DRM Lawsuit Filed By Independent Bookstores Against Amazon, "Big Six" Publishers

concealment writes "Three independent bookstores are taking Amazon and the so-called Big Six publishers (Random House, Penguin, Hachette, HarperCollins, Simon & Schuster and Macmillan) to court in an attempt to level the playing field for book retailers. If successful, the lawsuit could completely change how ebooks are sold. The class-action complaint, filed in New York on Feb 15., claims that by entering into confidential agreements with the Big Six publishers, who control approximately 60 percent of print book revenue in the U.S., Amazon has created a monopoly in the marketplace that is designed to control prices and destroy independent booksellers."

Comments

Raise the price of books and see a mass exodus

[Anonymous Coward]

Prices for most ebooks from amazon are priced correctly. best sellers being 15$ where a hardcover is 32.... raise that 15 and watch piracy skyrocket.

Re:Raise the price of books and see a mass exodus

[pwizard2]

Even $5 is too much for a ebook unless it's brand new. I can buy a dead-tree version of a paperback novel for less than that if I wait until it's on the clearance rack or get it secondhand. A dead tree book has to be printed, bound, and shipped someplace and there are inherent production costs. A file can be replicated an infinite number of times so there's no cost involved in production after the publisher has paid someone to convert the original text to pdf, epub, or mobi format (unless you count the cost of bandwidth, which is negligible). Everything they make on ebook sales is pure profit.

Re:Raise the price of books and see a mass exodus

[hawguy]

I hope you're joking. $15 for any fiction ebook is not a sound business model. I'd buy a good ebook for $5, but not $15.

I can only accept prices like that for certain kinds of non-fiction works where the market is smaller and the production/compilation effort is way higher.

I agree - if I'm going to pay for an eReader that takes away nearly all of the printing and distribution costs of a book along with most of the marketing costs, then I expect a significant discount on a $30 hardcover that's routinely discounted to $17 which is later sold as a $12 paperback discounted to $8.

$5 - $7 sounds more reasonable. Many Kindle books are priced higher than the discounted paper edition - even though I find reading the Kindle to be more convenient, I usually end up buying a used paperback (or even hardcover) because they are usually less than half the price of an eBook. I could even sell the used book after I'm done for a few dollars, making it even cheaper (though I usually just donate them to Goodwill)

So instead of getting $5 from me (minus the bookseller's profit), the publisher gets $0 from me for most of the books I read.

Re:Raise the price of books and see a mass exodus

[pwizard2]

Addendum: The only way I'd agree to pay $5 for an ebook is if most of it is going to the author (not the publisher). The author did the work so they deserve to get paid more than the middle man does. If the publisher is going to take all the profit, then piss on 'em. Otherwise, 99 cents for a DRM-free ebook in the format of my choice sounds fair to me.

Re: Raise the price of books and see a mass exodus

[Anonymous Coward]

I disagree. You obviously need to spend more time with pre-edited books- most novels before editing are barely readable. The editors work for the publisher, who also promotes the book and acquires the copyright in most cases.

As long as the author was getting at least a third I'd be ok.

Re:Raise the price of books and see a mass exodus

[dgatwood]

Except that it's much, much easier to prepare a book for print than it is to prepare an eBook. Preparing a book for electronic publishing is a bit like designing a web page in the mid-1990s, except that there are a lot more eBook reader vendors than there were browser vendors. Each one has its own set of quirks, some of which are... shall we say rather sizable sets. A single copy of your content has to look at least acceptable when used with all of those readers.

As much as I swear about the amount of time it took to create several thousand lines of custom LaTeX macros when designing the print edition of my novels, it pales compared with the amount of time I've spent on EPUB, MOBI, and KF8 versions. It has taken at least an order of magnitude more work, and that's a conservative estimate.

In addition to working around all the reader bugs, you'll also find yourself swearing at the lack of good fonts that can legally be distributed in such an easily opened format, particularly if you are distributing your books DRM-free. A big chunk of my time has been spent taking existing SIL-licensed fonts and redesigning parts of them so that they actually look acceptable. That's a lot harder than it looks.

