Home » Apple, Big Publishing, DOJ, Ebooks, Legal Stuff, Small Presses » In E-Book War, the Independent Publishers Strike Back

In E-Book War, the Independent Publishers Strike Back

4 July 2012

The Atlantic Monthly allows contributing writer and small-time publishing exec Peter Osnos to post a piece of self-congratulatory fiction masquerading as business news:
[I’ll skip his first paragraph recapping the state of play in the DoJ lawsuit. It was the only non-fiction part of the piece. Also, I’ve highlighted a few key phrases]

Now, nine of the country’s leading independent publishers have taken a bold step, and deserve public recognition for their action. On June 25, they submitted a cogent, twenty-page comment to the court…  At first glance, this may seem like a complex legal dispute far outside the general concerns of most bookbuyers. But stay with me and hopefully you will appreciate why the publishers deserve credit, and why this contentious issue matters to readers.

At the core of the case is the role of Amazon, which has dominated the e-book market since its release of the Kindle in 2007 set off the enormous surge in digital reading. … The dispute is essentially over how e-book prices should be determined: by the retailer under the longstanding practice known as “wholesale” pricing, or by the publisher in the “agency” model, in which the bookseller takes a commission on each sale. The Department of Justice contends that the publishers colluded to satisfy Apple’s preference for agency pricing when the iPad was unveiled in 2010. Unexpectedly, the agency concept came to be seen as a way to expand opportunities for bookselling and to limit Amazon’s ability to undercut the prices of its competitors.

In their comment, the independent publishers asserted that, “in aggregate, according to market data published by Nielsen BookScan the independents accounted for approximately 49 percent of total trade book sales nationwide in 2011.” A significant portion of those sales were through Amazon, which is why their decision to challenge the settlement and incur the possible wrath of this retailing giant is courageous.

Using language that in legal terms is very strong, the publishers objected to the proposed settlement as lacking “adequate factual basis” and “contrary to the public interest.” The outcome of this case will have a profound impact on how books are sold in the digital era, but at least these nine publishers have made it clear where they stand: in favor of robust competition. And that is why they deserve our thanks.

You can read the entire article at The Atlantic.

Folks who are tired of all the back and forth over this lawsuit may want to skip this because I’m going to spill quite a few electrons rebutting this non-sense.

Here in the USA it’s Independence Day. This is my patriotic contribution to cleaning up our public discourse of that form of argumentation described in Harry Frankfurt’s seminal work, On Bullshit. The purpose of Mr. Osnos is clear. He wants to shape your thinking about the DoJ lawsuit by appealing to one of our primal myths.

We are treated to a classic formulation of the fearless little guy taking a brave stand against a powerful and mysterious force that threatens the well-being of the audience. We have the “bold step”, “incur the … wrath of this … giant”,  and “courageous”. Look at what our heroes “deserve”:  “recognition”, credit”,  and “our thanks”. This tightly constructed narrative is built out of a rather amazing amalgam of flotsam and jetsam Osnos has collected the shipwreck that is traditional publishing’s justification for collusive behavior.

Let’s dismantle this edifice piece by piece, remembering that the key to a properly constructed exemplar of this art form is the complete lack of regard for the truth value of any particular component. That lack of regard for truth means that it is pointless to wonder whether the author is aware of the truth or falseness of any particular claim he includes. Nor can we discern when omissions of pertinent facts are deliberate. A practitioner of this dark art doesn’t dabble in such niceties. All that matters is that each element contributes to the construction of his myth.

The foundation of this article is this falsehood: “At the core of the case is the role of Amazon”. The entire publishing industry is irrevocably committed to hiding behind the notion that Amazon is the bogeyman. Amazon is relevant to the DoJ lawsuit only in that Amazon was the target of the alleged colluders’ actions. Far from being the central actor, Amazon isn’t even the alleged victim. Read the lawsuit. The DoJ is alleging that bookbuyers were the victims. The Price-Fix Six aimed to take out Amazon by forcing you and me to pay more for ebooks. That’s the core of this case.

Resting atop the false claim about Amazon’s centrality, is this statement:

The dispute is essentially over how e-book prices should be determined: by the retailer under the longstanding practice known as “wholesale” pricing, or by the publisher in the “agency” model, in which the bookseller takes a commission on each sale.

