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Judge Approves Settlement In eBook Price-Fixing Case
An anonymous reader writes "On Thursday a U.S. District Judge approved a settlement between the Department of Justice and three publishers accused to colluding to inflate ebook prices (order). 'The Justice Department had accused Apple and five publishers in April of illegally colluding on prices as part of an effort to fight internet retailer Amazon.com Inc's dominance of e-books. The publishers who agreed to settle are News Corp's HarperCollins Publishers Inc, CBS Corp's Simon & Schuster Inc and Lagardere SCA's Hachette Book Group. Apple; Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and Pearson Plc's Penguin Group have vowed to fight the Justice Department's lawsuit with a trial due to start on June 3 next year.' The decision came after a lengthy period of public comment. According to the AP, 'The ruling released Thursday cast aside the strident objections of Apple, other book publishers, book sellers and authors who argued the settlement will empower Internet retailing giant Amazon.com Inc. to destroy the "literary ecosystem" with rampant discounting that most competitors can't afford to match. Those worries were repeatedly raised in court filings about the settlement. More than 90 percent of the 868 public comments about the settlement opposed the agreement.'"
how do you sell an ebook copy at "below cost"? that implies that amazon paid authors out of their own pocket? is this right?
(because, in the sw world.. amazon actually makes the author accept zero payment for the privilidge of amazon giving the sw away as promotion)
world was created 5 seconds before this post as it is.
I have mod points. Now, if only there was a '+1 Flamebait', because, as right as you are, you are going to get a thrashing.
Slashdot - News for Nerds, Stuff that Matters, in ISO-8859-1 Has just realised that beta makes this signature redundant
I, for one, hope this results in lower eBook prices.
I have a Kindle (and Nook tablet) that are underutilized because I refuse to pay more for an eBook than I do to have a paper book delivered to my house. About the only eBooks I read are from Smashwords or Baen. Almost every book I've bought from Amazon has been a used paper book because they are typically about half the price of an eBook.
After 2 years with the Kindle, I've bought exactly 3 Amazon eBooks - all purchased before traveling since I didn't want to carry around heavy paper books. I've never gotten around to reselling my used books (which would net me another dollar or two of savings), so my local thrift shop has been getting them.
Yeah, lots of the comments were opposed. The judge looked through them, and saw that all the reasons people/groups/corporations were opposed weren't illegal or anticompetitive. So, no reason to reject the settlement.
I am getting pretty annoyed how so many companies are being settled with for legal issues, at cost of a mere pittance to these companies.
I want to see the ban hammer come down and come down hard on these guys. If i break the law with something as simple as a parking ticket, that is a substantial cost to me. if I were to break the law in something major it screws me for life. Why is this not being applied to corporations?
Price fixing? confiscate ALL past profits gained from of the fixing, and fine future profits as an exponential multiplier of the fixing revenue. not to mention jail time for the crooks who okay the fixing. make companies leave yellow piddle marks when people even suggest they could be price fixing, colluding, bribery.
Troll, Troll, go away and flame again some other day
It's amazing how ferociously the old giants fight when they're faced with obsolesce. I'm sure at one time the big publishing houses served a purpose. (Editing, promotion, collective use of expensive book printing/manufacture facilities).. But now the internet has turned them in to largely redundant middle men that still believe they can leech the system forever.
I hope Amazon kills every last one of them. I hope so because consumers can then realize the better prices that digital distribution should bring. Not to mention authors, who should see a bigger cut of sales without a literally 100 year old obsolete institution soaking up their profit.
They need to make it easier to download their ebooks, in more formats, without DRM (which Amazon has)so third party applications can organize the downloads better. In other words, provide more value than Amazon currently offers.
Take the cheese to sickbay, the doctor should see it as soon as possible - B'Elanna Torres, "Learning Curve"
Every once in a while we need a maverick. Amazon will undersell and bring back fierce competition to the benefit of the customer. Eventually, it will grow and become another apple, but until then, rejoice.
A 'singular oddity' is an event that cannot be explained and only happens when you are alone.
Do you realize that the agency model was designed to allow for publishers to set the prices thereby removing the power from the distributor/seller and to disrupt Amazon's monopoly?
Amazon could, at first, offer lower prices to the consumer until they wiped out the competition but once they were supreme, they could jack up the prices or try to gouge the publishers/authors for lower wholesale prices with threats to not carry their books in the future.
You seriously should not be happy with a monopoly of the justice department enforcing a return to a monopoly. The market should be allowed to decide. If a book does not sell well, the market forces should cause the publisher to lower the sale price until it does sell.
