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Old 07-25-2013, 09:21 AM   #1
fjtorres
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PW: Conspiracy Fines detailed, so far...

Those poor put-upon victims of the Feds have so far paid $166M dollars for their two year run of price fixing.

From Publisher's Weekly:

Quote:
Notably, the letter includes the total damage awards calculated by the states and lists the amount publishers agreed to pay as a percentage of those damages. In that regard, the deals look pretty good for the initial three settling publishers (Hachette, HarperCollins, and Simon & Schuster). Hachette was calculated to be on the hook for a total of $62,280,000, but has paid $32,686,165, roughly 52% of what it was liable for. HarperCollins paid $20,168,710, about 65% of $31,140,000 it was assessed for. And Simon & Schuster was on the hook for $42,920,000, and paid $18,303,551 or 42% of assessed damages.

Penguin and Macmillan, meanwhile, appear to have paid a premium for being the last two publishers to settle claims. Penguin, which struck a deal just days before Apple's June trial, agreed to pay $75 million to settle calculated damages of $62,128,000, or 121% of its assessed liability. Macmillan, which settled in March, paid $20 million to settle damage claims of $18,515,000—or, 108% of their liability.
Note that the way the "reparations" will be paid is a credits for future ebook purchases so they'll get the money right back.

As expected, they got off easy, though you'd never believe it to hear them whine about getting a wrist slap.

Glass tower crime pays off, again.

Last edited by Alexander Turcic; 07-25-2013 at 12:26 PM. Reason: adjusted for frontpage
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Old 07-25-2013, 10:38 AM   #2
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Quote:
Originally Posted by fjtorres View Post
Note that the way the "reparations" will be paid is a credits for future ebook purchases so they'll get the money right back.
Something along these lines, I bet

Quote:
Dear Customer:

As part of a settlement we have entered into with the Justice Department, we will be refunding excess monies collected for overcharging during the period in question. We have determined that you overpaid a total $17.93 for ebook purchases. This will be refunded to you in the form of $1.00 credits that you may apply to the future purchase of any single ebook priced $13.99 and up. Only one credit may be used per ebook. Excludes sale items and all titles on the New York Times Best Sellers lists.

Thank you for being a loyal customer and we look forward to serving you in the future.

Last edited by tubemonkey; 07-25-2013 at 11:32 AM.
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Old 07-25-2013, 11:30 AM   #3
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lol,

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Old 07-25-2013, 11:49 AM   #4
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Originally Posted by tubemonkey View Post
Something along these lines, I bet


Even if it wasn't along those lines, consumers would be hard pressed to use the exact amount of the credit and get something that they'd normally buy anyhow. Many would either underspend (thus the publishers would end out paying less) or overspend (thus the publishers would have additional revenues). Even if someone spent on the dot, only part of it would reflect an actual expense to the business while part of it would represent the loss of potential revenues. And I'm confident that there are tax-loopholes to deal with that. It kinda makes me wonder how much of that pentality will actually be a penalty.
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Old 07-25-2013, 02:14 PM   #5
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Originally Posted by BWinmill View Post
It kinda makes me wonder how much of that pentality will actually be a penalty.
None.

The ebook business in 2012 was worth $2Billion and the price fixers raked in half of the gross on which they overcharged 20-40%. Take the lower bound and the price fix cost consumers over $200M in 2012. Add in 2011 and late 2010 (when overcharges ran as high as 50% on some titles) and the conspiracy cost non-boycotting consumers well north of $300M and possible as high as $500M. Add in the reduced competition in both ebooks and ereaders and the six conspirators are not paying even a fraction of the damage they caused to authors, consumers, and other victims.

The only consolation is that they set the stage for the mainstreaming of indie publishing and that is going to keep on biting them in the rear unto eternity.
(Or reasonable facsimile of same.)
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Old 07-25-2013, 05:00 PM   #6
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Quote:
Originally Posted by fjtorres View Post
Those poor put-upon victims of the Feds have so far paid $166M dollars for their two year run of price fixing.

From Publisher's Weekly:



Note that the way the "reparations" will be paid is a credits for future ebook purchases so they'll get the money right back.

As expected, they got off easy, though you'd never believe it to hear them whine about getting a wrist slap.

Glass tower crime pays off, again.
Or blaming their business problems on the "DoJ being in their shorts". It's such a burden to deal with law enforcement .... after you broke the law.

