DOJ Responds to Public Comments

[Kumabjorn]

This whole debate makes me think that both retailers (incl Amazon) and publishers have taken a way too static approach to the sales of eBooks. Since the logistic costs are so much lower than for traditional book retailing there has been too much focus on price and margins.

What if you could get eBook sales to drive pBook sales? Instead of giving Amazon a 30% cut for an eBook, how about a 45% cut provided they move so many "copies" (files) within a certain time frame, in order to garner buzz for certain titles that will then sell better in BM stores? Why not view eBook sales as a promotional tool for the pBooks that publishers obviously seem to prioritize.

[avantman42]

Originally Posted by stonetools

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.

My understanding was that the agency model wasn't the problem, the collusion was the problem. If I've understood correctly, there wouldn't have been a lawsuit if the publishers had all independently agreed to an agency model.

Originally Posted by stonetools

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.

I saw it as the DOJ deciding that it will deal with Amazon abusing it's monopoly position if and when that happens. Some assume that Amazon will obtain and abuse a monopoly, some think that won't happen. It doesn't seem unreasonable to me to wait for them to break the law before doing something about it.

I don't really have an opinion on the settlement itself, but I am curious about one thing. Presumably the companies that have settled think that it's in their best interests to do so. Why are some people so intent on not allowing them to do what they believe is in their best interests?

[Top100EbooksRank]

Originally Posted by avantman42

Presumably the companies that have settled think that it's in their best interests to do so. Why are some people so intent on not allowing them to do what they believe is in their best interests?

What is interesting is that these 3 publishers settled knowing that by settling, they

1) pay $25 million in restitution each ($250 mil total) in the USA
2) pay $$$___in restitution each in Europe and other territories
3) dragging it out in court will further their goal of keeping ebook prices HIGH for as long as possible.


Where would the ebook market be today if Apple also used wholesale like Amazon, B&N, Sony did back in early 2010? Faster adoption? Lower prices?

[Top100EbooksRank]

http://www.justice.gov/atr/cases/f285300/285315.pdf

PRELIMINARY STATEMENT
When Apple launched its iBookstore in April of 2010, virtually overnight the retail prices of many bestselling and newly released e-books published in this country jumped 30 to 50 percent—affecting millions of consumers. The United States conducted a lengthy investigation into this steep price increase and uncovered significant evidence that the
seismic shift in e-book prices was not the result of market forces, but rather came about
through the collusive efforts of Apple and five of the six largest publishers in the country.
That conduct, which is detailed in the United States’ Complaint against those entities, is per
se illegal under the federal antitrust laws

Three of the publishers named in the Complaint as defendants—Hachette Book
Group, Inc., HarperCollins Publishers L.L.C., and Simon & Schuster, Inc.—have entered into
settlement agreements with the United States. As it is required to do under the Tunney Act,
the United States solicited comments from the public regarding the settlements. The United
States received 868 comments from individuals, publishers, booksellers, and even from
Apple, a key conspirator in the underlying price-fixing scheme.
Comments were submitted both in support of, and in opposition to, the proposed
settlements. Those in support largely commented favorably on the government’s efforts to
end the conspiracy that cost e-book purchasers millions of dollars, and restore competition to
the e-book market. Critical comments generally were submitted by those who have an
interest in seeing consumers pay more for e-books, and hobbling retailers that might want to
sell e-books at lower prices. Many such comments expressed a general frustration with
conditions that arise not from the settlements or even the United States’ Complaint, but fromthe evolving nature of the publishing industry—in which the growing popularity of e-books
is placing pressure on the prevailing model that is built on physical supply chains and brickand-mortar stores. Many critics of the settlements view the consequences of the
conspiracy—higher prices—as serving their own self-interests, and they prefer that
unfettered competition be replaced by industry collusion that places the welfare of certain
firms over that of the public. That position is wholly at odds with the purposes of the federal
antitrust laws—which were enacted to protect competition, not competitors. See, e.g., Brown
Shoe Co. v. United States, 370 U.S. 294, 320 (1962).

[RDaneel54]

Originally Posted by avantman42

Some assume that Amazon will obtain and abuse a monopoly, some think that won't happen. It doesn't seem unreasonable to me to wait for them to break the law before doing something about it.

Interesting concept.

[crossi]

Originally Posted by avantman42

My understanding was that the agency model wasn't the problem, the collusion was the problem. If I've understood correctly, there wouldn't have been a lawsuit if the publishers had all independently agreed to an agency model.


I saw it as the DOJ deciding that it will deal with Amazon abusing it's monopoly position if and when that happens. Some assume that Amazon will obtain and abuse a monopoly, some think that won't happen. It doesn't seem unreasonable to me to wait for them to break the law before doing something about it.

I don't really have an opinion on the settlement itself, but I am curious about one thing. Presumably the companies that have settled think that it's in their best interests to do so. Why are some people so intent on not allowing them to do what they believe is in their best interests?

Thieves and drugsellers and inside traders all think their actions are in their best interest. I don't think that is reason enough to allow them to break the law.

[avantman42]

Originally Posted by avantman42

I don't really have an opinion on the settlement itself, but I am curious about one thing. Presumably the companies that have settled think that it's in their best interests to do so. Why are some people so intent on not allowing them to do what they believe is in their best interests?

