American Booksellers Association, Barnes & Noble to weigh in on Apple ebooks case

[bklvr896]

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deesy58 wrote:

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JL_Garner wrote:

Sorry, I completely misread your post as not understanding the issue.

One thing I'm confused about is how this kind of collusion — the decision to use an agency model rather than a wholesale model — is illegal. From what I've read, the publishers only agreed to change the method by which they sold their eBooks to retailers, they didn't agree on what prices they would sell the eBooks at.

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Regardless of the guise, price fixing is price fixing, and it is a violation of US anti-trust laws.  Excusing an illegal activity just because somebody is of the opinion that there might be a greater good (preventing Amazon from developing a monopoly, for example) is not sufficient justification for failing to enforce our nation's laws.

We need to remember all the accusations of how IBM, then, later, Microsoft were developing monopolies earlier in our history,  How do those allegations look now?  Apple and Google seem to be doing quite well, and Microsoft seems to be spinning in ever tightening circles. 

The sky is not falling. 

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The agency pricing model isn't price fixing. It's not illegal, it's a valid pricing model. The DOJ is looking at the collusion to adopt the agency pricing model. With these changes that may be coming, one thing that has been mentioned is a delay in releasing the ebook for new releases, say six months or so after the release of the HC. I'd rather have agency pricing that Avignon to wait six months to read a specific book. But then I'm another rare one who doesn't have a problem with agency pricing.

Regarding ebooks being priced higher than paperbacks. Some brought this up a while back and provided specific examples. When I looked at those examples what I found was that the paperback was listed on the website, with a price, but was only available for preorder, it hadn't been released in paperback yet. You had to go to the paperback page to see that. I watched those books and the ebook price was reduced within a day of the paperback release. It's been very rare that I've seen the ebook priced higher than the paperback. What I have seen is a growing number of paperbacks priced a 9.99.

[Nallia Distinguished Bibliophile]

I always find it interesting that it is consistently ignored that self published authors sell their books through the agency model as well. Funny, that. It seems people only complain about big publishers doing it because they don't like the prices big publishers charge. It puts the lie to the ethical and legal arguments, as far as I'm concerned.

Think about it. What do you think would eventually happen to all those free and $.99 self-published ebooks if the courts one day forced everyone to completely scrap the agency model, as so many desire? Do you really think they would stay so cheap forever if booksellers were the only ones to set the prices? Do you think it would remain as inexpensive for self-published authors to sell their books through the booksellers?

[deesy58]

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bklvr896 wrote:

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The agency pricing model isn't price fixing. It's not illegal, it's a valid pricing model. The DOJ is looking at the collusion to adopt the agency pricing model. With these changes that may be coming, one thing that has been mentioned is a delay in releasing the ebook for new releases, say six months or so after the release of the HC. I'd rather have agency pricing that Avignon to wait six months to read a specific book. But then I'm another rare one who doesn't have a problem with agency pricing.

Regarding ebooks being priced higher than paperbacks. Some brought this up a while back and provided specific examples. When I looked at those examples what I found was that the paperback was listed on the website, with a price, but was only available for preorder, it hadn't been released in paperback yet. You had to go to the paperback page to see that. I watched those books and the ebook price was reduced within a day of the paperback release. It's been very rare that I've seen the ebook priced higher than the paperback. What I have seen is a growing number of paperbacks priced a 9.99.

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Hmm.  What is it, exactly, about the words "collusion to adopt the agency pricing model" that you do not believe meets the definition of price fixing?  My Merriam-Webster's 11th Collegiate Dictionary defines the word "collusion" as: "secret agreement or cooperation especially for an illegal or deceitful purpose." 

The Sherman Antitrust Act defines "price fixing" as: "The agreement to inhibit price competition by raising, depressing, fixing, or stabilizing prices is the most serious example of a per se violation under the Sherman Act. Under the act, it is immaterial whether the fixed prices are set at a maximum price, a minimum price, the actual cost, or the fair market price. It is also immaterial under the law whether the fixed price is reasonable."  http://legal-dictionary.thefreedictionary.com/price+fixing

Are you describing a distinction without a difference?  The Agency Model seems to precisely fit the definitions of both "collusion" and "price fixing." It is illegal, and that is why the DOJ is moving against the practice. 

