Retail price controls suspended for 2 years for 3 publishing houses

[AlanNJ Inspired Bibliophile]

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deesy58 wrote:

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AlanNJ wrote:

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sub_rosa wrote:

Collusion and price-fixing have been illegal for a long time.  It's why three of the five publishers that got sued decided to settle the case - because what they did was illegal.  It artifically inflated the price of ebooks to the detriment of consumers.  Antitrust Law 101.

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How do you know that?  I'll take the argument that the original e-book pricing of $9.99 was artificially deflated.  What is the "real" price of an e-book?  To my way of thinking it's what people are willing to pay.

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A little investigation into the difference between "cost" and "price" will reveal that "price" is always whatever someone is willing to pay for something.  In a Capitalist economy, there is no necessary relationship between cost and price, unless, that is, a firm continuously sells at prices below costs.  Then, they go out of business. 

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They go out of business UNLESS you're Amazon and you have MANY other products to make up the loss on e-books (something B&N can't do).

[sub_rosa]

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Omnigeek wrote:

News flash for you sub_rosa.  Lots of people and companies settle without being guilty.

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Indeed, lots of companies settle nuisance claims because it's cheaper than litigating them.  News flash for you:  I am a lawyer, and I have settled many claims on behalf of clients.  And it's usually because they have some culpability and they are minimizing the damage.  This DOJ suit is no nuisance claim - Simon & Schuster (part of CBS), Hachette (Lagardere), and Penguin (Pearson) are all part of multi-billion-dollar, multi-national businesses that have more than enough cash reserves to fight the DOJ on this.  This settlement fundamentally alters the way they do business in the e-book market - it's no nuisance lawsuit.  So, yes, they admit no wrongdoing and settle, claiming its merely a financial decision.  If you buy that, I have a couple of bridges I'd like to show you.  Go read the lawsuit, and see what evidence the DOJ has.  If you still believe they are not guilty of violating U.S. antitrust laws then you are more naive than I first thought.

Publishers and authors need to realize that the game has changed.  They will have to learn to live with less.  Amazon, B&N, and other retailers need to make a profit at $9.99 to be able to survive.  So the publishers and authors will have to adjust their practices to live with it, or they could always go and do something else.  But violating the law isn't the answer - can we at least agree on that?

[keriflur]

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sub_rosa wrote:

Publishers and authors need to realize that the game has changed.  They will have to learn to live with less.  Amazon, B&N, and other retailers need to make a profit at $9.99 to be able to survive.  So the publishers and authors will have to adjust their practices to live with it, or they could always go and do something else.  But violating the law isn't the answer - can we at least agree on that?

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The interesting thing about lowered prices in the publishing world is that it doesn't defacto mean that authors will make less $$.  The trends we've seen in the last 10 years or so is that decreasing pub revenue has led to fewer offers to debut authors.  Fewer debut offers have led to increased self-pubbing and people like Amanda Hocking making a killing in the digital-only world.

Lowered prices in publishing could mean a fundamental shift in the way the publishing world works.  It's obvious this will be a bad thing for the big six, be we have yet to see if it's going to be a bad thing for everyone else.  There will be growing pains, yes, but that's okay, IMO.

As a writer, the lower prices don't freak me out.  I'm more than happy to live in interesting times.  What does freak me out is that fewer and fewer people are reading anymore, but that's a topic for another thread on another day.

[Nallia Distinguished Bibliophile]

Seeing as how ebook sales have increased drastically over the last two years, I don't think the publishers or authors need to realize any such thing. The market has already shown that the market will bear the higher prices, the complaints of some here notwithstanding.

[sub_rosa]

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Nallia wrote:
Seeing as how ebook sales have increased drastically over the last two years, I don't think the publishers or authors need to realize any such thing. The market has already shown that the market will bear the higher prices, the complaints of some here notwithstanding.

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I don't necessarily disagree.  However, we don't know how sales would've been in a market free of antitrust violations by these publishers.  Perhaps it would have grown even faster and larger than it did if these publishers had played by the rules.  We'll never know.

Personally, I have most definitely shied away from books priced above $9.99.  I suspect lots of others have as well.  

[deesy58]

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AlanNJ wrote:

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deesy58 wrote:

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AlanNJ wrote:

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sub_rosa wrote:

Collusion and price-fixing have been illegal for a long time.  It's why three of the five publishers that got sued decided to settle the case - because what they did was illegal.  It artifically inflated the price of ebooks to the detriment of consumers.  Antitrust Law 101.