Originally Posted by crossi

Thieves and drugsellers and inside traders all think their actions are in their best interest. I don't think that is reason enough to allow them to break the law.

I'm not saying they should be allowed to break the law. If the settlement isn't approved, the case will go to court. If they get found guilty, they'll have some sort of punishment handed down, which may be more harsh or more lenient than the proposed settlement. Presumably the companies involved don't want to go to court, they'd rather settle and take the punishment outlined in the proposed settlement. The DOJ is presumably also happy for them to settle, and is happy with the punishment outlined in the settlement.

[fjtorres]

Originally Posted by Kumabjorn

Why not view eBook sales as a promotional tool for the pBooks that publishers obviously seem to prioritize.

Good grief!
You want publishers to learn 21st century marketting?
Heresy!
Quick, run for cover; you just painted a target on your back.
(If need be, I have a nice bunker nearby.)

[fjtorres]

Originally Posted by avantman42

If the settlement isn't approved, the case will go to court.

The case is going to court anyway.
The settlement is only for 3 of the six parties and isn't binding on the others.
That's why only Apple, among the conspirators, objected.
The objections were just PR and spin with no real chance to derail the trial itself.

[fjtorres]

Originally Posted by avantman42

It doesn't seem unreasonable to me to wait for them to break the law before doing something about it.

http://www.impawards.com/2002/minority_report.html

Originally Posted by avantman42

I don't really have an opinion on the settlement itself, but I am curious about one thing. Presumably the companies that have settled think that it's in their best interests to do so. Why are some people so intent on not allowing them to do what they believe is in their best interests?

The objectors realize that once the settlement is approved, the books from the 3 settling publishers (and who knows how many others) will be candidates for discounting while their price-fixed ones won't. So dragging the trial out as they prefer would cost them sales and market share.

As they themselves said in the DOJ-supplied emails, Agency only works if they all do it. That is why they asked B&N to pressure Random House to join the fix.

And that is one way the three settling publishers can recoup their fines.

Swimming with sharks is a risky business.

[Kumabjorn]

Originally Posted by fjtorres

Good grief!
You want publishers to learn 21st century marketting?
Heresy!
Quick, run for cover; you just painted a target on your back.
(If need be, I have a nice bunker nearby.)

Stupid, stupid, stupid me.

[BeccaPrice]

Some comments about the comments received, from Shelf Awareness:

In some detail, the Department described the comments it received. Among highlights:

Only one consumer organization, the Consumer Federation of America, commented--and it was so favorable that the Department quoted its studies at length and even reproduced one of its graphs concerning e-book price trends.

52 "readers and consumers" wrote favorable comments, some of which "echoed the themes of a form letter suggested by online publisher Wordpress.com."

A group of 186 authors "noted the growth of the e-book industry and the opportunities it gave them to bypass traditional distribution channels and successfully self-publish e-books at lower prices."

The Department said several favorable comments expressed the view that the final judgment was not harsh enough.

While many Authors Guild members wrote to criticize the settlement, several members and consumers knocked the idea that major publishers are a bastion of high-quality literature and writing. The Department noted: "One reader observed anecdotally that Publisher Defendants recently granted an advance to reality television personality 'Snooki' for a ghost-written book, implying the move was in response to commercial potential rather than literary quality."

[stonetools]

The objectors realize that once the settlement is approved, the books from the 3 settling publishers (and who knows how many others) will be candidates for discounting while their price-fixed ones won't. So dragging the trial out as they prefer would cost them sales and market share.

The settling publishers definitely helped themselves-unless Amazon says, " We aren't willing to eat the cost of discounting any more. So sell us your books at $9.99 or lose 60-70 per cent of sales".
Will Amazon do that? Dunno. If they do, then the settling publishers-and the authors they represent-are screwed with no lubricant. They may get market share-but that means nothing if they get less money.

[stonetools]

Why worry? There are lots of different retailers for ebook.

Amazon
Apple
Google
B&N/Microsoft
KOBO
Sony
Direct Selling from authors

Do you think that these companies would stop selling ebooks? Is 30% commission essential for their ebookstore?
__________________

This is rather unrealistic. Its like sayting that the market in Office Software is competitive because there are all these competitors to Microsoft Office. "Why there's Star Office, Abiword, Open Office, Iworks, Free Office-to say nothing of the Linux distros and don't forget Word Perfect." In reality, of course, MS Office has 90% of the market and is a monopoly in all but name.

In the ebook market, Amazon has at least a 55 % ( down from 90%) share, BN about 25%, Apple 10%, and then there's Kobo, Sony and Google in single figures and a handful of midgets in the fractions.THAT'S the reality of the ebook market. It's even worse than that, because BN is in real danger of going belly-up like Borders and may not survive a price war with Amazon.
Most analysts think its a question of when, not if, Amazon regains an 80% share of the ebook market under a "wholesale" price model market.

[Kumabjorn]

Originally Posted by stonetools

"Why there's Star Office, Abiword, Open Office, Iworks, Free Office-to say nothing of the Linux distros and don't forget Word Perfect."

Is Word Perfect still around? I did not know that. Is there any distribution outside the US? Used to love that software, they had fantastic support. Wasn't it based in Utah?