know, I’m askin’ for those damn ponies again. ;-)

  28. Sunita
    Apr 11, 2012 @ 13:36:33

    Why should the bookselling industry be immune to the type of consolidation and integration that practically every other industry has faced? I don’t see anyone here complaining about the loss of local, family-owned hardware stores, but they’re gone too. As are non-chain grocery stores in many parts of the country. And clothing stores. And on, and on, and on.

    Amazon was the instrument, not the cause.

    Jane, isn’t this potentially going to make life a little better for the small online ebook retailers, like Fictionwise? Does this create a space for competition at the online level to open up, because they can discount books if they want to now? Or even publishers getting into the act and selling direct to consumers? If, heaven forbid, they actually wanted to do something other than collude?

  29. Lynnd
    Apr 11, 2012 @ 13:47:37

    @Jane: Will the DOJ and the settling parties file the settlement agreement now or will they wait for some time before they file?

    Also, @Linda Hilton, I agree.

    If publishers want to stop any one retailer, device-maker etc. from having a monopoly all they need to do is insist on a standardized format for ebooks or get rid of DRM. I have also never understood why retalers couldn’t offer coupons, loyalty points or sales as they do with print books. Last month I went into my local Chapters had a sale and was able to buy four books for the price of three. I also got $5.00 off my purchase thanks to loyalty points. Why couldn’t this have been allowed with ebooks? Personally I think that the big 6 were just easy marks in the fight for supremecy between Apple and Amazon.

  30. library addict
    Apr 11, 2012 @ 14:07:26

    I wouldn’t mind paying $6.99 or $7.99 for digital books by the big 6 publishers if they were subject to occasional coupons and loyalty programs like ARe’s buy 10-get-1-free (which from what I understand the author still gets paid their regular amount and ARe takes the loss). It’s the $7.99, $8.99, $14.99, etc digital books when the mmpb edition is already released or sometimes OOP that I resent.

    Amazon feels their dominance in the market allows them to set whatever terms they want. Same with Apple. I do wish the Big 6 would wise up, get rid of DRM and sell ePub and Kindle compatible editions directly as well as distribute them to other etailers.

    I miss Borders and the heyday of Fictionwise. And I know we can’t go back. Yes the Big 6 have mismanaged the entire digital situation from the get-go, but I don’t want them to go out of business and have Amazon left as the only big publisher.

  31. Linda Hilton
    Apr 11, 2012 @ 14:09:52

    @Lynnd: As always, I could be totally wrong, but I see the control issue — no coupons, no loyalty discounts, etc. — as paranoia on the part of the publishers who are desperately trying to hang onto their profits from a low-tech product.

    I can’t speak for any other genres because I haven’t been following them, and I’ve only been following what’s going on in romance publishing for about a year. But seriously, why would any author especially a name author with a substantial fan base remain shackled to a publisher whose business decisions are intended to protect the publisher’s bottom line at the express expense of the author? Eventually authors are going to break away from the print publishers exactly the way the readers are, and the publishers know it. When that happens, the publishers (as we know them) are as doomed as Polaroid and Kodak. (Were any tears shed for them when new technology put them into bankruptcy and out of business?)

  32. Isobel Carr
    Apr 11, 2012 @ 14:49:50

    @Linda Hilton:

    But seriously, why would any author especially a name author with a substantial fan base remain shackled to a publisher whose business decisions are intended to protect the publisher’s bottom line at the express expense of the author?

    I don’t see my relationship with my publisher as adversarial. Am I giving up potential profit? Maybe (lots of selfpubs aren’t getting anywhere though). Why am I doing it? Because I think the help and support NY can give launching a career is worth the tradeoff. I’m investing in my career in the long term. Will it be worth it forever? I don’t know. Depends on how things progress. And believe me, being friends with Bella Andre, Tina Folsom, and Barbara Freethy is a major lesson is “lookie what you can do on your own” and I’m not dismissing the idea of selfpub as a VERY viable option.

  33. Courtney Milan
    Apr 11, 2012 @ 15:35:45

    For those who are wondering why Amazon is not getting sued as a monopolist, it’s because under US law, it is not a problem to have a monopoly. The offense is one of monopolization: having significant market power (and it doesn’t have to be a “true” monopoly) and using it to do something that harms competition.

    At least in the United States, it’s not an offense to be a monopoly; it’s an offense to use a monopoly for evil or to acquire monopoly powers by unacceptable means.