Amazon, in the digital space, and Wal-mart in the brick and mortar space, were actively using predatory pricing to squeeze out all of the other competition. That situation is not good for the consumer in the long run.
Jesus was a compassionate social conservative who called individuals to sin no more.
Do you realize that the agency model was designed to allow for publishers to set the prices thereby removing the power from the distributor/seller and to disrupt Amazon's monopoly?
So instead of Amazon having a monopoly the publishers get one. Your logic fails. Having a monopoly isn't illegal either. Abusing that monopoly is. Amazon never attempted to stop others from selling anything.
But news corp is owned by Murdoch! And murdoch is a major proponent of 'free markets'.
Boy, those free market libertarian fantasies always seem to fail. Even the champions of these ideologies exemplify the failures of deregulation.
Collusion. ~a market situation that arises when the people naively trust business so much that they have no rules, and the business is still prioritizing capital gain as usual.
Since publishers switched to the agency model, whenever I found an ebook priced higher than the print price, I added it to a "stupid publisher" wishlist. Some have dropped off when prices changed or I decided to buy them anyway, but last I checked, buying ebook version of all 342 of them, it would be about $1400 more.
Some of the prices were clearly higher because the publisher was too lazy to lower the ebook from hardback pricing when the paperback came out.
Most, though, were 9.99 and, more recently, 12.99, which is just a blatant "we're screwing you and we want you to know it". I look forward to authors getting the higher ebook royalty rate when those books drop down to paperback price and I subsequently purchase them.
This will certainly wreck Apple's 30% profit margin ecosystem. The whole publishing ecosystem I'm less certain about.
Monopoly ... mono ... kind of indicates the singular so I don't see how multiple publishers can have a singular monopoly. Certainly, the big 5 can be dickish but there are hundreds if not thousands of smaller publishers out there; I work for one. I would consider dumping product as an abuse of a monopoly and Amazon had done just that with our books in the past and there's no reason they won't do so in the future to further cement their monopoly in online physical book sales and e-books via the Kindle.
So instead of Amazon having a monopoly the publishers [i.e., more than one] get one. Your logic fails.
Speaking of logic fails...
An enigma, wrapped in a riddle, shrouded in bacon and cheese
So instead of Amazon having a monopoly the publishers [i.e., more than one] get one. Your logic fails.
Speaking of logic fails...
No, not if they are acting in collusion. Then they are essentially operating as a single entity to fix prices. My logic is quite reasonable.
I believe the term your looking for is oligopoly. You have the choice of a monopoly of the retailer or a oligopoly of the big 5 publishers. I would argue the oligopoly is preferable to the monopoly due to barrier of entry. There are hundreds if not thousands of smaller publishers that might not rival the oligopoly in terms of size but we can remain profitable and every once and a while hit it big with a best seller. Amazon is already entrenched as a practical monopoly and I just don't see how any sort of small upstart is going to overcome that. Small publishers can and do exist in the existing oligopoly but small retail outlets will not with Amazon's ability to dump product.
I have owned a kindle for about a year and a half. I own over 110 ebooks (most are tech, but also some fiction, classics, etc).
I have *never* seen a printed book cost less than the kindle ebook of the same title. I essentially always buy the ebook over the dead tree version, and aside from instant access, the reason that I do so is because the kindle version is frequently 30% (or more) less cost than the physical version (before thinking about shipping costs). Where are all of these books that are more expensive for kindle than for the paper versions? (Hint: they don't seem to be O'reily, Cisco Press, Apress, SAMS, Sybex, or Microsoft Press.)
Grandpa: My Homer is not a communist. He may be a liar, a pig, an idiot, a communist, but he is not a porn star.
It is a monopoly if they are colluding on prices.
Help I am stuck in a signature factory!
So your preferred solution is one where you can choose between multiple retailers but those retailers don't actually bother to compete with each other on price or content. That's not much better than an Amazon monopoly. By the way, the DOJ complaint details why your claims of predatory pricing by Amazon are largely unfounded
An e-book monopoly? What on earth are you talking about? I'm sure Apple, the most valuable company in history, has more than enough cash to match whatever price Amazon feels like charging. And don't forget B&N, whose Nook is selling pretty well, if not as well as the Kindle.
In addition, a Kindle will easily read books from other online stores; about 2/3rds of the books on my Kindle didn't come from Amazon, and few of those books are available in electronic format through Amazon.
In addition, it's silly to talk about theoretical future harms from a currently non-existent Amazon monopoly, when we have Agency Pricing, which results in artificially inflated consumer pricing right now.
And how is Wal-Mart's pricing power bad for consumers? There has been little evidence to date that Wal-Mart raises their prices after the local competition shutters. Their consistently low prices (and forcing low prices at their competitors) has been really good for consumers, if not so hot for jobs.
