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.'"

Comments

below cost?

[gl4ss]

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)

Re:below cost?

[hawguy]

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)

The same way a grocery store can sell milk for $2/gallon when it really costs them $2.50/gallon.

They pay the distributor the full $2.50, then eat the extra 50 cents themselves as a cost of getting more people in the door.

http://en.wikipedia.org/wiki/Loss_leader

Amazon can make up the difference on other products that the user may purchase from Amazon when they stop in to buy a book. Other retailers (like B&N and Apple) have a less diverse product catalog so if they take a loss on eBooks it's harder to make up the difference somewhere else.

Re:below cost?

[jandrese]

As I understand it, the books aren't actually "below cost", they're just below what the Publisher charges for their own version of the same ebooks. Amazon can't really afford to sell the books below cost because books are their primary business, especially on the Kindle. You can't make your biggest income source a loss leader for long. This sounds a lot like publishers going "mah profits!!!" because they thought they finally had a way to destroy the secondary market with ebooks and get everybody to pay retail again but then Amazon came along and wrecked their plans by selling below MSRP.

Re:below cost?

[crmarvin42]

They don't want to be beholden to a single distributor. If that happens, then Amazon can start more aggressively pushing the wholesale price down. The publishers will have no other retailer to go through, and will be forced to make those concessions to keep their wares listed in the largest (and in the minds of many e-shoppers, only) book seller.

To them, its' not about what they are getting paid today, but about what they are going to be getting paid 5, 10 or 15 years from now. They are resisting being pulled into an endless loop of lower retail prices leads to lower wholesale prices, which leads to lower retail prices and again to further reductions in wholesale prices, et infinitum. In that scenario they end up subsidizing Amazon's success in the long run in exchange for Amazon subsidizing their revenues in the short term.

But the publishers are big enough to not let Amazon push them around

Only if their is a relatively diverse pool of resellers to whom they can sell. The Agency model allowed them to stop Amazon's price spiral precisely because Amazon couldn't force everyone else out via agressive loss-leading. If they are forced to give up the agency model, then they will have little recourse to prevent the eventual bankruptcy of their business (from their perspective at least).

Re:below cost?

[Beetle B.]

Of course, the smart publisher would not sell a license to Amazon. Perhaps it's because my knowledge of the matter is admittedly incomplete, but I fail to see what leg these publishers have to stand on, considering.

Your so-called smart publisher would not value his brains when he has to shut down as a result.

Amazon has a huge edge on ebook sales - ask any publisher how many of their ebooks are sold on Amazon vs all other venues combined.

People don't go for the best products on the market. Everyone I know other than myself bought a Kindle instead of better alternatives. Their argument always was: "Oh, your device may be better, but Amazon has the largest selection."

"OK, what ebooks do you want that can only be bought at Amazon?"

No answer. Because there aren't any. Sure Amazon really does have a larger selection, but no one I personally know wants any of the exclusively Amazon ebooks anyway.

But would a consumer do that analysis? No. Not even when it's pointed out to them before they buy.

Guess how many of these Kindle owners buy ebooks from anywhere other than Amazon?

0.

So yeah, a publisher can say, "Nah, we won't sell on Amazon" to which Jeff Bezos will throw some change their way saying "Here're some pennies for when you become homeless."

Re:Lets face it....

[DeathToBill]

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.

Will this result in lower prices?

[hawguy]

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.

Re:Will this result in lower prices?

[hawguy]

What are you willing to pay? I personally buy books from Amazon all the time for Kindle, even though I have a Nexus 7 now. Amazon offers the best prices out of everyone I've checked.

Ideally, I'd pay around $6 or so, which is what I typically pay for a used book to be delivered to my door. (and I usually pay $4 - $6 on Smashwords or Baen)

Here's an example of pricing that makes no sense (assuming free Amazon Prime shipping)

        The Amateur - $16.99 hardcover, $9.99 eBook, $6.99 paperback, $6.88 used

Even moving off the bestseller list and going to an older book doesn't help

      Fahrenheit 451 - $13.78 hardcover, $9.99 eBook, $7.19 paperback, $6.88 used

Why is the paperback priced lower than the Kindle? I paid $100 for an eReader and publishers want me to pay more for the privilege of reducing their distribution costs?

It does go the other way sometimes too -- usually (but not always), the eBook is cheaper than the hardcover, but more often than not, the eBook seems to be priced more than the paperback, and is almost always more than a used book.

ban hammer these companies

[medelliadegray]

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.

Re:Boohoo your old buisness model is obsolete.

[bdam]

I work for a publishing company and ... this is going to blow your mind ... a significant majority of our authors wouldn't want to have to be responsible for editing, promoting, designing, and selling their product. They also tend to really like that we give them money in advance before they even have a finished manuscript. Their book could sell zero copies but they at least got several grand out of the deal; it's a comforting thought when putting in months of effort. Are there examples of authors out there who do like to take the hands on approach and can it work out for them? Sure. I seriously doubt however that our 60+ year old Amish fiction author wants to try and figure out why InDesign hyphenates across a page break despite being told not to when you add a hyperlink text destination for the table of content.

Re:Do you guys support Amazon as a monopoly? Reall

[bdam]

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.