    So far, the only element I’ve seen of anything that smacks of Amazonian monopolization (or attempted monopolization, really, given their market share) is its attempt to get exclusive dealing through KDP Select.

    It is much, much easier to get taken to task for collusion or some other form of concerted action than it is to be smacked down for monopolization, but for some reason, more people think of antitrust law as applying to monopolies rather than collusion.

  34. Mireya
    Apr 11, 2012 @ 16:00:03

    Thank you for the clarifications, ladies. I guess I’ll just sit back and watch any new developments.

    M.

  35. Merrian
    Apr 11, 2012 @ 18:28:17

    @CK:

    everything CK said except I don’t own a Kindle and Amazon is more a monopoly for Americans than for international readers cos of geo restrictions and whispernet costs

  36. Maili
    Apr 11, 2012 @ 18:41:49

    From John Sargeant’s statement:

    After days of thought and worry, I made the decision on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, [...]

    My dead tired brain honestly screeched to halt at that part. It’s conjured such a surreal image that I thought for a moment I imagined it. Well, I’m sure John Sargeant was sincere when he wrote that, but thanks for giving me the biggest laugh of the day.

    A-hem. Excuse me.

  37. Jia
    Apr 11, 2012 @ 18:57:38

    @Maili: You’re not the only one who read that post with a jaded eye.

  38. Moriah Jovan
    Apr 11, 2012 @ 19:08:12

    @Maili:

    Well, if he cuddled up to the readers and authors, he wouldn’t be lonely anymore, would he?

    Boo Fucking Hoo

  39. Susan
    Apr 11, 2012 @ 20:10:28

    @Maili: I had to wipe away the tears, thinking of the poor Macmillan CEO, all alone in the basement gym of his 8000 sq ft hovel, making the hard decisions that would benefit humankind. It just makes me feel warm and tingly to know he’s got my best interests at heart.

    Seriously, I’m feeling vindictive and would really have liked to see some punitive measures taken against these bozos. I’m tired of everyone earning big bucks to think up new ways to eff me over.

    And I’m so tired of having Amazon painted as the monster in the closet. Up ’til now, Amazon’s sold me books for lower prices and treated me well with good customer service. Are they just luring me into a false sense of security before the show their ugly face? Maybe, but I’m willing to deal with the problem at hand (agency pricing) and cross the Amazon bridge when I get to it. (Hey, how’s that for a bagful o’ mixed metaphors?)

  40. brooklynshoebabe
    Apr 11, 2012 @ 20:10:38

    1. I’m kind of confused by all the legalese. Can someone simplify this to me Law & Order style? Who are the bad guys? I understand that Amazon seems to be causing a monopoly. I also understand that Apple seems to be causing a monopoly as well. But are the publishers who are listed as defendants also causing a monopoly? If so, how?

    2. As a public librarian, I’m curious how this will affect the borrowing of ebooks since publishing houses are trying to squeeze as much money out of the libraries who buy titles for their collection.

  41. J.N. Duncan
    Apr 11, 2012 @ 20:25:21

    One interesting element in all of this is the fact that the settlement has a clause in it that restricts retailers from discounting more than their aggregate commission made on books (i.e. they couldn’t discount Penguin’s books over the course of a year for more than what they made on them). I honestly have no clue how this will effect a company like Amazon, but I can see it altering how and when discounts are made on books, like during the holidays.

    @keishon I did say that I’m all for getting my products for less money. I’m a reader as well as a writer, and I seldom by hardback because of the price. I have the patience to wait until paperbacks come out. That said, I don’t think the digital versions of hardback releases should be $10 either. I think this battle between pubs and Amazon is as much about perception as it is plain old money. Publishers want us to pay premium dollars for new content. The want us to perceive the value of a hardback book to be $25-$30, such that the discounts down to $15 seem like a bargain. Take the printing/distribution costs out of the picture and we’re still nowhere near $10. The public perception though is that removing the physical presence of the book makes the product far less valuable. The internet age has generated a big split in the perception between the value of digital versus physical content. People are so used to getting digital content for free or nearly free that they no longer feel they should have to pay much for it.

    Amazon figured out that $9.99 was the magical cutoff point for new, digital books. Not hard to understand why. They want to bring consumers into their store to buy things, and books have a rather large, built-in consumer base. They want to sell things that actually make money for them, where the margins are far higher than books. Pubs don’t want to discount to the point they can make money at $9.99? Amazon can afford to eat the difference. The consumer after all, is king. For them, how could it be otherwise?

