Confirmation: Macmillan e-book prices no longer set by publisher

Confirmation: Macmillan e-book prices no longer set by publisher

Yesterday, when I was telling you about a bunch of bargains with Amazon apparently price-matching Barnes & Noble on the latter’s half-off sale on top NOOK Books this weekend, I noticed that many of them were Macmillan and suggested that perhaps Macmillan and Amazon had renegotiated terms after the former settled on the Agency Model. Whew, that was  a long sentence! Let me catch breath…okay, to go on…

I’ve checked several Macmillan books this morning, and the line that “This price was set by the publisher” is now gone.

If you’ve been tracking books at

eReaderIQ

which is a great free service that will send you an e-mail when a book you are tracking drops in price an amount you specify, you may have gotten some pleasant surprises in your Inbox.

Macmillan has a number of imprints (specialized lines of books). If you were tracking something from one of these, you may have seen the change:

• Farrar, Straus and Giroux
• First Second
• Henry Holt & Co.
• Nature Publishing Group
• Palgrave Macmillan
• Picador
• Quick and Dirty Tips
• Scientific American
• St. Martin’s Press
• Minotaur Books
• Thomas Dunne Books
• Tor/Forge

What does this mean for the future?

We should start seeing Macmillan books discounted at Amazon, including being featured in Kindle Daily Deal and  100 Kindle Books for $3.99 or Less. I’ll certainly be interested in seeing how things are affected when I run my next Snapshot on May 1st. It’s possible the average price of a New York Times bestseller hardback equivalent may drop, for example.

So, where are we on the Big Six US trade publishers and the Agency Model at Amazon?

• Simon & Schuster: can be discounted
• Hachette: can be discounted
• Macmillan: can be discounted
• HarperCollins: can be discounted
• Penguin: can not be discounted (still under the Agency Model, but they have settled…we need to wait for the new terms to be worked out)
• Random House: can not be discounted (still under the Agency Model…they will be bound by Penguin having settled, if their merger with Penguin is approved)

It will take some time after the Agency Model is gone before we really see the impact, because we have to get back into price competition between sellers. I think we might really see an impact this holiday season, though.

Here is a search for books published by Macmillan (this won’t cover all of the imprints):

Macmillan titles in the US Kindle store

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Macmillan settles with the DoJ over the Agency Model

Macmillan settles with the DoJ over the Agency Model

Ding dong, the Agency Model is dead!

In this

press release

the United States Department of Justice (DoJ) announces that it has reached a settlement agreement with the last of five publishers against which it took a legal action over a pricing structure referred to as the Agency Model.

The four other publishers had already settled. Random House (the other publisher in the “Big Six”) will also be bound by the agreement that Penguin made, presuming that their merger is approved (and the settlement is approved).

This settlement won’t happen instantly (there is an approval process, and then it takes a bit of time to make new arrangements with the retailers, like Amazon).

Once that all happens, though, the “This price was set by the publisher” line will have disappeared from Amazon’s website.

However, the DoJ’s announcement does say that Macmillan agreed to allow price discounting immediately. I don’t see the price drops yet, and the price-setting line is still there…might happen soon, though.

While I don’t think that all New York Times bestseller hardback equivalents will drop to $9.99, I do think we’ll see specials on more books, and that the NYT list average will go down. Part of that may be driven by the return of competition between retailers on these books…and Amazon’s price-matching policy.

John Sargent, Macmillan’s CEO, had been public during the dispute with Amazon in first implementing the Agency Model (it didn’t get any messier, publicly, than it was between Macmillan and Amazon).

In this

statement

Sargent says

“I like to believe that we would win at trial. But outcomes are hard to predict with certainty, particularly in a civil case with a low burden of proof. And so we agreed to settle with no admission of guilt. As with the other settling publishers, retailers will now be able to discount Macmillan e-books for a limited time. This change will take effect quickly.”

The statement clearly suggests that they will find other ways to fight in the future, referring to this as a “round” (as in a boxing match).

Apple still has not settled, and may actually go to court in June of this year. Unlike Macmillan, Apple can probably afford to fight for a very long time…although it’s worth noting that Apple did settle in the European Union.