Quote:
I offered the advice some time ago that publishers should raise their author royalties as insulation against being hit up for margin by the retailers. At the time, one major publisher CEO said to me that there was merit in the advice I was giving, but it was “pretty hard to make changes like that with the DoJ in your shorts”. So perhaps we’ll see some overt moves to raise that 25% ebook royalty rate sometime soon since the DoJ problem seems to be in the past.
www.idealog.com/blog/publisher-margins-today-may-be-enviable-but-it-will-be-a-big-challenge-to-keep-them-that-way/
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Old 07-25-2013, 07:23 PM   #7
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Originally Posted by Barcey View Post
Or blaming their business problems on the "DoJ being in their shorts". It's such a burden to deal with law enforcement .... after you broke the law.



www.idealog.com/blog/publisher-margins-today-may-be-enviable-but-it-will-be-a-big-challenge-to-keep-them-that-way/
Their concern is that they have always colluded to set their rates (and most contract terms) and with the DOJ watching their moves for the *next few years* they would have to act independently and are terrified to have to actually calculate a fair royalty.

In their "defense", if one of them acts independently there is a chance agents might start agenting (for a change) and spawn bidding wars. And, again, with the feds watching...

Besides, it's better to keep on ripping off authors at 25% of (hollywood accounting) net.

Last edited by fjtorres; 07-25-2013 at 07:26 PM.
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Old 07-25-2013, 07:33 PM   #8
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Sadly my guess is the authors will be the ones losing out financially it wouldn't surprise me if it didn't effect the publishers at all or even made them slightly better off.
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Old 07-25-2013, 08:11 PM   #9
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Sadly my guess is the authors will be the ones losing out financially it wouldn't surprise me if it didn't effect the publishers at all or even made them slightly better off.
There have been lots of breakdowns and estimates of how much money authors lost due to the conspiracy but nobody knows for sure (outside the publishers, and maybe not even there) because the royalty is based on "net" and that is defined as the publishers choose.

More, some authors never get significant ebook royalties to start with; they signed away most of their ebook royalties (down to the 4% range) in return for a couple extra points of pbook royalties.

Edit: Check this:
http://aardvarknow.us/2013/06/04/e-b...always-denied/

Quote:
Look at Harper’s own numbers:

$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author

$14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.

So, in other words, at these average price points, every time a hardcover sale is replaced by an e-book sale, the publisher makes $2.20 more per copy and the author makes $1.58 less. If the author made the same $4.20 royalty on the e-book sale as he/she would have on a hardcover, the publisher would STILL be making an improved profit of $6.28.
BTW, under the Wholesale (pre-agency model) and 50% discount, that same ebook would bring in $14 from the retailer; $10.50 for the publisher and $3.50 for the author (assuming no creative accounting).

Last edited by fjtorres; 07-25-2013 at 08:24 PM.
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Old 07-26-2013, 01:22 PM   #10
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I just read speculation on GIGaom that Apple's fine could be $490 million. They're extrapolating from what the publishers settled for.

Quote:
Earlier this month, a lawyer from Hagens Berman — the class action firm in the case — told my colleague Jeff Roberts that Apple would likely face a liability payment of harm to consumers times three, minus the $166 million already paid out by publishers. On Wednesday, Law360 reported (paywall) the same thing, calculating that if Apple loses its appeal it would face about $490 million in damages.
gigaom.com/2013/07/25/apple-could-pay-nearly-500-million-in-ebook-case/
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Old 07-26-2013, 01:37 PM   #11
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Note that the way the "reparations" will be paid is a credits for future ebook purchases so they'll get the money right back.
Those of us outside the US get absolutely nothing.
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Old 07-26-2013, 08:48 PM   #12
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Their concern is that they have always colluded to set their rates (and most contract terms) and with the DOJ watching their moves for the *next few years* they would have to act independently and are terrified to have to actually calculate a fair royalty.

In their "defense", if one of them acts independently there is a chance agents might start agenting (for a change) and spawn bidding wars. And, again, with the feds watching...

Besides, it's better to keep on ripping off authors at 25% of (hollywood accounting) net.
Of such things collective agreements are made? Big companies often pay people as little as possible so their shareholders profits will be a penny or two more.

It is not really right IMO but I am lucky in that I can chose where I work. Perhaps that is luck or perhaps it is because I am competent.

Authors have more choices these days as do publishers. Publishers tried the power play and it seems to have failed as well it should have IMO.

Still for the most part it is a free world, and authors can charge what they wish and publishers can pay only what they want to pay. Both are free to look elsewhere contractual obligations aside. And no one signed these contracts at gunpoint AFAIK.

Helen
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Old 07-26-2013, 10:50 PM   #13
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And no one signed these contracts at gunpoint AFAIK.

Helen
No gunpoint. But it was hardly a free choice when the "industry standard contract" was the only way to be respectably published.
Not totally unlike the Hollywood casting couch; submit or go home.
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Old 07-26-2013, 11:16 PM   #14
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Those of us outside the US get absolutely nothing.
Some of us in the US get nothing either.
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Old 07-27-2013, 04:38 AM   #15
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Something along these lines, I bet
Seriously? They can do that?
Or is it a spoof?
Sorry, from this side of the pond it is hard to know.
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