DOJ Responds to Public Comments

[GreenMonkey]

Originally Posted by DiapDealer

From Shatzkin:

I wasn't aware that the publishers were being forced to sell their products through Amazon. Surely they can disintermediate them any time they like?

If Amazon is powerful enough, they start dictating the terms, because the company cannot stay in business without them.

Walmart pretty much has this kind of power in the retail market. Read up on Vlasic pickles + walmart, for example. Walmart basically has the power to dictate to some companies what price they will pay - the company has two choices. Do it and struggle, or tell Walmart to stuff it, and lose such a large volume of shares that you go out of business anyway.

I don't believe Amazon is this powerful in the book market, yet, though. Collaborative price fixing isn't the way to avoid them getting power.

[stonetools]

Originally Posted by GreenMonkey

If Amazon is powerful enough, they start dictating the terms, because the company cannot stay in business without them.

Walmart pretty much has this kind of power in the retail market. Read up on Vlasic pickles + walmart, for example. Walmart basically has the power to dictate to some companies what price they will pay - the company has two choices. Do it and struggle, or tell Walmart to stuff it, and lose such a large volume of shares that you go out of business anyway.

I don't believe Amazon is this powerful in the book market, yet, though. Collaborative price fixing isn't the way to avoid them getting power.

Not yet, but it is clearly going in that direction-witness its beat down of IPG. Also too, Amazon is starting to compete with them in publishing

[jgaiser]

Gotta love stonetools "could be", "maybe", "going in that direction".

None of this makes *any* difference. As on now there is no monopoly. As has been pointed out again and again, until there is you're just blowing smoke.

[AnemicOak]

Originally Posted by stonetools

Not yet, but it is clearly going in that direction-witness its beat down of IPG.

What 'beat down'? Amazon and IPG disagreed on terms. Amazon and IPG came to an agreement three months later. I've seen nothing to indicate if Amazon got their way or if they gave in and went with the previous terms like IPG wanted.

[SteveEisenberg]

Originally Posted by GreenMonkey

Read up on Vlasic pickles + walmart, for example. Walmart basically has the power to dictate to some companies what price they will pay - the company has two choices. Do it and struggle, or tell Walmart to stuff it, and lose such a large volume of shares that you go out of business anyway.

I don't believe Amazon is this powerful in the book market . . .

WalMart had about a third of the US supermarket share last year, but their share outside the US is generally small.

Amazon's English language eBook market share is clearly bigger than WalMart's grocery share in the US, and much bigger than WalMart's grocery share outside the US.

As for books overall, I can't find firm statistics. But according to at least one analyst, Amazon [is] Positioned for 50% Overall Market Share by End of 2012.

WalMart is declining while Amazon is growing. Good for Vlastic, not so good for people who read heavily researched non-fiction books.

Originally Posted by stonetools

Also too, Amazon is starting to compete with them in publishing

Yes. And as far as I can tell, Amazon is picking off the sort of books that are quick to write and easy to edit.

Originally Posted by murraypaul

If that is true, then the publishers must not be providing any useful services, so deserve to be cut out.

Lots of companies provide no useful services to me. Take every luxury car maker. Or hog producers. If you don't find their product to be a good value for money, or just don't want it, of course you won't buy it. But this kind of comment seems to imply that not only you don't need to buy their kind of product, you don't want them to provide it to others. Or am I missing something?

If you don't want books that are heavily edited, don't read 'em. Many self-published authors need your patronage!

Since I do mostly read heavily researched and edited books, I have concerns about them facing the Vlastic problem.

[kennyc]

Originally Posted by jgaiser

Gotta love stonetools "could be", "maybe", "going in that direction".

None of this makes *any* difference. As on now there is no monopoly. As has been pointed out again and again, until there is you're just blowing smoke.

[Kali Yuga]

Originally Posted by JD Gumby

When Amazon had their effective monopoly over the e-book market, they did nothing to abuse their customers or those supplying the goods that they sell.

And yet, back in the day when the major options were Amazon or Sony, posters on MR routinely vilified Amazon as the Big Bad.

