DOJ Lawsuit Update: Where Windowing Becomes Important
There are two major updates in the DOJ lawsuit. An additional 17 states have sued the publishers and Apple. Judge Denise Cote denied Apple, Penguin, and Macmillan’s motion to dismiss. You may want to read the Primer here if you haven’t already before going forward.
States Attorneys General Amended Complaint
1) An additional 17 states have joined the existing states that have filed suit against the major publishers and Apple bringing the total number up to 31. Those states include: Texas, Comiecticut, Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, Missouri, Nebraska, New Mexico, New York, North Dakota, Ohio, South Dakota, Termessee, Utah, Vermont, West Virginia, and Wisconsin, the District of Columbia, and the Commonwealths of Massachusetts, Pennsylvania, Puerto Rico, and Virginia.
Highlights from the amended lawsuit include a more detailed description of all the alleged concerted action and more damning quotations. Prepare for your mind to be blown. Mine was.
- Collectively the Big 6 account for approximately 60% of all revenue generated from print titles sold in the U.S. and 85% of all revenue generated from the sale of NYT Bestsellers. In 2009, the publishers’ market share broke down as follows: Random House (17.5%), Penguin (11.3%), Hachette (10%), HarperCollins (9.8%), Simon & Schuster (9.1%), and Macmillan (5.4%)
- In 2009, Amazon held up to 80% of the digital book marketshare. (Judge Cote’s decision said 90%).
- Amazon’s price point of $9.99 “stoked intense competition among e-book retailers as its rivals priced at or near Amazon’s price point to remain competitive. As a result, prior to January 2010, consumers could generally purchase NYT Bestselling e-books for $9.99” (This is an important point because Cote points out in her decision that the price for digital books is identical from retailer to retailer post agency pricing)
- An executive of the parent corporation of one publisher met with other Big 6 executives “to discuss a joint venture” that would compete with Amazon and hopefully raise prices. (I wonder if this was/is Bookish).
- Windowing is referred to as “the first collective attempt to raise prices.”
- “Months before announcing that they would experiment with Windowing certain titles, certain Publishers shared information among one another about which titles they would Window and their anticipated delay period for e-book publication.”
- Carolyn Reidy shared information “confidentially” to another publisher of S&S’s plan to window Stephen King’s Under the Dome. The executive shared this with his boss via email. “At the conclusion of the e-mail, the executive urges his boss to ‘double delete’ this e-mail from his files.”
- Carolyn Reidy emails Les Moonves, CEO of S&S’s parent corporation CBS, regarding windowing and the need to “‘gather more troops’ and ammunition first.”
- “[T]he Conspiring Publishers considering Windowing referenced themselves in one email as “the Club!”
- “On December 10, 2009, Simon & Schuster CEO Carolyn Reidy discussed systematic Windowing of e-books with Macmillan executive Stephen Rubin, a friend and former colleague of Reidy’s. In an e-mail to Macmillan CEO John Sargent recounting part of their conversation, Mr. Rubin wrote, “In the nicest possible way, she’d [Carolyn Reidy] love for you to join them. She feels if one more publisher comes aboard, everyone else will follow suit.”
- John Sargent asked Eddy Cue from Apple to take a reduced cut on hardcover first releases because under the new Agency model, revenue would decrease from $14 per book to $9.00. (This is important because Judge Cote uses this as an example of how anti competitive the actions were – that they would intentionally take a much lower figure in order to slow ebook adoption and raise prices).
- An executive to another executive in a parent corp. shared via email that Eddy Cue had indicated that Random House was out “and that ne [sic] need the five majors in but maybe four.”
- On Saturday, January 22, Penguin CEO David Shanks contacted Apple’s negotiator Eddie Cue. As Mr. Cue reported to Steve Jobs, Shanks ‘wanted an assurance that he is 1 of 4 before signing.”
- One executive (it must be Hachette by process of elimination) called John Sargent to confirm whether Macmillan was in. Sargent affirmed but the executive told Sargent that the executive’s company would not likely agree.
- Sargent and Reidy had a conversation wherein Sargent told Reidy he was signing the Apple agreement and would pursue the agency model.
- Eddy Cue asked Steve Jobs for help reeling in one recalcitrant publisher (whom I am assuming is Hachette). Jobs writes to an executive at the parent company of the publisher “As I see it, [Conspiring Publisher] has the following choices: 1) Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 to $14.99” Within three days, the recalcitrant publisher threw in.
- The publisher contracts with Apple were virtually identical, particularly as it relates to the maximum price floor, definitions for bestselling titles, commission rate, and the most favored nations clause.
- Penguin could not switch to Agency Model until June 2010 so it withheld from Amazon all newly released ebooks until Agency Model implemented. (AH HA! Seriously I remember this panicked time a few years ago).
- “The higher retail prices benefitted Apple because it would earn higher revenues from its commissions on each sale. Insulated from e-book price competition with other Outlets, Apple could earn gross margins up to several times higher than in the Wholesale-Retail Model. The Publishers achieved their long-running collective goal: higher retail prices for e-books.”
- After Macmillan had its buy buttons removed from Amazon following its demand to go Agency, publishers began to email “John Sargent needs our help!” and “Macmillan ‘has been brave, but they are small. We need to move the lines. And I am thrilled to know how A[mazon] will react against 3 0r 4 of the big guys.” The same executive emailed Sargent saying “I can ensure you that are not going to find your company alone in the battle.”
- The CEO of Barnes & Noble emailed Sargent to let him know that B&N had Macmillan’s back. “Barnes & Noble would ‘go to the mat’ for Macmillan. In an attempt to assist Macmillan during the negotiation process, B&N moved its titles to the top of its merchandizing pods & search results on the Nook.” (these things are so dirty)
- Amazon learned that five of the six publishers agreed to the Agency model and that these five accounted for about half of Amazon’s ebook business and thus Amazon caved to Macmillan. (In Judge Cote’s decision we find out that Amazon was presented with this information on the same day (Jan 20) by four different publishers)
- When Random House refused to move to Agency, David Shanks of Penguin went to Barnes & Noble “I would hope that [Barnes & Noble] would be equally brutal to Publishers who have thrown in with your competition [Amazon] with obvious disdain for your welfare.” B&N continued to promote RH titles and so Shanks went back to B&N. “Following this contact, B&N’s management decided not to feature Random House in any future advertising.”
- Random House eventually caves. I actually feel sorry for Random House for some reason.
Judge Cote’s Denial of Apple, Penguin and Macmillan’s Motions to Dismiss
2) Judge Cote issued a ruling denying Apple, Penguin and Macmillan’s motions to dismiss in the civil class action. The civil class action has been stayed against Hachette, Simon & Schuster, and HarperCollins, pending the outcome of the state attorney general lawsuits. A motion to dismiss is measured against a standard that does not favor dismissal. Every pled fact is assumed true and every inference is read in favor of the complainant (or plaintiff). The short version is that Judge Cote found that the class action petition made a plausible claim for per se antitrust violations based on horizontal price fixing agreements. That is doom, in my opinion, for the publishers and Apple. In fact, reading Judge Cote’s decision, my first thought was that she might reject the settlement because it doesn’t go far enough to protect consumers and punish the conspiring parties.
Here are some highlights from Judge Cote’s decision
- “By the Fall of 2009, the Publisher Defendants had come to see the growth of eBooks, combined with retailers’ discount pricing strategies, as a significant threat to their business model and to the publishing industry as a whole. Traditionally, hardcover book sales have been publishers’ most profitable product. Hardcovers typically provide publishers with the highest margins per unit of sale.”
- The Publisher Defendants feared that low-cost eBooks sales would cannibalize sales of physical books, especially hardcovers, eat into publishers’ profit margins, and harm brick- and-mortar retailers. They also feared that in the future, Amazon might use its market power to reduce publishers’ share of the profit margins for eBooks. Most fundamentally, the Publisher Defendants worried that Amazon’s low price point would condition consumers to believe that a book was only “worth” $9.99, and that this consumer expectation would exert powerful downward pressure on prices for eBooks and physical books alike. In the face of these pricing pressures, the Publisher Defendants feared that their business model would prove unsustainable over the long term.”
- Windowing decisions were announced by 4 of the big 6 within days of each other. Dec 4 – Hachette; Dec 7 – S&S; Dec 10 – HC; and Dec 16 – Macmillan.
- “In January 2010, Apple signed nearly identical contracts (the “Agency Agreements”) with each of the Publisher Defendants. Each of these Agency Agreements allegedly included four major elements. First, each Agency Agreement specified that beginning with the launch of Apple’s iPad and iBookstore on April 3, 2010, the publisher would sell its eBooks in the iBookstore under the agency model. For each sale in the iBookstore, Apple was to receive a commission of thirty percent of the sales price. Second, the contracts included MFN clauses. These clauses stipulated that the final sales price for eBooks sold through other distribution channels could not be lower than the prices for those titles in the iBookstore. Third, each Agency Agreement set the prices for eBooks according to a formula tied to the list price of physical books. Under this formula, the eBook prices would range from $12.99 to $14.99 for most newly- released general fiction and nonfiction titles. Lastly, each Agency Agreement explicitly required the Publisher Defendants to use the agency model when selling eBooks through other vendors of any meaningful size beginning on April 1, 2010.”
- The complaint alleges that the Publisher Defendants’ average per unit revenue for eBook sales decreased by 31 percent following the adoption of the agency model.
- After adoption of the agency model, the price of new bestselling eBooks increased by forty percent on average, even though there had been no corresponding increase in costs.
- “The CAC plausibly alleges that Apple and the Publisher Defendants took part in a conspiracy in restraint of trade, that an object of this conspiracy was to raise prices for eBooks, and that this restraint was unreasonable per se. The Complaint describes specific conversations from which it is fair to infer that the Publisher Defendants had agreed among themselves to adopt a joint strategy to force an increase in the price of eBooks. These include Hachette’s representation to Amazon on December 3, 2009 that the “industry’s” problem with eBook pricing would be solved if Amazon raised its prices by two or three dollars, and the separate meetings on a single day, January 20, 2010, in which four Publisher Defendants each presented Amazon with the identical demand that it adopt the agency model. There are ample allegations that Apple became an integral member of this conspiracy and well understood that the upshot of its participation would be the elimination of price competition at the retail level, forcing consumers to, in Jobs’s words, “pay a little more” for eBooks. (my emphasis)
- “Although the Complaint does not claim that Apple had an interest in higher retail prices, per se, it does plausibly allege that Apple had an interest in limiting retail competition. The Agency Agreements were a means to accomplish both these goals through a single tool. The switch to the agency model meant that the Publisher Defendants could control retail prices, whereas the MFN clauses protected Apple and its 30 percent commission from price competition by other retailers.”
- The hub in a hub and spoke conspiracy need not be a dominant player. (This was one of my concerns about the hub/spoke conspiracy.) Judge Cote said ” Second, the above-quoted dicta in Dentsply does not establish that a hub must be a dominant purchaser or supplier; it merely states that this is “generally” the case. This observation should not be surprising: a hub’s existing market power provides an obvious incentive to horizontal competitors to sign agreements in restraint of trade. In this case, however, existing dynamics in the publishing industry provided powerful incentives for the publishers to sign such agreements.”
- Cote also wrote (and I think this is important) ” These arguments do not address the fundamental claim in the CAC. It alleges that the defendants conspired to eliminate retail price competition and to raise the price of eBooks above the $9.99 price set by Amazon. This states a claim for violation of the law. That the eBook prices may now fall within a range, albeit one typically well-above $9.99, does not render the Complaint’s description of the conspiratorial agreement implausible. Similarly, as explained in the Complaint, the publishers perceived that their financial interests and business model, taken as a whole, were better protected by raising the prices of eBooks even if it meant reducing their profit margins in that line of their business. In the words of Macmillan’s CEO, the publishers believed the agency model would allow them to “have a stable and rational market,” and that the tradeoff was in their long-term business interests. “
- Cote ultimately found that the price restraint allegations were horizontal (between firms) and not merely vertical (within the firm) & conscious parallelism and thus measured under a per se standard but that even under a rule of reason would be illegal.
Judge Cote pointed to elements that she felt were supportive of an agreement (the essential ingredient for a horizontal cartel)
- Specific conversations from which it is fair to infer that the Publisher Defendants had agreed among themselves to adopt a joint strategy to force an increase in the price of eBooks.
- Signing agency agreement with Apple and demanding the same from Amazon would not have been in the publishers’ self interests unless there was a conspiracy of action.
- The rapid and simultaneous switch to the agency model — a model heretofore unknown in the publishing industry — by multiple competitors with every major eBook retailer was similar to the frowned upon action in Twombly. Twombly, 550 U.S. at 556 n.4.
Other notes of interest
Penguin argued that it was entitled to arbitration based on the user agreements between the customer and retailers like Amazon. This is based on the premise that Amazon is merely an agent of Penguin and thus any agreement a customer has with Amazon passes to Penguin. According to the docket, Penguin appears to be abandoning this claim. Penguin was ordered to advise the court by April 30, 2012, whether it intended to proceed with its arbitration argument. No filing by Penguin exists in the record which likely means that Penguin has waived the right to arbitrate.
ORDER: ORDERED that, unless Penguin advises the Court by April 30, 2012 that it wishes its March 2 motion to stay proceedings and compel arbitration to be addressed, the motion will be deemed withdrawn. IT IS FURTHER ORDERED that in the event Penguin files a renewed motion to arbitrate, any party opposing the motion may present any arguments that are appropriate, including that Penguin has waived its right to arbitrate. (Signed by Judge Denise L. Cote on 4/25/2012) Filed In Associated Cases: 1:11-md-02293-DLC et al.(djc) (Entered: 04/26/2012)
The emphasis on windowing is new to me and I don’t know why I missed it. It’s genius of the DOJ/States Attorneys General to argue this because it sets a pattern of concerted behavior regarding price controls. In this study by Yu Hu and Michael D Smith, the scholars collected quotes by major publishers regarding windowing:
Table 1: Delaying Ebooks
|September 2009: HarperCollins delays the ebook release of Sarah Palin’s memoirs by 5 months after the hardcover release date.||“The publishing plan is focused on maximizing velocity of the hardcover before Christmas.”Brian Murray, CEO HarperCollins|
|November 2009: Viacom/Schribner delays the ebook release of Stephen King’s new novel by 6 weeks after the hardcover release date.||“We think that this publishing sequence gives us the opportunity to maximize hardcover sales”Adam Rothberg, Spokesperson Schribner|
|Early 2010: Hachette Book Group delays the ebook release of nearly all of its titles by 3-4 months after the hardcover release date.||“I can’t sit back and watch years of building authors sold off at bargain- basement prices.”David Young, CEO Hachette|
|Early 2010: Simon & Schuster delays ebook release for 35 major titles by 4 months after the hardcover release date.||“The right place for the e-book is after the hardcover but before the paperback,”Carolyn Reidy, CEO Simon & Schuster|
My guess is that the publishers felt like discussing windowing and plans to window books wasn’t illegal collusive behavior because there was no price discussed but the objective remained the same – how to raise digital book prices.
Discovery is next as well as the approval or rejection of the settlement.I wouldn’t be surprised if the DOJ or the States Attorneys General ask for a temporary injunction to halt any agency agreements based on the language in Judge Cote’s decision. The publishers would be hard pressed to argue that they couldn’t make a change quickly given how they were able to move from Wholesale to Agency.
