Barnes & Noble claims price fixing settlement will raise e-book prices

[HarryT]

Originally Posted by markbot

This idea that price fixing and collusion are good for consumers is funny.

Many countries have adopted a position which disagrees with you. In many European countries, book prices are fixed on the grounds that protecting small independent booksellers benefits society as a whole, even if the individual consumer does pay more as a result. What's good for the consumer is not necessarily what's good for society.

[MovieBird]

Originally Posted by HarryT

Many countries have adopted a position which disagrees with you. In many European countries, book prices are fixed on the grounds that protecting small independent booksellers benefits society as a whole, even if the individual consumer does pay more as a result. What's good for the consumer is not necessarily what's good for society.

I don't see where markbot is addressing a common good. Is he not, quite explicitly, restricting his statement of irony to the argument that these practices are good for the consumer?

[HarryT]

Originally Posted by MovieBird

I don't see where markbot is addressing a common good. Is he not, quite explicitly, restricting his statement of irony to the argument that these practices are good for the consumer?

The two things are related. Is it good for the consumer to save money in the short-term, but pay the long-term price of having all your local bookstores disappear? Many countries have decided that the answer to this question is "no".

[Skydog]

Originally Posted by HarryT

The two things are related. Is it good for the consumer to save money in the short-term, but pay the long-term price of having all your local bookstores disappear? Many countries have decided that the answer to this question is "no".

In this case, it is not the business of government to decide what is "good" for the consumer. I will decide, with my wallet, what is best for me. Competetion and the free market work best to benefit the consumer, not a "Nanny State" government.

[HarryT]

Originally Posted by Skydog

In this case, it is not the business of government to decide what is "good" for the consumer. I will decide, with my wallet, what is best for me. Competetion and the free market work best to benefit the consumer, not a "Nanny State" government.

Isn't it a "nanny state" government that's decided that it's wrong for publishers to collude and fix prices? You can't have it both ways - either government interferes in commerce, or it doesn't.

[tompe]

Originally Posted by Skydog

In this case, it is not the business of government to decide what is "good" for the consumer. I will decide, with my wallet, what is best for me. Competetion and the free market work best to benefit the consumer, not a "Nanny State" government.

It just means that there are different opinons about what is good for the consumer. And we have a counter example of somebody thinking that a thing tha was claimed to impossible be good for the consumers actually are good for consumers. So the questions is not trivial and the original claim has no foundation in science or empirical studies.

[crossi]

Since I don't go and don't want to go to local bookstores higher prices in order to keep those stores that I don't visit in business are not in MY interest.

[fjtorres]

Originally Posted by HarryT

Many countries have adopted a position which disagrees with you. In many European countries, book prices are fixed on the grounds that protecting small independent booksellers benefits society as a whole, even if the individual consumer does pay more as a result. What's good for the consumer is not necessarily what's good for society.

Harry, I'll respectfully point out that US antitrust law--which is what DOJ and the FTC are charged with enforcing--for the past hundred years has been about protecting consumers from corporations, not about protecting consumers from their own personal choices. Or protecting corporations from each other.

The government department charged with that kind of nannyism is much newer, dating back to last year:
http://en.wikipedia.org/wiki/United_...tection_Bureau
So far they are having enough trouble finding their new offices on a regular basis that they have not yet taken a position on the matter of ebook pricing.

Also, US law does not offer privileged protection to arbitrary companies or industries. (except baseball.)
Everybody else is supposed to be subject to the equal protection clause of the constitution. Admittedly it is mostly honored by the frequency of violations but in this century Washington has apparently gotten serious (at last) about the equal protection clause.

In other words: do not expect consistency from the schizophrenic government.

Edit: and I do mean schizophrenic. Clinically.

[Scott Nicholson]

BN: "Wah. The future doesn't fit my business model."

[fjtorres]

Hmm, I'm wondering...
Among the evidence presented in the DOJ filing are emails where Penguin "nudges" B&N to "punish" Random House for not joining the conspiracy on day one. B&N went along and stopped all RH promotions until they joined the price fix regime.
The DOJ hasn't charged either because they appear to have been coerced.

