NEW YORK, July 10 (Reuters) – In a decision that could reshape how books are sold on the Internet, a federal judge ruled that Apple Inc conspired to raise the retail prices of e-books in violation of antitrust law, and called for a trial on damages. The decision by U.S. District Judge Denise Cote in Manhattan is a victory for the U.S. government and various states, which the judge said are entitled to injunctive relief. Apple had been accused of colluding with five publishers to boost e-book prices beginning in late 2009, as the Silicon Valley giant was preparing to launch its popular iPad tablet. The U.S. Department of Justice said this conspiracy was designed to undercut online retailer Amazon.com Inc’s dominance of the fast-growing e-books market. Only Apple went to trial, while the publishers – Lagardere SCA’s Hachette Book Group Inc and Macmillan, News Corp’s HarperCollins Publishers LLC, Pearson Plc’s Penguin Group (USA) Inc and CBS Corp’s Simon & Schuster Inc – settled with the U.S. government and the states.
The Department of Justice’s closing arguments concluded last week in their anti-trust suit against Apple. In case you’re not familiar with the details, here’s a brief primer from Salon.com:
“Apple was charged with colluding with publishers to fix e-book prices. At the root of the dispute lie two different ways that publishers can sell books to retailers. First, there’s the wholesale model, the way that book publishers have sold printed books to bookstores and other outlets for years. The publisher sets a cover price for a book, sells it to a retailer at a discount (typically 50 percent) and then the retailer can sell the book to consumers for whatever price it chooses. The other method of selling books is via the agency model, which means, essentially, on commission. The retailer offers the book to consumers at a price the publisher sets and gets a percentage of whatever sales are made. It’s rare for print books to be sold in this way, but it’s the method Apple uses to sell content like music and apps in its iTunes store.”
So we’re clear about the agency model vs. the wholesale model and how one may or may not work for certain media. Now read below how all roads lead to Amazon.
“Until 2010 — as Andrew Albanese explains … book publishers had been selling e-books to Amazon using the wholesale model. … This, they would soon realize, was a big mistake … since what the purchaser buys is “licensed access” to a digital file, rather than a physical object like a book. But what would torment publishers most about this arrangement was the freedom the wholesale model gave to Amazon to set the prices of e-books.With the launch of the Kindle, Amazon promoted a low baseline price of $9.99 for most e-books. That meant that Amazon was selling virtually all newly published e-books at a loss. For example: A new book with a hardcover list price of $29.95 would be given an e-book price of $23.95 — 20 percent less to account for the publisher’s savings in printing, binding and distribution. The publisher would sell that e-book to Amazon for $12, and Amazon would retail it for $9.99, taking a $2 loss. Why would Amazon do this? … The most popular theory … holds that Amazon intended from the start to totally dominate the e-book marketplace. By using its wealth to subsidize the sale of e-books at a loss, it could drive any competitors out of the market.”
I don’t know how all this is going to play out, but the e-books I usually buy are $5.99 or less. I say usually because I really have to want a book bad to pay more. And that’s not often. Maybe once or twice a year.
As a reader, I figure the publisher hasn’t incurred the same costs they normally would with print (paper, production, storage, shipping, returns/stripped books, excess inventory … etc). However, as a writer I know every story is created with the same amount of blood, sweat and tears, whatever the format—be it e-book, paperback or hardcover, which means writers and the people who help them along the way (editing, art & marketing professionals) should be properly compensated.
And there’s the rub.
So where do you fall in the argument, reader? Do you have a problem paying for a $9.99 e-book? Many mass market paperbacks are still selling at $6.99 to 8.99. My reader side wants to know why consumers should pay so much for an electronic file.
The writer in me says BECAUSE! Writers, editors, artists and marketing professionals deserve it since writing is hard. Creating is hard. Editing is hard. Photography is hard. Drawing is hard. Designing is hard. Selling is hard … etc … etc … etc…
See, I’m a writer who wants to sell books, but I’m also a rabid bibliophile.
Soooooo as you can see, I’m very, very conflicted.
Then there’s this:
One e-publisher is offering a subscription service that has come under fire recently. In short, readers sign up for a monthly or yearly subscription, pay a fee and then they can download as many books as they want. When the service was initially opened, it was alleged that authors weren’t adequately compensated. The publisher is still hammering out the details, but as an author, would something like that appeal to you? If your publisher had a subscription service that offered its readers unlimited access to their book catalogue which meant they could download as many titles as they desire for one monthly fee, would you be interested? What if the compensation was such that download amounts wouldn’t be counted? So you’d in essence get the same $$ as every other writer, regardless of how many times (or not) your book was downloaded? Would you choose to opt out? As a reader, would something like unlimited catalogue access appeal to you?
Here’s a comment from a very thoughtful (and equally torn) reader:
So what’s a reader to do? I am a voracious reader with over 1,100 titles in my Kindle archive and at least several hundred more with other digital platforms. I respect the time and effort of each writer I purchase. I respect your intellectual property and always buy my ebooks, so I can support those writers who give me so much enjoyment. That being said, there are some authors whose work I enjoy, but whose ebooks I will never buy simply because they are too expensive. I apologize, but I really believe that 12.99 for an ebook is too much. But 12.99 for a monthly, all access subscription? Sounds great to me, but now I feel guilty for even contemplating signing up. So what to do? Should I subscribe, because it will boost overall sales and downloads, even if the individual authors are not making much on each download, and the allocation system is unfair? Or do I just say forget it, and maybe miss out on meeting some new, great authors, who could then potentially have my repeat sales in the future?
Please, authors, what is a loyal, devoted reader who wants to support all of your efforts to do?