As I understand it, the Agency Model is now gone in the USA for e-books through December 2014 (at least). That’s long enough to change the pricing in the market, and to make it so that the conditions that first engendered the Agency Model are not in place at that time.

I suspect Macmillan’s investors will be happy to hear this, since fighting the court battle has been expensive.

When I start noticing price drops on Macmillan books, I’ll let you know.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Penguin settles with DoJ over Agency Model

Penguin settles with DoJ over Agency Model

Thanks to my reader Norma for the heads up on this!

According to this

US Department of Justice press release

Penguin has agreed to settle with the DoJ over its participation in the Agency Model. That’s a change in the way that e-books were sold, which turned former retailers (like Amazon) into “sales agents”, and thereby prevented them from discounting the books. Amazon fought it publicly, but it went into effect in April of 2010. For more information on that, see this category of posts.

It appears that this came about partially because Penguin’s proposed merger with Random House is currently under scrutiny.

Interestingly, the conditions proposed (which are similar to those already accepted by HarperCollins, Hachette, and Simon & Schuster) would also automatically apply to Random House if the merger goes through…and Random House was not named by the DoJ in their legal action.

Why didn’t they name Random House? Well, RH adopted the Agency Model almost a year after the others of the “Big Six” trade publishers in the USA, so it would probably be a lot harder to prove collusion. That’s part of the DoJ’s basis for the action…not just the Agency Model per se, but the concerted effort to set prices.

This will take a while to go into effect. A court has to approve it (but I don’t see a barrier to that). Then, they’ll have some grace period to negotiate new contracts. I would guess it would happen in the next few months.

That leaves Macmillan and Apple still fighting the DoJ.

The fight between Macmillan and Amazon over instituting the Agency Model in the first place was quite messy, and quite public:

Macmillan CEO John Sargent on the agency model

Amazon actually pulled the “buy buttons” from all Macmillan books during the process, but did eventually agree (under pressure of having e-books “windowed”, or delayed in release).

Apple has so much money, they can fight as long as they want. They did just settle with the EU (European Union), though.

All in all, I think this is very good news for readers, and should result in lower prices on very popular e-books before too long.

Thanks again to Norma!

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Agency Model ends for Hachette at Amazon

Agency Model ends for Hachette at Amazon

Thanks to reader Bailey for giving me the heads-up!

In April of 2010, five of the six largest USA trade publishers (Random House held off almost a year) adopted what is called the “Agency Model”. That system makes it so that the former retailers, such as Amazon, are no longer actually the “sellers of record”, but act as a “sales agent” for the publisher.

The key feature of that for consumers is that the price the consumer pays is set by the publisher, not by the former retailer. No discounting, and no price competition between e-bookstores on that front.

The US DoJ (Department of Justice) took a legal action against those publishers and Apple (which the DoJ says was part of implementing the Agency Model).

Three of those five settled with the DoJ, rather than continuing to fight: HarperCollins, Hachette, and Simon & Schuster.

We’ve been seeing the benefit of this with HarperCollins already, as their books have been featured in Amazon discounts.

It was only a matter of time before Hachette and Simon & Schuster worked out the new contracts with Amazon…and the phrase “This price was set by the publisher” went away from their books’ Amazon product pages.

That time has apparently arrived for Hachette!

Hachette books in the USA Kindle store

That search is only for books that say they are published by “Hachette”…imprints of the company (specific publishing lines) won’t be found by that one.

Let me give you a couple of examples of Hachette books where the price has dropped recently:

• Harry Bosch Novels, The: Volume 2: The Last Coyote, Trunk Music, Angels Flight
• Chelsea Chelsea Bang Bang

I was able to locate these quickly through the recently dropped prices listing at the website

http://www.ereaderiq.com/pricewatch/

which I strongly recommend. You can give them specific books to track, and they’ll send you an e-mail when those books drop in price. That’s how Bailey was alerted…and there is no charge for that service.

I would have thrown a few more books in here, but some of the ones I checked had text-to-speech blocked, in which case I don’t link directly to them. J.K. Rowling’s latest is in that category…but this does show a significant drop on a major bestseller. That’s likely to be the headline when other blogs report on this.

I checked Simon & Schuster…no change yet, still Agency Model pricing. I think we’ll see that change before too long, though.