    Pubs don’t have the advantage of selling readers other things with higher margins. The only have books. When you have a retailer with a huge market share, who is eating the costs to set an advantageous price point to consumers, there’s an obvious problem. Public perception of value is getting lowered. Publishers ignored digital content and this perception problem until it was too late to really do anything about it. Short-sighted of them to be sure, even downright stupid. The public now believes $10 is what a new “hardcover” book should cost. And now you have the problem of $7.99 paperback. The public is going to look at the price difference and say, “wtf?” Hardbacks were 3 times the price of paperback in the physical world, and now it’s $2? There’s something wrong with that picture. They should 4, maybe 5 bucks at most in comparison. There’s no paper and the content is the same, so what’s the deal here? Perception again.

    The value of story is getting eroded. Publishers dropped the ball. Amazon picked it up because they saw the opportunity to use books as a cheap access point to gain customers. They have the power to manipulate the environment to do just that. Self-publishing has been developed and promoted so heavily in their store because it serves that purpose so well. Circumvent the middleman and let the content creators play against each other to reach consumers. Now we have content getting devalued from both sides of the spectrum. Amazon can use it’s huge resources to pull value down from the high end, and the thousands of writers publishing to the kindle can erode it from the low end.

    Consumers deserve to get their money’s worth. I’m not arguing that point at all. But what is the actual content worth? What’s the value of a good story? Self-published authors can make money selling their books for a buck. There are plenty of examples around showing that. So is that what defines their value then? Some would argue that it’s just capitalism doing it’s thing. It’s the American way. Publishers obviously can’t make money selling for a dollar or even five. They’ve got a serious perception problem to deal with and I have no idea how they’re going to get around it now. We have a system getting established more firmly with every passing month that is pushing the value of story toward zero. Amazon is fine with this arrangement, as it generates more profit for them. The value of story is of no concern to them other than it’s ability to bring the consumer into the store.

    So, in the end, I’m pissed at the DoJ for not really understanding what’s going on in the industry and at Amazon for not really giving a shit about books as being something worthy in and of themselves, because to me, story (good ones) is worth something. It’s got more worth than the $.99 hot wheel in the value bin at my local Kroger. It’s worth more than the latte I’ll buy to sip on while I park my butt at my local Starbucks to read. I’m happy to pay $8 for a paperback, digital or paper because the hours spent lost in my imagination are well worth it. It’s a bargain, really. If it means I can’t buy as many books or I wait for it to come to my library or my local used book store, than so be it. It’s a price worth paying for such an invaluable resource.

  42. library addict
    Apr 11, 2012 @ 20:30:59

    @brooklynshoebabe:

    Can someone simplify this to me Law & Order style? Who are the bad guys?

    There are no good buys or bad guys, just corporations all trying to maximize their profit.

  43. rebecca
    Apr 11, 2012 @ 21:00:06

    Personally, I’m on the publishers’ side because I feel they better represent my interests. I love physical books, own thousands of them, and have zero interest in buying or reading e-books. The idea of a world in which Amazon controls the entire book market is terrifying to me. I want to buy traditionally published books, in print. I want to have physical bookstores survive to take my future children too. I think Amazon would happily see physical books gone if it increased their profits and helped them sell more e-books and Kindles. So personally, I don’t feel Amazon is on my side, and I don’t buy from them. I see their tactics as predatory pricing, not “helping” the customer, but obviously that is my personal viewpoint based on what I value.

  44. Linda Hilton
    Apr 11, 2012 @ 21:14:27

    @J.N. Duncan: I think you make an interesting set of points, but I’d argue that “hardcover” in and of itself is a perception-manipulator.

    I’ve been around long enough to remember when it was A Big Deal for a romance author to be published in hard cover. I remember when it was A Big Deal when 2000 or so hardcover copies of Outlander were handed out at the RWA conference. Having a book come out in the more expensive hardcover — which most UBSes don’t want and won’t take on trade — meant the author was selling to a higher cla$$ audience. It didn’t matter that the content was exactly the same in the $4.95 paperback. Hardcover was status.

