The publishing industry, roiled by ebooks and Amazon’s (s amzn) behemoth behavior, has been the target of government price-fixing charges. The situation raises the question of whether books are a special cultural product that the law should treat differently than buttons or rubber boots.
According to antitrust experts speaking at a New York book event this week, books should be treated like any other good in the market.
“There’s never been a defendant sued for antitrust who didn’t think their market was special,” said Chris Sagers of Cleveland State University, adding that “agency pricing” (a commission-style pricing system used by the publishers to check Amazon) is just another word for price-fixing.
And according to Ariel Katz, a law professor at the University of Toronto, publishers have been engaging in cartel-like behavior for more than a century. In 1908, for instance, a publisher sued the department store Macy’s for disobeying notices that required books to be sold for at least $1 (the publisher lost and the Supreme Court established copyright’s first sale doctrine).
The recent price-fixing charges, in which publishers allegedly ganged up with Apple (s aapl) in order to stop Amazon (s amzn), also appear to be classic cartel behavior — meaning the government was justified to sue them to protect the free market. Yet, it also feels intuitively wrong to equate book publishers with oil barrons, AT&T or other antitrust villains.
This is because books are not oil or boots or buttons. They are the repositories of our collective knowledge and exemplify what is best about humanity. Nina Elkin-Koren of the University of Haifa, who also spoke at the event, questioned the antitrust experts about whether it is appropriate to leave something as important as books to the whims of the market.
In the language of economists, the question is whether books are a big enough “cultural externality” to justify interfering with the market through corporate protectionism or government regulation.
Sagers suggested that governments can indeed make economic policies to favor cultural and intellectual activities but that the right way to do is by favoring cultural creators directly — and not through intermediaries like publishers.
The antitrust experts make a compelling case for regarding publishers as just another cartel. It will be interesting to see if the theory continues to hold up as Amazon expands its ever-growing influence on the nation’s reading habits.
The experts spoke at “In Re Books,” a two-day conference on law and the future of books held at New York School.