A denial of a motion to dismiss merely means that a case can proceed forward but the explicit finding by Judge Cote that the evidence supports a per se violation makes it difficult for the defendants. They are going to have to convince Judge Cote and then a jury (if they get by Cote) that there was no agreement. Business justifications are not allowed in a per se claim. Cote points to these facts as supportive of agreement:
the early efforts to induce Amazon to raise its prices for eBooks, first through Hachette’s request on behalf of the “industry” in December 2009, and when that proved unsuccessful, through windowing eBooks, are principally relevant as evidence of the willingness of Publisher Defendants to work together to effect market change, and specifically, to raise the prices of eBooks through collusion. That evidence of earlier jointly undertaken activity render more plausible the claim that the Publisher Defendants were indeed colluding when they acted to end the wholesale model for distribution of eBooks and thereby to raise the prices of these books.
I think that the defendants (Apple, Penguin and Macmillan) have two options here. Settle now or take their slim chances to jury where I am convinced they will lose and hope that the 2nd Circuit slaps down Judge Cote’s per se finding on appeal.
Documents in PDF form.
Wow. Yep, mind blown. Thanks Jane for taking the time to explain all this so clearly!
Thank you for the detailed analysis Jane. And, yay for Judge Denise Cote!
I remember when the agency pricing fix was obviously in thinking “how can this possibly be legal?” So nice to see that probably wasn’t. What I want to know is where were the publishers’ lawyers during all of this?
Excellent analysis and, taking into account that this is only one side of the story, still damning to the ‘alleged’ participants in the collusion. The only thing worse than collusion is incompetent collusion.
And yay for Judge Cote!
Thank you so much for all this. I still don’t know whether or not to gape in utter bemusement over some key players’ toe-curlingly embarrassing short-sightedness in some of their actions.
I do wonder what they will do in the end? I mean like with Sargent — will he return to his beloved exercise bike in basement little after 4AM again, to ponder on another round of worry and thought before deciding whether to settle or not? Or would this be too lonely for him to bear? (I’m sorry, but this bit remains my favourite part of the entire drama.)
Yep, mind blown. Thanks for the detailed analysis. I still don’t see what case Apple and the others have when their cohorts have settled and are offering up information on how they colluded and incompetently at that (to quote Don above). I find this whole thing quite sad and amusing and B&N! and poor Random House. Anyway, thanks!
Thank you, Jane, for this marvelous analysis. As one who has no love for publishers whatsoever, all I can say is karma’s a bitch, boys and girls. And a big hug and kiss to Judge Karma, er, Cote.
How is B&N’s move to promote Macmillan “so dirty” but Amazons removal of their entire list is spared your judgement? It is essentially the same move.
@Matt – I don’t see it as the same move at all. Amazon was negotiating with Macmillan. BN was not. BN was using its platform to raise the profile of a publisher, for free, and ahead of other publishers (and thus other books) in order to help the publishers effectuate an illegal activity.
Not even read below your question about mind blowing and my mind is blown. I wish Michael Lewis would start looking into this for a book.
@Maili: I have truly enjoyed Sargent’s various comments throughout all of this – I wonder what his uberbosses at the parent company (van Holtzbrinck) are going to tell him to do when he is told to be on that 4 a.m. conference call from Stuttgart, Germany.
This is incredible. And yes, mind blown. I’m not surprised about B&N. The Agency Model works in their favor and puts them on an even footing with Amazon.
Wow. My mind. It may be broken after all that, not just blown. Thanks, Jane for providing such a great analysis for those of us (namely me) that wouldn’t completely understand the original document. I’ve always been against the agency pricing model, but now I understand a little more why. Before it was more of a gut feeling. Now I feel like there is documentation to support my gut feeling.
Thank you for this great recap. This is just one of the many debates and issues and turns that will come from the new digital realm. Corporate publishers; massive eRetailers; self-publishers; plus many others are all trying to figure out the future. It is all good and it will ebb and flow. I have read everything I can on this and your recap is the best. Thank you again.
Dayum. How did they think they were going to get away with it? Did they not have at least an inkling that what they were doing was price fixing? I just can’t see that happening, though; they didn’t get to the top of their game by being clueless. Which means they did this knowing it was illegal, which makes them complete jerks.
Anyone else want to send Judge Cote a fruit basket?
I read the amended complaint last night and my mind was blown in so many ways. If the allegations in that complaint are true, and if there were any justice in the world, Carolyn Reidy and David Shanks would be going to jail. We rarely prosecute white collar crime, though, so I doubt they will.
But what is being alleged at this point is a conscious, criminal act, one that has cost consumers hundreds of thousands of dollars. They would be toast in a civil suit just from the phone call logs alone. But if even a fraction of the stuff Reidy and Shanks allegedly said (and wrote) is true, it’s a slam-dunk case to prove the state of mind necessary to get a criminal conviction.
This is criminal.
Let’s face it–everybody’s wrong except Joe Konrath, the DoJ and Amazon.
That’s right: Apple is wrong, Smashwords (Mark Coker) is wrong, Scott Turow is wrong, the IPG is wrong, the AAR is wrong, Cory Doctorow is wrong, the New York Times, Wired Magazine, Forbes Magazine, The Seattle Times, The Wall Street Journal, Charles Stross, John Sargent, Computerworld, thousands of writers successfully publishing through the “Big Six” and the agency model–all wrong, wrong, wrong.
Luckily, Amazon’s never been sued in an antitrust suit. By the way, did you know the law firm leading the charge in the antitrust suit is in the same building as Amazon, and has done business with Amazon? Any of the attorneys in the comments section have a thought about that?
Interesting the Barnes & Noble stacked the deck on its site in favor of Macmillan during its negotiation with Amazon, and punished Random House at the behest of a defendant to get them to come in line with agency. At what point does B&N become a co-conspirator? Because the more I read about this, the more it looks like they were providing material support to enable the collusive action to take hold.
Incompetent collusion? Check.
Mind blown? Check. Check.
This post? Priceless. Jane, thanks for making it more accessible for us.
My bet is the publishers didn’t think it was collusion because they are “curators of literature” not business people. And of course, without them, books will disappear.
Man, I kinda feel sorry for Random House too!
Wow. Mind completely blown.
Thanks for explaining this, Jane.
Just goes to show their bully behavior for what it is. Not only did they get carried away
with their neener-neener-glee by going to Amazon with their demands on *the same day* they looked to punish another publisher that wanted to opt-out of the shady situation. Bad juju.
Very pleased that Apple will be held accountable for their role in this. I luv my Apple products but this was just plain wrong. Jobs wasn’t encouraging them to go agency model because he cared about the publishers. He wanted a guarantee of Apple’s profit and recognized that his iPad had an uphill battle because it was *late to the e-reader party*. I have never bought an ebook from iBookstore and I never will.
It really chaps me that some people blame Amazon for having the leading share of the ebook market of the time. *Of course they did!* They were one of the first to bring a dedicated ebook reader (by a year or more) and a *convenient* delivery system (setting aside DRM as a separate conversation. They earned it. The others just wanted to riff off of it and tried to do so by rigging the system.
So glad all of the gory details are coming to light. Thanks for the breakdown, Jane!
@Maili: I do wonder what they will do in the end? I mean like with Sargent — will he return to his beloved exercise bike in basement little after 4AM again, to ponder on another round of worry and thought before deciding whether to settle or not? Or would this be too lonely for him to bear? (I’m sorry, but this bit remains my favourite part of the entire drama.)
OMG, me, too! In fact, Sargent’s steaming pile of loneliness was the first thing I thought of when I read his name in the post.
I have long believed that the big pubs think of themselves as a natural monopoly, and all of the revelations here simply strengthen my perception. So instead of revisiting/reforming/altering their business model to capitalize on what they OBVIOUSLY saw as a rapidly growing market, they expended god knows how much energy and thought to dig in their heels and try to maintain the status quo — by any means necessary? And even more ironically, they have done little to nothing during the past few years to sell whatever their vision is of books as uniquely valuable cultural artifacts. Beyond everything else, it’s a PR failure of monumental proportions.
Great, great summary.
I work in an industry where unfortunately quite a few very stupid people have done very stupid things in collusion with competitors and distributors, and it never, ever ceases to amaze me that they honesty think they can get away with this [email protected]%! time and time again! Like the law doesn’t apply to them or something..
As with all of these sad cases, the nail in the coffin is executives actually physically meeting, or speaking over the phone, either in person or through proxies, to actively manage a market.
Courtney Milan is right. Some of these executives appear to be individually liable, not just their employer, but the DOJ will probably go for the best chance of a conviction, and proving individual guilt is just harder and more expensive, it seems.
@Robin/Janet and @Maili:
This is all made his defiant 4 AM write up so much more intensely real. This is someone who made mistakes, and made big ones, who has done something clearly illegal and who thinks he is so absolutely Doing the Right Thing for Literacy and the Entire World that he can’t wrap his head around the fact that he is the villain of this piece.
I have to wonder how much advice antitrust counsel gave him before he made that decision. It sounds to me like he made that decision with his pride and his ego, and not his head. My guess is that at this point Sargent has rewritten all these events in his head so that he’s the star of the show.
I doubt he’s thinking about publishing or the company anymore. It’s about personal vindication and recognition.
Needless to say, that’s not how you want your CEO making decisions.
They called themselves “the Club” – hahahaha. That is so junior high!
Seriously, if someone wrote this as a movie script, no one would buy it. Trust really is stranger than fiction.
I get why Apple is part of the suit, but why isn’t B&N?
And as much as think Amazon isn’t to blame for the actions of the publishers, I still don’t want them to take over publishing. The Kindle wasn’t the first e-reader, it was just the first to really take off and now has a huge market dominance. But not everyone wants a Kindle.
But with CEOs like these, no wonder the Big 6 have so mishandled the whole kit and kaboodle from the onset of digital publishing. I have no words!
Truth not trust. Oops.
Wow, I’m amazed. To think these kinds of activities (I’m tempted to use the word “conspiracies”) are allowed to happen in the first place.
Also, I have one more reason to dislike Barnes and Noble, so thanks for that.
Yet another example of mama’s wisdom: Never write anything down you don’t want the world to see.
Seriously, I am amazed at all of the e-mail documentation here.
@Courtney Milan: I said to Jane this morning that I think all these individuals named as part of “the Club” believed they were doing The Right Thing. Sargent’s various statements over the past few years epitomize that moral rationalization, IMO, in part because their overwhelming and obvious disconnect from actual readers seemed completely invisible to him.
I have long believed that books are a “special” commodity; however, I think guys like Sargent have been entertaining a confusion between uniqueness and one-of-a-kind irreplaceability. Books are not fungible in the way of gas station fuels, but readers can and do make substitutions all the time for a variety of reasons. Can I get the same exact experience from different authors? No. But I can get an equally satisfying experience, which means that even if books as a category are uniquely valuable, but consumers can find equitable value in books from another author, another publisher, and, most problematic to publishers, we can find an equitable value in other forms of entertainment. And when the physical production values of books seem to signal a drop in quality, it becomes even more difficult to get actual book consumers to adopt the value/values argument as Sargent and others have tried to construct it.
You can only imagine the almost religious fervor that characterizes the re-telling of the story of publisher persecution/prosecution. It reminds me of the culture wars that blasted through the Humanities a number of years ago. Outdated, all the way around.
Thanks SO MUCH for laying all of this out. The concept of “windowing” is completely new to me, but now I have a much better grasp of what was done and why it was so plainly wrong.
“the Club”? Really? Sounds like a time-share gimmick.
Why is it that people like Sargent, who (at least in their own minds) are in positions of power believe in the righteousness of their actions? Something in the highly priced bottled water they drink? This had nothing to do with stewarding the literary landscape and everything to do with money.
One question about the lawsuit: my state hasn’t joined it (but a new attorney general was elected last night). Should Oregon sign on to the suit, or should our meager state budget be spent on other important issues?
Thanks for all the detail, but it’s too bad that you haven’t brought to bear the same level of detail to why it is that so many of these publishers, their authors, agents, readers and booksellers felt that this was such a wonderful and necessary thing at the time? In other words, what about the rabid elephant in the room and what it is doing to a whole industry in the name of becoming, as Bezos said, “the walmart of the internet”: Amazon? Please fill us all in on the paths of destruction Amazon continues to follow. Now that would be an interesting read. Looking forward to the full story. Thanks.
@John: I know why publishers and agents thought (and still believe) that this collusion was a good idea but not all readers, authors, and booksellers felt the same. In fact, since the inception of “agency” model, I’ve blogged vehemently how I believed it was illegal. Many authors have protested it because it reduced their aggregate royalties. Booksellers like Kobo and All Romance eBooks have spoken about the failure of agency pricing to facilitate their own business models and/or increase competition. I’ve blogged about those issues as well, repetitively since 2010.
Amazon isn’t a focus here because a business justification (i.e., all of this is happening because we need to prevent Amazon from taking over) isn’t considered in a per se price fixing scheme. Further, with Kobo bought by Ratuken, a company with a market cap about the size of Amazon; B&N partnering with Microsoft, Google, and Apple in the book market, it is hard to say that Amazon’s deep pockets aren’t able to be challenged.
Laws aren’t designed to keep any particular business model (i.e., a hardcover print model) or particularly businesses (any of the publishers) in existence. Antitrust laws are designed to protect the consumer. If the consumer is losing (as is evidenced here by the 40% increase in prices) through collusive behavior, then it is illegal regardless of what other company might be looming in the background.
The way to compete was not to engage in illegal activity.
@Karenmc: The whole corporate culture serves to reinforce the CEOs self perception of omnipotence and infallability. They get paid ridiculously high salaries, their bonusses/options are based on the performance of the company over a quarter or year (rather than a long period of time), they have great exit packages – even when they run a company into the ground, very few underlings are willing to contradict them (because they don’t have great exit packages, shareholders and others are rarely willing to punish them for their actions (witness what happened at the recent JP Morgan shareholders meeting – they lost $2 billion under the CEO/Chairman’s watch and he’s still running the place).
@Courtney Milan – My cynical view from the trenches of the legal profession, is that they didn’t even ask the lawyers for an opinion on the antitrust issues or, if they did get advice, they just ignored it – this happens far too often (“it’s a business decision and we’ll take the risk”). The courts are full of cases where companies have been advised that what they are doing is illegal or is going to result in a lawsuit and the companies just don’t care (and then the companies have the gall to complain about the lawyer’s fees when the company gets charged or sued for their misdeeds). Hopefully, if the lawyers did give an opinion, they put it in writing.
@Karenmc: I don’t read this as saying that “windowing” is in and of itself illegal; it’s the mutual agreement to window that’s the issue. A publisher (large, small, or self-) is free to publish their books in whatever formats they want at whatever time they want; there’s no legal reason why they can’t choose to publish the ebook six months after the pbook (or vice versa). But when they get together with other publishers and say “let’s all hold back the ebooks so we can control prices/encourage pbook sales”, *that’s* when it becomes illegal.
@Lynnd: Yes, these publishing decision-makers remind me a lot of Jamie Dimon and others in the financial industry. They live in a rarified world and seem willfully oblivious to life as the rest of us know it.
This summary is an incredible piece of work, Jane!
BAM!BAM!BAM! Hear that sound? That’s a bunch of asses getting nailed to the wall. As I said at SBTB, if you’re going to collude, don’t do it in writing, people.
I want a Judge Cote T-shirt to wear. But I’d love for this to go further; I want blood. And a refund check.
So, the local jocks are afraid they can’t compete with the newcomer so they gang up on him in a dark alley. Is that about right? I remember the snide comments about Amazon when they started using the “price set by the publisher” tag.
Oh man! So that’s why there’ve been complaints about B&N not putting books out timely. They’re too busy policing the pods and search results. LOL
My mind boggles that they put all this incriminating stuff into e-mails. How dumb is that.
