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Senator Schumer in WSJ: DOJ ebooks suit could “wipe out the publishing industry as we know it”

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The Department of Justice’s lawsuit against Apple (s AAPL) and major book publishers “sounds plausible on its face, [but] could wipe out the publishing industry as we know it, making it much harder for young authors to get published,” New York Senator Charles Schumer writes in a Wall Street Journal op-ed.

Schumer has been in touch with the WSJ about the ebook pricing suit for awhile. “Rarely have I seen a suit that so ill serves the interests of the consumer,” he told the paper in April.

Schumer’s overall argument against the agency pricing lawsuit is that the lawsuit hurts competition by making Amazon (s AMZN) the dominant player. “While consumers may have a short-term interest in today’s new release e-book prices, they have a more pressing long-term interest in the survival of the publishing industry,” he writes.

Overall, Schumer says, the lawsuit also has broad implications for “other industries that are coming up with creative ways to grow and adapt to the Internet.” He says, “The administration needs to reassess its prosecution priorities. Justice Department officials currently have comprehensive guidelines in place to determine when they should challenge mergers, but they have no such guidelines for non-merger investigations. It’s time to come up with some.”

The Department of Justice is suing Apple and five big publishers for allegedly colluding to set ebook prices. Three of the publishers — HarperCollins, Hachette and Simon & Schuster — have settled, while Penguin, Macmillan and Apple will fight the suit in court. The DOJ received over 800 public comments on the proposed settlement and is expected to post all of them, along with its response, around July 20, with the proposed final judgment on the settlement going through on August 3. The trial is set to begin June 3, 2013.

16 Responses to “Senator Schumer in WSJ: DOJ ebooks suit could “wipe out the publishing industry as we know it””

  1. John F. Harnish

    “’…[but] could wipe out the publishing industry as we know it, making it much harder for young authors to get published,’ New York Senator Charles Schumer writes in a Wall Street Journal op-ed.”

    The huge corporate style publishers made it much harder for aspiring authors to publish early in the 21st century when they attempted to squash Print-On-Demand publishers using digital technology to print books. Bookstores were advised not to stock books published by these evolving digital publishers if they wanted to continue to receive sweetheart deals and promotional dollars from the mainstream houses. Book reviewers with major newspapers and trade publications dependent on advertising dollars were discouraged from writing reviewers on books produced by these upstart publishers.

    The big publishers, the chains, and the reviewers created an effective Catch-22 to limit access to the marketplace to all but the selected few. The bookstore chains refused to stock books that weren’t reviewed in the media, and reviewers refused to review books that weren’t available for sale in the chain stores. The mainstream publishers benefitted from having their titles automatically reviewed and stocked on the shelves of the bookstore chains.

    The increasing popularity of affordable ebooks has leveled the playing field in favor of many new authors—they don’t need a publisher taking a big piece of the profits from downloads sold nor do they need to jump through hoops to try to get distribution through the dwindling number of brick and mortar bookstores.

  2. Perhaps I’m being dense, but can someone explain to me how permitting collusive pricing practices is (a) not prohibit behavior under anti-trust laws, and (b) is likely to “create” a monopoly on the part of Amazon?

    I’m not really a fan of Amazon (as a publishing house), but I’m not sure I think that “fighting fire with fire” is the right approach here. If Amazon is engages in monopolistic behavior, they should get the snot smacked out of them. But giving other companies a pass for anti-competitive behavior just doesn’t seem like the right answer.

    • David Thomas

      Anti-competitive collusion is debatable here ….the key pieces of evidence — and there are only two — include a dinner that occurred nearly two years prior to the release of the iPad in March of 2010. Publishing execs are smart, but they clearly lack a crystal ball.

  3. Nohopeorchange

    DOJ has no time to sue sanctuary cities for violating Federal Immigration law. last month they sued Arizona claiming only the Federl government could enforce or ignore immigration law. Last week DC passed an ordinance ordering DC police to
    not help ICE with secure communities. Not a peep from the AG.

    How many top executives on Wall Street have been indicted for the CDO’s and Housing Bubble?

    Misplaced priorities.

  4. The publishing industry “as we know it” is going to be wiped out, (or changed drastically) with or without the suit.
    The big houses were pretty much mandatory for creation, marketing and distribution of books, and now they’re not.
    There are lots of smaller houses springing up that are offering deals for both the authors and readers, and since ebooks don’t require printing, warehousing, trucking, stores, the little guys can do everything the big houses can, without the umpteen layers of overpriced management.
    It’s also moving from a model where copying was almost impossible to one where it’s trivial, and just like the music industry had to change for mp3’s, publishers are going to have to learn to compete with ‘free’.
    (And despite what the music industry reports, artists are doing quite well.)

      • Not for ebooks. Macmillan won’t even allow their ebooks in libraries, and Random House charges triple the list rate to libraries, and Harper Collins is doing its silly “26 checkouts and the book dies” thing.
        The publishers are fighting a losing battle.

    • WRONG! I thought at one time all I wanted too was the cheapest price but in this case that will not only create a monopoly with Amazon dictating terms and make for an unhealthy publishing environment. The DOJ is totally out to lunch on this one and need to back off, profusely apologize and receive some taste of the lash for their lack of foresight and vision. If Obama supports this he is a total moron.

    • “Disrupted industries need to either adapt or die.”

      In general I agree with you, but in this case doesn’t the DOJ’s lawsuit turn on a different issue?

  5. BongBong

    Chuck Schumer is usually so off the mark it isn’t even funny. In this case, he keeps his title of “political embarrassment” but is right. The DOJ is doing the wrong thing.

  6. The Chosen

    Here is the do nothing Senator from New York finally making a comment on this attack on the publishing industry by the DOJ. Senator Charles Schumer has done nothing to assist in this matter. Yesterday he abandoning any hope of helping the economy by telling the Fed they are the only ones that can do anything now. Here is a senior Senator refusing to do what is right for the country and New York for the sake of not breaking with the party. Who does he represent the party or New Yorkers? He know that many New Yorkers who make over $250,000 a year and pay more than 50% of their income to taxes can barely make it in one of the most expensive States and Cities in the country. The do nothing Senator has abandon all New Yorkers. He has been in office too long and has forgotten who he represents.