Sadly, no. This is roughly equivalent to claiming that a lawsuit arising from one person stabbing another person with a butcher knife is about the proper use of butcher knives. That lawsuit would essentially be about the stabbing, not about the butcher knife.  And if there was a legal order barring the stabber from approaching the victim with butcher knife in hand, that wouldn’t amount to outlawing butcher knives. This lawsuit is about a group of wholesale producers with substantial  market power in conspiring with a new entrant into the retail marketplace to raise the retail prices of ebooks and end the ability of retailers to compete on the basis of price. Agency pricing was just the tool that was used to accomplish these ends.

What Osnos leaves out of his discussion of the settlement is the quite salient fact that agency pricing is not prohibited by the settlement. Mentioning that fact would be a bit problematic for the argument that “Unexpectedly, the agency concept came to be seen as a way to expand opportunities for bookselling and to limit Amazon’s ability to undercut the prices of its competitors.” It wasn’t the agency concept that limited Amazon’s ability to undercut prices. It was the illegal collusion.

And what about that “Unexpectedly” floating untethered from any syntactical anchor at the beginning of that sentence? Who didn’t expect the outcome of the collusion? The colluders certainly expected it. Steve Jobs is on video describing exactly what was about to happen to Walter Mossberg at the iPad launch. Immediately after the five publishers signed an agreement to force Amazon to raise the prices of bestselling ebooks, but before they had implemented the plan, there’s Steve Jobs laying out how they would accomplish it. Anyone who didn’t expect what was about to happen just wasn’t paying attention.

In the real world, Osnos works for a company that is, at most, an interested bystander in this case. In the myth that Osnos is spinning, his employer and the other eight publishers who banded together are transformed into protagonists, acting forcefully against the Amazonian menace. Here is his one original contribution to the publishing industry myth, the notion that this hardy band of smaller publishers have become central actors in this drama by adopting, in full, the Big Six argument that the true threat to competition in the ebook business is not the price-fixing actions of Apple and all of the Big Six except Random House, but Amazon’s use of bestsellers as loss leaders. The act at the core of this bit of myth-making is simply after-the-fact “yeah, what he said”.

So, what are we, the audience, supposed to do in response to this myth? We are supposed to applaud these publishers for the courageous act of filing of a public comment about the proposed settlement between the DoJ and the three publishers who had enough sense to know when to fold rather than going all in on a losing hand. Seriously? For filing a public comment? That’s what passes for action in the world of publishing.

And why are we to believe these publishers are so brave for doing pointless paperwork that will assuredly be ignored by the court because the filers ignored the central issues of the case? Because they might incur the possible wrath of Amazon. If Mr. Osnos wanted to sell me on the idea that Amazon is a ruthless business that will do anything for a buck, I would be willing to listen. But he’s selling the notion that Amazon is a petulant bully that will extract revenge on these publishers because they said unflattering things about Amazon. And his evidence is? Nothing. Crickets.

To briefly recap: I call B.S. on Mr. Osnos.

-Guest post by William Ockham, who is solely responsible for the content of this post. The opinions stated herein do not necessarily reflect the views of the proprietor of this blog or the other guest bloggers.

Apple, Big Publishing, DOJ, Ebooks, Legal Stuff, Small Presses

44 Comments to “In E-Book War, the Independent Publishers Strike Back”

  1. You are now officially my hero of the day for citing Harry Frankfurt. Well done!

  2. An elitist piece from the Atlantic? I am shocked.

    • Yeah, but usually they have a bit higher quality elitism on display. This piece was pathetic.

  3. I would find your arguments more compelling if you didn’t feel it necessary to impute bad will to Mr. Osnos and the independent publishers. I doubt that Harry Frankfurt would be pleased. He certainly did not define “b*******” as any argument you find lacking in cogency. Amazon has exhibited plenty of bare-knuckle ruthlessness against vendors who don’t fall in line, enough to make fear of retaliation at least plausible.

    • It isn’t the lack of cogency I object to. It is the blatant dishonesty. As I understand Frankfurt’s theory of b*******, it is exactly this type of argument that he was describing. The DoJ case really isn’t about Amazon, despite what Osnos says. You may find the independent publishers’ fears plausible, but the simple truth is that Osnos makes a completely unsupported accusation against Amazon. I am well aware of Amazon’s business practices, but those have been in pursuit of profits or market share. Can you cite a case of Amazon retaliating against a publisher for something the publisher said? I am always willing to change my opinions based on evidence.

      I am imputing bad will to Mr. Osnos based on the evidence in his article. I have laid out my reasons in the post above. I read the DoJ case. It isn’t really complicated. And it bears no relation to the description of it by Mr. Osnos.