Great post! Thank you so much for explaining it all.
Thank you, Jane for keep us all up to date. Very enlightening.
Has it been announced when the Agency pricing, for the Publishers that settled, will end?
You seemed to take from my note that by hoping you would be as detailed about Amazon’s behavior, illegalities, intentions that I was asserting innocence on the publishers part. I think DOJ will sort out what was legal and what was not. I was just thinking that the details about what helped to push publishers to reduce the amount they would get for each ebook might be interesting — kinduv counterintuitive if you want to paint them as only out for the money. While Bezos often seems to get a pass, though what Amazon does (illegally not collecting sales tax for one) should be up for questioning too. I’m not saying white hats and black hats, but let’s see if the emperor is wearing any clothes. So, I thought you did a great job of summarizing the Judge’s decision and thought something equalling clear might be forthcoming. Why not? I think Bezos can handle it. Thanks for email, but I’m really not defending illegal actions, by anyone.
Thanks for the great summary! If this case is addressed with regards to the Big 6, I wonder what the impact has been to the smaller publisher and their authors.
You know, I wasn’t surprised by all this when I first heard about it. (Call me jaded.) Yet it was general not surprise, y’know. Seeing it all spelled out like this, well, yeah…mind blown. ANd like you I sorta felt bad for Random House. It seemed like they were trying to have integrity, but couldn’t keep it up. At least they tried.
Thanks for laying it all out like this.
@John – I don’t really understand your point here. Amazon isn’t part of the suit so why would I bring up their issues regarding taxes?
I am sure I will be slammed for this verbally, but as someone who only reads print books, I feel like nobody cares about my interests. It feels like it’s all about people who love ebooks wanting cheaper ebooks no matter what the cost to those of us who only want print. I don’t WANT to give my money to Amazon. I don’t want to buy ANYTHING from them yet at this rate Amazon is all that will be left. I see their behavior as bullying and predatory and to me B&N and the print publishers staying around is more important than cheap prices for something (ebooks) that I have zero interest in every buying.
@Rebecca: I’d have more sympathy for you if the price of ebooks didn’t almost double in an effort by publishers to save the paper books you prefer.
I’m getting screwed now so that maybe in the future you won’t get screwed. Does that seem fair to you?
@John: Can you tell us what you think Amazon has done that’s illegal?
Not what they’ve done that’s unethical or immoral or appears like it might garner a monopoly for them. Just what they’ve done that’s against the law in terms of how they set the price and availability of ebooks. Because that’s what the lawsuit is about.
It’s not that I don’t care about Jeff Bezos’ ethics or lifestyle or tax burden, but none of that is relevant to the case of Apple and the six biggest publishers in the world colluding to keep book prices artificially high and restrict readers’ access to those books. So let’s keep the conversation on topic, okay?
(Sorry, Jane. Didn’t mean to butt in. I’m just a tad steamed today.)
@Rebecca: Y’know, Rebecca, I rarely agree with Ridley on much, but I have to agree on this.
I don’t have a whole lot of sympathy for you either.
Shall we do away with ebooks altogether, so only the select few authors chosen by the Big 6 will ever get published? You wouldn’t mind that, would you now? Because you don’t care about those niche authors who would never be profitable for the big print guys, those authors who are finally getting a chance to publish even if they only sell a couple dozen copies? And apparently you also don’t care about the people who read those books, because it’s only YOUR reading tastes that matter, your mainstream, highly commercial, highly profitable, Big 6 (and a few others) real-paper-and-ink books.
And let’s not forget that the authors who are stuck with only the Big 6 (or other biggies, like Harlequin) to make their works available are also getting shafted with this agency pricing model. Or should they be restricted to the usual 6% or 8% royalty, often reduced by book club sales and reserves against returns and payments delayed until two years after the book is out and a two-month shelf life? Because after all, it’s only you who matters.
We won’t even talk about the environmental impact of all that paper and all that ink and all the fuel and all the waste. Because all that really matters is that Rebecca can hold her little books in her hand.
Never mind the people for whom e-reading offers them an enjoyment they never had before. Readers who benefit from being able to adjust the size of the print, or who can read now without having to turn and hold physical pages. I guess you don’t care about people like my friend’s mother who has such severe arthritis in her hands that she literally can’t turn the pages in a “real” book but can “turn” them on her Nook.
You write that you feel as if no one cares about you, but you’ve done a pretty good job of showing that you don’t care about anyone else if they have different needs, wants, or likes. Like those of us who have limited space in our residences for books. Or who would love to have lots and lots and lots of classic literature but can’t find print copies of Mrs. E.D.E.N. Southworth or Marie Corelli or Dinah Marie Craik or Lord Dunsany or William Morris. Or who like picking up 99-cent and free bargains, who like trying new authors who never get shelf space in the B&N stores.
Print books aren’t going to go away, Rebecca, at least not (probably) in your lifetime. But the world changes. We have airplanes and HD television and all kinds of other technological advances that I’ll bet you use or at least don’t mind that other people do.
You admitted you expected to get slammed, so you warned yourself. Don’t blame me; I just fulfilled your prophecy.
@Linda Hilton @Ridley – I understand Rebecca’s dilemma. I want to read ebooks and I’ve advocated for ebook production since the inception of the blog. That’s my preferred reading choice. But Rebecca wants to read in her preferred reading format which is print. I think that is a reasonable reader desire.
I do think that mass market is going away and for long time romance readers who prefer print, that is disappointing for them. They have to move to digital or they may have to pay higher prices for the same content (i.e., POD costs haven’t really come down). The net result is a reversal – higher print book prices than ebook prices. Is that really “fair” to them either?
Linda, many of the things that you claim would not be available if digital books weren’t around are true, but increased prices and even collusion hasn’t stemmed the digital book adoption tide.
@Linda Hilton: Rock the fuck on!
My mind is indeed blown by this summary, and I’m feeling a little gleeful. I can’t help feeling sad, though, that this same thing hasn’t happened to the scads of companies and executives and traders who BROKE THE WORLD’S ECONOMY. I mean, there are still people being illegally foreclosed upon. I’m very, very glad that all these AGs are going after the publishers for illegal activities, but I wish they would do the same to the financial industry.
I think it’s inevitable that there will be a huge change in publishing with the increase in digital adoption. A couple of years ago I dreamed up a model in which digital is the default, and then consumers could choose to upgrade (via an espresso POD machine, or something similar, or up to an artisanal hardcover). The fact that such a model would add costs to the consumer choosing to upgrade didn’t really occur to me at the time, but thinking about it now, it seems only fair. If you want extra with with your purchase, you pay more (extra being a tangible product).
If your preference is mass-market, it would probably seem like a big step backward. Like, going from getting your milk delivered to your home in glass bottles to having to drive to the supermarket to buy it in plastic bottles. I can’t think of a way to soften that blow.
The real comedy behind all of this is that people supporting the breakdown of agency pricing don’t seem to comprehend potential long-term cost.
Assuming Amazon undersells every bookseller imaginable into oblivion, well, what happens when Amazon is the only bookseller left? Somehow I’m doubtful we’ll continue seeing all the rock-bottom discounts Amazon offered in the past.
Is it really a wise idea to support an entity like Amazon? I just don’t see it.
Even if one can shrug off Amazon’s potential as the new Wal-Mart of booksellers, one should still feel concerned about the future of the production of books for the hobby/recreational reader.
For that matter, who says independent authors will continue underselling professional publishers if there are no more professional publishers to undersell?
One of the allurements of indie and small epub books is their cost. Rarely have I read books from these venues that I considered equal or surpassing quality of traditionally published books. It happens, but rarely. Usually I’m not dissatisfied with compromised quality because, after all, I paid less for the book and I understand the level of editing and polishing is not as pronounced.
U.S. citizens like too much cheap and fast without considering long-term consequences. It’s made an utter muddle of the economy but can we please avoid dragging this bad attitude into the production of art?
If you don’t want to pay $10 for a book, don’t pay for it. But don’t be angry it’s not cheaper.
At least right now we can both buy what we want, you just don’t like the prices. If Amazon gets their way, I can no longer buy what I want, and to add insult to injury, my tax dollars will have been used to make it happen. Personally, I do believe a company should be able to decide the goods it creates can’t be sold too cheap to undervalue them. If people don’t like the price, they can vote with their wallet and not buy it.
Aw, c’mon. It’s her money. She’s a consumer and she wants what she wants her way. And? So do you. So do I. MY sole concern when shelling out MY money is ME, and if YOURS isn’t YOU, then you’re a better person than the other 99% of us.
@Linda Hilton: I don’t think e-books are environmentally preferable. Think of the lifetime of an e-reader, and then think about the battery, which is toxic, which is going to go into a landfill. Next to that, a little pulp, especially if it’s from a sustainable logging operation, isn’t that bad–and paper books often get reused in ways that electronic devices do not.
I’m also very disturbed by the disappearance of paper books–in part because the digital divide means that if cheap paper books disappear, there is a large segment of society that might be left unable to read.
There are people out there who don’t have bank accounts, and yet they buy books in stores with cash. There are kids who can’t have credit cards, whose parents don’t prioritize reading, who save up to buy books. I weep for a world in which they can’t do that.
It’s not all just about my preferences versus your preferences. Books are important. Access is important. Digital has increased access in many ways, but if people lose the ability to buy print books just around the street corner, we’re removing access from those who most need it.
Have a little compassion.
@Jane: I felt Rebecca was basically saying she didn’t care if ebook prices stayed artifically high, she didn’t care about lack of availability, she didn’t care about author’s royalties, she didn’t care about Amazon or Kobo or anything else, so long as she had her “real” books. I don’t think ANYONE has advocated doing away with “real” books — which have the advantage of being able to be traded in, bought used, sold, exchanged, checked out of the library, etc., which ebooks can’t. Those of us who “buy” them, and that’s assuming we’re actually “buying” anything, pay full price and never get anything back. Rebecca seems to be saying she doesn’t care if we have to pay 40% or 50% or 200% more for the privilege, as long as her paper books are protected. I found that just a bit unconscionable.
As for paper books continuing to be affordable, is it fair? Well, as fair as a truly open marketplace makes them. The price goes up because the costs of production go up when the print runs are small. Remember, I’m the former cost accountant. I know how those numbers work. But the point is that right now, print isn’t subsidizing digital because digital is cheaper and therefore more profitable, so why should digital prices be expected to remain artificially higher just to subsidize the less-profitabe print books?
And especially when it’s not a matter of need but simply a matter of want. I do get rubbed the wrong way when someone who has the money and the space and the physical ability to read paper-and-ink books rails at those of us who don’t get to make that choice on our own.
My mother loves to read. She’s 83 and has just in the past few weeks moved into an assisted living facility where she no longer has the room for hundreds of books. She has difficulty holding a large hardcover from the library, and the print in MMPBs is getting too small. I’d love to get her a Kindle (she’d be stubborn and resist the technology, though) because I know she’d be more comfortable with it than with paper books. Unfortunately, neither she nor I can afford Agency-priced e-books, and those are what she likes to read. So she’ll get books from the library and read until her hands get tired or squint at the tiny print in a paperback until her eyes get tired. It’s for people like my mom that I think Rebecca’s statements are particularly unkind. Even though I’m sure Rebecca didn’t mean to be unkind, but that’s what happens when you only think about your own wants.
I can tell you that out of the 565 books on my Kindle for PC, I have not bought one single Agency-priced e-book. Not one. Because I can’t afford them. As a writer, I’m squealing with delight at the idea of being able to put my own books out there at prices REAL PEOPLE can afford, and still make more for myself per copy than a “real” publisher would pay me from a print copy. And that publisher would make more off each print copy than I would.
Sorry, all, but there’ll be a blizzard at the Mammoth Saloon in Goldfield, AZ, before I defend Big 6 publishers.
The difference, how I see it, between “my way” and what Linda would prefer is that “my way” would allow the current situation of both print and ebooks being readily available for most titles to continue, Linda (and those who agree with her) would just be unhappy with the prices of some of those books. Linda’s preference would lower the prices on her preferred books, but heavily reduce or eliminate the availability of the books I want to buy at ANY price.
I don’t think the government’s role or the law’s role should be lowering prices on non-essential items because some people just don’t like the prices and complained enough for it to be noticed. I believe a company producing something non-essential should be able to set a price beneath which their product cannot be sold. If people don’t like the prices or business practices of that company, they can vote with their wallets – just as I have made the decision that I will not buy anything from Amazon, or review any Amazon-published books on my blog, because I disagree with their business practices and philosophy. Let the market decide. If enough people think the current prices of ebooks are fair, then that should be that. If enough people think they are too high, they can buy other, cheaper books, or nothing at all, and the publisher can then decide whether or not to maintain the current price.
I also see a bit of irony in that I’m sure many (not all, but many) of those who want cheaper ebooks want to buy traditionally published titles, which may become less available in all formats if they get their way and the publishers lose too much money.
Are you saying that she is SUPPOSED to care about that?
@Rebecca: You’re essentially complaining about a function of American law.
In the US, it’s illegal for people to conspire to fix prices.
In the US, it is not illegal to have a monopoly–and oversight of monopolistic behavior has radically reduced since the middle of last century.
These two things together have tended to result in conglomerates that are larger and larger–a large company can effectively set prices in a way that five smallers ones can’t–with effectively identical anticompetitive results. US antitrust law is now set up to disfavor smaller businesses.
This always comes as a surprise to people, who say, “Wait? How can it be that ANTITRUST law doesn’t exist to make sure that small businesses survive?” And the answer is that over the last thirty to forty years, any element of antitrust law that was about helping smaller businesses survive has been ruthlessly quashed–so much so that that idea is referred to in legal circles as “the deviant strain” of antitrust.
I don’t think that agency pricing should be left in place. It’s wrong. It’s illegal.
But I do think there’s a real danger to cutting out concerted action by small guys without having stronger laws against monopolization.
I have no interest in attempting to ban ebooks. In fact I would prefer we both be able to buy the format we would because I know how painful it would be to me to lose print books – I’d probably give up reading altogether once I made it through my TBR pile. But if the ebook is available and you don’t like the price? Too bad, cry me a river. If I think a specific print title is overpriced, I just don’t buy it. The end.
@Courtney – yes, in essence, I do strongly disagree with this area of law. If a company or companies want to raise prices, unless it’s something people *need* for reasonable daily life, they should be allowed to, and the market can decide if that price is acceptable or not.
The DOJ suit isn’t about publishers saying that they set their own prices. It is about publishers conspiring with each other to set prices on ebooks together. Resale price maintenance is legal, if done well. What is not allowed is separate publishing houses working together to artificially raise prices.
Incidentally, I might agree with what you were saying if print books and ebooks were being treated the same, but there is a different rule for print books than ebooks. I can buy Macmillan books in print at Target for 25% off, but I have to pay full price for them online.
@Author On Vacation:
I really don’t understand this leap from End Agency Pricing –> Amazon Rules the World. I don’t think Amazon will ever be the only game in town.
Also, there’s an implication that the colluding publishers were right to collude in order to bring down Amazon, and the ends justify the means. Amazon may be featured in this issue, and may have even triggered it, but the suit is about the apparent criminal activities of people and companies who are not Amazon. Why keep bringing them up?
A company can raise prices by itself, and the market can decide what to do. But if a group of companies work together and agree to raise prices and not undercut each other, they distort the market. The market can’t decide what prices are acceptable if publishers aren’t allowing a fair marketplace to flourish in the first place.
I’m okay with pricing floors set by one company. I am not okay with pricing floors set by many of them together.