    But if you now take that status and turn it into $9.99 for the digital “hardcover,” how is that in any way shape or form different from the $7.99 digital mmpb? It’s not. And there goes your status symbol. Big Name Authors and self-pubbed hacks are brought down to exactly the same medium and yes, they’ll be competing for readers, but on their own merits. Will the BNA at the NY Publisher get better cover art? Better editing? More promotion? Maybe, maybe not. Because if the traditional publishing model goes the way of the Instamatic, the independent cover artists, the freelance editors, and the savvy self-promoters are going to fill the void.

    I don’t consider that “devaluing” story so much as it is leveling the playing field. I think there are a lot of books put out by the NY publishers that in terms of story value are no better than the self-pubbed stuff. I think there’s a lot of innovation coming from self- and indie-epubs. And a lot of it is stuff that would NEVER have been published by the traditional houses. NEVER.

    I’m not sure it’s fair to give Amazon the profit-margin advantage just because they sell other products besides books. The big publishers are also into more than just printing books, in that they sell other rights and other tie-ins from which they make lots of money. Amazon doesn’t have that capability yet, and the physical products they sell all have a cost. Can Amazon under-sell the Big 6 on e-books? Probably. But if the Big 6 weren’t so paranoid and were ahead of the curve on this one instead of three miles behind, Amazon wouldn’t be breathing down their necks.

    Amazon’s main product — at least in my opinion — has been innovation in marketing and integration in marketing. They don’t actually make anything, but they’ve designed a system that has used technology to move the goods faster and more efficiently from producer to consumer. Once they had the groundwork laid, they built on that over-arching model to integrate other products into the system. Look what they’ve done with the huge market for used paper-and-ink books, and integrated it right in with the Kindle digital distribution platform.

    To me, Apple is just saying, “Hey, we’ve got a really cool toy here that a lot of people really love and we’re going to use our market leverage to make all of you other guys protect the market for our popular device.” My bizarre way of thinking wonders what would have happened if they all told Apple to go fly a kite? “If you wanna sell books on your iThings, then make the deal fair for readers and the other people who sell the same product.” Do you think Apple wouldn’t have knuckled under, if they were faced with not having the major publishers on their iThings? The publishers were dumb for giving in to Apple, imho.

    But what do I know?

  45. J.N. Duncan
    Apr 11, 2012 @ 23:19:31

    @Linda I think you’re right that the field is getting leveled, and yes, pubs were rather short-sighted in signing on with Apple. Books aren’t a gateway product for them, I don’t believe. I think they’re operating under the assumption that their product is so cool, that in the end, the majority of people will own them and just shop their store for books on a defacto basis. I could obviously be wrong on that, but I think Apple could take or leave it on books. Like you said, it’s all about the device.

    I also agree that there’s a lot of creative stuff coming out of the self-publishing ranks that never would have seen the light of day otherwise. That is a good thing. There are definitely advantages to unlimited shelf space. Of course there are also inherent problems with the infinite bookstore. It’s hard to get noticed, among other things.

    It’s the whole “leveling the playing field” that leaves me uneasy. For those who have been on the outside looking in, with regard to traditional publishing, it’s a chance to prove one’s worth. For those who have managed to get into the paper market, the advantage of doing so is gradually disappearing. If everything turns toward writer control, and I’m not saying this is a bad thing per se, you now have writers pitted against one another, and all things being equal, the one thing they have to mess with is price.

    For many writers in the self-published sphere, cutting price has no relation to cutting margin. Whatever a book sells for is money made, whether it’s $.99 or $7.99. The only thing you’re charging against as it were, is the time and energy invested in creating the product. Of course there might be financial investment such as editing, cover art, and so on, in which case cutting price potentially endangers actually getting any kind of return on the investment. It’s a game Amazon is happy to let writer’s play, because a price battle brings in the consumers. When consumers can get stories worth reading for a buck, they wonder why all stories can’t be sold for a dollar. I think $.99 is something of a magical price barrier for the consumer. It’s a throwaway price. If the book rocks, it’s money well spent. If it sucks, well no big deal, it was only a dollar. In the consumer’s mind, I believe the value of the content ceases to matter. Leveling the playing field won’t do writers much good if the value bar continues to lower toward this point.

