DOJ Responds to Public Comments

[DiapDealer]

Originally Posted by Graham

This is the bit I don't understand. They're worried that it will hurt the consumers if Amazon eventually decides to raise the prices... like they did?

Quoted for relevance.

Actually, I find it ludicrous in general to pretend that any of the Big 6's recent actions/decisions were motivated by concern (even a teensy bit) for consumers.

[stonetools]

Originally Posted by Graham

This is the bit I don't understand. They're worried that it will hurt the consumers if Amazon eventually decides to raise the prices... like they did?

Graham

They do raise that as an argument, and its plausible-monopolies do raise prices (MS Office could be a lot cheaper ). However, the price argument is not their Sunday punch.

Their real argument is that the book industry will become poorer and less productive. B&M stores will more rapidly go out of business, meaning that discovery options for authors will decline . Publishers will be subject to be squeezed by a monopsonistic retailer (Amazon) and and will therefore lack the resources to finance major nonfiction projects like Robert Caro's multi-volume biography of LBJ and to bet on ground breaking new authors .

They also argue that the remedy provided will be an administrative nightmare . They make quite a few arguments, some better than others.

If your focus is purely on prices short term, then those arguments will be unconvincing.

[stonetools]

Do you really still think that the settlements aren't going to be approved?

I've always felt that the DOJ would proceed with settlement, no matter what the comments . I believe it will be approved , too. The remedy portion may have to be tweaked though. I do think that the restrictions on retailer discounting are going to be a mess and I think the court might just send it back for that reason.
If its approved , the next step will be to see what the publishers make of what will be for all intents and purposes, wholesale contracts.

[GreenMonkey]

Originally Posted by stonetools

They do raise that as an argument, and its plausible-monopolies do raise prices (MS Office could be a lot cheaper ). However, the price argument is not their Sunday punch.

Their real argument is that the book industry will become poorer and less productive. B&M stores will more rapidly go out of business, meaning that discovery options for authors will decline . Publishers will be subject to be squeezed by a monopsonistic retailer (Amazon) and and will therefore lack the resources to finance major nonfiction projects like Robert Caro's multi-volume biography of LBJ and to bet on ground breaking new authors .

They also argue that the remedy provided will be an administrative nightmare . They make quite a few arguments, some better than others.

If your focus is purely on prices short term, then those arguments will be unconvincing.

Speculation, and it doesn't matter. None of this is justification for price-fixing - it's anti-competitive and anti-free-markets.

If Amazon becomes a monopoly by abusing said power, they can be busted up by the feds.

You could have claimed the same thing about Apple + iTunes years ago, yet there's several places (like Amazon) selling music successfully.

The way to fix a wrong (or in this case, prevent a wrong) is not another wrong.

[Graham]

Originally Posted by stonetools

B&M stores will more rapidly go out of business, meaning that discovery options for authors will decline.

As the DoJ observed drily if the BPHs are that worried about B&M stores they could subsidise them directly, rather than making eBook consumers subsidise B&M sales.

And really? Do we really think that more people discover new authors working their way along shelves looking at spines than by following links and recommendations online?

I've loved books for half a century and I was already discovering new print authors via the internet rather than in my beloved bookshops years before I switched to ebooks.

Originally Posted by stonetools

Publishers will be subject to be squeezed by a monopsonistic retailer (Amazon) and and will therefore lack the resources to finance major nonfiction projects like Robert Caro's multi-volume biography of LBJ and to bet on ground breaking new authors.

This is speculation without evidence. I see no reason why Amazon themselves wouldn't finance projects like these, and provide a conduit for ground-breaking new authors. It's also begging the question to state that the BPHs will be squeezed out of this niche. Maybe, maybe not. They need to adapt to the new realities and use their core advantages to turn a profit. Advertise themselves as providing a quality product. Find a new route to market.

Originally Posted by stonetools

They also argue that the remedy provided will be an administrative nightmare.

The DoJ pointed out that the remedy was formulated in discussion with the three who settled, and that none of them saw any difficulty in providing the required information.

Graham

[stonetools]

As the DoJ observed drily if the BPHs are that worried about B&M stores they could subsidise them directly, rather than making eBook consumers subsidise B&M sales.

It's actually an interesting suggestion, but then that would move publishers towards vertical solutions where they not only develop and finance books but sell them in their own stores. More short term, they could just raise the wholesale prices on ebooks in order to subsidize B&M stores. Be careful what you wish for.

And really? Do we really think that more people discover new authors working their way along shelves looking at spines than by following links and recommendations online?

I've loved books for half a century and I was already discovering new print authors via the internet rather than in my beloved bookshops years before I switched to ebooks.

One study has found that people more readily discover new books browsing book stores. Even when they end up buying ebooks, they discover the pbook version browsing the B&M store. That's not just B&M store propaganda.