What you pay for a book is irrelevant.  The only thing that is relevant is that various suppliers, regardless of their relative position in the supply chain, met to set prices from publishers to wholesalers and retailers. They colluded to set prices. 

ILLEGAL!

[deesy58]

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Nallia wrote:
I always find it interesting that it is consistently ignored that self published authors sell their books through the agency model as well. Funny, that. It seems people only complain about big publishers doing it because they don't like the prices big publishers charge. It puts the lie to the ethical and legal arguments, as far as I'm concerned.

Think about it. What do you think would eventually happen to all those free and $.99 self-published ebooks if the courts one day forced everyone to completely scrap the agency model, as so many desire? Do you really think they would stay so cheap forever if booksellers were the only ones to set the prices? Do you think it would remain as inexpensive for self-published authors to sell their books through the booksellers?

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I found this post to be not quite sufficiently clear that I was completely able to understand your point.  Perhaps you could amplify your post a bit, and provide an example.

Are you suggesting that a self-published author colludes with himself or herself to set the price on his or her books, and that such action would somehow be considered unethical or illegal?  Are you saying that a single author has the business clout to require retailers to charge a specific retail price for his/her books or risk ... what?  It isn't clear how a single author could be in a position to violate antitrust laws (unless we're talking about the author of the Bible, for example ).

Yes.  I think that competition leads to the lowest prices for any type of product.  That's what Capitalism is all about.  If one bookseller is willing to sell a particular author's books for a lower price than another bookseller, then the seller with the lowest price will probably sell the most books, and the author shouldn't care, as long as he/she receives the prices for which he/she is willing to write and publish books.  If I was a published author, I would not care one whit how much any individual retailer was willing to cut its profit margins, as long as I received the price I had determined to be fair. 

If the courts force the Agency Model to be "scrapped," I believe that the reading public would see a lot more ninety-nine cent and free e-books.  Why do you think otherwise?

[bklvr896]

From what I remember about the DOJ action they are not moving against the agency model itself, but the way it was entered into. Those who have entered into te agreement will be able to return to the pricing model in a couple of years if they want. Random House, who adopted the agency model a year after the others and are not included in te suit, they can continue to use it. If the DOJ action was for the agency pricing model then RH would be named in the siut since they use the same model. Smash words uses it also, I don't believe they're named either. The pricing model, in and of itself, isn't considered price fixing. The publisher decided to become the actual seller of the book, and is using the retailers as the outlet to sell the books. BN is acting as an agent and gets a commission. The publisher could also decide to only sell its books from its own store and not through any retailer. Price fixing means they agreed to a set price for all books from all publishers, not that they decided collectively to change their pricing model. Doug Pardee had a great post here summarizing settlement, wish I could find it because the settlement doesn't appear to be much different than the current model.

[deesy58]

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bklvr896 wrote:

From what I remember about the DOJ action they are not moving against the agency model itself, but the way it was entered into. Those who have entered into te agreement will be able to return to the pricing model in a couple of years if they want. Random House, who adopted the agency model a year after the others and are not included in te suit, they can continue to use it. If the DOJ action was for the agency pricing model then RH would be named in the siut since they use the same model. Smash words uses it also, I don't believe they're named either. The pricing model, in and of itself, isn't considered price fixing. The publisher decided to become the actual seller of the book, and is using the retailers as the outlet to sell the books. BN is acting as an agent and gets a commission. The publisher could also decide to only sell its books from its own store and not through any retailer. Price fixing means they agreed to a set price for all books from all publishers, not that they decided collectively to change their pricing model. Doug Pardee had a great post here summarizing settlement, wish I could find it because the settlement doesn't appear to be much different than the current model.

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Well, according to reporting by wired.com: “The U.S. Department of Justice filed an antitrust lawsuit Wednesday against Apple and five major publishers — Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster — alleging collusion in e-book prices and sales models.”

