US Competition Accusations Against E-Book Publishers

The New York Times, Washington Post, and Wall Street Journal all carry front page stories today on the Justice Department’s antitrust accusations against leading book publishers and Apple, alleging price-fixing in the setting of prices for e-books.  (Here is an open I Business Times article, and here is the LA Times – not sure what’s behind the paywall with the others.)  Among other juicy bits, the news accounts say that Steve Jobs played a crucial role in the negotiations among the publishers as Apple.  The LAT says:

Former Apple Inc. Chief Executive Steve Jobs was a key player in a conspiracy with five major book publishers to drive up the price of digital books, federal and state officials said in antitrust lawsuits filed against the companies.  Jobs helped orchestrate a complex price-fixing plan that cost consumers tens of millions of dollars over the last two years by boosting the price of many new releases and bestsellers by $3 to $5 each, federal investigators said. Apple even proudly described the maneuver — which gave the iPad maker a guaranteed 30% commission on each e-book sold through its online marketplace — as an “aikido move,” referring to the Japanese martial art, according to the lawsuit.

“The customer pays a little more, but that’s what you want anyway,” Jobs told the publishers at one point, said Sharis Pozen, the acting head of the Justice Department’s antitrust division.

I’m not a competition law expert, so I would be interested in what folks knowledgeable in antitrust law think of the suit on its legal merits.  But I have been following the book selling business closely for several years, as I’ve used the travails of Borders and Barnes and Noble in competition with Amazon, Wal-Mart, etc., in class studies for quite a while.  As the New York Times  notes in its story, the effect of DOJ succeeding is to put pricing power back into the hands of Amazon – we all remember the famous, simple pricing on the original Kindle at 9.95 (or was it 9.99?).  Overall, I think that a successful antitrust action will put great pressure on the book publishers, and it will favor not only Amazon as a retailer, but increasingly as a publisher, in a world defined by a flattening of the publishing landscape toward self-publishing or “minimally intermediated” publishing.

Is a world of increasing self-publishing a good thing?  The question in part depends on whether the methods by which people can efficiently sort the stuff they want from the stuff they don’t – if we don’t have front end curation through publishing houses, then the ability to sort through to what you want will depend on back-end curation. These mechanisms are likely to be very different for different reading communities – the popular fiction markets, the scholarly and academic markets, etc., with different sorting mechanisms.

Apart from the sorting processes, there’s also a quality of production issue – how improved by the publishing process are books, quite apart from the selection process for publication in the first place?  On the one hand, those of us who have followed the decline and fall of the editor who has the time to work seriously with an author know that there has been a steep decline in rewriting and re-working at the publishing level – and the result, I’d say, is mostly that books are much longer, not to their improvement, because there is not a strong hand to cut out stuff.  But that is editing at a serious, high level.  The rise of essentially self-publishing raises a quite different problem – simply grammar, spelling, functional readability – a lot of editing that one takes for granted, and which many writers (experienced academics who write a lot, like me, for example) just assume isn’t a big deal.  It is a big deal, once you see what an experienced and serious copy editor(s) find going through a book-length manuscript that you thought you’d combed over thoroughly.

At that level of micro-level quality control, I’d envision seeing the rise of new editing services to do that at a relatively cheap price for your self-published e-book, leading to what I called the “minimally intermediated” model.  And of course, there is the rise of Amazon as an actual publisher, commissioning works for Kindle, and putting a certain brand name behind them as having both copy editing and production quality control, but also a brand name behind the book as worthwhile reading.

My new book, Living with the UN, is not yet out in Kindle – give it another week or two.  I don’t know what the price will be, but the economics for a think-tank press looking to subsidize getting the ideas out there to the public are very different from commercial or even academic publishers.  Jack Goldsmith’s new book, Power and Constraint, is published by WW Norton, listed for 26.95, immediately discounted by a third to 17.79, and the Kindle edition is 14.82.  Almost certainly a successful antitrust action would bring that price down.  Living with the UN is listed at 19.95 and immediately discounted a third to 13.43; Nook edition is already out and priced at 9.95, and I’d imagine Kindle will do the same thing.

Over the long term, the effect of pushing prices of e-books down in the short term might be to favor fewer high production price books and more minimally edited self-published books.  But this is speculation – though I follow book publishing business models closely.  What do readers think?  Where is book publishing going in a world of e-books, and a potential lifting of publisher-set e-book prices – looking to the long run?

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