I believe in some countries they are treated the same and neither are discounted at all – specifically I’m thinking of a couple of countries in Europe, but I can’t recall which. Personally, I’d have no problem with giving up discounts on print books. I often pay more to purchase from a company whose business practices I prefer anyway. And if I don’t like the price, I’ll pass. I don’t feel entitled to get a book “cheaply.”
Also, apparently, my using italics above isn’t working–so what was supposed to be quotes in the above posts look like I’m saying them, rather than responding to them. Whoops.
Well, there’s nothing stopping anyone else from saying “hey, I think this is stupid, I’m going to start publishing books and selling them for less.” And I think that’s fine. If Amazon wanted to start their own publishing house and just sell their own books cheaply, well, I wouldn’t buy from them, but I wouldn’t try to stop them or ask the government to stop them. But I do not believe they should be able to devalue the books published by others at the same time.
@Rebecca: Fair enough.
But why not just use the same argument on the publishing houses? Nothing’s stopping them from saying, “Hey, I’m just not going to sell to Amazon. Those jerks are devaluing my books and ruining publishing.”
Why is it that ebook buyers have to lump it or leave it, but the publishing houses don’t?
But you are measuring someone else’s opinions against your own preferences and calling something unconscionable because it doesn’t meet your own preferences isn’t really a sound rebuttal. The crux of your argument is that you should be able to purchase and read digitally at an acceptable to you price. Rebecca’s argument is that she should be able to purchase and read print at an acceptable price. You say you would rather see print books decline in order to take advantage of the digital distribution market. Rebecca would prefer to see her reading format be preserved even in the face of a digital decline. You both have opposing views. I don’t think it is necessary to name call or fling about unconscionable accusations.
@Courtney: To be quite honest – I wish they WOULD stop selling to Amazon. I’d definitely buy more to support a publisher who did that. I read about a publisher recently who decided to do that, unfortunately they didn’t publish anything I’d read (they published some sort of books for very young children) or I definitely would have been running out to buy their books. It turned out an upcoming book I wanted to read is being published by a publisher that got bought out by Amazon – I won’t buy from them, so I just have to lump or it leave it I suppose. Perhaps the library will get it, or I’ll find a cheap used copy from a site not owned by Amazon, if not, I simply will live without reading that book, and I guess I don’t understand why that’s such a horrible thing for ebook readers to do as well if they don’t like the price or publisher of a specific title – there are plenty of other books to read.
@Rebecca: Unfortunately, there is a lot wrong with your comments.
First, Amazon does have a publishing house. It has four or five separate publishing imprints including Amazon Montlake which publishes romances.
Second, you said that the market should determine the price but unfortunately publishers colluding is interfering with market forces. The Cote decision noted that Random House experienced a 250% increase in digital sales during the time in which it was not Agency and the rest of the Big 6 were. Most of RH’s books were priced at $9.99 below. The implication is that RH benefited from a lower price point. The market would indicate that readers would find a lower priced alternative to the ebook that is purchased.
Third, ebooks canabalizing print occurs regardless of publisher behavior. Despite the collusion and attempts by the publishers to slow digital adoption, there are more and more readers abandoning print for digital everyday. For Hachette, I believe it was 28% last quarter. That is more than mass market represented for the publishing houses. Further, despite the 31% decrease in revenue per unit sold, the publishers have still seen increase in overall revenue largely due to digital adoption so there isn’t any evidence that the rise in digital has actually lost money for the publishers (other than their own decision to cut their revenue streams from ebooks by 31%).
Fourth, other countries like France give special protection to books and do not allow any type of discounting. That is not the law in the U.S. and I don’t think we would want it to be the law. Once you start protecting one market (books) why not protect other markets (music, video games, music, shoes, housing, etc.). That really interferes with the market forces.
Perhaps I worded it poorly – what I intended to say was that if Amazon was ONLY discounting/selling their OWN published titles cheaper I wouldn’t see a problem. But they do that and ALSO want to heavily discount/undervalue books published by other publishers.
@Rebecca: Every retailer discounts. It’s a tool of the retailer arsenal. Discounting is a major part of book selling. Barnes & Noble, for example, discounts NYTimes Bestsellers by 30%. As part of the membership fee, you can get discounts off of all books. Borders was famous for its buy three get one free or 40% off one item. If discounting publishers’ books devalues those books, then publishers and retailers have been devaluing books for decades.
@Courtney Milan: Courtney — First of all, I never said print books weren’t important. Nor did I ever say people shouldn’t have them or want them. But as far as showing compassion, doesn’t that go both ways?
Again, one of the main issues in this whole case is that the publishers were trying to shore up their declining print profits by inflating the prices of ebooks and restricting access. In other words, e-books and the readers of e-books were being forced to subsidize print. Not to subsidize small-print-run niche books or specialty books, but to subsidize what had been the money-makers for the publishers.
I agree with you, Courtney, on the environmental impact of batteries (and the power to recharge them) and the plastics and other environmental toxins in e-reader devices. I’m also not discounting what amounts to the slave labor that goes into producing them and keeps the prices low. I also take into consideration that the major e-book sellers subsidize the low selling prices because they expect to make it up on sales of content. So nothing is without an environmental impact.
But while the paper of a discarded book can be pulped and somewhat recycled, what about all the chemicals to produce the inks? What about the hydrocarbon fuels used to cut the logs, haul them to the mills, and produce the paper in the first place? What about the energy used to repulp the discarded books? What about the warehousing and distribution costs associated with paper books? What about the space requirements associated with owning a whole big bunch of ’em?
A friend of mine is running for her second term on the local school board and we were talking about e-books just yesterday. One of the goals the board is working toward is taking the entire K-8 school system completely away from physical text books and only using e-books. Each student will have a netbook (and I’m so far behind the times I’m not even sure exactly what that is) and all the books they need for the entire year will be downloaded onto the netbook. They’ll be far more up-to-date than physical books, less liable to loss or damage, and cheaper. They can be tailored to the needs of the district and revised as needed, too, rather than purchased as a take-it-or-leave-it-this-is-what-Texas-dictates package deal that has to be used for three or four years to make it cost effective.
I envision a day when an e-reader will be able to replace books like the one I just received in the mail the other day, “The Pre-Raphaelites at Home” with all its gorgeous reproductions of paintings and sketches and photographs. Scrunched down to a 4″ x 6″ b&w screen it would be a joke, and not a funny one. For books like that and for reading to kids, yeah, there is still a need for “real” books.
But my grandsons, who are in first grade this year, are growing up with iPads and other digital devices that will ultimately allow them to carry a whole library in their pocket. They or maybe their children may reach a point where a “book” is as much an anomaly as a “record” is to a generation that’s never known music on anything more primitive than a CD or an iPod.
Am I better person because I’m trying to think of others’ wants and needs? Nah, I’m pretty much a selfish, self-centered, and self-righteous bitch most of the time. But what does bug me and really gets me upset is when someone says, “I want what I want, and I want you to give up something your want so I can have what I want.” That’s how I feel when people say digital books should be priced higher JUST SO print books can be cheaper than their cost warrants. Or vice versa.
For years and years and years and years, the profits from paperback romance fiction subsidized a lot of publishers’ mystery and science fiction lines. I remember talking to established SF writers at a con in Phoenix in 1987 and learning that they NEVER earned out an advance. NEVER. And they didn’t expect to. When I told them romance writers were considered unworthy of another contract if they didn’t earn out, I was looked at like a crazy person. But what that told us both was that many SF authors were ultimately paid a much higher royalty rate, based on the books that were actually sold, than their contract stipulated. Romance writers, on the other hand, were give such paltry advances based on expected sales, that they essentially subsidized their publishers’ SF lines.
And that’s what authors are being asked to do again via this Agency pricing BS: Give up sales, give up royalties, give up YOUR MONEY so the publishers can continue to make money on an outmoded technology. I just don’t think that’s fair. And when a reader basically says the same thing, I’m sorry, but I still think it’s unfair.
@Rebecca: It’s called competition, it’s how businesses operate. Home centers put hundreds of items they don’t produce on sale every day. Grocery stores don’t make the bags of tortilla chips they sell, but the price from one store to another is different; it all depends on what a particular store wants to sell something for. The idea that a business can only discount the things it makes is ridiculous.
@Linda Hilton: I shiver when I think of school districts going e-book only. Sure, they’re cheaper. Now. Fucking Reed Elsevier. And that is all I have to say on the topic.
As for the rest… you aren’t really lecturing me on the evils of the agency model and the way that authors get paid, are you? Because that would be ridiculous.
I’d be perfect fine giving up discounts, to be honest. I wouldn’t want books to start costing $50 or $100 but I’m perfectly happy to pay the list price or even a bit more than current list prices. At the physical B&N stores very few of the books I want are discounted yet I go there when I have the time because I want to support physical bookstores. The only time the books I get are discounted is if I order from B&N.com where the non-bestseller hardcovers have a discount.
@Darlynne – if the business that makes it doesn’t object to it being sold extremely cheap or at a loss, that’s fine. If they do, they should be able to protect the price/value of what they are producing (as long it’s a non-essential item). If some other business decided to take something you had made, and sell it for much less than you felt it was worth in order to sell more of their products (Kindles) would you be happy? I would not. Personally I wish publishers wouldn’t sell to Amazon at all, really.
@Rebecca: Physical bookstores and publishers are reaping what decades of an insane retail practice has sown. Anyone who’s ever run a retail business thinks publishing’s fucked up and they have no idea how it’s gone on so long. It’s a house of cards long overdue for crumbling.
That said, I don’t give a crap about independent bookstores. They don’t cater to me, they treat me with disdain, and they sneer at my romance purchases (um, if they HAVE any romance I want other than Nora Roberts). The owner of my only local (30 miles one way) independent bookstore tweets assholic things on a daily basis. Say what you will about Amazon, but they don’t treat me like shit.
@Rebecca: You keep shifting the argument. First you say that retailers shouldn’t discount because it devalues the books. I point out that discounting occurs regularly for print books. Then you state that you can be fine with giving up discounts but that’s not a reality because BN, unlike you state, regularly discounts all its Bestseller books. There is a big sign hanging over the cash register that proclaims this. I’m there almost every weekend buying a paper book for my kid which is why I know this but nonetheless, from B&N’s own site:
Let me repeat this. If discounting devalues books, BN and publishers have engaged in this since 1975.
Amazon hardly made me feel like a valued customer when I expressed my unhappiness at them temporarily removing print books from the website over ebook pricing disputes in an email I sent to them. I haven’t bought anything from them since. I’ve felt like a lesser customer since I don’t have or want a Kindle or ebooks. Barnes & Noble may not stock certain titles in their stores (and if I had limited shelf space, I’d hardly stock something published by a competitor either) but I’ve yet to see them remove books from their website over any issue like that.
I really don’t understand why more publishers just don’t sell direct-only from their websites. To me it makes no sense to “sell” a non-physical item to a retailers.
@Rebecca: What you are arguing for is called retail price maintenance. For over a 100 years, retail price maintenance (a manufacturer setting a price and not allowing discounting) was prohibited. In 1997, the Supreme Court ruled that it could be allowed under certain circumstances. (You’ll have to read the decision to parse out those details). Therefore, publishers would be able to engage in retail price maintenance should they want to. In fact, if you’ve read the settlement proposal, you’ll know that retail price maintenance can continue after a two year break so long as the retail price maintenance agreements aren’t made in concert with each other.
The DOJ and other entities have alleged facts that show collusive behavior by the publishers and that is what is being determined to be illegal. Retail price maintenance is not illegal. Calling each other and making sure everyone is making the same deal and then fixing prices at a certain level is illegal.
@Rebecca: Your lack of knowledge about how businesses work is truly stunning.
I don’t buy NY Times bestsellers, so no, I’m not getting much/any of a discount. Since I have their credit card which comes with a membership I get 10% off, which I’d happily give up – I pretty much only have it for the free shipping with no minimum order amount for when I can’t get to the bookstore or it’s something not in stock. If some publishers didn’t want their print books discounted either, I wouldn’t care. If they only wanted it discounted up to a certain amount, I wouldn’t care. From what I recall, it wasn’t even that publishers wanted NO discount EVER on ebooks at all, but that they objected to the price Amazon set being far below the difference between print and ebook production costs.
Well basically, I believe that the publishers felt they were left without a choice but to work together on this because of how big Amazon had become. Amazon had too much power and it was hard for just one publisher alone to stand up to them. So I think they felt backed into a corner by Amazon and that was what led to this. I also think it was morally justified, but I think Amazon’s business practices are morally wrong.
My point in both emails is merely: everyone seems to talk about the details of the suit, collusion or not, without dealing with the context. What would motivate publishers to reduce their margins, work with those they usually are heatedly competing with, and take more limited terms. Because you are being more thorough than some about the details, I thought you might be more honest and clear about the context of what might have driven them to it, which seems complicated but important. Maybe not as complicated as the legal details but perhaps even more important for things like reading, culture, publishing, authors, power, rights, choices. So, it really was not a defense of any alleged illegal activity by publishers, but the larger issues of which sales tax is just one, very revealing, instance.
Sorry to trouble you with this, though. I’ll refrain from the thread, except to give my answer to Linda thread, below. Not meaning for it to go that way. Thanks again for the details on the case.
@Linda, Rebecca, Courtney
As to illegality: definitely in some jurisdictions, sales tax collection; definitely in some warehouses, labor laws. As has been pointed out, Anti-Trust doesn’t necessarily protect the reader/consumer, or the independent businesses, but may protect Amazon, which had 80-90% of the market and now has a more pro-competitive (better for consumers) 60%. This may very well change after DOJ is done with things.
I tend to agree that Amazon, by all reasonable measures, doesn’t care a bit about books — just a way to capture the demographic that buys washing machines. Walmart has had a very destructive, though mostly legal and legislatively supported, effect on towns, businesses, jobs, the environment, the culture and yes consumers. But things sure are cheap. They squeeze their suppliers until they croak and then go to China to get more, with cheap labor, resources, and none of those pesky environmental regulations we have here. All legal. I think being a bad corporate citizen is something worth talking about. In the case of publishers, as has been mentioned, the desperate straights they saw them in, with the big bully undervaluing their cultural products to gain market share for selling their profitable wares, has obviously led to desperate measures.
But let’s not let Amazon off the hook. All the publishers, not just the big 6 are endangered by Amazon’s tactics. The big 6 just have the power to do something about it. Woe is the independent publisher, up against Amazon.
And for me, cultural things are not the same as brooms and dustpans. It may be bad to offshore our manufacturing, for a host of reasons, as Amazon/Walmart like to do. But put them in the powerseat for our culture, and we have no advocates, no passion for the culture, just the filter bubble of our own past choices, echoed back to us as algorithmic “if you liked…”
So, I do think the more powerful, the more dangerous. Spread the support to all the indie publishers, all the indie booksellers (who sell ebooks too!) and even support the big publishers who do actually care about the culture, as well as profit from it. There are new models everywhere, but each of them should take power away from Amazon, not give it more power. It’s done enough harm already.
That’s me. Sorry for the long rant, but got through work and had to answer you, Jane, and you Linda specifically. Oh, and love Courtney’s comment about ebooks not being more environment-friendly, couldn’t agree more. Hope we all keep reading, in all formats, w/o the big predators.
@Courtney Milan: You wrote:
As for the rest… you aren’t really lecturing me on the evils of the agency model and the way that authors get paid, are you? Because that would be ridiculous.
(I don’t know how to do the italics/quote thing.)
Nah, I’m not lecturing you at all. I know better. ;-) It’s just the self-righteous bitch in me spoutin’ off to the general public.