Note that the suit is not restricted to prices, but also includes “sales models.”

Wired also says: “If successful, the lawsuit would effectively eliminate the agency model for e-books as we know it, by prohibiting ‘any agreement between a Publisher Defendant and an e-book retailer that restricts, limits, or impedes the e-book retailer’s ability to set, alter, or reduce the retail price of any e-book or to offer price or other promotions to encourage consumers to purchase any e-book, or contains a retail price MFN’ — that is, a Most Favored Nation provision that prohibits e-books from being sold at any other retailer for a lower price.”

Wired is quoting the wording of the suit, and does not appear to limit the time during which the results of the suit would remain in force.

“The Justice Department asks the court for ‘injunctive relief to prevent further injury to consumers in the United States’ — potentially preventing the publishers from selling e-books through Apple’s e-bookstores as well as other retail outlets whose agreements with publishers are tainted by the alleged conspiracy.”  (wired.com)

The entire content of the 36-page lawsuit can be found on Wired’s Web site, and it includes as one of the demands for relief that the defendants be enjoined from implementing “… other arrangements having the same effect as the alleged violation …”  That wording says to me that the defendants would not be allowed to simply re-establish a similar pricing model if they lose the suit.  Why do you believe that they would? 

http://www.wired.com/business/2012/04/doj-files-antitrust-suit-against-apple-and-five-publishers/

[bklvr896]

Are they going to declare agency pricing models illegal for all sales or just ebooks? What isnillegal about the publisher hiring BN as its agent to sell its books? I hire a real estate agent to sell my house and pay them a commission. I can take my car to commission type lot and hire them to sell it and pay them a commission. I know from personal experience that a govt agency can decide its going to go after something, draw its conclusion and then go find what it needs to support its predetermined conclusion. The DOJ doesn't seem all that open to hearing anything that doesn't support it's desired outcome.

If the publisher decided to sell its book only on iinits own store, and refuses to provide the books to the retailers to sell, does the DOJ Then decide that is also illegal? Personally I think they are infringing on a businesses right to sell its product however it wants.

[flyingtoastr Scribe]

Read the actual brief before posting please.

The DOJ doesn't care a whit about Agency pricing. Not one little bit. In fact, in the settlements with a few of the publishers the DOJ expressly allows the publishers to again switch to Agency pricing after a certain time period. Let me emphesize this again:

THIS CASE IS NOT ABOUT THE AGENCY MODEL AS A PRICING SCHEME

The ONLY thing that the DOJ is suing over is the alleged collusion between the five publishers and Apple to raise prices, specifically the "most favored nation" clause that they all adopted. The DOJ is suing because that sort of collusion (if it actually occured) is illegal. The Agency Model as a pricing scheme is perfectly valid, however.

[deesy58]

bklvr896 said:

Are they going to declare agency pricing models illegal for all sales or just ebooks? What isnillegal about the publisher hiring BN as its agent to sell its books? I hire a real estate agent to sell my house and pay them a commission. I can take my car to commission type lot and hire them to sell it and pay them a commission. I know from personal experience that a govt agency can decide its going to go after something, draw its conclusion and then go find what it needs to support its predetermined conclusion.

The DOJ doesn't seem all that open to hearing anything that doesn't support it's desired outcome.

If the publisher decided to sell its book only on iinits own store, and refuses to provide the books to the retailers to sell, does the DOJ Then decide that is also illegal? Personally I think they are infringing on a businesses right to sell its product however it wants.

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flyingtoastr said:

Read the actual brief before posting please.

The DOJ doesn't care a whit about Agency pricing. Not one little bit. In fact, in the settlements with a few of the publishers the DOJ expressly allows the publishers to again switch to Agency pricing after a certain time period. Let me emphesize this again:

 THIS CASE IS NOT ABOUT THE AGENCY MODEL AS A PRICING SCHEME

The ONLY thing that the DOJ is suing over is the alleged collusion between the five publishers and Apple to raise prices, specifically the "most favored nation" clause that they all adopted. The DOJ is suing because that sort of collusion (if it actually occured) is illegal. The Agency Model as a pricing scheme is perfectly valid, however.