Thanks again, Bailey! I always appreciate it when a reader takes the time and energy to alert me (and therefore you) to something of benefit.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Kindle store credits coming in States’ e-book settlement

Kindle store credits coming in States’ e-book settlement

You may have already gotten or may be getting an e-mail from Amazon letting you know about a store credit (or you can opt for a payment) as a result of the States’ legal action against some publishers over the Agency Model.

I’d reproduce the e-mail for you, but Amazon included a copyright notice on it.  Generally, the recipient owns the e-mail (as does the sender) unless it is marked private, as I understand it, but the copyright notice changes that. I’ll hit the high points:

First, here is Amazon’s Help Page on it:

Customer FAQ for Attorneys General E-book Settlements

Second, you’ll be entitled to the credit if all of these are true:

• You bought a Kindle store book published by Hachette, Harper Collins, Simon & Schuster, Penguin or Macmillan between 4/1/10 and 5/21/12, and you did not return or refund the book
• You have a US billing address
• You are not in Minnesota (the Minnesota Attorney General did not elect to join the suit)

The amount is estimated to be something like thirty cents to $1.32 per book purchased.

This is not yet approved: the hearing to approve it is scheduled for February 8, 2013.

You can opt out of it, if you want.

More information is available at the official website for the settlement:

https://ebooksagsettlements.com/

You do not need to do anything to make this happen. When it does, the credit will be automatically applied to Kindle book or paperbook purchases from Amazon.

Other retailers are also involved.

To be very clear, this is not a settlement against Amazon, but against the publishers. Amazon openly fought the Agency Model.

I think those are the key points. If you have more questions, feel free to ask.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

An unsettling settlement

An unsettling settlement

I recently wrote about Judge Cote approving a settlement agreement between 49 states, four additional American entities, and three publishers over the Agency Model pricing structure.

 The basic idea in this civil action is that the three settling publishers (HarperCollins, Hachette, Simon & Schuster) damaged consumers by colluding (along with two other publishers and Apple…those have not settled yet) to raise e-book prices.

As I understand it, that’s how a civil suit works: someone is damaged, and someone else is found to be at fault and forced to “make right the wrong”.

That’s different from a criminal case. The criminal has broken a law, and is going to be punished…there isn’t necessarily a specific individual or other entity that has been damaged a certain amount. When you are speeding, you aren’t damaging another person. If you run over somebody’s petunias, they’ve suffered a specific loss. Speeding is criminal…running over the petunias would be civil.

So, the basic result of this suit is that consumers will get recompensed for the higher prices they paid…I’d be surprised if anybody got as much as $20, although it’s certainly possible.

That’s the way it works.

I want to thank regular reader and commenter Lady Galaxy for crystallizing my thoughts on this with a generous and wise comment.

In a comment on the above post about the settlement, Lady Galaxy said that essentially that getting the cash wouldn’t be the best result…buying the books at that price had been a choice. If that cash does come, Lady Galaxy would donate it to a library (you can read more of the details in the comment).

I thought that was very insightful.

Let’s say that someone bought a book for $12.99 that “should have been” $9.99.

Is that the person who was most damaged by the Agency Model?

I would guess that many (perhaps the majority) didn’t even know there was an Agency Model, didn’t even realize that prices were higher than they had been.

They were willing to pay $12.99 for the book…I respect that consumers can make an intelligent decision on that.

What about the people who decided that they couldn’t afford the book at $12.99? Weren’t they injured more?

Is getting a check for $3 (which may have cost more than that to process and send) going to make you feel satisfied?

I know…that’s the system. The directly injured person is recompensed, the indirectly injured person gets nothing.

The settlement is for $69 million dollars.

Just fantasizing, wouldn’t it be nice if that money could go to help people get books who couldn’t afford them?

Civil suits don’t punish, and aren’t really about the future, but if they were…

Let’s say they take that $69 million and donate it to Project Gutenberg to help digitize public domain books?

Honestly, I’d be a lot happier with that.

That wouldn’t really hurt the publishers…the public already owns those books. One could argue that having more public domain freebies available would hurt sales of current books, I suppose.

What if they were compelled to improve their deals (when they even have them) with public libraries?