      • Mr. Frankfurt defines B******* as an narrative advanced with blatant disregard as to it’s truth of falsity (to crudely paraphrase). Agree with them or not, it is easy to imagine that Mr. Osnos and the publishers believe the truth of their arguments, nor is it incredible to suppose that Amazon might look with disfavor on vendors who speak agains them publicly. I don’t have to prove this to accept that they believe it to be true. I should say that I’m no Amazon hater – my copy of “On B*******” is right here on my Kindle app!

        Speaking of b*******, I’m always amazed when someone asserts that some hotly contested legal issue “isn’t really complicated.” If that were so, and the truth were so obvious to all, then there wouldn’t be so many smart people disagreeing about it.

        • Have you read the DoJ complaint? I defy anyone to read that complaint and honestly make the claim that the core of the case is about Amazon’s role. It simply isn’t credible to believe Mr. Osnos is being honest.

          And the DoJ case is very simple. I can explain it one paragraph.

          Apple and the five publishers entered into an agreement to fix the prices of ebooks from those five publishers at all retail outlets, resulting in a substantial increase in retail prices. That is a “per se” violation of the Sherman Antitrust Act. That means there are no mitigating circumstances that can justify the violation.

          That is it. Nothing that Amazon has done or will do is relevant to the case. That is a fact, no matter what anybody says. All those “smart people” you refer to, their livelihoods depemd on them pretending not understand that.

          • Saying that those who disagree with you are liars and/or fools seems like a deeply unpersuasive form of argument. But perhaps persuasion wan’t the idea. My mistake, I guess.

            • William calls BS on this piece because it’s saying that the legal issue is Amazon’s role in pricing ebooks. The DoJ has never said that this was the reason for the case, nor even involved in the case. It’s pretty simple to understand.

              Ironically, in your defense of the article you are doing the same thing that the article is guilty of. The article says the legal case was brought about by Amazon’s sins (when it wasn’t), and you’re saying that William is calling Mr. Osnos a liar just because they have differing opinions (when he isn’t).

            • If the people who disagree with you are lying, then calling them liars is a fair observation. Osnos insists that the DOJ case is about this:

              “The dispute is essentially over how e-book prices should be determined: by the retailer under the longstanding practice known as “wholesale” pricing, or by the publisher in the “agency” model, in which the bookseller takes a commission on each sale.”

              It is not. Is about five publishers and Apple colluding to set prices. The DOJ doesn’t give a hoot if prices are set by the retailer or the publisher. They give a hoot if five of those publishers are getting together with one retailer to collude in setting those prices. By ignoring that fact, Osnos is presenting the case dishonestly.

              That is what we call “a lie.”

        • “Speaking of b*******, I’m always amazed when someone asserts that some hotly contested legal issue “isn’t really complicated.” If that were so, and the truth were so obvious to all, then there wouldn’t be so many smart people disagreeing about it.”

          A simple issue doesn’t become complicated just because one side is blatantly dishonest in an attempt to support its preferred position. Facts don’t go away just because someone refuses to admit they exist.

          And the DOJ suit isn’t about pricing, regardless of how many “smart” people want to say that it is … it’s about illegal behavior allegedly engaged in by six companies.

          I have no issue with William calling Mr. Osnos a liar, because Mr. Osnos is lying.

          • Maybe Mr. Osnos is lying. I’m no mind reader, and even Mr. Self, in a comment, expressed honest puzzlement over exactly why he would lie about it. What’s in it for him? But never mind, he’s clearly a lying liar because he’s obviously lying, which anyone who is not stupid can plainly see, because it’s all so simple, and anyone who can’t see that is a stupid liar too. I get it. Of course, if the independent publisher’s plans are as dumb as everyone says, they’re doomed anyway, which would seem to make all the bile a little pointless. And that’s what amazes me – this intense hatred of the publishing “elites”. You would think the government were taking down the Gambino Family or something. I will just say that while digital publishing is inevitable, no particular business model is. Amazon knows this, it’s why they’re so ruthless.

            • Well, either he’s lying or he’s a complete moron. Which do you think makes him look better?

            • “Maybe Mr. Osnos is lying. I’m no mind reader”

              He made a statement that is demonstrably and patently untrue. I’m not sure why that would require mind reading to determine.

              1) Osnos said the issue is agency pricing.
              2) The government says the issue is price collusion.
              2) Random House (his OWN FORMER COMPANY) uses agency pricing, but did not participate the alleged price collusion deal.
              3) The government is not suing Random House.
              4) Therefore Osnos’s statement is incorrect.

              The rest of your post is just a bunch of empty rhetoric.

            • Just stop. Nobody here said anything like:

              he’s clearly a lying liar because he’s obviously lying, which anyone who is not stupid can plainly see, because it’s all so simple, and anyone who can’t see that is a stupid liar too.

