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Summary:

As the Department of Justice’s lawsuit against Apple and five big publishers for allegedly colluding to fix e-book prices moves forward, the public has the chance to respond. Here are some of the most interesting letters sent to the DOJ so far.

Letter mail envelope
photo: Shutterstock

As the Department of Justice’s lawsuit against Apple and five big publishers for allegedly colluding to fix e-book prices moves forward, the public has the chance to respond with their take on the allegations. Any interested party has until June 25 to comment on the proposed settlement with Simon & Schuster, Hachette, and HarperCollins (Penguin and Macmillan are fighting the case in court). Many are also taking the opportunity to comment on the overall DOJ lawsuit.

Here are a few excerpts from some of the most interesting letters sent to the DOJ so far. After June 25, the DOJ will review the letters, write a response and file everything in the public record.

Letters in support of Apple and publishers:

Mike Shatzkin, publishing industry consultant: “The publisher of the future must be able to sell direct. With Amazon as their single biggest wholesale customer, that puts publishers in a Catch-22. If they sell direct at full price, Amazon will undercut them and make them look foolish to their customers. But if publishers discount, they invite a double-whammy. Amazon can still out-discount them, but Amazon (and other retailers) might also insist that the wholesale prices at which Amazon purchases from publishers, which are based on discounts-from-retail, be based on the price the publisher is actually selling for.

So, without a publisher-set price that is honored by everybody, including the publisher, Amazon will effectively be the only general publisher that can sell direct. This will materially disadvantage all publishers in competing with Amazon for authors, and the handicap will become increasingly severe as the sales continue to shift, as they will, away from physical stores and to online purchasing.” full letter here

Peter Glassman, owner of independent bookstore Books of Wonder: “As I understand it, in the DOJ’s lawsuit the DOJ objects to publishers colluding to switch from the wholesale model where the retailer purchases and take ownership of the property created by the manufacturer (or publisher), and agrees to payfor it in a specified period of time at a specified price or discount off the recommended price. In this model, since the retailer is purchasing and owns the merchandise, it is generally considered their right to set whatever price they wish. Unfortunately, publishers have never sold e-booksunder the wholesale model. Rather, they have sold them under the consignment model. Amazon and other e-book sellers never purchased or took ownership of the e-books they resold. Rather,they advertised the product, handled the transaction, and only after they had received payment and concluded the transaction did they pay the publisher for the e-book. That is consignment, not wholesale. Amazon never placed any buy orders or made any commitments to purchase specific quantities of any e-books. Unless the DOJ is seeking to change the very nature of property ownership in the United Sates and allow vendors to set prices on property they do not own nor have any commitment to purchasing, the precedent the DOJ would be setting should theDOJ win this lawsuit and go forward with its settlements could have grievous unintended consequences. I’m sure there are lawyers out there already looking forward to how they will beable to twist this to the advantage of themselves and their clients.” full letter here

Bob Kohn, CEO of Royalty Share and former CEO of eMusic: “E-books cannot just be read on hardware devices; they must be read on hardware devices. E-books have no value or use to a consumer without the aid of machine or device. Every reader of ebooks knows this. (If the DOJ can provide an example of how an e-book can be read without the aid of some form of hardware device, they are welcome to come forth and show it). By contrast, consumers can read printed books right off the shelf, standing alone, without the aid of any kind of device. Appreciating this critical distinction between e-books and printed books is crucial to this case. E-books are not just digital versions of books. Failure to appreciate the nature of copyrighted works in digital form, such as e-books, and the context in which they are consumed, will inevitably lead to the mistake made by the DOJ, treating the market for e-books like the market for any non-system good, such as printed books. It is this central mistake that lead the DOJ to conclude that Defendants’ alleged actions are anti-competitive when in fact they are manifestly pro-competitive. It was a mistake that could have been avoided had the DOJ simply followed its own Guidelines.” full letter here

Simon Lipskar, Writers House president: “Counter to the endless claims made by the government that agency prices for ebooks raised the consumer price of all ebooks, in fact, by setting most hardcover-period ebooks to $12.99, agency publishers were raising the consumer price of a small set of bestselling titles but simultaneously decreasing the price paid by the consumer on many other hardcover period ebooks.  The short-sighted focus by the government on the price effects of agency on only a limited number of bestselling titles demonstrates the inaccuracy of its larger and counter-factual generalizations about broader price consequences; the government here is straightforwardly guilty of the hasty generalization fallacy, in which a general rule is drawn from a single case.” full letter here

Letters in support of the DOJ

Joe Konrath, self-published author: “When prices of media are high, they’re a barrier to entry. Many are avoiding buying an ereader because the ebooks they most want are $9.99 – $14.99. If prices came down, more Kindles (and Kobo readers and Nooks and Sony readers) would be sold. That widens the market, which leads to more ebook sales. This is good for authors, and for readers who can get more for their money.” full letter here

David Gaughran, self-published author: “Personally, I believe that the actions the defending publishers and Apple are alleged to have undertaken…are motivated by fear. The world is changing and they don’t like it. Amazon, as the prime mover in facilitating those changes, is the primary target of their ire. I don’t share their apparent hatred of Amazon. From where I stand, Amazon has done more to make self-publishing a viable path than any other company (something which benefits authors through increased paths to publication and readers through a greater selection and lower prices).” full letter here

Courtney Milan, self-published author: “Game theory tells us that cartels never last. New entrants come into the market and undercut the pricing schemes; plus, there’s always an incentive for cartel members to cheat and grab market share. That low-priced books from non-agency publishers have taken over the market proves only that the cartel here did what cartels are wont to do, given enough time: It failed.” full letter here

Image courtesy of Shutterstock

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  1. Cindy Dashnaw Thursday, May 31, 2012

    Whether we’re an individual, a business or a monopoly, we all can relate to self-published author David Gaughran’s comment (above), “The actions the defending publishers and Apple are alleged to have undertaken … are motivated by fear. The world is changing and they don’t like it.” No doubt, there was a lot of fear around the conference room table when Booktango, a self-publishing outlet, decided to pay authors 100% of the royalties they earned (caveats apply, of course, but ridiculously few). Yet, the most visionary people are the ones who realize that the world IS changing, and we must all change along with it.

    In the olden days, people within an outlying town could subscribe to a percentage of time with a newspaper — meaning that Mr. Smith received the one physical copy first, then he was required to pass it along to Mr. Jones, who then sent it on to Miss Abbott. It’s likely that when the idea came up for each individual to receive his or her own copy, to keep, numerous arguments were made against that approach, too.

    Let’s hope that it’s the authors who create the product and the readers who consume it that come out ahead in the end of this debate!

    1. We won’t if the DOJ and Amazon have their way. Enjoy quality vetted books while you can.

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