Class action lawsuits are a wee bit different than DOJ lawsuits, though, and if B&N makes enough noise about how they benefitted from the price fix, some of the AGs or the customer attorneys might see fit to amend the filings and include B&N on the docket. Especially now that they have a $600 million pot of Microsoft money to pay from.

I'm wondering how wise it is for B&N to stand so close to the conspirators when their own hands aren't exactly clean...

[Boston]

I like going to the physical bookstores and because I want them to stay in business, try to buy something whenever I go. However, because I read mostly e-books, I would buy more if they would let me buy e-books at the store (not to mention that I am less price sensitive in the store than I am at home)

The scenario I always envisioned (but hasn't happened): Barcoded slips next to the physical book displays that you could take to the register to buy the e-book if you are a B&N member. Members would get discounts on e-books just like they do paper (agency permitting) and when you turn on your book reader (or other nook app tied to your B&B account), it automatically downloads.

Personally, I have no desire to pull out my ebook reader while in the store..so I jot down titles and wait until I go home to purchase and often I don't because the impulse is gone. Likewise, B&N has no idea that the purchase is the result of my visiting their store (or what store).

Likewise, there are people like my mom - she loves her ebook reader but doesn't like shopping for books on-line (I have to buy them for her and push to her Kindle)

Maybe this isn't the perfect scenario but my point is that the physical stores need to develop an integrated ecosystem just like Amazon has.
.

[HarryT]

Originally Posted by fjtorres

Harry, I'll respectfully point out that US antitrust law--which is what DOJ and the FTC are charged with enforcing--for the past hundred years has been about protecting consumers from corporations, not about protecting consumers from their own personal choices. Or protecting corporations from each other.

Yes, I know, and I thoroughly approve of anti-trust laws. I just thought it slightly ironic to see a complaint about "nanny state interference in free trade" when this whole DOJ lawsuit is the result of such "interference". Presumably the view is that it's OK for the government to interfere if doing so benefits the consumer, but not OK if it benefits corporations?

[fjtorres]

Originally Posted by HarryT

Yes, I know, and I thoroughly approve of anti-trust laws. I just thought it slightly ironic to see a complaint about "nanny state interference in free trade" when this whole DOJ lawsuit is the result of such "interference". Presumably the view is that it's OK for the government to interfere if doing so benefits the consumer, but not OK if it benefits corporations?

Ironic? You are kind.
As I said, I stand by my diagnosis of schizophrenia.

The thing is, there is a kind of consistency at work but it is historically-driven.
Since the US legal system follows English Common Law traditions and mechanisms, unlike the Continental Napoleonic systems, the status quo was forged out of past decisions and the past history is of corporations preying on consumers so the body of precedent is all directed to restraining corporate excesses and its effects on consumers. Competitors are presumed to be predators themselves and thus capable of taking care of themselves. (Notice how little sympathy the Borders implosion garnered? Notice how 20 years ago the disappearance of half the indie bookstores at the hands of Borders and B&N went unchallenged? There is plenty of precedent for letting losers fail across many industries. Bailouts are a more recent development. And a transitory one at that, most likely.)

Also, consider that US culture does not see failure in business as the personal "disgrace" it is seen as in many european countries. Failure in business can be bad luck, bad timing, a "learning experience", etc, and no personal stigma is attached. A business failing is not seen as significant enough to warrant special protection so long as the individuals involved are protected (through limited liability, unemployment insurance, etc). By letting companies fail when they can't keep up with competition--the underlying philosophy argues--Darwinian competition will breed stronger and healthier competitors better suited to meeting consumer needs.

Both policies end at the same point: the consumer is king. It is not a matter of personal rights or civil rights but of (unstated) economic rights. Common Law has its failings but the inability to keep up with the evolving social contract of the society isn't one of them. As the american economy has moved from an industrial economy to a consumer-driven economy over the last hundred years, the evolution of the law has followed suit and enshrined consumer protection as key to a healthy, active economy. (The only polite thing I can say about corporate protectionism is that the laws *may* have served a purpose in the olden days but are strong candidates for sunsetting today.)