              I don’t know whether or not Osnos believes the fantasy he wrote about. I do know that the “little guy standing up to big bad bogeyman” is a constructed myth. I know it is designed to mislead uninformed (not stupid) people about what’s at stake in the DoJ case. I know that writing a legal brief that completely misconstrues the facts and law of the case is all too common, but I still find it reprehensible. I know that it is wrong for a professional journalist to write about events in his other field of employment (Osnos is both a journalist and a publishing exec) and misconstrue basic facts, deliberate or not.

              This article strikes me as exactly what Frankfurt was describing in On B*******. You obviously disagree. That’s fine. I don’t expect to convince everyone. I do expect people who respond to my posts to have evidence to back up their assertions and engage in the substance of my points. Instead, you’ve engaged in a number of fallacious arguments. For example, you said, “Saying that those who disagree with you are liars and/or fools seems like a deeply unpersuasive form of argument.”

              That indeed is an unpersuasive form of argument but it isn’t the form of argument I’m using. I’ve explained to you repeatedly the facts (which you can verify quite easily) that Osnos got wrong. Here’s a link to the DoJ complaint:
              http://www.litigationandtrial.com/files/2012/04/Apple-Antitrust-Ebook-Publishing-DOJ-complaint.pdf

              Here’s a link to a lawyer’s blog entry who’s actually quite sympathetic to the position of the publishers, but understands what the law really says:

              http://www.litigationandtrial.com/2012/04/articles/business-lawsuits/apple-ebooks-antitrust/

  4. How dare Amazon virtually create a market where none existed before and then expect to dominate it! Why, they should all be strung up.

    I notice these “courageous” publishers aren’t pulling their titles from Amazon.

  5. William you sum up the whole situation very well here:

    “The entire publishing industry is irrevocably committed to hiding behind the notion that Amazon is the bogeyman. Amazon is relevant to the DoJ lawsuit only in that Amazon was the target of the alleged colluders’ actions. Far from being the central actor, Amazon isn’t even the alleged victim. Read the lawsuit. The DoJ is alleging that bookbuyers were the victims. The Price-Fix Six aimed to take out Amazon by forcing you and me to pay more for ebooks. That’s the core of this case.”

    I have thought all along that the allegations of the DoJ and of the states filing class action suits seem completely clear, and that their formal complaints, while full of the usual snooze-fest pedanticism of legal docs, were also very clear.

    So I’ve been mystified by the constant, repeated, by-now-it-certainly-seems never-ending MISREPRESENTATION of the case, the DoJ’s allegations, the issues at stake (responding to aggressive business competition with criminal behavior rather than with innovative business strategy and shrewd tactics) in the media (as well as in these various letters of sheer drooling idiocy which we’ve seen from orgs like the AAR and the AG).

  6. Jason Brook Jr.

    Lol @ Atlantic. What a waste. They aren’t even fighting Amazon.

  7. It’s decidedly odd that Osnos (a former Random House exec, no less) didn’t bother to mention mention that:
    1) Random House didn’t participate in the alleged “good old boys” price-fixing meetings (I haven’t heard whether they just didn’t get the memo or were simply smart enough to avoid getting involved).
    2) Consequently, Random House is NOT being sued by the DOJ.
    3) Random House IS using agency pricing.

    Of course, that would wreck his entire argument. The issue isn’t agency pricing, wholesale pricing, or Ouija board pricing. True, they allegedly used agency pricing in their scheme, but that doesn’t make the case ABOUT agency pricing any more than a smash-and-grab burglary case is about bricks.

    • It is amazing to me that all of these rebuttals to the DOJ case keep trying to make this a battle over Agency pricing when simply looking at Random House is all the argument needed to prove that it is not about Agency Pricing.

  8. I still just do not get what the publishers are thinking. Ebook profits are floating their bottom line right now, yet they keep trying to stab Amazon in the back. And there’s an entire culture of people out there like Mr. Osnos, who no longer has a stake in the game, who act like Amazon is trying to rape and plunder their village.

    Why didn’t they treat B&N like vikings when smaller bookstores were being driven out of business through similar practices? Because B&N sold more overall books? That doesn’t make sense, because Amazon is making them ever so much more money via ebooks.

    They’re fighting Amazon like it’s for their lives. What do these publishing people feel is being threatened by Amazon? Their relevance? Because I’m not even sure that’s true. The relevance of Manhattan-based corporations with fancy offices might be gone, but they could survive (and even thrive!) without that.

    Seriously, someone please clue me in.