Finally, the tools out there for doing electronic publishing leave much to be desired, particularly when it comes to working around all the aforementioned reader bugs. The folks working with major commercial design packages are having just as much trouble as those of us who are writing our own tools from scratch—maybe even more so, given that they don't have an easy way to fix bugs in their tools.

If my time has any value, I can't foresee a future in which the electronic versions of my trilogy of novels ever break even. I'd have to clear at least a couple hundred grand. That's a heck of a lot of books at ten bucks apiece (of which the publisher gets a lot less than ten bucks). Perhaps in ten years, when the technology has improved dramatically, eBook sales will be pure profit. Today, however, except for very, very basic transfers that eschew formatting altogether, I'd imagine that most eBooks are loss leaders.

Re:Raise the price of books and see a mass exodus

[fish waffle]

The publishers need to do a better job of lowering prices as time passes and on older books. But this "digital should be basically free" meme is bullshit.

No, it's not. People accepted physical book prices because they had no way to print them as nicely (yes, that does include the hard/soft-cover, dust-jacket, as well as actual binding, however shitty the glue-binding of current books), and they were willing to attribute some costs to transportation, shelf-stocking/presence, staff in the stores, and so forth. That was made books of value to your average consumer. E-books take that *all* away. The only thing left is a piddly bandwidth cost, and hard to quantify-or-appreciate, mysterious marketing/administration/editing costs. Whether that was actually the bulk of the cost or not doesn't matter---the price of actually printing a book is not the important part here, it's the perception of the price of a printed book. A physical object still seems inherently more valuable than a license to read a book on a device you have to buy separately.

Publishers can whine all they want about how little the physical book costs and how much of the publication cost is really all the other things, but all that does is inform consumers that publishers have been ripping them off for years.

Re:Raise the price of books and see a mass exodus

[dgatwood]

Worse than that. Depending on the sales model, publishers may get less money from an electronic book than from a print book, even after printing costs are taken into account.

For example, with Amazon's KDP program, you either get 70% of Amazon's current price (which is not your cover price) or 35% of your cover price, at your option. If you set the price at a fairly typical $10, you get $3.50.

By contrast, with print publishing, you get anywhere from 45–80% of the cover price, depending on how you set the discount (which affects how broadly you get distributed, but it is your choice). If you assume that a typical hardcover book costs under five bucks apiece, and you set the cover price at a fairly typical $25, even at a 55% discount (you get 45%), you get $6.24.

And at a more typical small-press hardcover discount of 30%, even if you set the premium at your actual manufacturing cost plus the eBook cost ($15), you get $5.50—significantly more than you get for the electronic edition at the fixed 35% royalty rate.

So there's really no guarantee that people are making more money off of electronic versions of their book, even ignoring the much, much higher cost of designing the electronic edition in the first place. Once you factor that in, you should be glad it doesn't cost several times what the physical edition costs. :-)

Re:Raise the price of books and see a mass exodus

[Telvin_3d]

Publishers can whine all they want about how little the physical book costs and how much of the publication cost is really all the other things, but all that does is inform consumers that publishers have been ripping them off for years.

Ripping them off? By not working for free? Or by paying authors? Basically no one gets rich in the publishing industry. The JK rowlings and Steven Kings are such statistical anomalies that it makes 'Hollywood star' look like a practical career path.

And things like editing are not particularly hard to quantify. A manuscript of a particular length will require a general amount of hours put into it. Those costs need to be accounted for in the final sale price. If they are not editors (and everone else that make books) will stop working for the excelent reason of not being paid. At which point you will complain that there are no good quality books being made anymore.

Re:Raise the price of books and see a mass exodus

[letherial]

any advertisement for 'hardcover' on a e-book gets pirated on principle

Re: Raise the price of books and see a mass exodus

[Meski]

I disagree. You obviously need to spend more time with pre-edited books- most novels before editing are barely readable.

Sadly true. Authors that are capable of self editing are a tiny minority. Five dollars would be a good price for the conditions attached to eBooks, that are not attached to dead-tree books. (not able to gift/sell the ebook when you're done with it, and with device specific DRM attached to it (I know, DRM is trivial to remove, but it's there))

Re:Raise the price of books and see a mass exodus

[Mitreya]

Except that it's much, much easier to prepare a book for print than it is to prepare an eBook. ... Perhaps in ten years, when the technology has improved dramatically, eBook sales will be pure profit.

