Tor/Forge Books Announces DRM-Free E-book Store

[stonetools]

Each contracted seller has its own MFN clause, and it started with Apple. Before that, publishers were able to set book prices differently at each store they sold to.

Actually, I believe Amazon had one before Apple.

Publishers are welcome to sell their books for $12.99 at Apple and Amazon, and offer them on their own site at $14.99. It's just that nobody does it that way. Publishers would *like* to sell at $12.99 at Apple and Amazon, and $9.99 at their own sites, where they don't lose 30% of the cover price--but the MFN clause prevents that.

Or not. We don't know whether the MFN clause applies to "other retailers" or to "other retailers, including the publisher." We just don't know.

Here is an example:

“In the event of a price decline, or should you at any time, during the life of this agreement, sell the same materials or service, under similar quantity and delivery conditions, to ________, at prices below those stated herein, the agreement vendor will immediately extend such lower prices to ________.”

Insert, say, Amazon or any bookseller in the first blank and Apple in the next, and you'll see how the MFN clause operates.

Note that such a clause says nothing about direct sales by the supplier.

[Elfwreck]

Originally Posted by stonetools

Or not. We don't know whether the MFN clause applies to "other retailers" or to "other retailers, including the publisher." We just don't know.

We do know. Amazon's KDP pricing requirements say:

You must set your Digital Book's List Price (and change it from time-to-time if necessary) so that it is no higher than the list price in any sales channel for any digital or physical edition of the Digital Book.

But if you choose the 70% Royalty Option, you must further set and adjust your List Price so that it is at least 20% below the list price in any sales channel for any physical edition of the Digital Book.

(Emphasis added.)

They don't care about whether the other sales channel is a publisher-direct or another retailer.

Removing the MFN clause from Apple and the Agency 5, but leaving it in Amazon (which they can't do anything about because Amazon's not part of the lawsuit), is going to be harsh. I don't expect a ruling to state that all MFN clauses are now illegal, or illegal for ebooks, so I don't see this getting fixed.

[stonetools]

Originally Posted by Elfwreck

We do know. Amazon's KDP pricing requirements say:



(Emphasis added.)

They don't care about whether the other sales channel is a publisher-direct or another retailer.

Removing the MFN clause from Apple and the Agency 5, but leaving it in Amazon (which they can't do anything about because Amazon's not part of the lawsuit), is going to be harsh. I don't expect a ruling to state that all MFN clauses are now illegal, or illegal for ebooks, so I don't see this getting fixed.

Ouch. That's some MFN clause. But it indicates that there may be diffferent MFN clauses, based on who the contracting parties may be. Amazon has huge leverage against indie authors who want to be part of KDP. As such they can dictate terms. Against a BPH, they don't have such leverage. I bet the terms of such MFN clauses are different .

[Fbone]

Originally Posted by AnemicOak

The retailer can sell individual titles at a loss, but must show a profit overall for all the books it sells from that publisher’s catalog, or at least that's my understanding.

This is how I understood it to mean also. Term length is one year from the contract date. How retailers will implement this will be interesting to see. How do they project sales figures 11 months in advance?

It's possible we won't see the big discounts like before. And we don't know what the starting wholesale prices will be either.

[JSWolf]

I do hope Tor's store will have reasonable prices.

[JSWolf]

Since the MFN clause is going to be ruled away, Tor will eventually be able to sell at whatever price they want at their own store.

[Elfwreck]

Originally Posted by JSWolf

Since the MFN clause is going to be ruled away, Tor will eventually be able to sell at whatever price they want at their own store.

Apple's MFN is being ruled away (well, for the three that settled; Tor's parent company isn't one of them). Amazon's MFN is still firmly in place.

[stonetools]

Originally Posted by Elfwreck

Apple's MFN is being ruled away (well, for the three that settled; Tor's parent company isn't one of them). Amazon's MFN is still firmly in place.

Under the terms of the settlements, the publishers have to offer new contracts to all retailers (including Amazon). Since they are barred from offering Apple an MFN clause, they can similarly refuse to offer one to Amazon-and they'll be backed by the DOJ, who must approve these contracts. So Amazon's MFN clause is probably going away, for the settling publishers.

For Macmillan, (and for Tor) all MFN clauses will still be in effect.

[JSWolf]

Originally Posted by stonetools

For Macmillan, (and for Tor) all MFN clauses will still be in effect.

But that won't last for that long once they lose the case.

[DiapDealer]

Originally Posted by JSWolf

But that won't last for that long once they lose the case.

Nice!
Most people at least pretend there's a point to the whole "trial" thingamabob.

[MikeB1972]

Originally Posted by JSWolf

But that won't last for that long once they lose the case.

Win or Lose it won't last long, I can't see the non-settling pubs agreeing to terms with amazon that aren't in their favour when that they know the settling pubs can't (and MFN is definitely in favour of the distributor not the publisher - especially when the publisher is setting up it's own distribution channel).

[stonetools]

Originally Posted by MikeB1972

Win or Lose it won't last long, I can't see the non-settling pubs agreeing to terms with amazon that aren't in their favour when that they know the settling pubs can't (and MFN is definitely in favour of the distributor not the publisher - especially when the publisher is setting up it's own distribution channel).

Agree. Its likely the non-settling 3 are going to resist these MFN clauses in the next round of contracts-win or lose on the case.

[ProfCrash]

It won't last for long because they will not want to be more expensive then the three that settled.

[murraypaul]

Originally Posted by stonetools

Under the terms of the settlements, the publishers have to offer new contracts to all retailers (including Amazon). Since they are barred from offering Apple an MFN clause, they can similarly refuse to offer one to Amazon-and they'll be backed by the DOJ, who must approve these contracts. So Amazon's MFN clause is probably going away, for the settling publishers.

Does the court have the power to void the current contracts with Amazon/B&N and other retailers, if the retailers wish to keep them? Given that Amazon et al are not a party to these proceedings?
If not, then those MFN clauses would remain until the current contracts end.

[stonetools]

Originally Posted by murraypaul

Does the court have the power to void the current contracts with Amazon/B&N and other retailers, if the retailers wish to keep them? Given that Amazon et al are not a party to these proceedings?
If not, then those MFN clauses would remain until the current contracts end.

The terms of the settlement:

According to the filing, settling publishers will be immediately required to do the following:

•Terminate its current contracts with Apple within seven days of the court’s acceptance of the settlement;
•Terminate any other contracts with e-book retailers that restrict the retailer’s ability to set final prices for books or contain a “most favored nation” provision prohibiting price competition, as soon as possible;
•Renegotiate contracts with Apple and other retailers, with a two-year prohibition on any contract that prevents retailers from discounting retail prices (see below);
•Notify the Department of Justice before entering into any joint ventures between it and another publisher related to e-books;
•Designate an antitrust compliance officer and provide the DOJ with a copy of its agreements with any e-book retailers quarterly for five years.
Furthermore, any future agreements between the settling publishers and e-book retailers will have to observe serious restrictions, at least for a time. For two years, e-bookstores must be permitted to discount retail prices of books at their own discretion.

LINK