    • Apple and the Price-Fix-Five need a boogeyman, Jim. Without one, the blame lies on themselves. On Apple for not grabbing control of the e-book market when they had the chance just as they did with the music market. On the big publishers for not being innovative and looking at their customers needs as opposed to telling the customers what they should want. On both for not anticipating that technology would and does eliminate the overhead on which much of the publishing industry rests its bulk.

      Find me a corporation in today’s business world that takes responsibility for its actions. It’s always easier to blame someone else for your mistakes.

      • Suzan, you could as easily say “Find me a person in today’s world that takes responsibility for his actions.” It’s all about the not-me game.

        No lie–I once got interviwed by a blogging magazine because I realized that my (relatively) high-profile argument with another blogger was wrong, so I admitted it an apologized. Yes, that was considered newsworthy. He even asked me why I admitted I was wrong. “Um–because I was.” Yes, he said, but nobody ever seemed to do that. What can I say, I was raised right.

        • *sigh* You’re so right, Meryl. And I thank your parents/legal guardians for bringing you up right! Too few people have the balls to say, “I was wrong.”

    • The real issue that publishing insiders care about is protecting the hardback bestseller scam. Scam might be too strong a word, but I’ll explain and you decide.

      The future of traditional publishing is completely tied to hardback books. Creating and distributing hardbacks is the only thing that traditional publishing does that can’t be easily replicated by anybody with an internet connection. Take away the hardback moat and the barbarians really are at the gates of the publishing castle.

      There will always be a market for hardback books, but without the new release bestsellers, the industry shrinks to a tiny fraction of its current size. The trouble is that almost no one wants the latest bestseller in hardback form. People only buy it because that’s the only way to get it. If you think about it, delivering the latest James Patterson thriller as a hardback is a really terrible idea. It’s slow, expensive, and horrible for the environment.

      The only reason that the five big publishers went along with Apple’s demands was that the current leadership desperately wants to put off the inevitable downsizing that they know is going to happen when the retail price of an ereader falls below the retail price of one bestseller. And that will happen. They knew that they would be sued by the DoJ over the deal with Apple. Those folks aren’t idiots and they have lawyers. They made the calculation that it was worth it. It’s possible they were right, but I think they ignored some of the side effects.

      What I’d really like to know is if the heads of the publishing companies told their corporate masters what they were up to. I suppose that may come out.

      • “They knew that they would be sued by the DoJ over the deal with Apple. Those folks aren’t idiots and they have lawyers. They made the calculation that it was worth it.”

        I’m pretty skeptical about that, William. I’ve worked with publishers for a long time. Most of them are actually pretty stupid, IMO. Publishing is heavily loaded with people who are there because they’re never smart, skilled, educated, or competitive enough to get work in other fields which pay better, offer better benefits, and/or have more opportunity for advancement. You sometimes meet smart editors in publishing who are there because they love books and love editing (you also meet a lot of really mediocre and not-so-bright editors), but you rarely encounter smart or noticeably capable people in business areas of publishing (marketing, accounting, legal, etc.).

        I think it’s quite possible (actually, no, I think it’s likely) that the publishing executives involved were so stupid they didn’t think they’d get caught, they were dealing with Apple without having the faintest idea that they entering the big leagues now and doing business with a company whose activities are closely scrutinized, and that their lawyers were too inept and ignorant to give them wise or effective legal counsel about their actions.

        After all, just look at what a startingly clear and damning paper (or phosphor) trail these people left of their activities. A friend of mine said that -competent- criminals everywhere are probably shaking their heads wondering how these people could have been so idiotic as to DRAW A ROADMAP for investigators about exactly what they were doing… and then leave all that handy, clear evidence in existence so that it could easily be found and used against them. As a law-abiding taxpayer, I wish everyone who broke the law would be so accommodating to the prosecutors as these publishers have been!

        And, yeah, the whole “Amazon is EVIL EVIL EVIL–and it’s coming to your home to eat your children!” stuff in the media, on blogs, in the AAR, the AG, among the publishers, etc… Yeah, it really does seem to have emerged (or, rather, intensified from a disgruntled grumble to a loud and constantly-repeated theme, in true Goebbels fashion) since the DoJ investigation became public. It’s the scapegoat. It’s the “we cannot be held resposible for our illegal actions” gambit. It’s idiotic–but if you repeat the lie loudly enough and often enough, over and over… it can be amazingly effective.

        • We are getting a bit far afield from the original topic, but this is a topic that fascinates me, so, what the hey.