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How do you know that?  I'll take the argument that the original e-book pricing of $9.99 was artificially deflated.  What is the "real" price of an e-book?  To my way of thinking it's what people are willing to pay.

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A little investigation into the difference between "cost" and "price" will reveal that "price" is always whatever someone is willing to pay for something.  In a Capitalist economy, there is no necessary relationship between cost and price, unless, that is, a firm continuously sells at prices below costs.  Then, they go out of business. 

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They go out of business UNLESS you're Amazon and you have MANY other products to make up the loss on e-books (something B&N can't do).

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Can't??  Why not?  If Amazon can do it, so can B&N.  e-Bay did it.  Yahoo! did it.  Other e-Commerce players have done it.  B&N could also do it if they wanted to. 

In fact, one could speculate that if B&N can't adapt to current market realities, they will travel the same path as Border's Books, and will have only themselves to blame. 

[deesy58]

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sub_rosa wrote:

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Omnigeek wrote:

News flash for you sub_rosa.  Lots of people and companies settle without being guilty.

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Indeed, lots of companies settle nuisance claims because it's cheaper than litigating them.  News flash for you:  I am a lawyer, and I have settled many claims on behalf of clients.  And it's usually because they have some culpability and they are minimizing the damage.  This DOJ suit is no nuisance claim - Simon & Schuster (part of CBS), Hachette (Lagardere), and Penguin (Pearson) are all part of multi-billion-dollar, multi-national businesses that have more than enough cash reserves to fight the DOJ on this.  This settlement fundamentally alters the way they do business in the e-book market - it's no nuisance lawsuit.  So, yes, they admit no wrongdoing and settle, claiming its merely a financial decision.  If you buy that, I have a couple of bridges I'd like to show you.  Go read the lawsuit, and see what evidence the DOJ has.  If you still believe they are not guilty of violating U.S. antitrust laws then you are more naive than I first thought.

Publishers and authors need to realize that the game has changed.  They will have to learn to live with less.  Amazon, B&N, and other retailers need to make a profit at $9.99 to be able to survive.  So the publishers and authors will have to adjust their practices to live with it, or they could always go and do something else.  But violating the law isn't the answer - can we at least agree on that?

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Very well put, IMO!! 

[Nallia Distinguished Bibliophile]

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sub_rosa wrote:

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Nallia wrote:
Seeing as how ebook sales have increased drastically over the last two years, I don't think the publishers or authors need to realize any such thing. The market has already shown that the market will bear the higher prices, the complaints of some here notwithstanding.

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I don't necessarily disagree.  However, we don't know how sales would've been in a market free of antitrust violations by these publishers.  Perhaps it would have grown even faster and larger than it did if these publishers had played by the rules.  We'll never know.

Personally, I have most definitely shied away from books priced above $9.99.  I suspect lots of others have as well.  

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This is true. We don't know. Maybe I'm just cynical, but I just don't trust that this settlement will make that much difference to ebook prices, long term.

[LarryOnLI]

I wonder what's going to happen when the agency model goes away and eBook prices climb instead of drop.

There is no guarantee that non agency pricing will result in a price drop.

Having eBook prices rise as a result of government intervention in a free market has much more historical support.

[keriflur]

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LarryOnLI wrote:

I wonder what's going to happen when the agency model goes away and eBook prices climb instead of drop.

There is no guarantee that non agency pricing will result in a price drop.

Having eBook prices rise as a result of government intervention in a free market has much more historical support.

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Amazon said just this week that they plan to reduce prices on the soon-to-be-non-agency books as soon as they can.  I linked the article in another thread and now I can't recall where...

[deesy58]

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LarryOnLI wrote:

I wonder what's going to happen when the agency model goes away and eBook prices climb instead of drop.

There is no guarantee that non agency pricing will result in a price drop.

Having eBook prices rise as a result of government intervention in a free market has much more historical support.

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Hmm.  This sounds fascinating.  Can you cite some examples? 

Thanks!

[LarryOnLI]

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deesy58 wrote:

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LarryOnLI wrote:

I wonder what's going to happen when the agency model goes away and eBook prices climb instead of drop.