It is a monopoly if they are colluding on prices.
No;
That word doesn't mean what you think it means.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
Yes, Amazon paid some authors out of thier own pocket. It also pays publishers directly as well. They purchased a book for $20 wholesale and sell it for $9.99 as a promotion. This is selling below cost. No evidence they were losing money on all their ebook sales. Amazons strategy is low low low margins. They lose money on best sellers and make up the loss with other books. They can do this because of the huge volume of sales that is possible when you have low low low margins. Their strategy is the exact opposite of Apples.
Ah. This.
Exposed to the facts of Amazon's actions, yeah, they're a horrible, terrible, no-good, very bad corporation. BUT...
The publishers want, it appears, to kill ebooks. It seems they'd rather not bother with the whole thing, because the prices they set are fucking insane. It costs approximately $0.0001/copy to produce and deliver my copy of, say, "Godzilla vs. Harry Potter", which is considerably cheaper than their cost to print, warehouse, distribute and track sales on an actual dead-tree copy. Yet the price for the ebook is many thousands of times the cost of production, whereas the margin on the dead-tree version is some double digit percentage points. (yes, I understand there will be profit+royalties added to that cost)
Now, I don't wonder that the publishers like this. Oh, they like it a lot, I can tell. But this conflict, wherein an evile corporate entity wants to overcharge for a new distribution method is battling against another evile corporate entity that wants to charge a more reasonable price initially to establish a monopoly, has no good guys, no heroes and no one to root for.
So I'm not buying ANY ebooks, as the technology is being held hostage. I'll just have to read or re-read the thousands of hard copies of books I've wisely stocked up (against my wife's regular suggestion that they be tossed or donated). That said, the Nook is a fine streaming media device, with a lot larger screen than a smart phone, and a decent mobile internet access device. And it was cheap!
Screw Amazon and especially screw the publishers. (if they weren't a cartel, they wouldn't be able to so effectively prevent reasonable pricing of ebooks from competitors. If this were to happen, I'd buy from them, but gee...somehow nobody can manage to charge $3-4 for ebooks. Maybe a coincidence, eh?)
The author-editor team didn't make anything from your used books.
It's a sticky topic. I don't want to go off the rails from your post, just point out that used books have that crucial payment to the creators stripped out -- it's an unsustainable comparison. Matching that price means no books produced.
Napkin time:
FWIW I make about the price of an okay coffee per book sold. Figure with technical books that 30k copies is an amazing success. (Not as crazy as it sounds. UK + US + CAN = ~ 400 million people; a small 100,000 person city would have 8 copies of a technical book sold to make 30k overall. That's all the people who /could/ be interested. Going to ebook format does not change this limit.)
Tech books often, but not always, have multiple authors. Figure that, plus don't forget a chunk to cover the time of the editor and tech proofers.
It's not big money on the receiving end. The old joke about burger-flipping making more per hour isn't really a joke.
But now you've got a cost of several dollars over the 'raw log delivery' of getting a used paperback from Amazon. Ebooks have to have that cost included or there just won't be books made.
So while I totally appreciate wanting to have eBook prices lower, there's a core-cost problem you should be aware of that prevents it from going anywhere near as low as most people think at first.
[AC post; my publishing contracts require me to say nothing at all about my publisher etc, unless it's rainbows and unicorns.]
I concur. With the digital distribution of written works, so long as you have a decent selection of distributors (particularly ones that accept self-publication) then the barrier to entry to the market is almost nil. A cartel on the publishing side means that major publishers can try charging $100 for Harry Potter if they'd like, but that's really all they can do since they can't compel other publishers/authors to stick to their high prices.
On the other hand a cartel or monopoly on the distribution side creates a chokepoint that rivals the world of physical print today. Getting your book listed would put you at the mercy of at most a couple of powerful distributors. Since all of this is virtual they'll probably list your work, but they get to dictate the prices and the share of the proceeds.
Ultimately with eBooks distributors become the new publishers, and publishers become a new type of middle-man. This means it's the distributors you need to be worried about, as the publishers are no longer capable of making themselves the chokepoint.
Monopoly ... mono ... kind of indicates the singular so I don't see how multiple publishers can have a singular monopoly.
https://en.wikipedia.org/wiki/Oligopoly
https://en.wikipedia.org/wiki/Cartel
The main difference is that Cartels involve purposeful collusion, while Oligopolies usually end up with the same behavior without active collusion.
I would consider dumping product as an abuse of a monopoly and Amazon had done just that with our books in the past and there's no reason they won't do so in the future to further cement their monopoly in online physical book sales and e-books via the Kindle.