          I’ll admit upfront that I haven’t had any dealings with the Big Six or any other traditional publishers. I have had a lot of opportunities to observe upper management at some pretty big corporations in my capacity as an IT consultant. Because I live in Houston, my experience is heavily skewed towards the energy business which has a much higher percentage of engineers in upper management compared to publishing. That might make a difference.

          My assumption when evaluating the actions of corporate leaders is that their first priority is furthering their own career and their second priority is the success of their company. In my experience, you can get to the top of corporate ladder without being able to succeed at that second priority but only if you are really good at the first.

          Now, if I pretend I was in charge of a Big Six company, the ideal path was the one that whoever is in charge of Random House took. Let the other saps take the fall while reaping all of the same benefits. That guy probably deserves a raise, even if he was just lucky.

          Think about in game theory terms. Apple presents the head of a publishing company with an interesting choice. Remember, the terms of the contract specified that at least four of the Big Six had to sign up. Assume that if three or less sign up, all of the company heads will lose their jobs because the bean counters at the parent company will figure they blew a chance to put Amazon in its place. Even if you don’t think that is likely, assume that they did believe it.

          Next, assume that if you do sign up, your company will get sued and will have to settle or lose the case. Your job will be worse, but you’ll get to keep it because the bean counters figure they can’t get anybody better to take the job while the DoJ is really running things.

          The winning play is for at least four of your competitors to sign up and you not to sign up. Then, you can sign on a few months later, get the benefits, and not get sued. If Random House successfully and convincingly signals they aren’t going to play the game, the other guys are left in a very tenuous position. Everyone waits until the very last minute, hoping that the other guys blink. Finally, they all sign up. Hilariously (from my perspective), the nature of the game drives them all to sign at exactly the same time, which only increases the likelihood of being sued (the more coordinated the action looks, the more the feds are sure to sue).

          If that is the game those guys are playing, the actions are perfectly rational.

          • Well, one thing I agree with in your premise is that it’s unlikely these execs will lose their jobs. Partly for the reason you state: It’s probably hard to find a good replacement to run a company while it’s being sued by the DoJ. Partly for the usual reason–incompetence never leads to getting fired in publishing. I and almost everyone I know has worked with far too many long-term publishing employees who were AMAZINGLY incompetent to believe any premise that =incompetence= could get you fired from a publishing house. (“Even if you’re incompetent enough to get a company sued by the DoJ?” Well, that gives me pause… but, no, I’ll stick with my bet and say that even THAT level of incompetence can’t get you fired in an industry where, based on all my experience and observation, as well as all the experience and observation of almost everyone I know, =incompetence is never considered grounds for firing an employee=.)

            I think the flaw in your reasoning here is precisely that you’re assuming the publishing execs were thinking like business people. But when talking about energy corporations, as you were… you’re probably talking about people who’ve worked in the business world, maybe hold business degrees, etc. In the publishing world… the execs are usually people who’ve spent their whole careers in publishing and have no other real professional background. And publishing is, in the scheme of big business, a minor industry, provincial, badly-run, sloppy, and largely unprofitable. While publishing execs may often share the absence of ethics that characterizes your description, I don’t thik they share the business acumen and sophisticated you’re describing, nor the competitiveness–remember that (at in my premise) they belong to an industry where incompetence doesn’t ever get you fired. (Budget cuts and things of that nature do. But =not= BEING BAD AT YOUR JOB.) And they stayed in an industry where their salaries and benefits are pretty modest compared to what CEOs in, for example, the energy biz earn. Because they weren’t the sort of execs who could run with the big dogs… And then they … MET APPLE. Enter the DoJ, right on cue.

  9. If it’s so terrible for retailers to set prices for ebooks, why isn’t it equally terrible for them to set prices for paper books? Why aren’t the brave publishers making that argument?

    Because agency pricing is about slowing down the adoption of ebooks. It’s not about bravery, moral high ground, predatory pricing, mom and pop bookstores, or anything else. It’s about holding back time.

    • “If it’s so terrible for retailers to set prices for ebooks, why isn’t it equally terrible for them to set prices for paper books? Why aren’t the brave publishers making that argument?
      Because agency pricing is about slowing down the adoption of ebooks.””

      Well, not agency pricing. After all, thousands (probably tens of thousands) of self-publishing writers are also using agency pricing, and they mostly use it to price their books LOWER than typical publisher pricing–as well as to run sales, etc.

      But, yes, the alleged collusive price-fixing is about slowing down the adoption of ebooks–or, more to the point, protecting the sales and price points of hardcover books, which are expensive to produce.