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Deesy says:

This suit is all about price fixing.  I’m not sure what “brief” is being referred to, but Amicus Curiae (Friend of the Court) briefs that are often filed by third parties are never unbiased, and are no more than an attempt to influence the judge. 

The original complaint, in PDF format, that was filed by the US Department of Justice in the United States District Court for the Southern District of New York can be found at:

http://www.justice.gov/atr/cases/f282100/282135.pdf

The original complaint is the only salient document at this point.  Briefs should not be considered to be governing documents in a case.

In Section VII.  VIOLATIONS ALLEGED the complaint sets out a number of specific violations.  In sub-sections 96(a) through (g), all seven specifics cite retail e-book prices.  That’s a very big majority of the specifics, and is compelling evidence that this case is about price fixing. 

The DOJ might have settled with some defendants, but not with all defendants.  Ultimately, unless there are out-of-court settlements, it will be up to a judge to determine what will happen. 

The current Agency Model, as a pricing scheme, is expressly prohibited as a violation of the Sherman Act according to the wording of the complaint.  Specifically, in Section VIII.  REQUEST FOR RELIEF, the DOJ asks the court to “Enjoin the Defendants … from continuing, maintaining or renewing in any manner … the conduct alleged herein or from engaging in any other conduct, combination, conspiracy, agreement, understanding, plan, program, or other arrangement having the same effect as the alleged violation …”  It could be interpreted that if any of the defendants named in this suit tries to re-establish an agency business model without a court-approved settlement, they could be stopped by court order.  It also appears that, even though some of the Defendants have reached settlement agreements with the DOJ, they are meaningless until approved by the Court.  I have not seen anything that tells me that the Court has acted on this matter.  Perhaps you could direct me to a source. 

The remark “that sort of collusion (if it actually occured) is illegal” is a bit naïve if one but reads the whole of the complaint, which cites in great detail the dates, times, places and names of attendees of the meetings at which the collusion took place.  Do we believe that the US Department of Justice simply made this stuff up?  If the Defendants were so innocent of collusion, why were some of them so quick to agree to settlement terms? 

Publishers are much like other manufacturers.  They are totally different from Real Estate Brokers, Insurance Brokers, or other types of agency businesses.  They are more akin to auto manufacturers.  If we wish to purchase a new automobile or truck, we usually must purchase it from some sort of dealer, who acts as an agent for the producer.  There will be a sticker price on the window, but the dealer is free to set the final price.  This includes non-traditional dealers like Sam’s Club and Costco, I believe. 

Before heaping scorn on the US Department of Justice, we should recall our high school Civics lessons.  It is not the DOJ that makes our laws, it is the Congress, with the approval of the President.  The DOJ are the cops who enforce the laws.  Any allegation that the DOJ has reached a conclusion, and then went seeking facts to support it, is spurious and insulting to the men and women of our government agencies who work tirelessly for the benefit of US citizens.  It is not appropriate for inclusion on this forum, IMO. 

[frantastk]

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deesy58 wrote:

bklvr896 said:

Are they going to declare agency pricing models illegal for all sales or just ebooks? What isnillegal about the publisher hiring BN as its agent to sell its books? I hire a real estate agent to sell my house and pay them a commission. I can take my car to commission type lot and hire them to sell it and pay them a commission. I know from personal experience that a govt agency can decide its going to go after something, draw its conclusion and then go find what it needs to support its predetermined conclusion.

The DOJ doesn't seem all that open to hearing anything that doesn't support it's desired outcome.

If the publisher decided to sell its book only on iinits own store, and refuses to provide the books to the retailers to sell, does the DOJ Then decide that is also illegal? Personally I think they are infringing on a businesses right to sell its product however it wants.

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flyingtoastr said:

Read the actual brief before posting please.