Paper books also require storage (particularly if you are dealing with large amounts) can be damaged in transit at any point (to/from retailer)... and a book that ultimately fails to sell is a total loss

Seems like eBooks should be much cheaper than paper books and often they are not. Your argument about the preparation-to-print expense makes sense for a relatively small release, but not for anyone operating in bulk, since that cost is completely independent of how many books you end up selling.

Re:Raise the price of books and see a mass exodus

[Fierlo]

I'm really curious as to how/why there is a much, much higher cost of designing the electronic edition.

I guess I just can't see why it is (or should be) complex. Especially given that you should be leaving all the presentation aspects to the devices themselves.

It just seems like spending a lot of time typesetting a document for viewing on an e-reader that may have a different height/width, and can be enlarged on that same screen, would be a losing battle that should not be dealt with by an author, but rather by the device manufacturer/format specification.

Again... not saying that you're wrong about it, just that there must be something that I'm missing.

Re:Raise the price of books and see a mass exodus

[LaughingRadish]

If you like LaTeX and want to produce EPUBs, I suggest you take a look at Pandoc ( http://johnmacfarlane.net/pandoc/ and http://github.com/jgm/pandoc.git ). It's a sort of swiss-army-knife of document conversion. It'll convert LaTeX to EPUB with a decent degree of accuracy. Lately it has been getting a lot of LaTeX-related enhancements, but it's still missing some staples like honoring \newpage and centered text. There's another package called tex4ebook ( http://github.com/michal-h21/tex4ebook.git) that's more LaTeX-specific. It could potentially be better than Pandoc, but is quite a bit behind in maturity.

Re:Raise the price of books and see a mass exodus

[3Cats]

Two things never discussed in the ebook / paper costs debate are the costs of warehousing and taxes on unsold inventory and availability of "out of print" books. One of the reasons it's nearly impossible to get older works is they are purposefully allowed to go out of print. No publisher wants to do another run of 40,000 copies of "Pride of Chanur" and then hold onto them as they trickle out to bookstores and buyers. Publishers want the latest flavor of Teen Paranormal Romance which is selling NOW. They want to print 10,000 copies and then move on to the next latest Zombie Teen Paranormal Werewolf Romance. There's thousands of excellent books no longer available even used at a reasonable price. Ebooks allow publishers to warehouse zero copies, saving the tax on inventory and space requirements. Ebooks allow YOU as a writer ( assuming you've been at it a while ) to sell your backlist to new readers. Some of the great SF authors of the 60's and 70's have dozens of titles that are impossible to find. For the cost of converting or creating an ebook, you will continue to have a copy available to sell, in theory, forever as it will never go out of print.

Re:Raise the price of books and see a mass exodus

[RocketRabbit]

It was sarcasm. How anybody could actually think that making an electronic book is more complicated or difficult than bringing a real book to press is beyond me. Logic alone will inform you of the correctness of this.

Ebooks go through absolutely no more preparation, at the worst case, than a normal paper book goes through before the press even gets the file.

Re:Raise the price of books and see a mass exodus

[bitingduck]

Except that it's much, much easier to prepare a book for print than it is to prepare an eBook. Preparing a book for electronic publishing is a bit like designing a web page in the mid-1990s, except that there are a lot more eBook reader vendors than there were browser vendors. Each one has its own set of quirks, some of which are... shall we say rather sizable sets.

For something that's pretty much straight words that's not true-- you can generate an ebook that's the equivalent of a mass-market paperbook pretty easily. Substantially more easily than generating a nice looking paper book. If you want to add a lot of features (images, in particular) that can add some time and energy, but even cross references aren't hard to do with a little grep action.

There are some tools that are missing-- Indesign is just finally getting to where it can export a decent epub once you do the paper layout. Up until Indesign 6 it was easier to just fork into paper and ebook versions and format independently. It would also be nice if git supported epub-- all it needs is zip and unzip in the right place and it could work well. It's probably possible to put a wrapper on it, but I haven't had time to sort that out yet.

