Amazon vs. IPG dispute

[Dr. Tachyon]

Here's a New York Times article on ebook pricing. Looks like the publishers are really just fighting the future.

http://www.nytimes.com/2010/03/01/business/media/01ebooks.html?pagewanted=1&_r=1&adxnnlx=1304798706-MVRJyTTN1kMHo6107EI/DA

[Mr. E]

Here's a New York Times article on ebook pricing. Looks like the publishers are really just fighting the future.

http://www.nytimes.c...N1kMHo6107EI/DA

while you may be right about that, I don't think we can discount this section of the article:

In fact, the industry is based on the understanding that as much as 70 percent of the books published will make little or no money at all for the publisher once costs are paid.

Some of these books are by writers who are experimenting with form or genre, or those who just do not have recognizable names. “You’re less apt to take a chance on an important first novel if you don’t have the profit margin on the volume of the big books,” said Lindy Hess, director of the Columbia Publishing Course, a program that trains young aspirants for jobs in the publishing industry. “The truth about this business is that, with rare exceptions, nobody makes a great deal of money.”

[felice]

The material and transport costs are not greater than the editing and layout costs.

Material and transport is a per-unit cost, editing and layout is a fixed cost, so it depends how many you're selling. So if only a handful of people buy the book (and demand wasn't wildly overestimated yet the publisher went ahead anyway) then yes, editing & layout is the biggest cost. But if you're selling a million copies, the cost of material & transport dwarfs editing & layout.

[Altherion]

Looks like both the US and the EU are suing the book publishers (and Apple) for collusion in e-book pricing. They were a bit too overt about the price fixing, I think.

[Myrddin]

Author's guild weighs in

Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90% to roughly 60%. Customers are benefiting from the surprisingly innovative e-readers Barnes & Noble’s investments have delivered, including a tablet device that beat Amazon to the market by fully twelve months. Brick-and-mortar bookstores are starting to compete through their partnership with Google, so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition.

The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.

[Altherion]

The publishers (and the Authors Guild) would love competition... but only among the e-reader manufacturers, not among themselves. Amazon would love competition among the publishers so it could sell for very low prices and make a profit that is small per item sold, but large because of the volume (since it dominates the market). But what Amazon was doing was not quite illegal whereas what the publishers did was almost certainly illegal. We'll see if they get punished for it -- a lot of the time corporations this large can pay the right people enough to get off with a slap on the wrist.

[Ser Plissken]

Wouldn't it be great if there was something like i-tunes for e-books?

If the publishers are having so much grief with amazon et al, why don't they just pool their resources and bring a service like i-tunes to market?

[fionwe1987]

Wouldn't it be great if there was something like i-tunes for e-books?

If the publishers are having so much grief with amazon et al, why don't they just pool their resources and bring a service like i-tunes to market?

Because an iTunes like service would never work with current book prices.

Incidentally, Google Play for books does have the potential to be something like an iTunes for books.

[fionwe1987]

Ignore. Double post.

[Shryke]

The publishers (and the Authors Guild) would love competition... but only among the e-reader manufacturers, not among themselves. Amazon would love competition among the publishers so it could sell for very low prices and make a profit that is small per item sold, but large because of the volume (since it dominates the market). But what Amazon was doing was not quite illegal whereas what the publishers did was almost certainly illegal. We'll see if they get punished for it -- a lot of the time corporations this large can pay the right people enough to get off with a slap on the wrist.

According to what? And based on what evidence?

This is a key thing:

We have no way of knowing whether publishers colluded in adopting the agency model for e-book pricing. We do know that collusion wasn't necessary: given the chance, any rational publisher would have leapt at Apple's offer and clung to it like a life raft. Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open.

Publishers aren't stupid. Amazon is trying to kill retail competition and publishers have every reason to fight that because it kills their business model too and puts them fully in the hands of Amazon.

