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Remember a couple of years ago when the price of new Kindle e-books from Amazon.com suddenly rose from a dependable $9.99 to around 14–15 bucks, or even more? The Department of Justice does. The Wall Street Journal reports that the DoJ has warned Apple Inc. and five major publishers that it plans to sue them for colluding to raise the price of electronic books.

The accusation against the six companies is fairly damning, as the WSJ explains it:

The case centers on Apple's move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in early 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that "wholesale model," booksellers were then free to offer those books to customers for less than the cover price if they wished. Most physical books are sold using this model.

To build its early lead in e-books, Amazon Inc. sold many new best sellers at $9.99 to encourage consumers to buy its Kindle electronic readers. But publishers deeply disliked the strategy, fearing consumers would grow accustomed to inexpensive e-books and limit publishers' ability to sell pricier titles.

[...]

As Apple prepared to introduce its first iPad, the late Steve Jobs, then its chief executive, suggested moving to an "agency model," under which the publishers would set the price of the book and Apple would take a 30% cut. Apple also stipulated that publishers couldn't let rival retailers sell the same book at a lower price.

It's worth noting that this was all done quite openly at the time, and received a decent amount of coverage in the tech press and, to a lesser extent, the mainstream media. Amazon.com even removed all physical and electronic books published by Macmillan, one of the publishers the DoJ has warned, from its virtual shelves briefly in a highly publicized but ultimately unsuccessful attempt to break the collusion.

As those of us who've grown to love our Kindles know only two well, the end result of all of this maneuvering is that we're paying a lot more for new titles. As of this writing, the book being promoted at the top left of the Amazon.com Kindle book page is Heidi Julavits' novel The Vanishers, published by Random House. Amazon.com sells the hardcover version for $14.98. The Kindle version—which uses no paper or ink, requires no labor to manufacture, and does not need to be shipped either from the publisher to Amazon or from Amazon to you—goes for $13.99, a whopping 99 cents less.

For its part, Apple has responded with a perplexingly dickish court filing in which it claims that it doesn't see the Kindle as a threat, although if that's the case it's hard to see why Steve Jobs wanted to prevent the publishers from letting other retailers sell their books for less money than Apple.

This all seemed pretty clearly illegal to me at the time, and I remember wondering why no one seemed to want to do anything about it. In retrospect, given the Justice Department's traditionally glacial pace on such matters, I suppose we should be pleasantly surprised that it only took two years for this all to come together. In any event, let's hope this portends imminent relief for the reading public.

Originally posted to phenry on Fri Mar 09, 2012 at 11:21 AM PST.

Also republished by Readers and Book Lovers.

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Comment Preferences

  •  Not to mention that when you buy (8+ / 0-)

    an e-book you do not really own it.  I don't know about other e-readers, but with the Kindle you can lend just a few selected titles and then only once and for a limited period of time.  I used to share books with my two grown sons but now that we are all Kindle users we cannot share.

  •  Fucking finally! This was an incredible scam (9+ / 0-)

    from the beginning.

    The power of accurate observation is commonly called cynicism by those who have not got it. G.B. Shaw

    by baghavadgita on Fri Mar 09, 2012 at 11:57:56 AM PST

  •  May the force be with them! (6+ / 0-)

    Your example of an e-book costing 99 cents less than an actual book with paper, ink and shipping costs is not quite as interesting at what I've run into several times lately on Amazon - e-books costing anywehre from cents to dollars MORE than dead tree versions.

    from a bright young conservative: “I’m watching my first GOP debate…and WE SOUND LIKE CRAZY PEOPLE!!!!”

    by Catte Nappe on Fri Mar 09, 2012 at 12:03:00 PM PST

  •  Checking the Reader Fora on Amazon (2+ / 0-)
    Recommended by:
    phenry, FarWestGirl

    you'll find lots of opinions from incensed Kindle owners.

    Is it any wonder?

    Steve Jobs, what a (greedy) guy.