This is speculation without evidence. I see no reason why Amazon themselves wouldn't finance projects like these, and provide a conduit for ground-breaking new authors. It's also begging the question to state that the BPHs will be squeezed out of this niche. Maybe, maybe not. They need to adapt to the new realities and use their core advantages to turn a profit. Advertise themselves as providing a quality product. Find a new route to market.

Let's just say Amazon hasn't done anything like that yet, so its speculation to think they will , although they are moving into publishing . As for the publishers, I indeed think they'll find a new way, now that agency pricing is temporarily blocked. That new route will be their own ebook stores.

The DoJ pointed out that the remedy was formulated in discussion with the three who settled, and that none of them saw any difficulty in providing the required information.

THe problem was discussed in detail by Mike Shatzkin HERE.

In short, the retailers have to provide the publishers with detailed sales info in order for the publishers to properly police the discounting restrictions-info that the publishers are not now getting . Please read the whole thing, though, to get a full analysis of the problems. The DOJ has oversimplified the issue in its Response.

[Graham]

Originally Posted by stonetools

THe problem was discussed in detail by Mike Shatzkin HERE.

In short, the retailers have to provide the publishers with detailed sales info in order for the publishers to properly police the discounting restrictions-info that the publishers are not now getting . Please read the whole thing, though, to get a full analysis of the problems. The DOJ has oversimplified the issue in its Response.

I've been through Shatzin's letter, but I'll need to reread it later (getting late here and time to switch off), but on first pass I think he's setting up a straw man.

The publishers are free to agree whatever contracts they like with the retailers, barring Agency pricing for 2 years. If their chosen solution includes the sort of discounting restrictions Shatzkin proposes then they'll also come up with an agreement with the retailer on how to police it.

Graham

[Kali Yuga]

Originally Posted by shalym

And the DOJ made it very clear that the comments from the people in the industry were, for the most part, irrelevant to the case.

The DoJ doesn't get to decide what is or is not relevant.

The judge in the case is the one who will decide whether or not to accept the settlement. I don't know the whole process, but presumably the judge will go through the comments, and do his/her own research, and apply the relevant criteria.

[JD Gumby]

Originally Posted by stonetools

They do raise that as an argument, and its plausible-monopolies do raise prices (MS Office could be a lot cheaper ).

But not always, of course. When Amazon had their effective monopoly over the e-book market, they did nothing to abuse their customers or those supplying the goods that they sell. The worst that you could say about their behaviour is that they used new titles and best sellers as loss leaders (and virtually every retail concern there ever has been has had loss leaders to entice people to buy their other stuff) - and even then that was only rarely, mostly selling them at about cost...

[JD Gumby]

Originally Posted by GreenMonkey

If Amazon becomes a monopoly by abusing said power, they can be busted up by the feds.

It's not even about whether or not they are, or become, a monopoly - it's about whether they abuse their position as a monopoly to disadvantage customers and keep others out of the market (for example, jacking up prices for the customers (beyond reason - profit *is* allowed, after all), or forcing exclusivity or "most favored nation" agreements with their suppliers).

[stonetools]

Originally Posted by JD Gumby

It's not even about whether or not they are, or become, a monopoly - it's about whether they abuse their position as a monopoly to disadvantage customers and keep others out of the market (for example, jacking up prices for the customers (beyond reason - profit *is* allowed, after all), or forcing exclusivity or "most favored nation" agreements with their suppliers).

Amazon has certainly forced exclusivity and MFN clauses on its suppliers. Based on that, its not inconceivable it could gouge consumers in the right circumstances.
That said, the price argument isn't the publisher's best.

[murraypaul]

Originally Posted by stonetools

THe problem was discussed in detail by Mike Shatzkin HERE.

From that:

In a nutshell, without uniform retail pricing, Amazon can effectively disintermediate the publishers, but the publishers can’t effectively disintermediate Amazon.

If that is true, then the publishers must not be providing any useful services, so deserve to be cut out.

[DiapDealer]

From Shatzkin:

In a nutshell, without uniform retail pricing, Amazon can effectively disintermediate the publishers, but the publishers can’t effectively disintermediate Amazon.

I wasn't aware that the publishers were being forced to sell their products through Amazon. Surely they can disintermediate them any time they like?

[tompe]

Originally Posted by DiapDealer

From Shatzkin:

I wasn't aware that the publishers were being forced to sell their products through Amazon. Surely they can disintermediate them any time they like?

You missed the word "effectively".

[DiapDealer]

Originally Posted by tompe

You missed the word "effectively".

I didn't actually. Are you sure you're not confused about "effectively"'s meaning? Because not allowing Amazon to sell your products would be quite effective in disintermediating them.