I really don’t get how anybody thinks this is a good idea. For one thing, they won’t be cheaper. Are ebooks by mainstream pubs cheaper now? I looked at some etextbooks for college classes, and there was no price advantage. The rental ones were almost as much as the hardbacks. Also, I have three nephews in grade school. They can’t be trusted alone with a PC. I laugh incredulously at the idea of netbooks in their possession – rattling around in their backpacks, getting thrown into a corner with their shoes, being sat on and spilled on. Craziness!
@John: Context isn’t important because the Court found that there is a plausible case for per se price fixing. Per se price fixing doesn’t allow for a contextual (or business justification) argument. The only defense to a per se allegation is that there was no horizontal collusion, not that there was collusion but it was justified.
Further, motivation is apparent. The publishers wanted to preserve the print publishing business model because its margins on hardcover books are much higher. The publishers wanted to slow ebook adoption. The publishers wanted to reduce the increase of power by Amazon. I don’t know if you’ve read my primer that I link to at the top of the article, but I talk about the acquisition of a monopoly vis a vis antitrust concerns. Being a monopoly isn’t illegal. It’s what you do with the monopoly that can make it illegal. Gaining a monopoly through innovation or just pure business savvy isn’t illegal.
Perserving a certain business model is not the goal of antitrust laws.
Further, I am one of those people who believe that the reduced friction to the market through easier distribution access actually increases those important things like reading, culture, publishing, authors, power, rights and choices. I don’t know of a time where authors, in particular, have had more choice and more power over their own success and careers.
Antitrust laws aren’t morality tales either. We aren’t measuring the morality of companies. Otherwise, wouldn’t we have to take into account things like Macmillan being caught bribing officials for a piece of the West Africa education market?
I feel I have been very honest and clear about the price fixing lawsuit. Amazon’s actions are not at issue here. I’ve posted about labor issues at Amazon, tax issues at Amazon, and other bad Amazon behavior various times during the years but the price fixing lawsuit is about whether publishers and Apple engaged in illegal activity to interfere with the market.
Why did the comments suddenly shifted to Amazon being a Big Bad Wolf? Amazon has its cons, certainly. But this is about the Big Bad Publishers and Apple.
@Courtney Milan: This has been my main complaint about Agency pricing from Day 1. I don’t like higher prices…who does (other than shareholders?) But I was so frustrated by the inequity in pricing between ebooks and print books. If a company is going to fix its prices, fix them all. It’s ridiculous that a print book, with all its extra production costs, costs LESS than the cheaper-to-produce ebook (that comes with fewer rights to the purchaser).
I suspect, though I could be wrong, that publishers found it was more profitable to sell through retailers than via their own websites. They probably knew that readers/shoppers don’t always know who the publisher is and that readers/shoppers like to browse.
For example, I know of one publisher years ago who suggested an author who wanted for professional reasons to take a pseudonym take one alphabetically right next to one of the biggest names in that particular subgenre of romance. So even though the authors weren’t with the same publisher, they were next to each other on the bookstore shelves.
If the reader didn’t know who publishes Rosalaria Dusseldorf, would that reader likely go to four or five different publishers’ websites looking for it? Or would she, upon finding that ONE website carried a VARIETY of publishers, start shopping where she had a bigger selection?
Used to be our grandmothers and great-grandmothers and maybe for some of the younger members of the community their great-great-grandmothers didn’t go to the Safeway or the Dillon’s or the Kroger. They went to a butcher shop for the meat and the bakery for the bread and noodles, and vegetables in season from the local farm stand. Most people don’t shop that way any more. Most people don’t have the luxury of the time to shop that way, either for groceries or for books.
Most manufacturers, Rebecca, do not even attempt to control the retail price of their goods, and that goes for whether they are essential or elective. They set the wholesale price and then the retailer takes it from there. And sometimes the retailer screws up.
For example: I make handmade jewelry, and several months ago I sold a dozen pieces at a 40% discount to a local retailer. I told her I usually got $XX for them. She assured me my prices were too low; she could get twice that. But she wanted the discount anyway. So let’s use round numbers: I sell ’em for $10, she paid $6, and she’s priced ’em at $18. So my profit was about $4, and she stood to make about $10 (taking out about $4 for her much higher overhead.) Did I think she was greedy? Yeah. Did I think she’d sell ’em at that price? No. Guess how many she has actually sold at that price. Ah, good guess! None. Not one.
As Jane has said, and others, it’s not about one individual producer of a product contracting a with a retailer and specifying a price floor to protect the perceived “value” of the product. The alleged Agency pricing collusion had nothig to do with the perceived value at all. And I’m not sure it was really even about preventing the Amazon “monopoly” — couldn’t they have done that by LOWERING prices? — so much as it was about just trying to preserve the highly profitable print publishing platform despite consumers’ migration to digital. The so-called moral high ground of defeating the Amazon bully rings a little false to me, like a distraction to prevent anyone from seeing what’s really going on.
But what do I know?
The problem with your argument is that the publishers were not attempting to “support culture,” they were trying to make more off Patterson’s robo-written pot-boilers.
The next problem is your assumption (and frankly, you sound like a publisher) that the only model is the existing one. Whenever a new technology has emerged, ancillary services have also emerged. By cutting out the middle-man (publisher) it’s possible that both authors will get more for their product and readers will pay less, that’s how it traditionally works. Usually, more options become available, which we are already seeing.
Amazon is where it is today because it was incredibly successful at meeting customer demand. It’s suggestion engine is the best I’ve ever seen. It’s selection is immense — when I was looking for books on learning to speak Bulgarian, it had a choice. The Kindle is ubiquitous because it is the best e-reader. It’s even popular in Russia, where access to Amazon’s store is not an issue. The way to muzzle the might of Amazon is to out-compete them. I, too, don’t want Amazon to be the only bookstore in the US, but the answer is not collusion to raise prices in order to support stores whose customer service is a joke. And frankly, I’m not sure that the people who designed the iBookstore even know what a book is.
There are many things the publishers could do to successfully reduce the might of Amazon, but rather than thinking creatively and shaping the future of e-books, they focused on putting the brakes on, which anyone living in the 21st century should have been able to see never works.
@Rebecca: Then what do you call B&N deliberate down selling of Random House publications as punishment for not joining in illegal collusive activity?
I don’t see this as simply a competition between digital and print, because a) there has always been a clear hierarchy of value for print books, and b) print has been in a degraded state for number of years now. Would it be more accurate to pose it as a competition between the hardcover and every other book format?
I agree with those who have voiced concerns regarding the future availability of print books. However, I think the MMPB, which is the most socially mobile of all formats (i.e. more reasonable, plentiful, and widely available), is now poorly constructed and produced, to the point where the durability people tend to praise in print books is all but absent in the MMPB. Spines break with little stress, pages fall out, the quality of the paper is awful (I’ve noticed this in trade, too, which really bugs me, since trade is often my preferred format), printing is sometimes not even straight, covers are flimsy, etc. This is one of the reasons I laugh in frustration at the arguments some of the Big 6 folks make about the value of books being under assault by outside factors and forces. But I also don’t think it’s merely the growth of digital that endangers the future of print, especially MMPBs.
Re. Amazon, if the Big 6 acted the way they did in response to Amazon, that’s simply indicative of what I see as trad publishing’s tragic myopia. If it wasn’t Amazon, it would be something or someone else — IMO it’s all excuses and scapegoats and denials of responsibility to illegitimately justify illegal behavior.
One thing I think Amazon absolutely did do was fill a vacuum created by an increasingly inefficient, backward-looking publishing business model (inclusive of retail print distribution). It’s not like Big 6 publishers were flexible and responsive to changes in the market. In fact, a fundamental aspect of their strategy was to reverse rather than capitalize on changes in the way people acquire and read books. And while they may have viewed it as a stall tactic, what did they accomplish in the two (?) years since they undertook it? *crickets* I’m only amazed the Big 6 has managed to survive as well as they have, given their behavior and decisions over the past, well, at least five years.
First, this whole conversation is one of the many reasons that I come here multiple times a day, so thank you everyone.
I’m almost at a point where I don’t know where to start in what to say, but I’m absolutely stunned by the evidence that is against publishers and Apple. Suspecting it, like I had for a long time, and seeing a load of quote, emails, discussions backing it up are two very different things. It amazes me what they thought they could get away with.
@Courtney Milan – I think I’m just going to agree with you, because you’ve summed up nearly everything else I think. lol.
I want to add that personally I don’t have a problem with Publishing setting the pricing on ebooks. I, and I’m probably one of the few, that doesn’t have a problem with paying $8 for an ebook (from an author that I know usually delivers for me), or even $15 for an author I love. So the price if barely an issue for me (though if publishers want me to try more authors, less than $8 is a better way to go). Back on my topic, price setting and the price itself is not my problem with the “agency” pricing. My problem is the collusion. And that’s what this suit is about. It’s not about the reason the publishers decided to collude, it’s not about the evils of Amazon, it’s not about how to preserve an existing business model. It’s about illegal collusion.
@Rebecca: Believe whatever you want. What the publishers and Apple did was as illegal as it was anti-competitive.
And if you’re feeling sorry for your print-preferring self, keep in mind all the people like me who can’t read paper books due to one disability or another. If ebook prices are too high – and they are – I’m out of luck. I can’t use a coupon, shop around or borrow from the library. Nor can I borrow a friend’s copy. My might-buy-when-agency-dies shelf on Goodreads is ballooning with titles that are effectively unavailable to me. I’m being punished so publishers can protect a book format I can’t even use.
Again, I’m getting screwed now so that maybe you won’t get screwed later. How is this fair?
At this point in the thread, I’m gonna have to agree with that.
I’m not saying Rebecca is SUPPOSED to care about anything. But if she APPEARS not to care about something, I feel it’s fair to point that out. And if she appears to be saying she doesn’t care about the legality of price fixing so long as it’s done to harm a company she doesn’t like, well, I feel it’s fair to point that out, too.
Do *I* care about other people’s reading choices and their ability to acquire the reading material they enjoy? Actually, yes, I do care. I find the mere notion of dub-con BDSM repulsive, but I’m not going to tell someone they can’t read it or write it or publish it or that they’re an evil selfish monster for liking it and that because *I* don’t like it, they should pay a higher price for it, NOT because it’s more expensive to produce but because I want their higher prices to make it so I don’t have to pay so much for my preferred reading.
I do not want to read graphic depictions of battles and violence and killing; they give me nightmares, and I mean that literally. Hard science fiction bores me to tears most of the time. But just because I’m not interested in it or don’t like it doesn’t mean I don’t care about other people being able to read what they want at a reasonably affordable price based somewhat on the actual costs to produce it and what the market will bear. Nor do I expect them to pay more for their choice so that my choice is financially subsidized by them.
Rebecca seemed to be saying that she hates Amazon because they treated her badly and she doesn’t care if people who like e-books are victims of what amounts (imho) to extortion by Apple and the Agency-model publishers because what Apple and A-6 were doing was ostensibly trying to bring down the company she doesn’t like. She fears that if this apparently illegal cartel doesn’t win, then Amazon will immediately take over publishing of all books worldwide and do away with the print books that are her preferred media. (We haven’t even speculated on what would happen if Agency pricing continued. . . . rainbows and ponies and Hugh Jackman on unicorn?)
First of all, and I guess this is addressed to Rebecca as much as to the general reading and lurking public but confirming what some of us have been saying all along, Amazon isn’t going to do away with print books next week or next year or anytime in the very near future. Amazon isn’t going to put the publishers out of business, for one thing, and the publishers are still going to publish print books because they make money on them. Hardcover is where they make their money, and if they can sell hardcovers through Amazon, they will. They’re all in the business to make money. And the existing physical distribution model for print — from grocery stores to brick-n-mortar Barnes & Nobles to corner independents to airport newsstands, etc. — is going to continue for a while even as it shrinks.
But even the publishers know digital is going to radically alter their existence. We know they know it, because they’re fighting it. Amazon isn’t fighting it; they’re embracing it. B&N is trying to. Apple is fighting Amazon, but they aren’t fighting the switch to digital.
Someone upthread brought up the issue of the casual reader, such as (but not limited to) the person who picks up a paperback at the airport to read during a crosscountry or transocean flight. If paperbacks fade away, those casual readers might not read! horrors! Or — just think about it — they might buy a relatively inexpensive e-reader that’s safe to use in flight (but not during take off and landing) and download not one but a couple of books (You know, in case one is boring or something) and instead of leaving a half-finished copy of “Whatever I could find at WH Smith” on the plane, they take the e-reader with them, finish the book and omfg start reading more!
I just think it’s unfair to assume that a rise in digital publication is going to lead to a decline in reading in general simply because print books are no longer as readily available. And the technology will evolve to a point where the e-reader for the 6-year-old is as ubiquitous as the cell phone/Android/iPhone/WTFever.
On the issue of energy consumption and the environmental impact of digital publication: I haven’t yet figured out a way to read in the dark, and unless people restrict their reading of paper books to daylight hours, they’ll probably be burning as many lights using as much electricity as what an e-reader’s battery provides. I’d like to see an environmental impact study on what it costs to produce a typical e-reading device versus the production and storage of the equivalent number of print volumes. It’s not fair to compare one Kindle to one MMPB or even to a complete set of Harry Potter, Lord of the Rings, and Wheel of Time. What’s the capacity of a standard e-reading device? Amazon says the basic Kindle ($79) will hold 1400 books. That’s a lot of fuckin’ books!!! Now let’s compare the environmental footprint of one basic $79 Kindle to the footprint of producing 1400 physical books.
Someone upthread said something along the lines of, “Well, what’s to stop someone from coming out and saying they’re going to publish books cheaper than the A-6?” Well, if that person was referring to print books, the first thing stopping anyone from doing so is $$$$. Print books have to be printed before they can be sold, and the editors and cover artists and printers and binders generally want to be paid before the books ever get printed to be sold. (Unless, of course, your Dorchester and you just don’t pay. You see what happened to them.) Even assuming spreading the pre-production costs (editing, typesetting, cover art, etc.) so that the total cost of the book is $1/copy, even a very very modest print run will cost thousands of dollars. That’s with no distribution, no advertising, no promotion, all of which cost more money. And if the new “publisher” doesn’t make a profit, there’s no money for the next venture. There’s just a garage full of. . . . books.
On the other hand, digital publishing does allow for small start-ups. It allows for affordable self-publishing. It allows for low prices and even free books. Does it have its downsides? Oh, sure! (Like, primarily, a lot of really crappy books!)
There’s no reason why digital and print can’t co-exist and each fill the needs of its constituent market unless and until one of those markets is no longer viable. What I consider truly unfair is when one side DEMANDS that the other subsidize what is otherwise an unprofitable model.
Rebecca said she didn’t want to have to pay $50 or $100 for a book. I’d like to point out that because of the costs of printing, some of the books I’d like to buy are well over $100. They’re scholarly books that have a very small audience but are expensive to set up in terms of illustrations, copyright permissions, etc. with very small print runs from which to recover those costs. I’d love to see those books available in a digital format, with all the illustrations and active indexes and so on, but it’s not technologically possible. . . . yet. So I can’t afford to buy the books I’d really like to read. But I’m not going out and telling any publisher that they need to charge more for their hard SF and their dub-con BDSM in order to bring down the prices on their academic books.
@Linda Hilton: tl;dr
My whole point to you was that you and she disagreed, and you took great umbrage at her disagreement (to the tune of a few thousand words). Of course you can point it out, but it’s hardly germane to the conversation.
SHE doesn’t understand how regular retail works, much less how unbelievably deviant (and incestuous) publishing/bookselling retail is–and how unsustainable–and how Amazon simply corrected the market imbalance (aka bubble) by making bookselling the same as the rest of wholesale/retail.
