April 17, 2012

Please Don’t Feed the Monster – Why e-book price fixing isn’t the issue

Filed under: Uncategorized — Jarek Steele @ 1:28 pm
Tags: , , , ,

Does anyone else see the supreme irony in the Department of Justice’s antitrust lawsuit against book publishers and Apple?

In a nutshell, here’s what happened:

Publishers: Hey, retailers.  We own the rights to this really great book.  We’re selling the e-book version for $9.00 each.  We’d like to sell it through your website.

Apple and Indie Bookstores: Awesome! Sign us up.

Amazon: Wait.  I usually sell all books as loss leaders and mark them down to under the price all my competition pays for them so I can sell garbage disposals.  Does this mean I can’t do that?

Publishers: Um. Yeah.

Indie Bookstores:  Woohoo! Look at that – people are buying books and e-books from us!

Amazon:  Wait, my whole business plan is to sell your entire industry’s products for under cost so you’ll all go out of business and I’ll be the only one left.  Then I’ll raise the prices so I can actually bathe in money.

Publishers, Apple and Indie Bookstores:  But won’t that mean that you won’t have the book selection you have now?

Amazon:  I don’t care about that.  I’m just interested in installing my money burning fireplace in my en suite.  Of course my customers are too stupid to realize what I’m doing.  I just have to wave sparkly Kindles in front of them and they’ll follow me anywhere.

Indie Bookstores:  Do you really think your customers are that stupid?  They are readers, after all.  They’ll probably catch on.

Amazon:  Nah, watch this.  I’ll get the Department of Justice to sue all of you so I’ll look like a populist good guy – only concerned about the price of books for my loyal customers.  Then you’ll look like you’re trying to monopolize the industry.  Your customers are gonna be SO MAD at you.

Publishers and Bookstores:  Um, wait.  Selling them through the agency model ensures that more retailers can compete, thereby creating a more diverse selling climate, creates more competition and ensures that we don’t sell at a loss and go out of business.

Amazon:  Yeah, whatever.  I’m still going to look awesome, and my pr team is totally going to trash you. Plus, Americans don’t really care about monopolies as long as they get a bargain.  They just know they’re supposed to care so I’ll just wave the words “price fixing” around so it gets lots of media coverage.

Apple: Can I just chime in here?  This is how the music industry was destroyed.  People started buying downloads of music for free and almost free so musicians couldn’t afford to make music and the music producers went out of business.

Amazon: Yawn… Are you still here?  Look, I have the freaking Department of Justice on this.  Give up. You’re done.  We’ve trained everyone to expect big monster corporations to gobble up small businesses and become too big to fail.  It’s the American way!

Simon & Schuster, Hachette and HarperCollins:  Crap.  We’re outta here.

Penguin, Apple, Macmillan and Indie bookstores: This is totally outrageous.  This is just Amazon’s latest tactic to tilt the table so all the marbles roll toward you.  This doesn’t benefit anyone except you.  Not even your customers.  You can’t do that!

Amazon: Watch me.


If the department of justice wanted to really deal with a price fixing issue, let’s take a long, hard look at gas prices and oil companies.  Paying fair market value for books in any form is not monopoly, it’s fair play and makes good economic sense.

Here are some more sources: 

Publisher’s Weekly Article – MacMillan CEO John Sargent’s letter is really good.

PBS NewsHour interview.  Still trying to wrap my head around Stever Berman’s (a “seattle based lawyer” – read Amazon’s) quote,  But there’s nothing wrong with being a monopolist. And if Amazon could gain a monopoly share by offering the lowest price, and consumers want that lowest price, they’re enabled and allowed under the law to do so.


As my brilliant partner, Kris said this morning – Life doesn’t move toward fairness.  It just moves forward.


  1. Almost perfect, but I think you’re being a bit unfair to Amazon. I mean their model isn’t to sell below cost, it’s to sell for pennies above cost and then browbeat the publishers into lowering the price that Publishers charge Amazon, so Amazon can make a profit. Because that is so much better than using our entire industry as a loss leader, devaluing the price of books in the minds of consumers, refusing to pay sales tax, and basically being all around evil. You do simplify things nicely for the consumer, who likely has no idea what’s going on, just that big bad publishers and Apple are conspiring to make them pay more for ebooks. Because you know the cost for ebooks should be so much less than physical books, because they’re not made from paper. Sorry this whole DOJ fiasco has made me rather grumpy.

    Comment by Victoria — April 17, 2012 @ 1:53 pm | Reply

  2. Well what I said was, Life doesn’t move towards a happy ending, it just moves along. But anyway, this is a sizzling hot commentary and I couldn’t agree with it more.

    Comment by kriskleindienst — April 17, 2012 @ 2:28 pm | Reply

  3. Although kinda simplistic, I can see your point regarding e-book sales. However your description of the poor “destroyed” music industry could hardly be more off base. Firstly, since there are so many musicians who now “can’t afford to make music”, could you name one influential, significant, or even well-liked band that’s had to quit the business because of digital content distribution? Me neither. Secondly, and more sadly, the producers you claim are now out of business are simply experiencing less growth due to their ham-fisted attempts to legislate profitability for a distribution model that more and more consumers no longer want. They are still very much in business and have paid an elected representative near you to endorse the next version of SOPA/CISPA/whatever else will ensure they don’t have to innovate ever again.

    Comment by Chris — April 18, 2012 @ 12:17 am | Reply

  4. Thanks for your take on this.

    Comment by Lisa Hautly — April 18, 2012 @ 3:58 pm | Reply

  5. […] Right now, the department of justice is proceeding with an antitrust lawsuit against several publishers and Apple over e-books.  I summed this up on my last post here: https://jareksteele.wordpress.com/2012/04/17/feed-the-monster/ […]

    Pingback by The Apathy and the Ecstasy « jareksteele — June 11, 2012 @ 9:53 pm | Reply

  6. […] been sitting with the DOJ’s decision about the “anti-trust” lawsuit brought against some in the publishing industry feeling an eerily familiar feeling.  I […]

    Pingback by From the Department of Just This « jareksteele — July 25, 2012 @ 12:21 am | Reply

  7. […] States Department of (in)Justice looked up from their Kindles briefly to side with Amazon on the Agency Model lawsuit – a decision that was as patently ridiculous as the Seahawks/Packers Replacement Ref call […]

    Pingback by Operation Book Deployment: The Penguin Random House Juggernaut « jareksteele — October 30, 2012 @ 12:20 am | Reply

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