Which is probably why Amazon thinks the settlement is such a great deal:
Speaking at an event in California to unveil new Kindle Fire tablet computers, Amazon executive Jay Marine said the settlement was "great for customers."
(by customers he means Amazon can start again in 2 years and doesn't have to pay any fines)
[Fuck Beta]
o0t!
But it depends on the books.
Almost anything physically available at my local B&M Chapters/Indigo/etc is at least the same price on Amazon for an eBook. Often more. The big publishers seem intent on charging more for eBooks than the physical copies, even though it should cost substantially less.
End result: other than a few favorite authors/series I'm finishing off, I've purchased a lot less of those books.
What I did find is a TON of books by author's I'd never heard of. Often they're not books I'd see at my local B&M, but I've bought over 50 books since last April. Average price is around $5 or less. Some authors are really smart and sell the first book in a series for $1-3, and the later ones for $5+. Still more reasonable than the bookstore, but it seems more fair to both the readers and the authors.
Price in eBooks should reflect a few things:
a) The distribution model is cheaper: once you've got the first copy out making additional copies is a few pennies more
b) Selling further books is easier. You finish book 1 in a series, and most ebook readers will "recommend" the next one
c) There isn't a resale market for ebooks. This is lost value for the purchaser, but may result in more "new" sales for the publisher and writer etc
From the very link you provide, under "Historical monopolies":
Robin Gollan argues in The Coalminers of New South Wales that anti-competitive practices developed in the coal industry of Australia's Newcastle as a result of the business cycle. The monopoly was generated by formal meetings of the local management of coal companies agreeing to fix a minimum price for sale at dock. This collusion was known as "The Vend". The Vend ended and was reformed repeatedly during the late 19th century, ending by recession in the business cycle. "The Vend" was able to maintain its monopoly due to trade union assistance, and material advantages (primarily coal geography).
So, let me repeat: it is a monopoly if they are colluding on prices.
The reason being that they are now acting as one entity and are not competing with each other.
Help I am stuck in a signature factory!
So, what do you, as a representative of a "small, independent publisher", charge retailers/distributors for eBooks? Do you stand up and make your product available at less than 100% profit? (which would, apparently, put you at odds with the Big Book cartel.)
Or is your company just happy to go along with the ridiculous markups of the big publishers and count the extra profits till ebooks are given up as a bad idea? (or, I guess, people just accept the $0 production cost/$2 royalties/$8 profit model)
Somewhere in this whole mess, competition is being suppressed for the sake of inflated profits at both Amazon and the cartel publishers.
is why aren't there antitrust proceedings against Amazon? They have a monopoly on ebooks, although I will admit that they earned legitimately. But you can only read those ebooks on a Kindle. Therefore, they're leveraging their monopoly on ebooks to sell ebook readers.
And to respond to some of the obvious rebuttals:
1. Yes, I know they're not the only ebook store on the Internet. But Windows was not the only operating system during Microsoft's antitrust trial. A monopoly doesn't have to be 100%.
2. You could argue that the Kindle wins on features anyway. Maybe so, but if Amazon thinks they can win on just features, why don't they sell ebooks in the less proprietary epub format, that can be read on other devices than just the Kindle?
3. And no, I'm not an Apple shill. I'm actually fairly anti-Apple. I don't care where I get my ebooks from. I just don't want to be locked into a self-reinforcing ebook/reader combination. I don't want to buy books that force me to buy a particular reader, which then forces me to buy my books from a single source.
Third, even if Amazon was engaged in predatory pricing,this is no excuse for unlawful price-fixing. Congress “has notpermitted the age-old cry of ruinous competition and competitiveevils to be a defense to price-fixing conspiracies.” Socony-Vacuum Oil Co., 310 U.S. at 221. The familiar mantra regarding“two wrongs” would seem to offer guidance in these
The judge can't approve price fixing just because another company is dumping. If Amazon is dumping the publishers should sue Amazon. Or file a complaint with the Department of Justice. Amazon is innocent untill proven guilty of Dumping. They Judge can't take the law into his own hands and punish Amazon without a trial.
This term is a far more accurate descriptor.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
You greatly misunderstand the way small publishers interact with Apple and Amazon. They dictate the terms to us, not the other way around. I'm not in sales but from what I gather both Amazon and Apple have restrictions on how much we are allowed to charge. If memory serves, no more than the lowest priced physical equivalent.
Perhaps, but an oligopoly doesn't mean that they are actively colluding, as was the case here. Because of the active price fixing, this effectively became a monopoly because all members were in talks regarding keeping prices up.
Help I am stuck in a signature factory!