Re:Raise the price of books and see a mass exodus

[bitingduck]

Print on Demand

It's getting significantly better and cheaper, and even some large publishers are using it, particularly for backlist. If you print 10,000 copies of "this month's copycat paranormal romance" at $1 each and sell 1/3 of them (pulping the rest), you're paying the same per copy sold as if you printed 3333 copies on demand at $3 each (you can probably get a better price if you're doing that kind of volume) and they were only printed when someone said "I want a copy".

Re:Raise the price of books and see a mass exodus

[icebike]

And yet there are tool for this, no?

Epub is largely just packaged html. You can download free word processors (Atlantis) that will take what ever format you write in directly to Epub. I'm sure there are far more sophisticated tools as well.

And you really don't have to format for each device. It's the device's job to handle standard formats, and most of them do it rather well. Don't kid yourself into thinking they test on a wide variety of devices. Doesn't happen.

The truth is, once the book is through editing it can get to ebook format ready to ship much much quicker than it can be printed. Sometimes from editor to ebook in less than an hour.

Re: Raise the price of books and see a mass exodus

[peterhudson]

The idea of the conditions attached to ebooks over dead tree books is what lead to the idea for (full disclosure: this is my company) eYourBooks. The idea of bundling an ebook (for convenience) with a paper book (for countless other important reasons e.g. first sale doctrine), isn't new. But ebook bundling so far has only been at the point of sale. We're hoping to allow somebody to buy (or get for free) an ebook by proving they own the real book using their smart phone *after* the point of sale. So in theory, you could buy a real book from a used book store bargain bin, get the ebook for free (or well below "new" ebook price) and enjoy the best of both worlds.

Re:Raise the price of books and see a mass exodus

[drinkypoo]

Virtually all books-based-on-some-other-franchise series are garbage. Like, for example, Star Trek. OMFGWTFBBQ.

Re:Raise the price of books and see a mass exodus

[tlhIngan]

Two things never discussed in the ebook / paper costs debate are the costs of warehousing and taxes on unsold inventory and availability of "out of print" books. One of the reasons it's nearly impossible to get older works is they are purposefully allowed to go out of print. No publisher wants to do another run of 40,000 copies of "Pride of Chanur" and then hold onto them as they trickle out to bookstores and buyers. Publishers want the latest flavor of Teen Paranormal Romance which is selling NOW. They want to print 10,000 copies and then move on to the next latest Zombie Teen Paranormal Werewolf Romance.

There are no warehousing costs. Once the publisher does a print run, that's it. The book is shipped to the retailers and the publisher may retain a tiny amount of stock, but most likely not. Excess is either sent to the author or pulped. The stores themselves only send the publisher back torn off covers to claim refunds - those unsold books are pulped as well. It's why you see in most books a warning about buying a book without its cover.

It's the reason why the physical paper cost of a book is really only 10-20% the cover price

Re:Raise the price of books and see a mass exodus

[dgatwood]

It's the device's job to handle standard formats, and most of them do it rather well.

You've obviously never tried to do anything even slightly interesting in EPUB. If you attempt drop caps and you want consistent rendering, you'll tear your hair out literally for months.

Here's a short list of the reader bugs that I've found personally:

