U.S. Justice Dept. to Sue Publishers, Apple, for Price Collusion?

[stonetools]

Pubishing consultant Mike Shatzkin weighs in the DOJ's move. He is not pleased. He games out what will happen if agancy pricing is reversed:

LINK

He sizes up the winners and the losers:

Over time, the biggest losers here will be the authors. The independent authors will feel the pain first. Agency pricing creates a zone of pricing they can occupy without much competition from branded merchandise. When the known authors are only available at $9.99 and up, the fledgling at $0.99-$2.99 looks very attractive and worth a try. Ending agency will have the “desired” effect of bringing all ebook prices down. As the big book prices are reduced, the ability of the unknowns to use price as a discovery tool will diminish as well. In the short run, it will be the independent authors who will pay the biggest price of all.

But, in the long run, all authors will just get less. They will join the legion of suppliers beholden to a retailer whose mission is to deliver the lowest possible price to the consumer.

As for readers,

But what about the reader? The reader gets lower prices, cheaper reading. What the reader won’t see is that s/he’s not getting what s/he won’t pay for. Some of the best books won’t get written and the biggest casualties will be in the area of highly-researched non-fiction, like major biographies, in my opinion. Twenty years ago they used to say that a conservative was a liberal who’s been mugged. I’m not about to become a conservative, but I sure see how easy it is for the government not to understand how their decisions might affect the dynamics of a business. Or, in this case, a culture.

I think he is right about Amazon squeezing authors in the end and right about non-fiction.

[Fbone]

Has anyone ever done a price comparison before and after Agency pricing for a specific publisher?

[Elfwreck]

Originally Posted by stonetools

The purpose of agency pricing was to reduce Amazon's power and allow a diversity of ebook retailers, not solve every problem in the ebook marketplace. It did what it did.

What additional ebook retailers do we have now than we did a year ago? Where are the new thriving stores that agency pricing will encourage? Where are the customers who decide anew, based on store quality and features, where to shop for ebooks every time a new book comes out?

I don't see "splitting the market between Amazon and B&N" to be a great improvement worth a 50% hike in consumer prices for a huge array of products.

I don't see that agency pricing caused any of the split in the marketplace--the new business went to stores with wifi devices, not stores with better customer service or more detailed search engines or more personalized selection options.

Reversing agency pricing would in all likelihood re-establish an Amazon monopoly,

Reversing agency pricing would let small ebookstores, those without a wifi-enabled device connection, to offer incentives to customers.

As for Fictionwise, do you honestly think that it would have survived long trying to out discount Amazon?

They didn't need to out-discount Amazon; they had a paid membership package with small bonuses, and regular "buy one, get one free later" options. Those worked to create customer loyalty--and since they offered a lot of multiformat books, they did so without requiring lock-in. *That's* supporting diversity in the marketplace.

How do you know it wasn't on the point of bankruptcy when BN bought it? Frankly, we just don't know how successful its business model was.

And this justifies agency pricing destroying their business model? "Maybe they were already having problems, so it's okay to coordinate our efforts to raise prices in a way that knocks out small companies?"

[stonetools]

What additional ebook retailers do we have now than we did a year ago? Where are the new thriving stores that agency pricing will encourage? Where are the customers who decide anew, based on store quality and features, where to shop for ebooks every time a new book comes out?

I am certain that Apple would not have gone into the ebook retail business absent agency pricing, so that's one. Google most likely would not have gone in , either, so that's another.
As for Fictionwise? Had they been doing all that well, they would not have sold out to BN. I'm sure that you aand others liked Fictionwise, but it's also clear that they weren't doing well enough that they felt that they could go it alone.

[fjtorres]

Originally Posted by stonetools

I am certain that Apple would not have gone into the ebook retail business absent agency pricing, so that's one. Google most likely would not have gone in , either, so that's another.

I suspect the ePub "standard" would be in better shape without Apple forking the DRM and the plumbing.

And I "vaguely" remember Google investing heavily in ebooks long before the Price Fix.
They even got sued for their plans to make money off ebooks.

Anybody else?
Does Blio count?