None of that’s going to happen…I’m sure people will get checks.

Those same three publishers have settled with the Department of Justice in a separate action.

The two publishers (Penguin, Macmillan) and Apple, who haven’t? They may eventually be subject to criminal penalties…or, they could win, and owe nothing.

===

Two asides to people who have recently commented.

In a private comment, a reader urged me to write something for the KFHD (Kindle Fire HD). I am considering that. I’ve been working a lot, and I may have some “writing days” coming up as a result. There’s another book I want to finish before I do something else.

I think I wouldn’t do something as…formal as Love Your Kindle Fire. I may do something and introduce it at ninety-nine cents. There are lots of differences between the KFHD and the KF1 (Kindle Fire 1st Generation), and some of them are non-intuitive. For example, I got to listen to the new text-to-speech (TTS) today on a commute…I was impressed! It’s the Ivona software, and I think it is the Salli voice.

The surprising thing was that turning the KFHD from portrait (taller than it is wide) to landscape (wider than it was tall) stopped the TTS. That was disconcerting at first, but I can really see the value. If someone walks in when you are listening to something… embarrassing, perhaps, you can stop it quickly.

You can lock the rotation so it doesn’t turn off, if you want…swipe down from the top, and you can tap the “Unlocked” icon to make it “Locked”.

So, I appreciate your encouragement, reader, and I’ll certainly think about it.

As to the other comment…

That person wanted me to post it (or at least, didn’t say it was private).

I’m not going to do that.

It was really basically an ad…it linked to their own blog. I’ll sometimes allow that if I think it’s just an interesting article that would interest my readers.

However, the comment was partially this:

“Why not strip the drm, then you can read the ebooks anywhere any without limitaion.”

The answer for me is, because I believe it is likely to be illegal.

I don’t typically promote activity I believe to be illegal.

On top of that, the author made the deal with the publisher, and the DMCA (Digital Millennium Copyright Act) protected DRM (Digital Rights Management) was part of that understanding.

While the author might prefer that there be no DRM, and I believe it disrespects the author to strip that. The author might have gotten more money if the book was being released without DRM, since that might, hypothetically, reduce the sales…meaning that the publisher pays a higher royalty to make up for that.

So for me, that’s why.

Some major publishers are releasing books without DRM…that’s a different story.

Feel free to tell me and my readers what you think. Is giving money to consumers who paid a higher price due to the Agency Model the right action? If the non-settling publishers lose their case, what would you like their punishment to be? Are you fine with stripping DRM? Should I write something on the KFHD? If I do, how do I handle the multiple models in that line? You can comment on this post…if you’d like it to be private, please say so in the post.

Thanks again to Lady Galaxy!

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Harper’s Droppers: post Agency Model savings

Harper’s Droppers: post Agency Model savings

Thanks to my reader Bailey, I was able to  report yesterday that the “This price was set by the publisher” line was gone from HarperCollins’ books in the USA Kindle store.

Harper recently settled with the Department of Justice in the government’s legal action against the Agency Model.

That meant that Amazon could go back to discounting the price of HarperCollins’ e-books.

While that seemed very likely to mean lower prices, it was a bit more complicated than that.

The publisher could raise the list price, which would raise the cost to Amazon, which would make it more expensive for them to discount the book.

Let’s say HarperCollins was selling the book for $12.99. Amazon would get thirty percent of that for being the sales agent…about $3.90.

Now, let’s say that Amazon wants to sell the book for $9.99, and still make that $3.90 on it. $9.99 – $3.90 = $6.09.

Not counting costs of sale, if the publisher sets the digital list price at…higher than $12.18, Amazon doesn’t make its $3.90.

I know, that was math geeky.

Of course, Amazon doesn’t have to continue to make that $3.90…they could choose to make $2.90 or $1 or even lose money…

But would they?

That’s where

http://www.ereaderiq.com/

comes in.

I’ve recommended them many times before…eReaderIQ is the most valuable site for Kindle owners on the internet.

In addition to helping you find free e-books, giving you search capabilities superior to Amazon, and letting you know when a book you list has been Kindleized, they’ll send you a free e-mail when a book you choose drops a specified amount in price.

