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.