    Readers & Book Lovers Pull up a chair! You're never too old to be a Meta Groupie

    by Limelite on Fri Mar 09, 2012 at 12:18:17 PM PST

  •  My god. We still have antitrust laws? (6+ / 0-)

    How quaint.


    "Facts do not cease to exist because they are ignored." - Aldous Huxley

    by Pluto on Fri Mar 09, 2012 at 12:26:00 PM PST

  •  I put off getting a Kindle because I was ... (2+ / 0-)
    Recommended by:
    phenry, FarWestGirl

    waiting to see what the iPad looked like.  I'd had Kindle for PC, liked it, but figured I might like something more flexible than a Kindle for a portable device.  But when Jobs and the book publishers pulled this one, I immediately ordered a Kindle and resolved NEVER to buy an Apple product.  I read a LOT of ebooks, and it's outrageous to me that the publishers insist on pricing them at nearly as much (or in some cases MORE) than the hard-cover versions.

    The publishers are making the same mistake as the recording studios in failing to realize that by lowering the price, the market could be vastly increased.  It's inevitable that book stores will be going the same way as record stores -- a few of them catering to niche markets, with most distribution being done electronically.  And all the publishers are doing by trying to resist that by screwing the customers is pissing off their customer base.

    I congratulate DOJ for going after them on this.  I would also point out that for more than 100 years, until a 5-4 Supreme Court decision in the case of Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), the kind of vertical minimum price fixing engaged in by the publishers was per se illegal.  (Nobody who follows the Supreme Court at all would be surprised by which Justices were on which side.)  It's now subject to a "rule of reason," but is by no means always legal -- especially, as here, where there appears to have been collusion between the publishers.

    Bin Laden is dead. GM and Chrysler are alive.

    by leevank on Fri Mar 09, 2012 at 12:36:05 PM PST

    •  Not all customers prefer electronic books. (1+ / 0-)
      Recommended by:
      niemann

      Or can afford them.

      Or can find old electronic books at garage sales.

      Or can give away old copies of electronic books, one way to ensure the next generation (especially those who can't indulge in electronic media) grows up literate.

      Physical books serve more functions than simple entertainment, which isn't really the case with vinyl records. Owning your own physical copy of a book, that can be distributed at will, is a far cry from the usual electronic model.

      •  I also like to consider that fact that ... (0+ / 0-)

        ... if books were electronic several hundred years ago, we wouldn't have any of Shakespeare, as well as much of the world's other great literature.

        Paper lasts.  (Well, at least much longer than digital formats.)

    •  Just FYI, you can get the Kindle program for iPad, (0+ / 0-)

      and Android, it's a free app. So you can buy or read anything published in the Kindle format.

      Information is abundant, wisdom is scarce. The Druid

      by FarWestGirl on Fri Mar 09, 2012 at 05:01:50 PM PST

      [ Parent ]

  •  The E-publisher of my books is better. (3+ / 0-)
    Recommended by:
    Alexandra Lynch, FarWestGirl, leevank

    My publisher is double-dragon-ebooks. They sell downloads of my books for $5.99 each and give me 30 cents royalty for each, which would be $1.80.

    The only catch is, they also distribute my ebooks through other e-publishers at a deep discount. As a result, my royalties on my semi-annual statement often average out to as little as 60 cents.

    This is nothing comparable to the price fixing DOJ has alleged.

    PS - Amazon sells my ebooks for $4.79.

    "Mistress of the Topaz" is now available in paperback! Link here: http://www.double-dragon-ebooks.com/single.php?ISBN=1-55404-900-8

    by Kimball Cross on Fri Mar 09, 2012 at 02:16:09 PM PST

  •  Apparently authors are not in favor of the DOJ (0+ / 0-)

    action.

    They apparently think bookstores would be on their way to extinction, under the Amazon model.

    •  I think they might well be, except for niche ... (0+ / 0-)

      markets, such as old books, etc.  But how that hurts authors is frankly beyond me.  I've read several books on my Kindle that I've never even seen in a bookstore, much less would have gone to the trouble of having the bookstore special order it so that I could see whether I was actually interested enough to buy the book.  With Kindle, I could download a preview with one click, and then if I liked the book, download the book with another click.