As part of that, the information-rich site tracks (even graphing) the prices of Kindle store books which have recently seen price reductions.

Of the last twenty most recent drops they see, nineteen are from HarperCollins or its imprints.

The price graph for all of those HarperCollins titles looks pretty much the same…and it looks like it fell off a cliff.

Stable price, stable price, stable price, boom!

I thought I’d list the ten most recent HarperCollins price drops for you, and note the percentage of drop:

• Hail, Hail, Euphoria!: Presenting the Marx Brothers in Duck Soup, the Greatest War Movie Ever Made by Roy Blount, Jr. $8.99 on September 9, $6.64 today…down about 26%
• Yes, You’re Pregnant, But What About Me? by Kevin Nealon $9.99/$7.59/24%
• What I Wish I Knew When I Was 20 by Tina Seelig $10.99/$9.99/9%
• Spin Doctor by Leslie Carroll $9.99/$7.99/20%
• The Anti-Romantic Child: A Story of Unexpected Joy by Priscilla Gilman $9.99/$7.99/20%
• God’s Secret Agents: Queen Elizabeth’s Forbidden Priests and the Hatching of the Gunpowder Plot by Alice Hogge $10.99/$9.78/11%
• Where Did the Jobs Go–and How Do We Get Them Back?: Your Guided Tour to America’s Employment Crisis by Jean Johnson $9.99/$7.99/20%
• Hidden: A Firelight Novel by Sophie Jordan $9.99/$8.79/12%
• Highland Lairds Trilogy: The Maclean Groom by Kathleen Harrington $7.99/$6.99/12.5%
• Descent into Dust (Emma Andrews) by Jacqueline Lepore $9.99/$7.59/24%

As you can see, those are substantial drops.

I also did some spot checking…some HarperCollins books (especially teen ones) have dropped fifty percent and more. For example:

The Sharing Knife, Volume Three by Lois McMaster Bujold $7.99/$3.99/50%

It’s also worth noting that eReaderIQ has been tracking that since December 21, 2010 (which would have been when somebody requested the tracking)…and this is the first time the price has dropped during that period.

Two other interesting things: while I was writing the post, another wave of HarperCollins price drops happened…it may be taking them some time to adjust.

Also, many of the books have already dropped twice since September 9th…that could be due to automatic adjustment to prices at other retailers. There was no price competition between retailers under the Agency Model.

How would you know about these drops if I didn’t tell you? Sign up at eReaderIQ…if you don’t, you could be wasting a lot of money (if you can wait for prices to come down).

Thanks to the Department of Justice for bringing this case!

Thanks to Amazon for reducing the prices!

Thanks to HarperCollins for settling! Yes, they went in on the Agency Model, but we can be thankful they settled, rather than continuing to fight. One could argue that the publishers and Apple which haven’t settled are standing up for what they believe to be their innocence, rather than caving to legal pressure…

Thanks (once again) to

http://www.ereaderiq.com/

I use them for a lot of purposes, and I do buy through their links when I’ve signed up for something there and they notify me about it…that helps them, and I do want to reward them for their efforts.

Update: my Flipboard app had this story this morning:

paidContent:
“Apple is already fighting Amazon in the ebook price wars”

and I was also alerted to it by regular reader and commenter Lady Galaxy.

Amazon’s price war right now might, ironically, be with Apple. As the hardware company continues to fight the Department of Justice in court to retain the Agency Model, which keeps the consumer prices the same everywhere, they are lowering the prices on iBooks, to counter Amazon. They are competing on prices, in a race to the bottom…which would seem to be  what they were complaining about Amazon doing before the Agency Model.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Judge Cote approves DoJ Agency Model settlement

Judge Cote approves DoJ Agency Model settlement

In a strikingly expeditious decision, Judge Cote has approved the proposed settlement between the Department of Justice and three publishers (Hachette, HarperCollins, and Simon & Schuster) over the Agency Model:

Decision

That’s it…for those three publishers, the Agency Model will end.

Judge Cote could have waited until Apple, Penguin, and Macmillan to have their day in court (probably next year), but significantly, did not do that.

I think that before the end of September, we’ll see prices for e-books from the settling publishers on the New York Times Bestseller Hardback list drop.

