Aug 10 2011
First up is this trailer of Maya Banks’ Highlander series. Men in Kilts. It’s must watch YouTube. (It is also part of the auction that Maya Banks won in support of our blogger friend, Fatin, when she lost her husband in a senseless shooting. Tessa Dare put it together and it features, amongst other things, Men in Kilts. At least watch the opening sequence, won’t you?
This seemed inevitable. Apple and five of the big 6: Penguin, Simon & Schuster, Harper Collins, Macmillan, and Hachette are being sued. Random House is the only one that is not and likely because it joined the agency party late, it’s hard to point the collusion finger toward them. First noticed by Edward Nawotka at Publishing Perspectives and explored more in depth here. I wrote back in the day
The economic history of a vertical price constraint always leads to higher prices. Even the Supreme Court didn’t rebut that in Leegin, instead it argued that in some cases, freeloading disincentivized quality service to consumers (noting that price isn’t the only thing in measuring whether anticompetitive behavior has a pro consumer result).
In books, however, as opposed to luxury goods or technology, there is no specialized training that a seller needs to sell a particular novel. Further, I don’t think any publisher could show that they engage in any kind of specialized service or training that the Leegin court talked about in overturning the 97 year old decision against RPM.
So, no, I would never be in favor of RPMs because they are decidedly anti competitive, create artificial pricing floors.
When all publishers go to the agency model wherein the publisher sets the price (and they will all move to that model now), and the retailer is not allowed to discount, there will be no trending downward of prices. It’s very possible that if all publishers move to the agency model (unless they can prove that it is, in truth, real agency relationships), I have some doubts whether the big 6 won’t face some action of violation the Sherman Act.
My thoughts are that collusion will be hard to sustain but it may succeed in proving a horizontal cartel by mutuality of action. However, the Leegin decision did not rule out cases involving retail price maintenance, only made them very hard to prove. What the big six are doing, however, isn’t exactly Agency pricing because their prices are bound by the rules Apple created.
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
- 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.
I’ve written a few articles about the Agency pricing model:
- Is Macmillan’s Retail Price Maintenance Legal
- Minimum Resale Prices Bad for Consumers (2007)
- Why Do eBooks Cost So Much (explanation of agency pricing)
- Retail Price Maintenance Eliminates Discounts, Coupons, and Loyalty Programs
The Publishing Perspectives piece also notes that the same law firm is looking at launching an ebook royalty class action suit, asserting that ebook royalties aren’t properly accounted for.
Amazon has launched a html5 web app for Kindle. This is only useable on Chrome, Safari, and iPad. It is NOT available for iTouch/iPhone users. It does NOT have any way to organize your books. It does NOT have any notes or highlighting features. It DOES have syncing and a nice looking Amazon eBookstore.