• Destination anchors () incorrectly rendered as links (underlined and blue).
• ADE-based readers ignore the entire CSS file if it contains @media rules (and maybe @page). Put them in a separate CSS file.
• Same goes for the IE-specific filter property.
• Nook refuses to center heading tags (h1, h2, and so on). Use div.
• ADE and Nook (based on ADE) do not support the OpenType small-caps feature. You can work around this by using a separate small caps font in which the lowercase glyphs are replaced by small caps glyphs.
• If you are working around this ADE bug by using a separate small caps font instead of a normal font with a smcp OpenType feature, be sure to add font-variant: small-caps not only in any CSS styles that request the font, but also in the @font declaration for the style. If you forget to add it in the @font declaration, some readers (Sony Reader in particular) will fall back to the next font that has either an smcp feature or a separate small-cap variant style.
• ADE and Nook (based on ADE) do not support the use of the :before pseudo-element with the content: property.
• Some readers get very unhappy when embedded fonts have multiple local names.
• When creating drop caps, avoid padding-bottom; many readers compute the vertical position incorrectly if padding is nonzero. Instead use margins to set the vertical positioning of drop caps, which seems to be more compatible.
• When working with drop caps, always explicitly set the line height to 1.2 em (or more), both for the body text and the drop cap block. Some readers (Kindle, IIRC) set lower bounds on line height, and some fonts have an intrinsic line height that is less than 1.2em. Those readers may force the line height up to 1.2em on your behalf, resulting in the drop cap character appearing too high or too low in those readers.
• Nested block and inline-block elements are problematic on some readers. In particular, Nook on iOS appears to ignore (treat as zero) the margins of inline-block elements when drawing the contents of any block elements that appear inside them. Thus, if you are doing drop caps, you must not use nested block elements for positioning purposes if you care about supporting Nook on iOS.
• Some readers incorrectly calculate block element height when computed in ems. In particular, Nook on iOS tends to undersize its boxes. This can result in drop caps that overlap text. When setting the height CSS property for drop caps, find the smallest value and the largest value that result in correct behavior on a proper web browser (e.g. WebKit or Firefox), then choose a value that is somewhere near the middle of this range.
• Don't count on CSS precedence working correctly. Readers based on Adobe Digital Editions sometimes fail to treat classes in a selector as having a higher precedence than containing elements. For example, in spec-compliant readers and browsers, if you have a rule on "div.preface div.section p + p", a contrary rule on "p.classname" should override it, because a class on the selector for the element itself always has higher precedence than any number of elements). In ADE, however, the precedence calculation is broken, and the "div.preface div.section p + p" rule gets precedence.
• In Kobo reader (at least on iOS), if you set the left and right margins of the body tag to zero, you will see part of page 2 on page 1, and so on, and you will be unable to reach the last page of a chapter.
• In some iOS readers based on Adobe Digital Editions (seen on Sony Reader and Bluefire), if a paragraph containing a drop cap falls a

Re:Raise the price of books and see a mass exodus

[Darinbob]

I see similar things with digital-only games. There cost of making more and the cost to store is zero. An old book gets discounted so that it gets off the shelves, but in electronic form the price continues to stay high much longer. With games I see the same thing; packaged games end up in the bargain bins priced to sell while the exact same game in digital form may sell for double or triple. I used to see retail games have a very quick drop off of price, from $60 down to $40 in just a few months, yet newer digital games can keep that initial price for over a year.

There are two main reasons to hold sales in a retail store: to get customers into the store to see other non-sale good to buy, and to reduce inventory. For digital stores though only the first reason applies.

The reduced cost of production for digital products is never passed onto the customer.

Re:Raise the price of books and see a mass exodus

[dgatwood]

And lots of authors whose publisher contracts have expired also use POD. The notion of print runs needing to be large to be profitable are so last century.

DRM?

[OhPlz]

I don't see what DRM has to do with this. I would think that file formats are the issue. Kindles can read raw .mobi files among other formats. I assume other e-readers can do the same. I don't know of a single reader that ONLY supports DRM content. It could be onerous for an independent to support a ton of different formats, but I don't see what barrier optional DRM creates.

Even if they somehow get to argue this in court, Amazon has an out. I've seen material lately on their site that is marked "At the publisher's request, this title is being sold without Digital Rights Management software applied." Look up "Bowl of Heaven" as an example.

Re:DRM?

[drinkypoo]

I don't see what DRM has to do with this. I would think that file formats are the issue. Kindles can read raw .mobi files among other formats.

How did you get this so very wrong? It's not about whether Kindles can read other publishers' formats, it's about whether other eBook readers can read Kindle titles. They fear Microsoft-esque lock-in. History tells us that this is a valid concern.

Re:I wondered why it took them so long.

[russotto]

Don't bet on it. When it comes to copyright and the courts, evil always wins in the end.

Hold on a second wern't these the same publishers.