[JSWolf]

Originally Posted by fjtorres

I suspect the ePub "standard" would be in better shape without Apple forking the DRM and the plumbing.

Apple is not 100% ePub so they don't really count. It's B&N with the different DRM on standard ePub that's at fault.

[stonetools]

Whats interesting is that the guys who are most in favor of ePub who are also in favor of dismantling agency pricing-which would hugely benefit Mobi's champion, Amazon.

[fjtorres]

Originally Posted by stonetools

Whats interesting is that the guys who are most in favor of ePub who are also in favor of dismantling agency pricing-which would hugely benefit Mobi's champion, Amazon.

And that still doesn't cue you in that the issue *isn't* Amazon?

It's the P-R-I-C-E-S, sir.

[Rob Lister]

Over time, the biggest losers here will be the authors. The independent authors will feel the pain first. Agency pricing creates a zone of pricing they can occupy without much competition from branded merchandise.

I don't much buy it. The publishers will still be free to charge whatever wholesale price they want, just like they now charge any agency price they want.

[Elfwreck]

Originally Posted by stonetools

I am certain that Apple would not have gone into the ebook retail business absent agency pricing, so that's one.

Ah yes--the one that's being sued for price-fixing, because they couldn't enter the market without it.

Google most likely would not have gone in, either, so that's another.

Google had been planning to enter the ebook market for years.

So... you can name two powerhouse tech companies who decided to dabble in ebooks after agency pricing went into effect, and you're calling that "diversity?" Neither Apple nor Google needs to sell ebooks to remain profitable; they can both afford their ebook sales stores to run in the red for several years while they're sorting out what to do with them.

Where are the dozens of "mom-and-pop ebook" stores, the ones without a huge selection but instead a curated collection designed to appeal to a specific audience? There's an AllRomanceEbooks, which was hit hard by agency pricing... if agency pricing is *better* for bookstores, why haven't All-Mystery-Ebooks and All-SF-Ebooks sprung up in the last year?

If Amazon's semi-monopoly was threatening other businesses, publishers had options other than "collude to raise prices for customers and drive smaller stores out of business."

[stonetools]

Originally Posted by fjtorres

And that still doesn't cue you in that the issue *isn't* Amazon?

It's the P-R-I-C-E-S, sir.

Supreme Court said different, recently.

Im certain that the DOJ isnt going to want an Amazon 90% share of the retail market, either.

I'm betting on a modified agency pricing model coming out of this.

[DiapDealer]

Originally Posted by stonetools

I'm betting on a modified agency pricing model coming out of this.

Wow! Are you sure that limb you're climbing out on will support you?

Of course that's going to be the outcome... whether the DOJ ever determines they acted illegally or not. That's a foregone conclusion.

[Fbone]

Originally Posted by Rob Lister

I don't much buy it. The publishers will still be free to charge whatever wholesale price they want, just like they now charge any agency price they want.

This is how I look at it also. If the publishers want to sell their books for $10-13 now, they can easily find a way to sell them for that amount in the future.

[geertm]

Originally Posted by JSWolf

Apple is not 100% ePub so they don't really count. It's B&N with the different DRM on standard ePub that's at fault.

Unlike Amazon and Apple who do not license their DRM to anyone else, B&N has licensed its DRM to Adobe, and support for B&N's DRM is included in the latest Adobe software. Any software ereader or ereader device using the latest Adobe software can support B&N's DRM.
Several software ereaders do support B&N's DRM (including a pre-release of the new ADE software), but manufacturers like Kobo and Sony have chosen not to enable support for the B&N DRM.

So instead of blaming B&N, blame the ereader manufacturers for not enabling the included B&N DRM support.

[osnova]

Whether or not collusion brings any benefits to third parties (those that did not collude such as customers, ebook stores, etc.) is irrelevant. Price fixing (competitors agreeing on prices, discounts or lack thereof) is illegal conduct per se (in itself). If publishers came out with the agency model by discussing their pricing among themselves, then they violated the law period. It's a felony. All this discussion of agency model versus non-agency model is besides the point.