Why would Amazon ever become a monopoly? Any monopoly requires substantial barriers to entry. There are none in selling ebooks -- just set up a web site! If Amazon tries to implement monopoly pricing, competitors, which should also include the publishers themselves, will spring up like mayflies.
Direct sales via the web is also the publishing industries' best response to any monopsony power Amazon may try to exert. They can sell their e-books at whatever wholesale price plus markup they feel is appropriate. Amazon could try to put them out of business but that is hard to do when Amazon is buying from them.
My biggest fear is that the publishing industry will realize that they don't need resellers for ebooks. After all, who in the past has shown the greater consideration for their customers? Amazon or the publishers?
...you mean like every 'Stockholm Syndrome'-ed supplier to Walmart? The giant corporations more than willing to debase themselves for increasingly less profit to appease the 600-pound gorilla in US retail?
But I'm not surprised the publishing industry isn't already aware of this, given that the only book genres in Walmart are Christian Fantasy and Right-Wing Fiction.
Don't like Amazon? Sod off and do your own online delivery. With Amazon (or other large online retainer), you're not just putting your crap on a shelf, you're buying into their ecosystem and hundreds of millions of customers. No one forces you to use them. You do because you are lazy and want a free ride. Try getting your pulp into Walmart or Target, and them come back and whine.
Again, you clearly do not understand the market. Our customers force us to sell via Amazon; that is where they want to purchase our books. We do sell to Walmart and Target although they use intermediary buyers. We are also working on our own online delivery but that won't make a lick of difference. Amazon already has the monopoly on internet book retail and e-books and we are not likely to rival them in any meaningful way. Nor do we want to; we just want to publish books.
There is no barrier to entry to do what Amazon does. You just need a website and and a Ipad application. The technical service that Amazon provides is tiny. If they ever raised prices new competition would eat Amazon alive. The costs are so low for Amazon competition that Amazon can't drive them out of business. Even if Sony or Barnes and Noble never sell another best seller their ebook business can stay alive. Only physical stores are at risk.
The only way Amazon can become and remain a monopoly is by keeping prices low. As soon as the prices rise high enough it will become worthwhile for competitors to spring up (especially since there is a very low barrier to entry). Also, books are not a requirement of life. If the prices become too high, people will stop buying as many books, and Amazon will make less money, forcing them to lower prices.
It is weird that you pick Amazon and Wal-mart as examples. While it is true that their low prices forced others out of business, there is zero evidence that they have raised prices above what the competition was originally charging. That would be predatory pricing.
How long, exactly, is the 'long run'? Wal-mart has had pretty much a monopoly for certain things in my area for about 30 years. Prices are still low. When is that magically going to change?
Isn't this what Walmart does or has been accused of? Coming into small towns, selling at a loss until the competitors die, then jack up the prices??
Looks like you really bought Apple's lawyers' argument hook line and sinker. I've never heard anyone explain how Amazon is going to bankrupt Apple and also jack up the prices of ebooks despite there being billions of real books that have the exact same text in them that one can buy or borrow. Also, why can't the Justice Department wait until Amazon actually starts screwing people? Right now Apple's screwing people hard by price fixing, and it doesn't make much sense to me to allow Apple to screw people now so that in a lawyer-imagined fantasyland of the future Amazon won't screw people.
Paramount for ripping off their flashlight?
Prior Art.. by real artists!
As a customer, I will pick the one monopoly (or oligopoly... it doesn't really matter to me) that will result in me paying lower prices. So far, Amazon has consistently delivered on that count, for years that I've been its customer - not just on books, but on other stuff.
The real money in publishing is not in the grunt work publishers do. There is not much money in connecting a writer with and editor. Not a lot of money in loaning authors small amounts of money. The real money is in controlling distribution. Publishers are ranked based on how many books they can sell. With Amazon they had no control. No control over distribution or even price. They could no longer pick winners and losers. Amazon had books at $9.99 to accelerate the physical to digital switch. Agency pricing is a delay tactic by the publishers.
Lets see, I can pick up a paperback book with a retail of $9.99 for $7.49 at the local grocery store, Target or Walmart or buy a eReader for $70 to $250 then pay $9.99 or more for the ebook. The publisher had to print the book on paper, ship it to a distributor who then ships it to a brick and mortar store who has to mark it up to cover his operating costs and generate a profit. But I have to pay a higher price to Amazon or Apple for the same book who had no distributor or retailer handling costs for selling the same book at a higher price. I doubt that the author receives more money for an eBook than a physical book. Until they get the prices right on eBooks I'll keep killing trees. I don't mind people making money off of me, but I'm not giving it away due to unfair profiteering.
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