      Bin Laden is dead. GM and Chrysler are alive.

      by leevank on Fri Mar 09, 2012 at 07:59:05 PM PST

      [ Parent ]

      •  That would be a real problem, for authors. (0+ / 0-)
        Turow also says that the existence of bricks-and-mortar bookstores is critical for new authors, downplaying self-publishing platforms like Amazon’s KDP: “The high royalties of direct publishing, for most, are more than offset by drastically smaller markets.”

        Agency pricing has caused Amazon to “[lose] its chokehold” on the industry, Turow concludes, and notes, “Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition.” His implication: If that competition vanishes, Amazon’s high royalty rates for self-published authors may vanish as well.

        Further, the majority of the world has no access to nifty electronic gadgets.

        Those who do:

        Who buys ebook reading devices

        The demographics are as follows.
        Gender: 56% men; 44% women
        Average age: 35-54 years
        Average household income: $100,000+
        Average education: bachelors or Post Graduate degrees
        Heavy Internet users

        •  If you can't afford $79 (the price for the ... (1+ / 0-)
          Recommended by:
          phenry

          basic Kindle), I really question how many books you're going to be buying.  I suspect the reasons for the profile you mention are that these are the people who read the most books, rather that others don't have access to e-reading devices.

          Bin Laden is dead. GM and Chrysler are alive.

          by leevank on Sat Mar 10, 2012 at 02:02:12 PM PST

          [ Parent ]

          •  Used books. (0+ / 0-)

            What a concept.

            Say, how do you get used e-books?

            •  How do used book sales help authors? (0+ / 0-)

              We were talking about why authors would oppose this antitrust action.

              Bin Laden is dead. GM and Chrysler are alive.

              by leevank on Sun Mar 11, 2012 at 07:16:36 AM PDT

              [ Parent ]

              •  Of course we were. (0+ / 0-)

                Used books help authors tremendously, as it turns out - because it gets their name known.

                However, the actual question I was responding to there was:

                If you can't afford $79 (the price for the basic Kindle), I really question how many books you're going to be buying.
                On the other hand, your suspicion below is basically ridiculous:
                I suspect the reasons for the profile you mention are that these are the people who read the most books, rather that others don't have access to e-reading devices.
                The whole point was that what data there is right now shows that e-books are largely being bought by upper-income consumers.

                For someone who adds so much to the net worth of authors, your ability to follow a conversational thread is somewhat appalling.

            •  If anything, by lowering the price of new books .. (0+ / 0-)

              and thereby increasing the market for new books, e-readers should help authors.  

              When I buy a book, I'm interested in the author's ideas and language, not the cover, the ink, the paper, the cost of storing it in a warehouse and a book store, or the cost of shipping it from wherever it's printed and bound.  By eliminating the costs of all that stuff that I'm not really interested in buying, but am forced to buy with a physical book, it should be possible to both reduce the purchase price and increase the money that goes to the author.

              Bin Laden is dead. GM and Chrysler are alive.

              by leevank on Sun Mar 11, 2012 at 07:22:21 AM PDT

              [ Parent ]

              •  "Should be possible" (0+ / 0-)

                The link I gave illustrated that even if that is possible, it isn't what was happening.

                Furthermore, you are still focused on the idea that everyone can buy books (and find books) the way you do. Not to mention ignoring the concept of actual ownership of a good, rather than the renting of an arrangement of words.

                •  You're assuming a totally inelastic mkt for books (1+ / 0-)
                  Recommended by:
                  phenry

                  I don't know what your evidence is that books, unlike almost all other optional purchases, don't have an elastic market -- that is, one where a reduction in prices causes an increase in sales.

                  Bin Laden is dead. GM and Chrysler are alive.

                  by leevank on Sun Mar 11, 2012 at 03:27:23 PM PDT

                  [ Parent ]

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