[Altherion]

Three down, three to go:

The Justice Department settled with three of the publishers -- HarperCollins, Simon & Schuster and Hachette -- requiring them to grant retailers like Amazon and Barnes & Noble the freedom to reduce prices.

The publishers will also be forced to tear up their current agreements with Apple and other e-book publishers and negotiate new, fair, and legal agreements.

"The settlement will begin to undo harm and restore price-competition," Pozen added. "It will result in lower e-book prices and provide a more open and fair marketplace."

The DOJ said it would "vigorously" pursue its claims against Apple, Pearson and Macmillan, which opted not to settle.

As to why it was almost certainly illegal:

The alleged conspiracy placed many books at so-called "agency pricing," putting them on the market for about $12.99 and giving Apple a 30% cut. About three days later, Amazon allowed publishers to set their own prices, resulting in higher prices on the Kindle as well.

"This action drove up e-book prices virtually overnight," said Sharis Pozen, head of the DOJ's antitrust division, at a news conference. "Let me be clear: When companies enter agreements that prevent price competition, that is illegal."

...

"We'll go to [an] agency model where you set the price, and we get our 30%, and, yes, the customer pays a little more, but that's what you want anyway," biographer Walter Isaacson quoted Steve Jobs as saying.

[Spring Bass]

This will be the death of Barnes & Nobles, or at least that of its physical bookstores. It might also kill their e-book business, or at least force them to go all-in on the "tablet" business (since they won't be able to cross-subsidize their e-books). Small bookstores have had higher prices for years, so they'll either keep on dying or find a niche.

It won't necessarily lead to a monopoly, but the e-book market for the publishing house books is going to get much more concentrated. We'll be looking at an e-book market dominated by Amazon, Google, Apple, and the publishers' websites themselves.

[Serious Callers Only]

You know, I kind of disagree with that. Unless Amazon wants to open its own editing, galley and proofing divisions I think publishers have to stick around, at least in the "novel" business--for all the crap publishers get, they are the "gatekeepers," as it were--I don't know if I want to live in a world where anybody with half a mind can publish anything they want on Amazon regardless of editing, construction or quality.

Why? Do you read every single "historical romance" that gets published even if you are a fan of the genre? No. You get in touch with people that have the same hobbies, and get informed about authors that are worthwhile. Nothing changes, because i certainly don't trust amazon reviews.

[Spring Bass]

I managed to find a copy of the settlement.

1. It bans restrictions on retailer discounting on the price of e-books, but only for "at least two years". Amazon is allowed to stretch the termination of its contracts with the publishers so that they don't all slam it with Agency Pricing again in two years time.

2. The settling publishers have to notify the DoJ of any agreement on e-books between them.

3. The "Price MFN" clause in the publishers' contracts with Apple, banning the sale of e-books anywhere else at a cheaper price, is banned from use for five years. They also ban "MFN" agreements more or less in general for the publishing business for five years.

4. Settling publishers are forbidden from "punishing" a retailer for discounting e-books, or urging other publishers to do it. That seems to apply even after the two-year ban on Agency Pricing agreements ends.

5. Settling publishers can promote brick-and-mortar stores by paying for promotions or marketing in those stores.

6. Settling publishers can enter 1-year agency agreements that prevent retailers from selling their e-books at a loss during that period. It's not clear whether or not this takes effect after the two-year ban, but that's probably the case. EDIT: The agreements can only require that the retailer show an aggregate profit from sales - they can still sell individual titles at a loss.

Assuming that the 1-year agency agreements are after the 2-year ban, the settlement sounds like an almost total loss for the publishers. Going to court must have seemed like a much more dangerous alternative for them to accept this.

[AncalagonTheBlack]

Looks like both the US and the EU are suing the book publishers (and Apple) for collusion in e-book pricing. They were a bit too overt about the price fixing, I think.

Macmillan Settles with the DOJ Over Price Fixing Lawsuit

“Judge Denise Cote quickly approved a $70-million plus settlement