It wouldn’t surprise me to see Amazon do some big sale on some books from these publishers, to celebrate.

We may see a price war between Barnes & Noble and Amazon on frontlist books from these publishers this holiday season…now that it will be possible again.

I’ll reiterate something I said recently…I think that Macmillan and Penguin are in danger of losing significant marketshare during what could be a year of discounting on their competitors’ titles. Could Macmillan and Penguin lower their prices to compete? Sure, but under the Agency Model, the publisher takes the hit.

With the Agency Model, the publisher gets 70% of the consumer price. If they lower the consumer price, they make less money.

With the Wholesale Model (where the retailer sets the price), the publisher gets 50% of the list price of the book…regardless of what the consumer pays for it.

Let’s say the Agency Model publisher had the book priced at $12.99. The publisher gets about $9.09.

If the Agency Model publisher lowers the price to $9.99, they get about $7. They lose more than $2 per sale by lowering the price.

With the Wholesale Model, let’s the publisher set the digital list price at $18, and Amazon pays them $9 for it. If Amazon sells the book to the consumer for $12.99, the publisher gets $9 for it. If Amazon sells the book to the consumer for $9.99, the publisher gets that same $9 for it. If Amazon sells the book for $1, the publisher gets that same $9 for it.

Amazon takes the loss, not the publisher.

It’s more complicated than that, because of how prices can affect other prices, but that’s how the direct sale money generally works.

It would not surprise me to see Penguin and Macmillan flip and decide to settle in the next couple of months…and maybe before the holiday season.

It has been costing publishers a ton of money to fight this battle.

Apple will probably stick it out…they are confident in their legal prowess.

The judge quoted an Emily Dickinson poem about the value of books, and I’m going to close this post by quoting part of what Judge Cote said in approving the settlement:

“…there can be no denying the importance of books and authors in the quest for human knowledge and creative expression, and in supporting a free and prosperous society.”

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Bloomberg: “U.S. files antitrust suit against Apple, publishers”

Bloomberg: “U.S. files antitrust suit against Apple, publishers”

More on this later, but according to this

Washington Post article

the Department of Justice has filed suit against Apple and the “Agency 5″ publishers (Hachette, Penguin, HarperCollins, Sinon & Schuster, and Macmillan) over the Agency Model.

We’ll probably see the filing shortly, and I’ll update this later today.

Update: here is a

Wall Street Journal article

with more good information. According to the article, Hachette, Simon & Schuster, and HarperCollins

“…agreed to terminate their agreements with Apple regarding e-books and refrain from limiting any retailer’s ability to set e-book prices for two years. That could help Amazon.com Inc. AMZN +0.93% resume deep discounts on new e-books.”

We may see the “This price set by the publisher” warnings go away very quickly.

I don’t think we’ll see a dramatic quick lowering of the New York Times bestseller hardback equivalents across the board to $9.99. I do think we’ll see those former Agency Model publishers’ books included in sales, and prominently.

Could this be a negative impact for independently published books? Perhaps…price might be less of an advantage for them, and if the Big Six has books in the promotions in the same way the indies do, that muddies the water.

The WSJ also nicely provided this

pdf of the filing

I’m looking forward to reading it.

Update: here are some sections that are catching my eye in the government filing:

“Publishers saw the rise in e-books, and particularly Ama zon’ s price discounting,
as a substantial challenge to their traditional business model. The Publisher Defendants feared
that lower retail prices for e-books might lead eventually to lower wholesale prices for e-books,
lower prices for print books, or other consequences the publishers hoped to avoid. Each
Publisher Defendant desired higher retail e-book prices across the industry before “$9.99″
became an entrenched consumer expectation. By the end of 2009, however, the Publisher
Defendants had concluded that unilateral efforts to move Ama zon away from its practice of
offering low retail prices would not work, and they thereafter conspired to raise retail e-book
prices and to otherwise limit competition in the sale of e-books. To effectuate their conspiracy,the Publisher Defendants teamed up with Defendant Apple, whichshared the same goal of restraining retail price competition in the sale of e-books.”

“As Apple CEO Steve Jobs described his company’sstrategy for negotiating with the Publisher Defendants, “We’ll go to [an] agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway.”"