YOU don’t understand that her tone/feeling/misunderstanding is not a personal slight to you, me, or any other ebook reader. It’s not her job as a consumer to care about anybody but herself and your heated justifications in choosing to read ebooks are neither welcome (to her) nor persuasive.
And JOHN seems to want to make Amazon the big bad bully here, but you know, the messenger always gets shot and the bubble is always blamed for daring to burst.
@Moriah Jovan: I disagreed w/Rebecca, fine, but I guess I don’t get to present my side? I infer that she believes a reading format she doesn’t use has to support her preferred format, but I don’t get to say I disagree? Should I have just said, “Uh, no”?
I said, no, she’s not supposed/required/obligated to care about anyone else. But when she put those feelings out there (“I feel like nobody cares about my interests,” is what she wrote), she’s essentially saying she wants people to care about her, but you’re now saying she can ask for that without caring about anyone else. That’s what I think is unfair — especially unfair to other readers, whether of print or digital.
The lawsuit that all this hinges upon is about the alleged illegality of what Apple and the A-6 (or A-5, or even A-3) did in setting up Agency pricing. Rebecca has said she basically sees nothing wrong with it.
Yeup. That’s what I’m saying.
Because she doesn’t understand and, given the direction the thread’s gone, is not likely to. So what?
“You say that so often, I wonder what your basis for comparison is.” –Jareth, the Goblin King
@Linda Hilton: I think the point is something more like this: Obviously you can say whatever you wish. Nobody’s deleting your posts or demanding that you be blocked from commenting.
But consider this: aside from John and Rebecca, everybody else here agrees with you. And you’re yelling at us, too.
This is a good way to get people’s backs up, not to persuade them to try and think of things from your point of view. You’re alienating your allies and giving your enemies justification for thinking that our point of view is premised on nothing but hostility to publishers.
In short, you’re being ineffective.
Personally, I’d be happy to see the big six all go out of business and publishing have to reinvent itself properly as a business in the modern world. If this lawsuit goes some way to achieving that, then I’ll be cheering. I do think that, increasingly, print books will become luxury items (which is why I also think that libraries will need more investment in the future, to make those items available to all).
In the UK, the Net Book Agreement existed until fairly recently (10 years ago? something like that), and meant that books were always the same price wherever you bought them. When it was abandoned, books became cheaper and many independent booksellers went out of business because they couldn’t compete. I’m all in favour of cheaper books. Bookshops aren’t a public service, they’re a business, and if they can’t make money, I don’t owe them a living. I’m also fairly much in favour of Amazon. They make books accessible to people who live a day’s journey from a bookshop. They let me buy (print but not digital) books that aren’t available in the UK.
Rebecca, you seem to me to be arguing from a position of enormous privilege. I’m glad that you can afford to pay as much as you like for a book. I can’t. If someone offers me a discount, I’ll take it every time. And I won’t be made to feel bad for doing so.
@Ros: Perfectly put.
But ebooks are available – and in most cases, are slightly cheaper than print books. You could even say they are MORE available than print books, with all the ebook exclusive short stories these days. They are available, you just don’t like the price. If you choose to buy a larger number of cheaper books instead of a smaller number of agency titles, whose fault is that but your own? The format you like is available, you just don’t like the price. If Amazon gets what they want, I believe the format I want will become much less available – not just more expensive, but literally completely unavailable for certain genres/titles. So when the very existence of what I love, what means so much to me, is threatened, I have zero sympathy for someone when the books they want are available in their format but they’d rather buy a bunch of cheaper titles instead of a couple expensive ones they claimed to want so badly.
And yes, by my moral beliefs, what the publishers did is justified. I’m not forcing my moral code on you, you are free to believe as you wish, but in my world view, they were completely justified.
And it looks like Simon & Schuster settled.
@Rebecca: Your worldview is amazingly self-centered, which makes me wonder why you have such a beef with Amazon. You’re kindred spirits, really.
I guess most readers here and the United States government will have to agree to disagree with you. I have to concur with Ros, your argument is that from “a position of enormous privilege” and an ignorance of business ethics I have to add.
I believe it’s because some people are so vehemently against Amazon, they refuse to see the good things (how few, how large is debatable) Amazon has done for consumers. Amazon = forever the Big Bad Wolf.
I believe it is justified because the result would be a greater chance of both print and ebooks being available, and a greater chance of having more places besides Amazon to buy books 5 years from now. When what you want is available now and you just don’t like the price, yeah I think it’s amazingly self centered to want the price lowered at the cost of what I want not being available *AT ALL* anymore.
@Rebecca: It’s not just the price, Rebecca. Print books are currently privileged over ebooks, and that’s not fair. For one thing, you can use your discount card to get discounts on paper books; you can use coupons to get discounts. We can’t get discounts of any sort on ebooks under Agency. how is that fair?
Market forces will determine whether there’s enough of a market for paper books to survive. eBook readers shouldn’t be punished to support a flagging market.
Anyway, it’s not about price. It’s about whether it was legal for the Big 5 and Apple to collude. That’s the sum total of the DoJ lawsuit. Clearly the Big 5 and Apple felt their actions were justified (read John Sargent’s statement here). The DoJ and this other suit say “justified or not, it wasn’t legal”. And clearly Simon & Schuster, at least, is admitting wrong-doing (or finally listening to their legal team) in settling both the DoJ and this suit.
Hey. I have no idea if the agency publishers are right or not. I think that’s up to the legal system to determine.
But I’m fed up with people complaining of alleged “artificially high” prices on ebooks. If someone doesn’t want to pay the price, do without the book. It’s really that simple.
There are many non-essential or luxury items people routinely do without because they either cannot afford them or their price threshold objects. Don’t like the price of Dior lipstick? Buy M.A.C.. Don’t like M.A.C. prices? Buy Maybelline. Don’t like Maybelline? Buy whatever’s cheaper. Be satisfied, make it work for you. Don’t hate on Dior, Chanel, Guerlain, and every other high-priced department store brand for “artifically high” lipstick prices.
Furthermore, I’ve been an ebook consumer several years now and I don’t really see the alleged “artificiality” of ebook prices. This appears to be the foundation of the grievance voiced by many anti-Agency readers. What is artificial about it? True, ebooks cannot be traded, sold, shared, or gifted. However, print books cannot be backed up and re-downloaded for use on various devices. Technically, an ebook is indestructible.
If my house burns down, my $30 Massie biography of Catherine the Great is history. My $14 e-version remains in my possession. All I have to do is download from the website.
Decide which product you want, buy it, enjoy it, and be at peace with it. People do this all the time and have been doing it for generations.
In fact, due to geographical restrictions, the format I like is mostly NOT available to me.
Again, Amazon is never going to be the only game in town. And if I decided to never ever again shop with a business where I had a crappy customer service experience, I’d have to become completely self-sufficient and grow my own food, and materials for clothing, and make my own paper and ink, and not use plumbing or electricity. Of course, I probably wouldn’t have time to read, then, so there’s that.
Ebooks are currently privileged over print books, and that’s not fair. for one thing, you can access free ebooks and significantly discounted ebooks regularly. We can’t get weekly freebies, regular freebies, and exclusive discounts such as the $1, $2, and $3 specials routinely mentioned in blogs like Dear Author. How is that fair?
When Agency was first implemented, every single new release by my favourite authors were available in mmpb at my local bookstore. As digital, though, they were either $3 – 5 more, or were completely unavailable for purchase if you weren’t in the US.
If I’ve already shelled out for the e-reader, and I don’t have any lending or re-selling rights, why charge me 30% more for the book? The exact same book. Not with added features, not with extra moisturizers, not with detangler added or an amazing new fresh scent. The. exact. same. book.
$3 – 5 more for the identical product in a form that’s cheaper to deliver and at least no more expensive to produce is artificial.
@Author On Vacation: The thing is, we can’t make statements about what ebook prices would look like in the absence of agency pricing. We don’t know if ebook prices are artificially low. We know only that if collusion has occurred, that the market for ebooks has been distorted. If there is collusion, a publisher can set the price of their books knowing that they are unlikely to be undercut by any of their major competitors. If there is collusion, authors who want their books to be lower-priced have no major publisher they can sell their books to in order to get that price, and so can’t use it as a decision point at deal time.
If the Big 6 colluded on price, the prices are by definition artificial because they’re not being set by market forces.
@Author On Vacation: the freebies are only valid if you consider books fungible, that is, if I can’t get book by author A, a book by author B will do just as well.
Anyway, the argument isn’t over price, it’s over legality of collusion.
Therefore it is entirely possible ebooks could be much more expensive than at present, correct? Given the growing popularity of ebooks and digital reading devices, it might even make sense for ebooks to cost more than print works without Agency pricing.
Look, I’m a big reader. I mean I am a VERY BIG reader. I’m the contented owner of over 750 ebooks and I could not give you an accurate count of every print book I’ve ever read because I cull my shelves yearly.
And I buy pretty much all my books. I’m as interested as the next person to get the best deals I can. However, I also want authors, cover artists, editors, and other parties involved in book creation to be generously rewarded — both financially and with praise — for their hard work in producing books I love (and even books I don’t love.) If the rewards are removed, the best talent will be lost. This is a sociological and a mathematical certainty. Stephen King would not be a novelist if teaching rewarded him more than creating novels.
So no, I’m not gonna whine and cry that every ebook in the world doesn’t cost $2.00 and that some cost more than $10. I want the most choices to the best artists capable of producing books.
But you yourself allege that
It sounds like you have a tremendous grievance concerning prices of books.
@Author On Vacation: The lawsuit is about collusion. The motion to dismiss by Cote, if you read it, references retail price maintenance and how under Leegin, certain types of RPM is appropriate. It is the horizontal agreements to increase prices of digital books by 40% and at a loss of 31% per unit that is the problem. That is not a free market determining price levels. That is artificial price setting.
@Author On Vacation: I wouldn’t say I have a “tremendous grievance” – I just don’t see why one delivery method should be treated differently than another – and that’s what we’re talking about: delivery methods for the story. If Agency also said no discounts on paper books, I would be (marginally) happier.
I hear you, Jane. And I understand the matter addresses significant legal questions. I do understand that.
However, it doesn’t impact my opinion. Neither I nore anybody else is entittled to books at a specific price.
@Author On Vacation: No one is arguing for books at a specific price. We are arguing that publishers shouldn’t be circumventing market forces and that retailers should be allowed to treat digital books the same as paper books.
@Rebecca: Well, what would you make of the fact that I never bought ebooks at Amazon pre-agency pricing? Never. Not once. I could always get ebooks cheaper (or at least it felt cheaper) when Fictionwise had a rebate sale.
Since agency pricing leveled the pricing field and eliminated most retailers’ loyalty programs, I’ve started buying from Amazon, because it’s easy.
You think agency pricing is this fabulous silver bullet. It’s not. There are other, legal, ways to compete with Amazon without anti-competitive price fixing. Eliminate DRM, settle on a standard format, and let people with Kindles shop around. Agency pricing hasn’t stopped ebook adoption, and nothing will. Publishers just need to find a way to adapt to the changing market. No one can convince me that print is doomed. That’s just lazy thinking. Print might be much less profitable, but too many people want it for it to die out.
becca, for what it’s worth, I’m deeply offended by the global restrictions placed on ebooks. It’s uncivilized. For the first time in human history, society has the means to create its very own world library and share information and technology in ways that must have been a dream to generations long before us. I hope this will change. I don’t know how many hands must be greased for it to happen, but I’d like to see it.
To those who are arguing on that agency pricing is O.K. and that the collusion between the publishers and Apple is “no big deal”, how are you missing the big picture here. They are facing legal proceedings because they very likely broke the law (based on Jane’s excellent summary, I would say that the the odds of the publishers who haven’t settled being found liable are pretty darn good). What I’ve taken from Rebecca’s arguments is that she couldn’t care less that laws have been broken because she perceives that she’s benefitting from those breaches. What she fails to understand is that law is based on enforcement and it is based on precedent. If Apple and the publishers are able to get away with their collusion, it just makes it that much easier for other companies to do exactly the same thing because they know that the law isn’t going to be enforce/or their is a precedent that allows this kind of behaviour. What happens when it’s the gas company or the electricity company or the food producers or providers of other necessities that engage in this kind of behaviour?
As for whether agency pricing would actually save print books – as far as I can tell from the crap that my local chapters is selling in place of print books, it really doesn’t really seem to be working all that well so far. All that agency pricing has managed to do is annoy a whole segment of customers – how is that good business?
@Author On Vacation: Therefore it is entirely possible ebooks could be much more expensive than at present, correct?
If by “entirely possible” you mean, “not supported by any available data or reasonable inference drawn therefrom,” sure.
* Non-agency-pricing publishers have cheaper e-book prices than agency-priced publishers.
* The effect of agency-pricing was to increase the price of e-books from earlier levels.
* E-mails and other correspondence that have been uncovered thus far all indicate that the purpose of agency pricing was to increase book prices.
* The publishers in question engaged in illegal behavior–behavior that they knew was illegal, based on their “double delete” comments in e-mails. It could be that they Carolyn Reidy risked jailtime in federal prison because she wanted to give consumers lower prices and to hurt the bottom line of her company. But I wouldn’t bet on it.
* Random House did not engage in agency pricing right away, and the e-book prices of Random House books were lower than its peers thereafter.
If you grant that the market for ebooks is artificial, you’ve pretty much given up the game. There is no logical argument that explains furtive e-mails, illegal conspiracies, and an actual increase in prices over time and yet says that agency pricing has decreased the cost of books.
Nobody here is saying that anyone is entitled to books at a specific price.
We are entitled to books at market price. The vast majority of evidence indicates that the market price for e-books is lower than the agency publisher’s pricing.
Can you cite a single shred of evidence anywhere suggesting that the market price for e-books should be higher?
What do you mean, please?
@Courtney Milan: Do you think that shareholders could mount a successful suit against Reidy, Sargent et al. for any of this? I agree that the the chances are slim to none that they will face criminal charges, but a civil suit might serve a similar purpose and it would be one way for shareholders to claw back some of the huge exit packages these people will get when they are finally shown the door.
@Author On Vacation: I mean that if you grant that the market is artificial, you’re effectively granting that the prices are too high. You can’t construct an argument that agency pricing lowered the prices of books based on the actual data of the last two years.
@Lynnd: Corporations was the one class I took in law school pass/fail. I have only the vaguest memories of the circumstances under which shareholders can bring suit against company officers. And while I’ve picked up a weird eclectic mix of stuff since law school for a variety of reasons, suits against shareholders never showed up on the menu. It’s state law stuff, and I’m much less likely to know state law.
It’s even weirder, because I think most publishers are wholly-owned subsidiaries of entities like CBS.
I have never for one instant been interested in arguing or attempted to argue what you say I have.
I don’t believe the price of ebooks is artificial. Your point:
is the most convincing evidence that Agency publishing does indeed cost more and that prices can and should reflect that.
In general — NOT always but GENERALLY — Agency published books boast significantly better quality. This is probably a reflection of the resources available to Agency publishers. Agency publishers normally have greater talent on their payrolls.
So yes, an Agency published book — GENERALLY boasting greater writing talent, better, more educated editing, etc. — is going to be more valuable than a non-agency book. I feel non-agency pubbed books hold an advantage in being more innovative and, at times, more creative and “risky.” It seems small epubs and indie authors are willing to take risks on books Agency pubs won’t touch. But I don’t consider them better than or even equal to Agency pubbed works in terms of overall quality (including creative talent and editorial quality.)