    Of course, that’s only one doom and gloom possibility. I’m not sure that it actually could happen, but I can see it’s potential. More than likely, publishers will eventually get their act together and figure out how to regain control of the digital marketplace. Digital only pubs continue to proliferate and will continue to achieve success. What I’m guessing will happen is that the sheer volume of books out there will eventually drive consumers to seek out trusted sources of content. Those pubs that can provide this curative perception to the consumer will grow in dominance and the price of books will settle at some new level, lower than it is now. Self-publishing will continue to provide a potential avenue for new writers and a successful one for established writers, but the chaos we have now of everyone throwing a book out there because they think if they just put it out there that people will buy it, is going to wane.

    There’s a middle ground out there somewhere between current paper publishing and the likes of Amazon that I think will be better for writers and readers. I just don’t want to see the incredible value of story get squashed in this process of this change.

  46. J.N. Duncan
    Apr 11, 2012 @ 23:23:55

    Oh, I should have also added a thank you, Linda, for the interesting discussion and feedback. It’s not nearly as much fun rambling to myself. :)

  47. Rebecca Herman
    Apr 11, 2012 @ 23:30:44

    Perhaps I am the odd one out, I don’t know. But I’d rather get one awesome, amazing book that I love and will keep forever for $20, than 10 books that cost $2 each but that, after reading, I think are mediocre or just average. If a book has strong appeal for me (series, author, subject), then I’m willing to pay a pretty high price – obviously not something absurd like $100, but you know what I mean. To me, price is the least important factor in choosing a book. I’d only be annoyed at a price if the book fell apart after one reading or the book was extremely different from what I expected (inaccurate summary/marketing).

  48. Roslyn Holcomb
    Apr 11, 2012 @ 23:52:45

    Actually Rebecca I’m right with you. I’m very surprised that price is such an issuecwith some people. I’ve been a voracious romance reader for nearly forty years. For much of that time I’ve been a person of limited means, still, I never concerned myself overly much with a book’s price. If I had money and wanted the book I bought it. If I didn’t have money I waited until I did or got it at the library or the UBS. Books are the one area of my life I refuse to scrounge at.

    I rarely buy hardbacks, it’s been my experience that when authors go hardback the quality suffers. Of course that might be a perception I developed because the higher price point increased my expectations. So, the agency model doesn’t impact me overly much. I’m accustomed to waiting for the paperback or even its appearance at the UBS.

    I managed a large bookstore at one time and I know that people absolutely adore cheap books. They seemed to understand that most of the books in the bargain barrel were crap, but they were intrigued by the chance of getting a winner for only a buck. *shrugs* I don’t get it, but then I don’t play the lottery either.

    I suspect that most readers do not follow the industry all that closely. If they’re online they might check an author’s website for release dates, but not go much further. I also think most of them are more like you and I, than like the typical blog follower, but I could be wrong.

  49. Linda Hilton
    Apr 12, 2012 @ 00:25:19

    @J.N. Duncan: Ah, you’re very welcome! And thanks back to you, too, because (surprise, surprise) I too get tired of my own voice after a while!

    The level playing field is a good analogy, as long as one remembers that not all the players are equally talented/skilled/supported. Right now, from what I can see, there’s a whole lot of pretty bad self-pubbed stuff out there, at least in the romance genre. And that may continue for a while. I think if there’s a door opening up where another has closed, it’s for the reviewers. Not the fiverr shills or the sisters and the daughters and the cousins and the aunts on GR, but the review sites and blogs where readers can find trusted opinions and analysis.

    What I see happening — and as always, I could be totally wrong — is that the market opens up to the point that there’s some parity of pricing between “established” writers and the untested. Instead of the Nora Robertses and the Courtney Milans being Agency priced at $7.99 or $9.99, competition will drive them down closer to $3.99, which is what a mmpb cost in 1985. That’s a huge drop in today’s market. As more readers are able to afford the $3.99 books by the BNAs along with the 99-cent “new” authors, readers will be able to discern the difference in quality. This will be especially true if reviewers take up where mail room first readers left off — going through the digital slush pile and pointing out the dreck. While I agree with Isobel Carr that most authors don’t see themselves as in an adversarial position vis à vis their publishers — though I, however, most certainly did because I’m a b*tch — I still think that the transition to digital that will ultimately do away with print publishing altogether is going to put authors in much more control over their product and over their earnings, to the point that they can make more money at $3.99 than they can at Agency pricing of $8.99.

    At that point, the whole ball game changes. And I think some authors — both new and established — are going to be much better positioned to take advantage of the new rules than others.

    If I were a betting person, which I’m not, I’d put money on seeing a MAJOR alteration in the landscape of publishing before the end of the two year moratorium on Agency pricing. MAJOR with a capital M.