“Plaintiff United States ofAmerica brings this action pursuant to Section 4 ofthe
Sherman Act, 15 U.S.C. § 4, to obtain equitable r e l i e f and other r e l i e fto prevent and restrain
De f endant s ‘ viol a t ions of Se c t ion 1 ofthe She rman Act, 15 U.S.C § 1.
19. This Court has subject matter jurisdiction over this action under Section 4 ofthe
Sherman Act, 15 U.S.C. § 4, and 28 U.S.C. §§ 1331,1337( a ) , and 1345.”

“Beginning no later than September 2008, the Publisher Defendants’ senior executives engaged in a series ofmeetings, telephone conversations and other communications in which they jointly acknowledged to each other the threat posed by Amazon’s pricing strategy and the need to work collectively to end that strategy. By the end ofthe summer of2009, the  Publisher Defendants had agreed to act collectively to force up Amazon’s retail prices and thereafter considered and implemented various means to accomplish that goal, including moving under the guise of a joint venture.”

“In September 2008, Penguin Group CEO John Makinson was joined by Macmillan CEO John Sargent and the CEOs ofthe other four large publishers at a dinner meeting in “The Che f s Wine Cellar,” a private room at Picholene. One ofthe CEOs reported
that business matters were discussed.”

“All five Publisher Defendants agreed in 2009 at the latest to act collectively to raise retail prices for the most popular e-books above $9.99. One CEO of a Publisher Defendant’s parent company explained to his corporate superior in a July 29, 2009 e-mail message that “[i]n the USA and the UK, but also in Spain and France to a lesser degree, the ‘top publishers’ are in discussions to create an alternative platform to Amazon for e-books.”

“The executive in charge ofApple’s inchoate e-books business, Eddy Cue, telephoned each Publisher Defendant and Random House on or around December 8, 2009 to schedule exploratory meetings in New York City on December 15 and December 16.”

As I would expect with the DoJ filing suit, it sounds like they have evidence of a collusion. They probably have call logs and such.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

WSJ: U.S. Warns Apple, Publishers: Justice Department Threatens Lawsuits, Alleging Collusion Over E-Book Pricing

WSJ: U.S. Warns Apple, Publishers: Justice Department Threatens Lawsuits, Alleging Collusion Over E-Book Pricing

Thanks to one of my most reliable readers, who gave me the heads-up to this story in a private e-mail (if you’d like credit, just let me know):

WSJ article

It talks about inside sources saying the the DOJ (Department of Justice) is letting Apple and five publishers (the five that initially agreed to the Agency Model) know that they will take legal action against them for collusion if a settlement can’t be reached.

I thought the Agency Model might go away in this way in 2011, and obviously, I was wrong about that.

This article by Thomas Catan And the ever reliable Jeffrey A. Trachtenberg does a good job of summing up the situation.

The publishers have to decide if it’s worth getting into a public legal case, or just dumping the Agency Model (or seriously modifying it in some way).

My guess?

They don’t love the Agency Model anyway. Pricing is hard. The Agency Model has only given them bad will with the serious book buyers. iBooks has not been a success (so they don’t have to fear Apple’s power as much), and the person who allegedly…guided the Agency Model for e-books isn’t part of the situation any more.

I’m thinking this does settle out of court. That doesn’t immediately mean lower e-book prices…nothing forces the prices to be as low as Amazon had been setting them in the beginning.

You might be wondering why Random House (which joined the Agency Model in 2011) isn’t mentioned in the article as part of it. The wheels of the Department of Justice turn slowly, for one thing…Random House could be in it later. Also, the charge is collusion: The other five all had the same action at the same time…Random House was almost a year later.

Could the publishers win this? The defense would have to be that Apple suggested the idea to each publisher individually and they all agree to it, without consulting with each other. That’s one possibility, and that has to do with price-fixing. However, there are other anti-competitive charges that could be involved, as I understand it.

I just don’t see the publishers fighting this in court. Even if you think what they did with the Agency Model is fine, I don’t see it being worth a public trial.

My feeling is that the Agency Model, at least as we know it, will be over in the USA this year.

I’ve been wrong before, though.

I strongly suggest you read the article.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.