I will tell you honestly, it is VERY RARE I’ve read an indie or epub work and thought it equal in quality to Agency pubbed books. Sometimes I read Agency pubbed books and think they’re junk, but more often than not, I feel I got my money’s worth. With non-Agency reads, it’s the other way around. I’ll read several mediocre or inferior books, then find the occassional “really good” read.
I’ve already offered the analogy comparing Agency pub books and non-Agency books to the differences between designer, department store cosmetics and drugstore brands. Essentially, there’s actually little to no difference in the formulations of most cosmetic products. In fact, some department store cosmetics are sold in cheaper packaging at drugstores (L’Oreal does this.) And yet, people are happy to drop $20+ on a Lancome mascara they could have bought at Wal-Mart for less than half that amount under the L’Oreal label. Yes, the packaging, promotion, and method of sale is different, but it’s essentially the same product.
No one is suing L’oreal, Estee Lauder, and all the other big cosmetics companies for maintaining artificial prices on their goods.
@Author On Vacation: The problem is this: you keep saying the prices are not artificially high. But you are ignoring all evidence that the prices are artificial–namely, not set by the market–and you’re refusing to grapple with the people who repeatedly explain to you that the issue is that the agency publishers colluded.
The reason no one is suing Estee Lauder is because there is no evidence of collusion. It’s a dumb analogy, one that makes no sense under the circumstances.
If the agency publishers colluded to raise the prices of e-books, their prices are artificial. That’s what it means to have artificial prices: the prices are not the prices set by the market. Saying, “I don’t see artificial prices” without talking about collusion makes no sense.
You’re like a person whose only taste of strawberries is a McDonald’s shake. I’m telling you their shakes are artificial. And you’re taking a sip and saying, “No, that tastes like strawberries. It’s not artificial.” You don’t know what strawberries taste like. You’ve never had real strawberries. So you can’t tell by taste. If you want to know whether something is artificial, you have to look at the ingredient list.
Right now, there are e-mails that show that publishers colluded to create higher prices. I’m pulling out the ingredient list and pointing to the line that says, “Artificial flavors,” and you’re shutting your eyes and saying, “TASTES LIKE STRAWBERRIES!”
Non-agency-pricing publishers have cheaper e-book prices than agency-priced publishers.
is the most convincing evidence that Agency publishing does indeed cost more and that prices can and should reflect that.
And that is not true. The most convincing evidence that agency prices are artificial is the e-mails in the amended complaint where the publishers agree with one another that they are going to work together to change e-book pricing. That’s the point where I am showing you the ingredient list and saying, “This is artificial.”
So you can keep saying that prices aren’t artificial, but if you can’t construct an argument that the agency publishers did not collude to raise prices, you basically have your head in the sand to avoid the ingredient list. You don’t get to say that prices aren’t artificial because you happen to think they’re fair. You’re not the market. That’s not how prices are set. Non-artificial prices are set through competition with one another on the open marketplace. And right now, the evidence shows that agency publishers agreed not to compete with one another on price. That makes the prices artificial.
If the agency publishers colluded to raise prices, why on earth do people not have the right to be angry that a criminal act was committed, one that has cost them money?
@Author On Vacation: Your opinion and belief that the prices of ebooks are artificial is simply wrong. Because Apple has set a pricing floor and ceiling that every big 6 publisher abides by, market forces aren’t allowed to intervene. Because the publishers colluded, market forces aren’t allowed to intervene. Because there is no price competition between the publishers, market forces aren’t allowed to intervene. There is nothing but artificiality in agency pricing.
The most qualitative data about price is probably compiled by Smashwords and based on the data compiled by Mark Coker, the optimum digital book price is around $4.00. This, coincidentally, is not dissimilar to the data that Thea at the Booksmugglers collected regarding readers’ optimum digital price point. You can also see the optimum price point vary in the Kindle bestseller list – many of the bestsellers are sub $5. There was actual data collected for that as well.
So here are the facts:
All of the publishers have agreed to a contract with Apple that requires them to set a price floor and ceiling that is tied to the print price of a book.
Prices of ebooks from these big 6 publishers, which account, at least, for over 60% of the market, where increased by 60%.
This move to agency reduced the income derived from a per unit sale by 31% for hardcovers.
Multiple emails show the publishers discussing with each other who was going “in” on the agency agreement.
The current prices of Agency books are artificially created. Where is your facts to argue otherwise?
@Author On Vacation:
1. No one is suing L’Oreal and Estée Lauder because L’Oreal and Estée Lauder aren’t forcing retailers to all sell at the same price. The customer who can and wants to spend $20 for lipstick is free to do so, but she/he also has the choice to go somewhere else and spend $15 or use a coupon and get two for one. That’s competition and that’s a free market.
2. No one is arguing that publishers — who have significantly higher overhead — can’t charge higher prices for books than indies or small presses. No one is arguing that hardcovers can sell for more than MMPBs. The issue is that the Agency pricing model illegally controls the prices not based on cost or quality but on a desire to manipulate the marketplace.
3. No one is even arguing that long-established print publishers with lots of money to spend on cover art and careful editing and fat advances will frequently attract more experienced/talented authors and ultimately produce better quality books. The quality of the product is not an issue in this at all. It’s the illegal agreement between normally competing parties to stop competing between themselves in order to help their co-conspirator (Apple) quash its competition.
Y’all can fit the good fight but AoV already said “I believe”. Faith based positions are reality immune. I respect her right to believe whatever she chooses to believe, but I appreciate our nation (and courts) dealing in facts. The facts are clear here, her beliefs are immaterial to me.
@Courtney Milan: Thanks for responding to my query. It has been many years since I took my business law classes and I don’t often have cause to revisit those issues. it is probably further complicate by the fact that most of the parent companies are foreign corps.
It’s too bad those anti-trust laws you’re all so fired up about go conspicuously unenforced when Amazon violates them. But anything to save a buck, right? What’s a little retail monopoly matter when you can get free shipping!
“It’s too bad those anti-trust laws you’re all so fired up about go conspicuously unenforced when Amazon violates them. ”
@Lynnd: I wondered about the possibility of a derivative shareholder suit, myself. I don’t remember enough from Corporations to even speculate, but I certainly think these allegations suggest a breach of fiduciary duty on the part of some of these executives, not only within publishing, but B&N, as well.
In fact, one of the things that fascinates me about this thread is that there is so much hostility directed at Amazon, but little discussion of the allegations against B&N. Since I’ve heard a number of folks claim they prefer B&N over Amazon based on some perception of stronger ethics and less corporate evil, I wonder how those perceptions could ever survive all of this.
Isn’t it? What’s up with that? Is it because Amazon is mentioned more often in the news and the news aren’t always good news? I understand why people would hate Amazon, but I don’t understand why in this issue Amazon is still seen as a bad guy when they’re not the ones who allegedly did the price-fixing…
Um, well, all right.
@Robin/Janet: Your point on B&N is one I’ve pondered as well, since the start of Agency in fact. Having a family member who worked for B&N for many years I really wonder how this image of them as benevolent even began. B&N has been exactly this shady for a long time, yet consumers consistently give them a pass. Whatever marketing trick they’ve deployed, I think a crossroads was somehow involved.
@Ann Somerville: 90% market share in ebooks prior to the introduction of agency pricing, use of that position to engage in predatory pricing by dumping ebooks below cost as a loss leader, prior to that use of their size and position to strong arm special discounts on books from suppliers that were otherwise unavailable to other outlets. Every single one of those things is an issue that should be addressed by anti-trust law enforcement, on every single one of them the government has been conspicuously silent. Then there’s Amazon’s status as a noted public tax scofflaw.
Amazon was burning the book business to the ground in order to dominate the fulfillment-warehouses-in-the-middle-of-nowhere business, and will do so again now that their destructive business model has the protection of the federal government. Agency pricing was a necessary step precisely because the provisions of anti-trust law that should have been used to restrain Amazon were not being enforced. This DoJ suit will ultimately serve to prop up a dangerous monopoly and harm consumers. We should all be more concerned about the use of anti-trust litigation as a bludgeon to protect the interests of a massive monopoly than we are about getting books for a price lower than what they the cost to publish.
@Robin/Janet: I agree with you about B & N. I remember when they were evil incarnate to the literati because of their business practices. Now they are the white knight.
In my opinion, Amazon has propped up the publishers for years by giving deep discounts on hardcover books (while still paying the publishers the full wholesale price). This permitted genre fiction books in hardcover to be within the price range which more people could afford/ were willing to spend for their pleasure reading. How many people would regularly buy books in hardcover at $25 – $30.00? Once the price decreased, more and more books/authors started to be published in hardcover because they made significantly more money for the publishers (this is what killed off most of the independent bookstores who could not afford to compete). Publishers certainly didn’t complain about how “evil” and “monopolistic” Amazon was then.
The thing about monopolies is that there will always be some new upstart to come along to take them down when they get too big and start doing stupid anti-competitve things. Where are IBM, AT&T and Microsoft now – all struggling to compete against the little upstarts like Apple, (which is poised to become an even bigger monopoly than Amazon – how many iThings have been sold in the past few years for which Apple has the control over the content).
If I’m reading your comment correctly, you seem to think lowering the cost of ebooks hurt consumers. Alrighty then… Also, you won’t convince anyone here that agency pricing is a good thing with that, uh, logic for the lack of a better word. Jane has periodically blogged about it serve only the publishers and not the readers nor the authors. I’ll just leave this comment of her that was posted upthread:
Pricing fixing is price fixing. Period.
I don’t have a problem with this. I consulted with my parents after you posted this comment and they don’t see my view as problematic, either. Courtney, although I’m truly sorry you see my views as a problem, I suspect this represents some failure or intolerance on your part. I’m afraid I cannot be responsible for that.
Why should I want to grapple with anybody over a simple difference of opinion? I’ve already agreed that this case addresses significant legal questions. If the Agency Publishers have violated the law, they should be held accountable for that.
My position on that matter does not blind me to what I perceive as failings in the thought processes of many “anti-Agency Pub” supporters.
Exactly. The Agency Publishers didn’t handle business effectively. Had they behaved more discreetly things would be business as usual. The biggest crime syndicate in the U.S, is corporate America. Publishers took a chance and lost, they’ll pay for it. Or rather their customers will pay for it. Not good news for readers.
Sorry, but no matter how hard you try, you are not going to convince me that a luxurious, gourmet doberge torte topped with fresh, hand-prepared ganache should not cost more than a processed snack cake. I am well-informed of the ingredients for both, and I am willing to spend more money on the torte.
No publisher, bookseller, or other agent representing a publisher has ever forced me to buy a single book.
Ms. Milan, I am more than a little surprised by what I perceive as aggressive tones and hostile language in your posts. I have purchased no less than four of your ebooks and read one of them. While not an avid fan, I believe your work is quite promising and I wish you nothing but the very best with your artistic endeavors.
If anything, you have benefitted tremendously from Agency Publishing. Agency Pub price fixing created a window for you and other talented authors to create, sell, and promote books at competitive prices more attractive to readers dissatisfied with Agency Publishers and their actions. While I recognize your earliest publications took place with traditional publishers, your self-pub work was priced to sell and encouraged me to give you a read.
Trust me, I won’t be buying your work if I can get Agency pubbed books for the same or similar prices for which your books are sold. That’s not an insult; it just is what it is.
I also doubt you or any other non-Agency pubbed author will insist their own books were overpriced as a result of the “artificial prices” nurtured by Agency pubs and insist on refunding or partially refunding their customers/readers for what they paid.
Traditional agency publishers may be guilty of illegal activities, but you have certainly found opportunities in that situation and did not hesitate to benefit yourself accordingly off the same consumers allegedly exploited by Agency publishers. While not strictly illegal, it certainly smacks of questionnable ethics.
If I was one of those obnoxious, drama queen-esque types frequenting the virtual reading community, I would probably be on my blog right now criticizing you as an “author behaving badly,” advocating boycot of your books, and whatnot. Fortunately for me (and for you) my I.Q., my level of education, and my ethical standards are simply above that kind of nincompoopery. I believe you have the right to say what you want and I don’t believe your livelihood should be threatened because you do that.
Finally, I hope the matter concerning the alleged artifically high pricing of Agency published books is resolved fairly and opens possibilities beneficial to publishers, authors, and readers alike. That is far more important than sticking it to Agency Publishers for ill-advised decisions in managing their business. Good luck to you again.
@authorinvacation the fact that you self ascribe high ethical behavior while accusing authors using their real names of bad behavior whilst hiding behind some anonymous identity is hilarious. Truly the funniest thing I’ve read in a super long time.
@Courtney Milan: I may get my @$$ reamed on this, Courtney, and I mean it only in the most respectful and affectionate way because I know you know more about all this than I do, but Re AoV, I think you’re becoming ineffective. ;-)
Truly? Oh well.
@Author On Vacation: Your point is that agency-published books are luxurious, gourmet doberge tortes topped with fresh, hand-prepared ganache and should be paid for accordingly.
While they are not shitty self-pubbed Twinkies, they are, in fact, just overpriced hash-house desserts shipped frozen from the franchise warehouse.
Also? Your insults at Courtney and her self-pubbed work (which, according to you, MUST be inferior because she DIY’d it) are utterly without class. It’s easy to insult and threaten people when you hide your professional name behind a moniker, isn’t it? SHE is not the one behaving badly. We just don’t know who YOU are.
@Author On Vacation:
Dear Sir or Madam,
In my view, you are a loon.
Not only do I think my NY eBooks are priced too high, I’ve discussed the issue with my editor.
@Peter – Help me out with why you think readers want books below their production cost? Help me out with why paying a much higher price in digital than paper does anything but create a tiered consumer class via collusion? Because if we’re blaming readers for the criminal actions of corporations, I’m going to need to see a red dress at the very least.
@AoV I can never decide if you’re trolling. Sometimes I say yes, but then you roll out some nonsense that makes me say no. Facts are awesome. Hope you get some.
I sort of hate these threads. It’s like talking to Birthers. Facts be damned, and thrice damned if they can’t be ignored.
Moriah, I fully support your right to your opinion. I also fully support my right to my opinion.
As is often discussed, reading is a highly individualized, personal experience. My opinions regarding differences between traditional publishing and non-traditional publishing are based on my reading experiences. I have discovered some really wonderful authors and stories through non-traditional published books, but in my experience overall quality does not compare to agency pub books.
That doesn’t automatically translate into “all agency pub books = masterpieces” and “all non-agency pub books = garbage not worth reading.” Each category has its pros and cons, but, to me, traditonally published books have the edge on non-trad in terms of overall quality.
What insults do you mean? As I said previously:
“I have purchased no less than four of (Milan’s self-pubbed) ebooks and read one of them. While not an avid fan, I believe (Milan’s) work is quite promising and I wish (Milan) nothing but the very best with (Milan’s) artistic endeavors…I won’t be buying (Milan’s) work if I can get Agency pubbed books for the same or similar prices for which (Milan’s) books are sold. That’s not an insult; it just is what it is.”
My opinion of Milan’s storytelling is not based on alleged inferiority related to her work being self-published. My opinion is based on 1) my PURCHASING Milan’s work, and 2) my READING Milan’s work.
Ms. Milan is a professional, multi-published author. Her novels are her art form and she has made them available for consumption by the public. I’m confident Ms. Milan fully supports the reader’s right to analyze, consider, and formulate an opinion of her work’s quality.
If Ms. Milan and other DA participants do not support my right to do this, DA is a vastly more hypocritical community than I imagined.