  50. Courtney Milan
    Apr 12, 2012 @ 00:48:06

    @Linda Hilton

    Them’s fightin’ words. Courtney Milan has never been agency priced.

    I also find its unlikely that digital will do away with print altogether. Instead, I think that print will be the new hardcover.

  51. Courtney Milan
    Apr 12, 2012 @ 00:49:59

    Argh. It not its. That’s what I get for posting on an iPad.

  52. Rebecca
    Apr 12, 2012 @ 00:56:13

    I don’t see print books going away so fast. Maybe when all those who are adults today are long dead and gone and everyone alive has grown up with e-books. There’s still plenty of printed books being sold and plenty of people who read printed books but don’t own an e-reader. But it could just me being hopeful, I suppose, because I really dislike e-books. If most books became e-book only I would basically read 99% older print books I never got around to reading. I can count on one hand the number of authors I’d be willing to read an e-book from.

  53. Roslyn Holcomb
    Apr 12, 2012 @ 07:03:28

    I don’t see print going away, I do see mmpb going away, and rather quickly. Publishing has never liked them as they’re expensive to produce, comparatively speaking, and not the moneymaker that hardbacks are. (That information is circa 1992, so it might have changed, but I don’t think so.) publishers would be stupid not to replace them with digital. The only benefit with paperback is that authors essentially got two release dates to two different markets. The sale arc will be shortened significantly as both the hardback and digital are released at the same time. I think we’ll have hardbacks and trade paperbacks which are cheaper to produce, but even trade paperbacks will be primarily for non- fic and literary works not elevated enough for hardbacks. I do agree that in this “brave new world” reviews will become far more important than ever. I expect review sites to pick up volume exponentially, and sites like Amazon and Goodreads will have to get a handle on the system gaming, fewer people trust them which should be a bonanza for the blogs.

  54. Linda Hilton
    Apr 12, 2012 @ 07:29:24

    @Courtney Milan: Courtney: My apologies on the Agency pricing slur. ;-) I assure you it wasn’t intended that way, and yes, I remember now that you’re not affected by it. Besides, I know the authors had nothing to do with the Agency pricing arrangement anyway. (Okay, Linda, remove foot from mouth before you choke on your kneecap.)

    And this morning (Thursday) the NYT has posted that Amazon is already cutting prices, making it a monopoly. I guess they think all the other booksellers just folded up overnight and that there will never be any other innovation.

    I guess I’m just weird, but I don’t see this action as an end-of-the-world-as-we-know-it catastrophe. A major change, yes, but not a catastrophe. I think it’s going to be good for readers and good for writers in both the short and the long term.

  55. Jane
    Apr 12, 2012 @ 07:38:09

    I didn’t see any NYT article that said Amazon is already cutting prices. The terms of the settlement aren’t approved yet and can’t be for 60 days. Unless the three settling defendants are going to act, in advance of the settlement approval, and immediately terminate agency pricing, Amazon can’t reduce prices for the Big 6.

  56. Lada
    Apr 12, 2012 @ 08:53:46

    I think blaming Amazon alone for consumer pricing expectations may be short sighted. It’s actually Apple that got me used to paying $0.99 (or $1.99) for apps that give me hours upon hours of entertaintainment, information, etc. And I’m certain the developers of those apps would argue that just as much (or more) time, creativity and work goes into creating those apps as goes into writing and publishing books. Interestingly, many developers pay attention to comments posted by consumers and make improvements based solely on information/complaints made by users.

    I am willing to pay more for books (though not agency prices) because reading is my main form of entertainment. But if publishers and authors are looking to attract *new* readers/fans, innovation and willingness to to drop the old business model is needed (as Jane has been pointing out for years now).

    Like @brooklynshoebabe: I’m curious how/if this settlement will affect library ebook lending.

  57. Linda Hilton
    Apr 12, 2012 @ 09:11:05

  58. Jia
    Apr 12, 2012 @ 09:14:13

    @Jane: I think Linda’s talking about this article which… doesn’t mention that Amazon has already cut prices at all. It just says that Amazon will push down prices but everyone knows that’s exactly what they intend to do.

  59. Linda Hilton
    Apr 12, 2012 @ 09:14:43

    Jane: My apologies, I hit the post comment button when I was trying to flip back to another screen as I’m trying to “work” and post and read at the same time.