The mechanisms at play in US antitrust are obscure and "not-pretty" in operation but they seem to work acceptably for the general good. It is schizophrenic in that many of the players in government may not personally buy into these underlying philosophies or be able to articulate them but they are constrained by the environment and the law. The DOJ clearly understands that Amazon could conceivable win big in any punishment of the conspiring corporations, hence the (unusual) constraints they've imposed on them in the settlement terms which are actually *light* on the three settling companies (compared to the usual price-fixing conspiracy penalties), even though they are not participants in the conspiracy and fought it publicly. They may not like Amazon (theoretically) benefitting, but they are also compelled by law and precedent to act; they can't turn a blind eye to such a classic antitrust violation with such a high visibility factor. Motivation and consequences don't enter into the equation; just the raw fact that producers conspired with one particular distributor to reduce competition among themselves and raise consumer prices. Faced with the evidence in the filing, they *had* to do their job: protect consumers, restrain and punish the conspirators. Anything else going on is irrelevant to the case and at most only worth monitoring but unworthy of action until an actual law is broken.

Different societies have different values and different social contracts so they produce different bodies of law. In a connected world these bodies of law are broadly visible across borders and there is a strong tendency to apply them in places/situations they were not intended for; to people and places with different values and different needs.

One consequence of this is that some US judges have taken to looking at foreign precedents as guidance, not just previous US precedents, with the expected consequences: serious debate and a growing movement to explicitly de-legitimize foreign precedent as legal guidance. Several states have passed or are legislating such constraints for a variety of reasons but at core they have a reasonable concern: Common Law requires a common history to ensure general buy-in and its force and utility comes from that general buy-in. It is a dynamically adjusting, emergent effect, not a grafted-on constraint. This particular subject is headed straight to the SCOTUS within the next year or two so the scope of US Common Law guidance is about to be defined as either based on local legal history and laws or global. It will be interesting to see how the court rules on importing precedent without importing the customs and mores that produced those precedents.

But until then, the system stands: based on "high principle" but (flexibly) inconsistent. It is not necessarily a bad thing for a legal system to be schizophrenicaly inconsistent.

Emerson's full quote fits the situation nicely:

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.

I for one would not like to see little minds or little statesmen running the legal system, much less philosophers or religion advocates. Keeping their grubby hands of the levers of power is an ongoing, never-ending effort in the US with, as usual mix results.
(As I said, the workings aren't pretty. But they're surprisingly efficent.)

Stripping away the blather: The DOJ is acting in accordance to US mores, customs and laws; doing their job and letting the chips fall where they may, as expected of them.
Europe is grappling with the same conspiracy on their own terms, following their own mores and laws.
They may end up at the same place (my tea-leaf reading) or not but that is up to the Brusselcrats.

[cfrizz]

Very nice post Fjtorres!

[stonetools]

You have to be realistic about things. BN wrote this letter because its acting in its economic self-interest, as is every other coroprate actor here.
Looking at folks excoriating BN because its too "lazy" to compete with Amazon or because its pursuing an "outdated business model", I'm reminded of the military history adage " Amateurs talk about tactics and professionals talk about the logistics.' The reason why Amazon can out compete BN and other retailers comes down to one thing: Amazon can afford to lose money on sales of ebook bestsellers because of other revenue streams, and BN and other retailers can't. Everything else, is in the words of Penn Juliette, BULLS**T!
What it means is that any "discount scheme", "loyalty program", "new workflow", or what not that BN can come up with , Amazon can match or exceed it. Because Amazon has a logistical advantage in unrestricted price competition, there is really going to by only one result in an ebook market with permits that: domination by Amazon-which is bad news for Amazon ebook suppliers (whether they be BPHs or authors, btw).
Now BN and Kobo have taken advantage of the breathing space offered by two years of agency pricing to get rich partners, so maybe agency pricing has achieved the stated goal of increasing retailer diversity. Most analysts seem to think that if unrestricted price competition returns , Amazon's share of the ebook market, which has shrunk to 60 per cent, will return to monopsonistic levels. We'll see.