Cordially, A.O. Vacation
@Author On Vacation:
Then I’m curious to know if you can compare the Writer’s Coffee Shop edition with the Vintage edition of James’s 50 Shades of Grey. I’m not being funny. I’m honestly curious, seeing that Vintage is a well-respected literary publisher and that, by your reasoning, Vintage should have the edge over Writer’s Coffee Shop in terms of quality. But I think you and I know that Vintage didn’t do much to amend the original edition of 50 Shades. So I wonder if you’d agree that a book published by a respected publisher matters more to you than the actual contents of a book regardless of its publisher. In short, a brand comes before a book?
Yeah, but sometimes you gotta do it for the lurkers. ;-)
Kinda like pointing out that AoV pretty much said she/he only bought certain non-Big 6 books because they’re lower in price and she/he is waiting for Big 6 books to come down in price even though of course they’re properly priced now, because even the absolute worst Big 6 pubbed book is still better than anything Courtney Milan ever wrote, but that’s not an insult because some indie books are good and some Big 6 books are. . .
Yeah, right. Now my brain hurts.
“Every single one of those things is an issue that should be addressed by anti-trust law enforcement, on every single one of them the government has been conspicuously silent.”
And yet the US government isn’t inactive on such issues, which makes me wonder if your allegations are as fatal as you think.
“90% market share in ebooks prior to the introduction of agency pricing, use of that position to engage in predatory pricing by dumping ebooks below cost as a loss leader, prior to that use of their size and position to strong arm special discounts on books from suppliers that were otherwise unavailable to other outlets. ”
These allegations ignore one crucial fact – there would be *no* substantial ebook market without Amazon’s lead in the first place. They are the market leader because they were the first to really exploit the possibilities of ebooks.
Nearly all my books are available at Amazon, both through Samhain and through Smashwords. *None* of them are ‘dumped’ below cost. Samhain is not part of any cartel, and neither is Smashwords. That allegation is false. It is not illegal to sell goods as a lossleader – every business and shop does it to entice customers. *Some* ebooks may be sold at an ultra low price. Most are not – they simply match the best price available elsewhere. I would pull my self-pubbed books from Amazon in a second if that wasn’t true.
“strong arm special discounts on books from suppliers that were otherwise unavailable to other outlets.”
No idea what this is referring to.
Amazon’s refusal in some jurisdictions not to collect sales tax isn’t unique. It may be a breach of tax regulations, but it’s not an antitrust issue as I understand it (caveat – not an American, not a lawyer.)
@Author On Vacation:
“I consulted with my parents after you posted this comment and they don’t see my view as problematic, either. ”
I bet they think your books are just swell too.
Have you considered that it might be time to end your vacation and go back to writing books which will undoubtedly knock Ms Milan’s right out of the park? Like spinster’s children, I’m sure those books yet to be written will be simply *perfect* creations.
DA: “Here is a summary of stuff that’s come out in the case against the Agency publishers, and it’s pretty damning.”
Reality-Based Commenters: “Holy cow, that IS pretty damning. What were they thinking?”
Commenters Who Confuse Me: “But Amazon is bad!”
RBC: “Buh? What’s Amazon got to do with the case?”
CWCM: “They’re big ol’ meanies, and IF the agency publishers did anything wrong, which they totally didn’t, it’s okay because it will stop Amazon.”
RBC: “No, it’s really not okay. And Amazon may have their faults, but there’s no evidence that they broke the law.”
CWCM: “Also, books published by the agency publishers are inherently better than anything else out there, so we should all be grateful to spend more money on them.”
RBC: “We vehemently disagree, and some of us have trotted out evidence that you are factually incorrect.”
CWCM: “Amazon is a bully, and my ethics and opinions are superior to all of yours, and breaking the law is okay if it hurts things I don’t like.”
RBC: ” O_o ”
CWCM: “Also, Courtney Milan, you show promise, but you’re nowhere near as good as the agency books I buy, and I’ll never buy you again on account of I’m a better judge of strawberries than you are, in spite of never having eaten a fresh, unprocessed one.”
RBC: *backing away slowly*
@Author On Vacation: I have purchased no less than four of (Milan’s self-pubbed) ebooks and read one of them.
Since Courtney has only self-published three titles (Unlocked, Unraveled, and The Governess Affair), I do not believe it is possible that you have bought FOUR self-published ebooks by her. Of course, her traditionally published books were published by Harlequin, which does not engage in Agency pricing. Perhaps, in your view, that puts them on a “par” with self-published books.
Maili, I think reading two separate copies of “50 Shades” is just too much Dead Sea meat for me to chew. Sorry.
Regarding your comments concerning branding, I’ve read lots of traditionally published and a good number of alternatively published books and I’ve come to harbor certain expectations concerning each “camp.” Those expectations have been formed through my personal reading experiences.
I don’t turn my nose up at non-trad books, but I’ve learned to accept that there will be at least some quirks concerning quality issues in these works. This happens in trad books, too, but in my reading experiences it hasn’t proved as consistent. The “payoff” with non-trad books is there is a broader scope of creativity, crossings of genres, etc…. Theyre’s just, overall, more adventurous than trad works. Works that trad publishers might find too risky or ambivalent can be found here, and that’s great. But often I find the writing or structures themselves a tad “rough.”
Again, this is my personal experience. Not saying everyone should agree or that their experiences can’t be different.
@Jackie Barbosa: Oh my goodness, you’re right about that. I just checked my reading device and I have “The Governess Affair,” “Unraveled,” “Unveiled,” and “unlocked.” “Unveiled” is not independently published. I stand corrected and I amend my earlier claim of having purchased and owned “4 independently published books” by Milan. I actually purchased and own 3 indies and 1 traditionally published novel.
I wonder if “Author on Vacation” is really “Big 6 Publisher on Vacation”…
Wahoo Suze, I especially enjoyed your post while imagining it illustrated with the “only sane person in the world” photo from Regretsy. Also, please marry me.
Lurkers definitely deserve to know that Courtney Milan repeatedly chastised and criticized one of her readers — someone who actually paid for her books — and called the customer/reader “a person whose only taste of strawberries is a McDonald’s shake.”
@Author On Vacation: You are so far out of line, again. Ridley’s not here, so I’ll say it: Get off the damn lawn.
@Darlynne: No ma’am, I am not out of line. You’re simply too irrelevant to know better.
@willaful: I just happen to be in the market for a spouse right now, but only if you’re well over 6’5″, speak 8 languages, are a supermodel AND a rock star, a world-champion martial artist, and a self-made bazillionaire under 20 years old (who’s also secretly a werewolf and immortal wizard). Cuz a girl has to have some standards, you know.
I tried to google for a picture of The Only Sane Person in the World, and came up dry. Perhaps you could attempt to gain my favours by having one of your superbly-efficient minions locate it for me.
@Author On Vacation: You seem to be taking this whole issue very personally, and you’re making less sense as the thread goes on. It might be time to take a break from it.
Cue appropriate line from Real Genius.
@Author on Vacation: I suspect you have an intense emotional and possibly financial interest in defending the Big 6. So with that, I’ll go back to writing and let you continue to chaw your leg off to get out of whatever trap you’re in.
@Darlynne: I haven’t said much because I haven’t had to. Author On Vacation trolls herself. I couldn’t write anything that would make her look any more foolish than her own words have.
@Author On Vacation: tah/wnlr
For your viewing pleasure, Wahoo Suze: http://www.regretsy.com/2011/04/21/yesterday-today-and-probably-tomorrow/
About halfway down the page.
@willaful: Yep, that is the appropriate facial expression for this thread. Thanks!
@Author On Vacation:
Lurkers are too busy laughing their arses off at Courtney and Wahoo Suze’s responses to your nonsense to give a flying fuck what you think they should pay attention to.
Of course if you weren’t too gutless to use your actual penname on these discussions, the fact you called a potential readers ‘too irrelevant to know better’ is a hell of a lot more damning than Courtney’s accurate assessment of your discernment.
Perhaps you should ask your Ma and Pa how you should proceed now. That would be appropriate since I doubt you’re allowed out in public without a legal guardian making sure you don’t walk into doors.
Okay, I am going to try to explain this in very small words: the problem is not what the Big Six charged for ebooks; the problem is that they colluded to set the price. It is entirely possible that Big Six ebooks might prove to be worth a premium price in the market on account of their production quality. Several people in this thread have asserted that they would be willing to pay more for these books, and you may not be the only ones. But the market has not been free to determine that. The power of consumers to determine a fair price through their buying habits has been blocked and that is what the lawsuit is about.
On the question of B&N, I do wonder whether the answer is simply that they have bricks and mortar stores, and there is still a feeling among many readers that this is an important and valuable service that’s enough to get them a free pass when Amazon doesn’t.
I don’t understand the correlation between the end of Agency pricing and Amazon taking over the book retailing world. The death of Agency pricing (and may it be soon) would be a good thing for Books onBoard, Fictionwise and All Romance eBooks, etc as it will enable them to offer the discounts and full service loyalty programs they want to. The Amazon haters should be happy about that.
Also, Wahoo Suze? I think I love you. :)
I don’t take the issue personally at all. For people “too emotionally invested” in the issue, you ought to look at some of the other posters. You know, the ones resorting to name-calling, abusive language, and other behaviors characteristic of folks lacking objectivity and plain decency.
Then again, as this thread eloquently demonstrates, objectivity is a scant commodity in this house indeed.
Ann Somerville, lurkers are laughing all right. Just not for the reasons you allege to be so.
I’ve always suspected all the rumpus about “book fail” and “authors behaving badly” was simply a dramatic device employed by this blog (and other blogs) to garner attention. Now I am most convinced of it. Evidently, D.A. is perfectly okay for authors to write and produce second-rate books and to abuse their readers and their reviewers in a public venue so long as that author is “one of the girls.”
Many thanks to all the participants in this discussion for revealing the obvious.
If the legal authorities decide the defendants are guilty of collusion and/or other offences, the defendants ought to be made accountable for that.
Just because I personally don’t see their actions as “bad” doesn’t mean I don’t think they’re not responsible for their actions. At no time have I said or implied they should not be held responsible. I don’t think anybody else has said so, either, although I could be mistaken about that.
@AuthoronVacation – your agenda is showing. Might want to have that looked at.
@Author On Vacation:
Right now you’re screwing up your blood pressure, ruining your weekend, and destroying your credibility. You may not believe the last one, but you can surely tell that the first two are true.
Take a deep breath, go for a walk, make a voodoo doll with my name on it and stick it in the fire, and then just let it go. Surely none of us are worth all this stress on your part.
@Author On Vacation:
What is making others in this thread feel that you do not believe publishers should be made accountable is your earlier denial of the fact that collusion=artificially inflated ebook prices.
In a free market, market forces (supply and demand and competition among companies) determine the price. Emails turned in as evidence in this case show that the publishers colluded to alter market forces. Because market forces were tampered with, yes, the defendants should as you say, “be made accountable for that.” But what is it you think they should be made accountable for, if not colluding to artificially inflate ebook prices?
Why have the Department of Justice and the state Attorneys General taken an interest in the case, if not because they believe the price fixing was unfair to consumers?
I have enjoyed a very relaxing and productive weekend with family and friends, thank you.
Ms. Milan, I am not about to reproach you for insensitive speculations concerning my supposed health issues and supposed religious beliefs. No se habla estupido.
As to your concern your antics and whoever else — who exactly is “we,” anyway? — constitute a source of stress to me, I assure you that concern is misplaced.
@Kaetrin: I wonder how much of the Amazon-hatred is coming from mere consumers and how much is coming from publishing professionals, retailers, and/or authors. I do think publishers managed to sell some authors a bill of goods when they started what they referred to as Agency pricing. I remember a number of authors coming right out of the gate to defend the publishers and admonish Amazon as All Evil.
As a mere consumer, my experience with Amazon has been stellar. Responsive customer service, extensive product availability, the amazing Prime program (which is especially fab with a Kindle Fire), and competitive pricing. Do I want Amazon to be the only successful retailer? No. But how the players in this particular game think/thought it was okay to essentially (allegedly) rig the market is beyond my understanding, especially when so little has been done in the years since this all started to create more competition with Amazon. Publishers have done little, IMO, to sway public opinion to their side or acknowledge the existence of/reach out to consumers; BN hasn’t offered me competitive enough prices; and Apple, well, as much as I love Apple products, I’m not buying books from them and object to a number of their business practices. Whatever the proffered reasons this alleged collusion took place, the other entities were very obviously looking out for themselves, NOT for consumers (and I don’t think for most of their authors, either, especially not their mega-selling hardcover authors, but that’s another story for another day). Blaming Amazon may be a convenient red herring, but to me it would be like Hoover blaming Dyson for building a better vacuum and Costco for selling it too cheaply. That so much blame has been foisted on Amazon is, IMO, indicative of how little like most consumer-oriented industries publishing has been, and how entitled some may feel to that status quo, no matter how inefficiently and unhealthily it may have served them.
@Author On Vacation:
Someone needs to tell the programmer of this bot that it can’t pass a Turing test, let alone a Voight-Kampff test.
Where’s Rick Deckard when you need him?
@Robin/Janet: I’m not an Amazon hater at all. (Well, sometimes I get cross with them when I realise that $2.99 Loveswepts in the US are $4.54 in Australia with allegedly “free” Whispernet delivery when the USD and AUD are basically on part… but, I digress). I shop at various online book retailers, Amazon being only one of them. As my preferred format is ePub, I generally go to other places first but I do buy fairly regularly from Amazon. I’m a consumer and as a consumer, I want price competition. I want retailers to be able to woo me with reward programs and discount offers and coupons etc – which they can only do now if the exclude Agency books. I’ll be delighted when Agency goes the way of the dodo.
@Kaetrin: I’m a consumer and as a consumer, I want price competition. I want retailers to be able to woo me with reward programs and discount offers and coupons etc – which they can only do now if the exclude Agency books.
I agree. In fact, since so-called Agency kicked in, my purchasing has narrowed considerably, in part because I have a Kindle, but largely because Agency killed selection for me at Books on Board and Fictionwise, especially as compared to Amazon. Which is pretty ironic, given all the blather about more competition for consumers.
I think this is really about killing more than Agency, though (in fact, I HATE that term, because it’s not even accurate, but, boy, is it embedded in our vocabulary — like a tick, I’d say); I think it’s also about getting the Big 6 to bring their business models in line with the changes in the reading market and the more fluid conceptions of “the book” that have evolved over the past decade. It just seems incredibly outdated to me to base an entire industry on the hardcover, especially given the relatively few authors who sell big in that format, as compared to the meat and potatoes mid-listers. That publishers have managed to be profitable with that model tells us something about how much potential profit there is to be made in books. If, that is, the stubborn devotion to a single format is finally defeated by the the market’s conformity to consumer behavior, as opposed to the attempted bullying of consumers to conform to publishing’s ill-fitting “Agency” model.
In another thread the upcoming Carla Kelly title is mentioned. I think it’s a brilliant example of what the free market was doing with e-books before the price collusion.
If I want the book today, I can buy it directly from the publisher (Harlequin) for $4.79. If I have a coupon, I can use one. (The only choice is epub, but most readers have figured out how to strip and sideload in other formats if needed.)
If I want the book in paper, I can order it from any bookstore and it releases on May 22. Amazon is charging $6.25 but offering it as a 4 for 3.
If I want the book in Kindle native form from Amazon, I can have it on June 1, at a price of $5.09. If I have a coupon, etc. (In fact I DO have a coupon and could have gotten the book for free from Amazon, had I not already downloaded it from Harlequin.)
I have choice as a consumer. The retailers have choices, the market sets the prices. This is how the economy legally works.
These aren’t the droids you’re looking for … We can go about our business … Move along …