    The NYT article doesn’t say Amazon is immediately cutting prices on Agency-priced books but that “Amazon announced plans to push down prices on e-books. The price of some major titles could fall to $9.99 or less from $14.99, saving voracious readers a bundle.”

  60. J.N. Duncan
    Apr 12, 2012 @ 10:37:06

    I’ll agree that Apple has gone a long ways toward establishing that $.99 price as “the” price for mass content on your mobile device, be it apps, books, music, etc. Again, publishing has completely blown it on the public perception end of things. They’ve done absolutely nothing to try and make the public believe that a book download is any different than getting a fave song or angrybirds. To the public, it’s all just a bunch of interchangeable, digital info to entertain and fill the memory card.

    Movies seem to have done a better job of this. New movie dvd’s still retail for $20. You can rent them for $2-4. I am sort of curious why publishing hasn’t looked more into the notion of the $.99 expiring DRM. Maybe the tech isn’t there for it.

    However, it may be too late now for pubs to do anything about the perception of the $1 book. Sad as this makes me, because I don’t feel that a good novel should ever be priced at a $1 unless it’s some kind of promo deal, pubs are going to have to figure out a way to manage this new perception to their advantage.

    For instance, they should probably start investing in the infrastructure to sell their own digital titles. Maybe they already are working in this direction, I don’t know, but they need to get themselves into a new position where they can compete against Amazon’s methods of pricing cutting, and give readers a better shopping experience. They always talk about value-added content with books, author interviews, related short stories, etc. Would you as a reader, drop the $9.99 new title from Amazon and get it direct from the publisher if you got to hear the author talk about the book and got an extra short story with the characters tossed in for $12.99? Anyway, there are likely a number of avenues publishers can pursue that go beyond just putting the book out there to retailers.

    Regardless, I can discuss the issues all day long. It’s fun and interesting stuff, but in the end, for me, and maybe I’m just being naive and stuck on the past, but a good story is worth more than a buck or two. I honestly don’t care if writers can make money off that price. Hell, I could be forced into that position myself at some point and probably will, but that doesn’t change the fact that, to me, the digital change is eroding the value of story, and all financial aspects aside, that’s not a good thing.

  61. CK
    Apr 12, 2012 @ 12:07:21

    @J.N. Duncan: I disagree with the concept that somehow digital has/is “eroding the value of [a] story”. Are all stories (novels) going to be .99? No, but how a reader values a story does change. I refuse to buy beyond 9.99, but…would I be willing to pay $20 for a Courtney Milan ARC of Star Wars meets Pride & Prejudice vs a zombie horde of demonic bunnies 6 months in advance? You betcha! Would I pay $15 if its bundled with illustrations, music, interviews, etc? Yeah. Would I pay 12.99 for just text (which may or may not include the cover) the day it’s released? No. (Sorry, Courtney ;) But I’d have no problem paying 9.99 for it.

    Publishers sat in their ivory towers and watched the music empire crumble. They did not innovate. Am I supposed to feel sorry for them? There are ways to make money in the digital revolution and that doesn’t mean that everything is free or .99.

    Will print disappear? I think I’ll believe The Doctor (he is a time-traveler, so he should know) when he pulls out his paper copy of Death in the Clouds and says that it was printed in the year 5,000,000,000 and that Agatha Christie is the best-selling novelist of all time.

  62. Courtney Milan
    Apr 12, 2012 @ 13:19:21

    @J.N. Duncan:
    They’ve done absolutely nothing to try and make the public believe that a book download is any different than getting a fave song or angrybirds.

    I hate to sound awful, but honestly… Why is book download so different from a song or Angry Birds?

    I can pay 99 cents for a piece of music that required a sound studio, a series of technicians, and a full symphony plus conductor–several hundred people, all of whom needed to spend years and years to perfect their craft, and then countless hours practicing the piece–not to mention the composer’s time, if the music isn’t out of copyright yet. Angry Birds has a development team, artists, programmers, a team of beta testers, and so forth.

    I have a pretty good idea what goes into creating a book, and it boggles my mind that someone would think that this is somehow more substantial than a computer game or a piece of music. My investment in time and money in creating a book is not much more substantial in kind than the effort put in by the producers of Angry Birds or the cost to produce a song.