[tuppe666]

...that were in a cartel with these very same publishers who had sided with Apple against Amazon http://www.policymic.com/articles/6812/apple-founder-steve-jobs-leader-of-ebook-price-fixing-cartel that Steve Jobs what a player. I love the quote from the article on this "a move that was widely seen as benefiting Amazon's dominant position among ebook retailers"..clearly not the best understanding that, the move would simply shift the scale to Apple, and making it impossible for independent vendors to compete on price.

I actually agree with the reality that books need to be transferable [and films, magazines...oh and Applications hell anything stored on a computer with a price tag attached.]...so that the better technology competes. In fact lets go further I see no reason at all why you can't have multiple store fronts on every device you own...like say Android :)

Re:High or Low?

[bhagwad]

Except that for ebooks, there is no "artificially" low price. You can sell it for a few cents and it'll still be enough to cover the marginal costs of producing a new one.

No one can predict the future. You can't automatically assume that Amazon will raise prices later on...that's like punishing someone for a crime they haven't even committed yet.

Re:DRM Free

[Obfuscant]

Nothing stops a user from buying a DRM free ebook and using it on their reader.

As long as someone is selling that book in DRM-free format, that is. I'm going through this issue now with the publisher of three magazines I read on a regular basis, one of which I've been a print subscriber for thirty years or more. The only DRM-free (and multi-format, to boot) vendor (Fictionwise) stopped selling. Every other source has DRM (or the equivalent, being tied to a proprietary reader program).

I complained loudly to the publisher and got ignored at first, and then I was told that this issue was being examined and they wanted to move away from the retailers they were using. The confusing part was that she said that "we won't do that DRM again". I don't know if she meant "we will be DRM-free when we arrange future retailers", or if she was referring to the DRM-free versions they used to provide to Fictionwise not happening again.

Either way, Calibre and epub is your friend, except when the publishers start mangling the formats so you get black and white cover images and say essentially "read these articles in this order".

Re:High or Low?

[bhagwad]

So you're assuming that Amazon will raise prices later on? And you're willing to punish a company on the basis of what it might do in the future? Also, the pricing of an ebook can be just above zero and still cover marginal production costs.

Also, I'm 30 years old. But nice way to bring in an ad hominem.

Re:High or Low?

[Obfuscant]

I guess you're too young to remember how Microsoft "abused its monopoly" by bundling Internet Explorer with the OS for free.

Nobody seems to remember the even worse abuse, where they required vendors to sell EVERY computer with a copy of a Microsoft OS if they wanted to sell ANY system with a copy. I lost count of the number of new computers I bought where the first step was to format the disk and then install Linux. That wasted a lot of the taxpayer's money, since I was buying each one off of a federal research grant.

Re:High or Low?

[hawguy]

Except that for ebooks, there is no "artificially" low price. You can sell it for a few cents and it'll still be enough to cover the marginal costs of producing a new one.

No one can predict the future. You can't automatically assume that Amazon will raise prices later on...that's like punishing someone for a crime they haven't even committed yet.

How would you know if they are inflating prices? If Amazon did become a true monopoly over eBooks, any price they set would be the "market price" no matter how high or low.

Re:I wondered why it took them so long.

[letherial]

only because good is dumb

Re:High or Low?

[wallsg]

No ad hominem meant. It was supposed to be a light-hearted joke but everyone's so sensitive these days that everything's offensive to someone. And I'll be 50 this year so get off my lawn.

So when they actually do something, that is the time to catch them. Basic principle of justice - you can't punish someone for something they haven't done yet.

They are being accused of doing something now. It's called predatory pricing. It's illegal for a business with a dominate position to routinely sell a product under cost in order to drive competitors out of the market (or keep them from entering).

Now, whether it should be is a topic for a different argument about economic systems.

In Europe, from what I understand, anti-trust laws are meant to protect competitors and here they're meant to protect consumers. As the linked page above says, since it's consumers that are supposed to be protected and not rivals, there's a high bar to winning these complaints.

Oh pelase cry me a river

[aepervius]

You do it once that preparation, and it is still much cheaper than buy tons of paper, print it, distribute it, get back unsold or even the breakage rate, and that does not even count shipping over sea. Ebook you can distribute internationally forever. There is no way in hell preparing a book would be cheaper than preparing an ebook even if there is more than 1 vendor.