      I’ve been puzzled by this, though, since what writers have been hearing our publishers talk about for, oh, 20 years, are the rising costs of paper and printing–especially paper. Warehousing and shipping books has become more costly, too. So book prices keep going up. Several years ago, right before ebooks hit big, publishers were really struggling, losing money, laying off staff, having dire bottom lines on their quarterly fiscal reports, etc. My impression all along is that the Kindle should have changed their lives by making them realize, “HERE IS THE SOLUTION to the rising costs of the current physical model and distribution model of our prodict. Digitalization ELIMINATES those costs which we’ve been struggling with for 10-20 years, while still delivering the book to the customer!”

      It’s been so puzzling to me that publishers didn’t rush in early on to embrace this new format, create (or partner with companies to create) viable competition for the Kindle as soon as its potential was apparent, open their own online digital stores and create marketing tools to get readers to visit and shop at those sites. (Then again, I’ve also been very puzzled by why have chosen to alienate authors, exercise extortionate, unreasonable, unethical, and even illegal business practices, and get into legal battles over digital rights rather than just going to all their authors about four years ago and offering them attractive terms for their digital rights, along with a well thought-out e-publishing plan to convince them this would be a good thing for them.)

      I remember being really interested when one of the major houses was rumbling a year or two ago about having an innovative new e-program in the works… and then being so disappointed and bemused when they launched it last year and we learned it was actually… Just a vanity e-press designed to fleece ignorant aspiring writers. I mean… SERIOUSLY? As a major publisher with thousands of writers under contract and huge resources under your roof… THAT’S what you see as the Big Opportunity in the digital age? Were you dropped on your friggin’ HEAD?

      Anyhow, rather than publishers, it was -authors- who befriended Amazon, saw the potential in Kindle, experiemented, innovated, and blew th e-market wide open.

      Similarly, I was puzzled back in 2008 or 2009 that no agents were going to Amazon to say, “I have about 50 writers on my client list, all of whom have out-of-print backlist and/or good projects the big houses didn’t want. I want to negotiate with you as if you were a publisher, get a good boilerplate agency contract established with you, and then offer it to my list of clients for their backlist, along with tools to get their out-of-work books published in this new format. In exchange for which, I’ll take a 15% commission on the earnings.”

      Self-publishing is now such a well-trodden path and so easy to organize for oneself, I think any writer doing it via their agent is just throwing away money and quality control, for no gain, advantage, or reason. But back in 2008 or 2009, when this was a confusing mystery to most professional writers who had no idea how to get started doing it, it would have been smart for an agency to do that. Instead, literary agencies waited until after that ship had sailed and THEN started trying to elbow their way into the market in 2011 via becoming “epublishers” of their own clients. And in a couple of instances shared with me by departing clients, demanding a cut of the client’s e-earnings if the client chooses to self-publish RATHER THAN let the agency become its “publisher.”

      OVerall, there was a lot of opportunity early on in the publishing industry to embrace a new format that solved old problems with the rising costs of creating and distribution the industry’s products… and it all got passed up. In favor of threatening, bullying, and taking advantage of writers, getting emeshed in lawsuits and legal battles, and allegedly committing antitrust violations.

      None of it has made any sense to me. Which is pretty much par for the course with publishing.

  10. Mr. Ockam, I can’t seem to reply the thread directly, so I will do so here, sorry for the confusion.
    One of the most tiresome tropes of internet argument is the “show me the evidence!” gag. I read the linked items you offered. They are admirable summaries of the DOJ position, and I take it you find them persuasive. They are not, however, evidence of anything than strong opinions. I personally find the “little guy vs, big bad predator” narrative compelling, though you don’t. Others also do, like Mr. Osnos, and the independent publishers. I will spare you links in support of these views, as I suspect you’ve seen them and find them to be, well, b*******. And that’s fine. What is interesting to me is the hate. The thrust of your entire piece is that to believe Mr. Osmos is a bullshitter (or liar or idiot, as other commenters have hypothesized.) However pathetic and “pointless” their filing is, the publishers are responding to what they perceive to be an existential threat that seems non-imaginary, which also concerns many people worried about Amazon dominating publishing so thoroughly. They may be wrong, but I’m hard-pressed to understand how they deserve such bitter, unyielding contempt. I can’t think of any clearer way to say it, so I will stop now. It’s been fun!

    • However pathetic and “pointless” their filing is, the publishers are responding to what they perceive to be an existential threat that seems non-imaginary,

      The publishers are responding to ‘what they perceive to be an existential threat’ that THEY CREATED THEMSELVES. The basic facts of the matter are not in dispute; communications between the infringing parties, notably by Steve Jobs, have been made public and have been seen by enormous numbers of people. Three of the six defendants have already agreed to settle — on terms that substantially concede the illegality of their actions.

