Printed from http://www.electronista.com

Authors Guild: DOJ suit vs. Apple may give Amazon free rein

updated 06:55 pm EDT, Thu March 22, 2012

Guild head says antitrust vs Apple may go too far

A possible DOJ antitrust lawsuit against Apple and book publishers may swing too much power towards Amazon, Authors Guild president Scott Turow said in the combination of an open letter and editorial Wednesday. He likened Amazon to a "Darth Vader" for Bloomberg, calling it a very successful company but a "frequently unscrupulous" firm. Until Apple's entrance and demands for an agency model in the iBookstore, where publishers set the prices, Amazon was pricing Kindle e-books below cost, both accelerating the death of physical bookstores and making it difficult for other e-bookstores to fairly compete.

"Amazon's predatory pricing would shield it from e-book competitors that lacked Amazon's deep pockets," Turow said in the letter. "It was as if Netflix announced that it would stream new movies the same weekend they opened in theaters."

He argued that Amazon had a tendency to abuse its position whenever it was dominant, such as pulling publishers' books whenever they challenged it on price and acquiring companies that gave it more control of the end-to-end chain. While Turow, himself a best-selling author, actually made more money from the Kindle model than the agency model, he saw Amazon's strategy narrowing the number of options and hurting the overall chances for authors to succeed. Physical stores encouraged random browsing, he said as an example.

Suing Apple and publishers was "shortsighted," since the market was now more competitive, not less. Amazon had dropped from 90 percent to 60 percent of e-book share, bookstores had Google's local e-book services, and Amazon had doubled its royalty rates.

Turow didn't rule out legal action, but he didn't want the DOJ to simply "reinstate the status quo" under the fear that the market would simply revert to the model Amazon was using and possibly do further damage. He admitted that he had "no way of knowing" whether or not publishers were actively colluding on prices.

Whether or not publishers discussed the issue between themselves, Apple is commonly thought to have used publishers as leverage to level the playing field against Amazon. Along with giving publishers what they wanted, the deal had a "most favored nation" clause that prevented any other store from selling below Apple's price, forcing Amazon to either raise its prices or lose its content.



By Electronista Staff
Post tools:

TAGS :

toggle

Comments

  1. thinkman

    Fresh-Faced Recruit

    Joined: Jan 2005

    +1

    1...2...3 Fire!

    This is preposterous, how often does the DOJ Do Justice - well. As for me, I consider Amazon to be the biggest threat to American businesses, a nail in the coffin of bricks and mortar stores - as long as they are not required to collect taxes. For my part, I simply don't give them any of my business. There's way too much at stake, and right now they have a veritable license to steal. Good going DOJ. Amazon, may you go up in flames!

  1. SierraDragon

    Mac Elite

    Joined: Mar 2004

    +3

    Why Apple?

    Publishers fixing prices is clear collusion and needs investigation/litigation. I consider myself adamantly against price fixing, collusion, etc. however Apple asking 30% margin from the folks it buys books from does not even deserve Apple being named in the investigation.

    Apple does not set a price of any kind (except the % they charge for distribution, which is Apple's prerogative) and publishers have all kinds of other options than just selling through Apple.

  1. chas_m

    Moderator

    Joined: Aug 2001

    0

    Not defending Amazon, but

    Google -- or some other company -- would have done the exact same thing if Amazon didn't exist. There's always some online company that is more than willing to engage in predatory behaviour that has the effect (sometimes intentional) of laying waste to brick-and-mortar shops.

    Look at what Netflix (and Apple) did to Blockbuster and all the other video stores ... many of which were "mom and pop" businesses, I might add ...

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: 1...2...3 Fire!

    as long as they are not required to collect taxes.

    That's the gov't's call. And you hear how everyone hoots and howls anytime someone tries to pass some law about collecting sales taxes for internet sales.

    For my part, I simply don't give them any of my business. There's way too much at stake, and right now they have a veritable license to steal. Good going DOJ. Amazon, may you go up in flames!

    Yes, because no other company works in this manner.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: Why Apple?

    however Apple asking 30% margin from the folks it buys books from does not even deserve Apple being named in the investigation.

    Apple is part of the investigation because they are part of the group that decided on this model and setting the prices. And see below.

    and publishers have all kinds of other options than just selling through Apple.

    Except they have limitations on what they can sell things for. Apple's rules that they can't offer a title cheaper anywhere else is part of what the DOJ is looking at.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    yeah, right

    He argued that Amazon had a tendency to abuse its position whenever it was dominant, such as pulling publishers' books whenever they challenged it on price and acquiring companies that gave it more control of the end-to-end chain.

    And publishers never abused their dominant position by trying to control pricing or distribution of their content? Yeah, that's like saying the record labels were all about the competition until Amazon came along and started to undersell music.

    ...he saw Amazon's strategy narrowing the number of options and hurting the overall chances for authors to succeed. Physical stores encouraged random browsing, he said as an example.

    It's also a horrible example and completely meaningless to the discussion. eBooks as a whole are about purchasing online. There's no physical stores to buy eBooks. Thus browsing is already an issue, regardless of Amazon's practices with eBooks. What this shows is he doesn't like Amazon because they affect the traditional book buying experience. But that has no bearing on the DOJ's investigation.

    Suing Apple and publishers was "shortsighted," since the market was now more competitive, not less. Amazon had dropped from 90 percent to 60 percent of e-book share, bookstores had Google's local e-book services, and Amazon had doubled its royalty rates.

    Yes, let's not look at it in terms of what laws might have been broken, but who was hurt by those laws. That's what we need to do. And are all of Amazon's royalty rates up, and their practices better now, or is it just the ebook area?

    He admitted that he had "no way of knowing" whether or not publishers were actively colluding on prices.

    And, again, that's the whole point of the investigation.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    and...

    Whether or not publishers discussed the issue between themselves, Apple is commonly thought to have used publishers as leverage to level the playing field against Amazon. Along with giving publishers what they wanted, the deal had a "most favored nation" clause that prevented any other store from selling below Apple's price, forcing Amazon to either raise its prices or lose its content.

    And there's another reason why Apple is in this thing. Is Apple using their dominant power to make sure they get the best deals on their books? Or did they use their dominant power as a 'bonus' in their offer to the publishers by basically saying "Hey, and put this in our deal, and Amazon will be stuck having to raise their prices! Bwahahahahaha!"

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    but....

    Isn't it interesting how publishers can set their prices for books on apple's store, and apple was all for this and saying it was fair and how it should be done. But for music, it was Apple who was stating that prices should be fixed and that the labels shouldn't be allowed to charge whatever they want for things, since it just confuses the customer.

    Sort of like how music should be DRM-free, but Apple doesn't say a word about video or any other type of media.

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

Sponsor

Recent Reviews

ActvContent Sync Smartband

Smartbands of all sorts are hitting the market. Some build on the buzz around fitness trackers, while others offer simpler features fo ...

RocketStor 6324L Thunderbolt 2 eSATA bridge

Like it or not, the shift to Thunderbolt is underway. The connection is extremely flexible, allowing for video and data to co-habitate ...

Patriot Stellar Boost XT 64GB USB 3.0 drive

A vast selection of USB memory sticks means that consumers can often find exactly the size drive they need in a configuration that can ...

Sponsor

toggle

Most Commented

 
toggle

Popular News