The DOJ doesn't care a whit about Agency pricing. Not one little bit. In fact, in the settlements with a few of the publishers the DOJ expressly allows the publishers to again switch to Agency pricing after a certain time period. Let me emphesize this again:

 THIS CASE IS NOT ABOUT THE AGENCY MODEL AS A PRICING SCHEME

The ONLY thing that the DOJ is suing over is the alleged collusion between the five publishers and Apple to raise prices, specifically the "most favored nation" clause that they all adopted. The DOJ is suing because that sort of collusion (if it actually occured) is illegal. The Agency Model as a pricing scheme is perfectly valid, however.

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Deesy says:

This suit is all about price fixing.  I’m not sure what “brief” is being referred to, but Amicus Curiae (Friend of the Court) briefs that are often filed by third parties are never unbiased, and are no more than an attempt to influence the judge. 

The original complaint, in PDF format, that was filed by the US Department of Justice in the United States District Court for the Southern District of New York can be found at:

http://www.justice.gov/atr/cases/f282100/282135.pdf

The original complaint is the only salient document at this point.  Briefs should not be considered to be governing documents in a case.

In Section VII.  VIOLATIONS ALLEGED the complaint sets out a number of specific violations.  In sub-sections 96(a) through (g), all seven specifics cite retail e-book prices.  That’s a very big majority of the specifics, and is compelling evidence that this case is about price fixing. 

The DOJ might have settled with some defendants, but not with all defendants.  Ultimately, unless there are out-of-court settlements, it will be up to a judge to determine what will happen. 

The current Agency Model, as a pricing scheme, is expressly prohibited as a violation of the Sherman Act according to the wording of the complaint.  Specifically, in Section VIII.  REQUEST FOR RELIEF, the DOJ asks the court to “Enjoin the Defendants … from continuing, maintaining or renewing in any manner … the conduct alleged herein or from engaging in any other conduct, combination, conspiracy, agreement, understanding, plan, program, or other arrangement having the same effect as the alleged violation …”  It could be interpreted that if any of the defendants named in this suit tries to re-establish an agency business model without a court-approved settlement, they could be stopped by court order.  It also appears that, even though some of the Defendants have reached settlement agreements with the DOJ, they are meaningless until approved by the Court.  I have not seen anything that tells me that the Court has acted on this matter.  Perhaps you could direct me to a source. 

The remark “that sort of collusion (if it actually occured) is illegal” is a bit naïve if one but reads the whole of the complaint, which cites in great detail the dates, times, places and names of attendees of the meetings at which the collusion took place.  Do we believe that the US Department of Justice simply made this stuff up?  If the Defendants were so innocent of collusion, why were some of them so quick to agree to settlement terms? 

Publishers are much like other manufacturers.  They are totally different from Real Estate Brokers, Insurance Brokers, or other types of agency businesses.  They are more akin to auto manufacturers.  If we wish to purchase a new automobile or truck, we usually must purchase it from some sort of dealer, who acts as an agent for the producer.  There will be a sticker price on the window, but the dealer is free to set the final price.  This includes non-traditional dealers like Sam’s Club and Costco, I believe. 

Before heaping scorn on the US Department of Justice, we should recall our high school Civics lessons.  It is not the DOJ that makes our laws, it is the Congress, with the approval of the President.  The DOJ are the cops who enforce the laws.  Any allegation that the DOJ has reached a conclusion, and then went seeking facts to support it, is spurious and insulting to the men and women of our government agencies who work tirelessly for the benefit of US citizens.  It is not appropriate for inclusion on this forum, IMO. 

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If, as you say, the agency model itself is illegal, then why do you think they did not file suit against Random House or Smashwords or any other publishers using the agency model pricing? The DOJ only went after the 5 publishers and Apple that are involved in the alleged collusion. And, from what I've read of the proposed settlement with the 3 publishers that have decided to settle, they may go back to using agency pricing individually after a term of 2 years (it might be 3 years, I can't rememebr the exact time frame). If agency pricing itself is illegal, they would not be allowed to do that. From everything I have read about the case, it is the collusion of all the publishers involved and Apple that is illegal. If each publisher had come to the agency model on their own, and negotiated contracts for agency model pricing independent of what the others had done it would not be illegal. Publishing and e-books are not the only industry where agency model pricing contracts happen. As far as I know, the DOJ is not going after every company using agency pricing.