      I’m hard-pressed to understand how they deserve such bitter, unyielding contempt.

      These publishers have been ripping off writers for decades. They abetted Barnes & Noble and Borders in using predatory pricing to kill off independent bookshops. Their accounting systems are slipshod, their contracts are foul, and they make a routine practice of trying to sell rights that they do not even have under the terms of the contracts they wrote themselves. Now they are ripping off the reading public by forcing retailers to adhere to their public and admitted collusion in raising prices — and they have the nerve to paint themselves as the victims, and to involve Amazon (which is not even a party to the case) by blaming it for everything that goes wrong.

      This is contemptible behaviour by a group of contemptible businesses. What is contempt for, if not for this?

      • Yes, that’s it! There it is. The Hate. Who knew publishers were such vile creature? I mean, I’m sure many are as venal and greedy as any other random (or Random) group of people – but I’d always supposed them to be more the hapless, book-besotted types. By which I man “elites,” I guess. I mean, what sane person goes into publishing to get rich? Well, good news – that’s all over now. Amazon is here, soon enough all that’s here, and I’m sure they will be much more interested in the well-being of authors. I can’t see what can possibly go wrong with that.

        • Weird how people assume doomday predictions that Amazon will be the only place left when their market share has been dropping on eBooks for years, even before Agency. More independent bookstores opened last year now that the recession is ending. Kobo has a huge market share overseas, and plenty of startups like Smashwords have started just been created in the last few years and are growing.

          Btw, I think you can’t nest replies past 5 or so, that’s why you couldn’t reply to William above. You have to jump back up to one of the higher posts or start a new thread like you did.

    • “I personally find the “little guy vs, big bad predator” narrative compelling, though you don’t. ”

      But there are no “little guys” in this situation. Apple is a tech-comm mega-giant. The five publishing houses accused by the DoJ are five of the largest publishing corporations in the industry. One of the companies fighting the lawsuit alongside Apple is Penguin, the second largest publishing corporation in the US and part of an immense global corporate empire, Pearson.

      The size and scope of Amazon falls somewhere within the range of these corporations. These six companies portraying Amazon as a Goliath to their individual Davids is an inaccurate framing of the situation–designed specifically, yep, to create a “compelling narrative.” Because a good narrative influences public opinion, no matter how devoid of facts it is of facts or how directly is contradicts facts.

      • Forget Apple, nobody feels sorry for Apple. Amazon has a market cap of 103 Billion and change. I invite you to google up information on major publishers and see how they compare. Heres a start for you: http://biz.yahoo.com/ic/729.html

        Publishers, whatever their faults, live and die by books. Amazon don’t need to profit from books, and can afford to sell at a loss as long as needed to ruin competitors. If you don’t think that an unequal contest, I don’t know what to tell you.

        • Umm, Google has 192 Billion market cap and a $60 Billion warchest and its not doing so well. Apple has $570 Billion market cap and $100 Billion warchest and they haven’t taken over the eBook business. They could destroy Amazon if it was just a matter of not making a profit for a while. The reason they are struggling compared to Amazon in book sales is their websites suck. Hell, iTunes is not very good for .mp3’s or even helpfully sorting my iPhone.

          Finally, publishers were making more money before Agency. They cut their profits and the royalties of their authors with Agency. The Author’s guild has a post on how Publishers shares of eBooks profits went up as they paid authors less. Feb 2011 I believe if you want to check their blog archive.

  11. I don’t see Amazon/trade publishing as a zero sum game. However, to misinterpret–willingly or innocently–the DOJ’s case against the publishers? This is wrong-headed. Repeat as needed: It was never about agency pricing per se. It was about collusion to fix prices. Only collusion. That’s all.

    Take p.r.n. until the thinking heals itself.

  12. Folks. Mr. Larrett is a troll. I apologize for engaging him for so long. Let’s not feed the troll.

    • Folks, I am not a troll. I offer no insult, I play fair. I just disagree. That is not trolling. Still, I do not wish to offend. Sorry if I spoiled your fun. Bye bye.

      • It’s not that you disagree. It’s that you’re acting like a twit and, more importantly, it’s that you have no idea what the Hell you’re talking about.

    • Ah, the lime-green hair should have clued us in a bit earlier… 😉

      Actually, I don’t think Mr. Larrett is trolling so much as really just *not* getting the picture (at least, the optimist in me likes to think so). Oh well, you all tried valiantly.

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