Its not surprising that the DOJ thought it got it right with is settlement proposal.
But first, a bit of civic stagecraft: The Department of Justice posted the settlement, invited public comment and then ignored the public comment.
What 's surprising is that ninety per cent
of the comments opposed the settlement. The opposition to the settlement is deep and widespread through the book industry, going well beyond the reviled BPHs to include independent publishers, chain bookstores, independent bookstores, authors and agents. That's everybody in the book industry not named Amazon.
The DOJ put the best face on it by quoting the CFA and the Konrathites-indie authors associated with Amazon- but its pretty much lipstick on a pig.
1. The DOJ affirmed that Amazon's ebook business has been consistently profitable. This counters what many people-including me- believed, which is that Amazon was using ebooks as a loss leader.
2. The DOJ says, repeatedly, that the settlement will only last two years and the publishers can go back to "full agency" after that. The strong hint I get from that is that a return by full agency by the BPHs is likely, if not inevitable, and the DOJ knows that.
3. The DOJ thinks that Amazon won't abuse its monopoly position (should they regain that) by raising consumer prices. It doesn't really explain why Amazon would not do that.
4. The DOJ has a novel suggestion to the "Showroom/Free Rider" problem: that the publishers should pay the B&M stores for marketing their books.
Settling Defendants may compensate brick-and-mortar
retailers for e-book “marketing or other promotional services.” PFJ § VI.A. The CIS
elaborates that this provision is intended “to support brick-and-mortar retailers by directly paying for promotion or marketing efforts.” CIS at 14. Rather than subsidizing these services with the earnings from collusive e-book profits, Settling Defendants may pay brick-and-mortar stores directly for marketing and promotional support.
Not sure how that works out, but I have suggested that we could be moving to vertical solutions in the book industry where one company controls the entire supply chain from developing the author to putting the book in its store. The settlement might be a move in that direction, in that the DOJ appears to be saying that publishers should be investing in B&M stores.
5. It will be up to the BPHs to police the discounting restrictions on the retailers by negotiating with the retailers to insert auditing clauses in the contracts with retailers.
(I think it quite likely that the DOJ will be drawn into disputes about discounting restrictions, but we will have to wait and see).
That's my first take. More anon.