The ebook market at that point was still very small, and growing. They also knew that Google was getting into the market, and likely suspected that Apple was as well.

I.e. they were not in a position to start throwing their weight around.

[sabredog]

Originally Posted by jgaiser

Gotta love stonetools "could be", "maybe", "going in that direction".

None of this makes *any* difference. As on now there is no monopoly. As has been pointed out again and again, until there is you're just blowing smoke.

Exactly.

The BPH's and the author's guild, et al can cry foul all they like, the reality is that Amazon innovated whilst they all sat huddled in their respective caves, oblivious to the changes around them.

Perhaps even that they were cognizant of the changes around them, but either so arrogant that they believed they need not change, or so damn stupid to think that consumers would not change. I think all three are the essential truth.

[bgalbrecht]

I was one of the consumers who responded in favor of the DOJ. I went through my list of Fictionwise purchases prior to April 2010, and found that if I when I looked at just my credit card purchases, to buy the same ebooks today, I would have to pay at least 30% more, and if I were to include all the micropay rebate purchases, it would have been at least double what I paid.

[murraypaul]

Originally Posted by SteveEisenberg

Lots of companies provide no useful services to me. Take every luxury car maker. Or hog producers. If you don't find their product to be a good value for money, or just don't want it, of course you won't buy it. But this kind of comment seems to imply that not only you don't need to buy their kind of product, you don't want them to provide it to others. Or am I missing something?

I didn't say 'to me'.
If the publishers can be easily disintermediated it means that all the services they provide can be easily provided by someone else.
If Amazon can do the same tasks just as well, but more efficiently, that is good for authors and readers.
When Shatzkin says that publishers can be easily disintermediated without protection from the government, he is saying that they aren't really needed. If they provided a vital service, that another element of the chain could not provide, they couldn't be disintermediated.

[fjtorres]

Originally Posted by murraypaul

When Shatzkin says that publishers can be easily disintermediated without protection from the government, he is saying that they aren't really needed. If they provided a vital service, that another element of the chain could not provide, they couldn't be disintermediated.

Exactly.
The reason disintermediation happens in the first place is because those specific players serve no clearly useful *economic* role or because others can fill the same role *better*.

Publishers currently defend their "special" place in the product supply chain in four ways:

1- Gatekeeping, keeping the "slush" out of the market. So far in the ebook era, the market has shown there is no value in keeping content out of the market and that content rejected by the gatekeepers can have substantial value to consumers and producers. (Do we really need to list examples beyond Hocking?)

2- Editorial services - proofing, editing, formatting, covers. All of which are available separately from qualified professionals for lump-sum fees instead of an eternal percentage of income. Clearly this is a personal choice for the content creator but the trade-off between limited up-front cost and persistent charge is, under currently prevalent practices, very hard to justify. At a minimum, rates need to change to favor the creator.

3- Up-front financing - basically, payday loans that trade *potential* future income for a guaranteed up-front lump sum. Again, strictly a personal choice for the creator. And again, the currently prevalent terms are quite punitive to a lot of creators, though a certain portion of the Authors Guild are blessed with special terms. It is pretty clear that creators with a deep enough catalog don't need up-front financing so if the aspiring author can bootstrap themselves through the first few *successful* releases they will no longer need advances. Though a good financial advicer would be hepful.

4- Distribution services - in the pre-internet era, freedom of the press was only for those than owned one. In the pre-ebook era, publishers controlled access to the pbook distribution system and the bookstore shelves. Rarely if ever did an independent title find its way to market without a publisher. That particular barrier to entry is gone, though. Even pbook distribution is opening up to independent content. This still remains but the value is much diminished and for many creators the added income provided by the greater visibility is wiped out by the terms under which the broader reach is provided.

In other words, for three of the four main "services" that traditional publisher provide, viable alternatives exist and they come with greatly reduced financial burden on the creator's project. The fourth one, gatekeeping, has been proven to be valueless to the creator. There is no gate to keep anymore.