    Just because I am an author doesn’t mean I can’t respect the effort and work and creativity that other creative professionals put into their product. Authors aren’t producing a unique little kitten. We’re putting out a product. It is a product that entertains and enriches and hopefully tickles people on a lot of different levels. But it’s still a product.

    Why are books so different?

  63. J.N. Duncan
    Apr 12, 2012 @ 13:38:13

    I don’t believe print will disappear either. I do believe we might see the gradual disappearance of the mass market paperback. Not in the near future mind you, but down the road, as today’s kids grow up consuming the bulk of their media on mobile devices. I also agree one can’t feel sorry for the pubs. It’s their own short-sightedness and rigid entrenchment with traditional methods that have brought them to this problematic point.

    I still think value erosion is going to be a problem though, particularly in the mass market area. Unless things change, more and more of those “midlist” type authors are going to turn to self-publishing because pubs can’t/won’t offer more favorable terms. If I were to guess, I’d say $2.99 is going to end up being the fall point for these authors. Authors with little to no exposure will be forced to hit the $.99 mark to be able to make things happen at all. I could easily be wrong in all of this of course, but I think this will create a force that pulls down on the new “hardcover” books. Pubs are heading for a world of hurt if they don’t start making some serious efforts to change how they do things.

    One of the biggest things I think they could do is offer more favorable terms to authors. They really need to cut down on this growing split between making it in the paper world vs. digital. As an author, I like having the professional services offered to me with a paper pub and the ability to hit the shelves. It’s worth the financial tradeoff, but it won’t be long in the future before that tradeoff is pretty much worthless to me. I hope they figure this out because honestly, I’m not overly fond of doing everything myself or having to put out money for services.

  64. rebecca
    Apr 12, 2012 @ 13:43:35

    I wouldn’t mourn the loss of MMPB and I love print books. Trade and HC are just physically better quality anyway. For what its worth MM is already almost a dead format for young adult books. Everything is hardcover or trade paperback.

  65. J.N. Duncan
    Apr 12, 2012 @ 16:05:47

    I don’t read YA, so wasn’t really aware of that, but it certainly makes sense to me. We could easily be moving toward a market where getting published in paper at all is the status symbol for authors (in fiction at least) and most everyone is digital. I’m going to guess too, that POD technology will continue to improve, and at some point, every major bookstore will have the ability to just make a copy of whatever book you want. The current roughly 70/30 split between paper and digital sales will have flip-flopped, and shelf space will be much smaller than it is now. On the plus side, maybe this means the small, specialized bookstore will find itself once again. Anyway, it’s lots of fun to prognosticate. It’s going to be really interesting to see what publishing looks like in a few years.

  66. Rebecca
    Apr 12, 2012 @ 17:12:39

    From what I recall, YA is one of the categories where ebooks are less popular (and I mainly read YA these days, tired of every adult historical being set in Regency England). So I’m hoping that’s not the case anytime soon. I have zero interest in ebooks or self published books.

  67. Lynnd
    Apr 12, 2012 @ 19:03:59

    @brooklynshoebabe: There aren’t any good guys and bad guys, just a bunch of huge multinational companies with over-paid executives fighting for a corner of the sandbox. Perhaps we need to stop referring to the Big 6 as Harper Collins, Simon & Shuster, Hachette, Penguin, MacMillan and Random House and start referring to them by their true owners, News Corp, CBS Corporation, Lagardere Group, Pearson PLC, Georg van Holzbrinck Publishing Group and Bertelsmann AG respectively.

    Really, with their resources, why did the parent companies not intervene. Certainly there is an option 3 – set up their own distribution system and undercut both Apple and Amazon. These media companies need to move out of their fortresses and into the real world. Ebooks are not a threat to book publishing, Angry Birds is.

  68. Jia
    Apr 13, 2012 @ 12:15:10

    Part of the reason why hardcover is so prevalent in YA is because of the library market. Hardcovers are favored there. And that age demographic makes use of the library probably more so than older age groups.

  69. MaryK
    Apr 13, 2012 @ 13:28:46

    I don’t think I buy the “people want everything to be free” argument. If a product declines in popularity, the price has to drop for buyers to even consider buying. There are a lot more people listening to songs and playing Angry Birds (or W.E.L.D.E.R. even) than there are reading. If those people do decide to browse digital books, they’re in for a big sticker shock by comparison. People sink a lot of money into entertainment – players, recorders, portable players, subscription services, on demand services, streaming services. If they’re not reading, it’s because they’ve chosen another activity.

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