Things are not so far gone *yet* where *every* creator can reasonably do without traditional publishing services, but the number of those that *can* is increasing rapidly. And it will continue to increase as long as the traditional publishers maintain their current advance and royalty rate structures.

To ever increasing numbers of authors new and *established*, the traditional services simply are no longer worth the traditional charges.

The traditional publishers are being disintermediated because of the collapse of the barriers to entry to the marketplace, not because of the actions of any single vendor. Technology has changed the market and changed consumer behavior. Past tense. Done deal. The ramifications haven't fully played out but there is no going back to the "ancien regime".

Trying to restore the old balance by force of market power, either by collusion to fix prices or to hold back content from any specific channel is not the answer.

Ultimately the only viable answer is to rebalance Traditional Publishing's value proposition; overhead has to come down, royalty rates have to go up, and delivered value is going to have to be obvious to the author.

Otherwise, disntermediation will continue and accelerate.

[fjtorres]

BTW, all those comments harping about how "special" publishing is?

Here's a short-n-sweet tutorial on how other "special" industries fared in antitrust court:
http://www.courtneymilan.com/ramblin...ust-snowflake/

Stop thinking about this emotionally. Stop thinking of this as your livelihood. Ask yourself honestly: Do you think that courts will say that book publishing is more important than the building of safe bridges? Do you really think that courts will find it so much more important that they will grant book publishers a judicial exemption in the face of more than a hundred years denying them?

One particularly interesting court opinion:

In United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940), the defendants—like the agency publishers at issue here—thought that they were facing what they called “ruinous competition”—competition so fierce that it (they claimed) could destroy the industry. For that reason, they believed that their price-fixing scheme should be allowed.

Here’s what the Court thought of that:

Anybody still doubt the outcome of the court?

At this point, all that matters is that Five Publishers coordinated through a sixth player to *simultaneously* raise consumer prices. (Three accepted they were caught with their hands in the cookie jar and settled or a mild wrist-slap.)
Unless the DOJ fabricated their email evidence (seriously?) there really isn't much *fact* to debate here.

Just emotion.

Time to get past denial.

http://en.wikipedia.org/wiki/K%C3%BC...s_model#Stages

[MovieBird]

Originally Posted by Kali Yuga

And yet, back in the day when the major options were Amazon or Sony, posters on MR routinely vilified Amazon as the Big Bad..

Can you quote some examples of this? I don't recall anything of the sort way back in 2009, your join date.

I'm discounting one Sony poster that hates Amazon, however.

[tompe]

Originally Posted by MovieBird

Can you quote some examples of this? I don't recall anything of the sort way back in 2009, your join date.

I'm discounting one Sony poster that hates Amazon, however.

There are a lot of examples. The whole thing with removing content. Issues like removing some kind of books from listings. Also complaints of publishing only on amazon. And then there was the threat about the program that read the id or whatever.

[Elfwreck]

Originally Posted by fjtorres

Publishers currently defend their "special" place in the product supply chain in four ways:

1- Gatekeeping, keeping the "slush" out of the market. ....

2- Editorial services - proofing, editing, formatting, covers. ....

3- Up-front financing - basically, payday loans that trade *potential* future income for a guaranteed up-front lump sum. ....

4- Distribution services - in the pre-internet era, freedom of the press was only for those than owned one. ....

I'd add one more:

5- Advertising - letting the public know this book exists, and that it's worth their time and money.

That's the *only* aspect that indie authors will never be able to do as well as a big company... and it's the aspect publishers cut first when they're feeling strapped for cash. Over the years, they've pushed more and more of this onto the authors: Start your own blog! Schedule your own bookstore appearances! No talk shows, not even local-tv interviews, for anyone not on the NYT Bestseller list! No press releases, no attempts to get reviews in big publications, no "coming soon" announcements for the midlist.

No wonder those authors are pondering how much they can do for themselves. While print distribution is still tricky for indie authors and small publishers, it's no longer essential to an author's career. Advertising is, and will remain, crucial to a financially successful career. And publishers are failing to provide it for anyone they don't think is a superstar.