There is no guarantee that non agency pricing will result in a price drop.

Having eBook prices rise as a result of government intervention in a free market has much more historical support.

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Hmm.  This sounds fascinating.  Can you cite some examples? 

Thanks!

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http://blog.heritage.org/2010/10/21/government-intervention-in-health-care-increases-costs/

http://www.thecomingdepression.net/countries/north-america/government-intervention-drives-up-tuition...

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&ved=0CEwQFjAF&url=http%3A%2F%2Fwww.st...

[deesy58]

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LarryOnLI wrote:

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deesy58 wrote:

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LarryOnLI wrote:

I wonder what's going to happen when the agency model goes away and eBook prices climb instead of drop.

There is no guarantee that non agency pricing will result in a price drop.

Having eBook prices rise as a result of government intervention in a free market has much more historical support.

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Hmm.  This sounds fascinating.  Can you cite some examples? 

Thanks!

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http://blog.heritage.org/2010/10/21/government-intervention-in-health-care-increases-costs/

http://www.thecomingdepression.net/countries/north-america/government-intervention-drives-up-tuition...

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&ved=0CEwQFjAF&url=http%3A%2F%2Fwww.st...

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The first source is, apparently, from the Heritage Foundation, a conservative think tank that promotes an anti-government position.  It is an opinion piece written by Kathryn Nix that is, essentially, an attack on the "Patient Protection and Affordable Care Act" that is derisively referred to by right wing ideologues as "Obamacare."  Tell us how this, in any way, relates to e-book prices increasing as a result of government intervention in a free market.  In addition, that law has not fully gone into effect, yet, so how might we truly know how and how much health care prices will be affected?

The second source is a screed about how federal financial aid has caused the price of education to increase.  It was produced by the Pew Research Center that is funded by the Pew Charitable Trusts.  According to information to be found at Wikipedia:

"The mission of the J. Howard Pew Freedom Trust was to "acquaint the American people with the evils of bureaucracy and the values of a free market and to inform our people of the struggle, persecution, hardship, sacrifice and death by which freedom of the individual was won." Joseph N. Pew, Jr. called Franklin Roosevelt's New Deal "a gigantic scheme to raze U.S. businesses to a dead level and debase the citizenry into a mass of ballot-casting serfs."

Doesn't sound very unbiased to me.  In fact, it reeks of right-wing ideology.  

In any event, what does the cost of education have to do with the price of e-books?  

The third source is a very complex scientific treatise on the economics of home purchasing, and the effects of government intervention thereon.  It has nothing at all to do with e-books, and appears to be the result of a quick, slap-dash Google search.  I challenge the poster to explain this scientific paper that was published by two economists at Stanford University.  Explain it clearly, so that everybody on the forum will understand it -- if you can.  (BTW everybody, if you want to see something truly mind-numbing, check out this link.)

None of the sources cited seems to support the assertion that " Having eBook prices rise as a result of government intervention in a free market has much more historical support."

Perhaps you could find some better examples?  

[LarryOnLI]

None of my links have anything to do with the price of eBooks.

I never claimed they did.

What I did claim was that government intervention in a free market had unintended consequences, you asked for examples, and I gave you three links from a quick Google search.

One link argues that government actions to make college more affordable have actually driven up the cost of education.

Another link that argues attempts to make home ownership more achievable has actually inflated the cost of housing (and currently led to the current burst of the housing bubble?).

Whether you agree with the conclusions is another mater.

[deesy58]

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LarryOnLI wrote:

None of my links have anything to do with the price of eBooks.

I never claimed they did.

What I did claim was that government intervention in a free market had unintended consequences, you asked for examples, and I gave you three links from a quick Google search.

One link argues that government actions to make college more affordable have actually driven up the cost of education.

Another link that argues attempts to make home ownership more achievable has actually inflated the cost of housing (and currently led to the current burst of the housing bubble?).

Whether you agree with the conclusions is another mater.

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Ahh.  Okay.  That is a little more clear.  You are asserting that the "Law of Unintended Consequenses" holds when the government intervenes in a free market.  Do you also assert, however, that the consequences are always negative?  If they are, negative for whom?  For consumers?  Like the antitrust laws?  It doesn't seem that this is actually the case. 

[Omnigeek]

deesy58 can you cite any case where heavy-handed government intervention has actually improved things for consumers? Rent controls in NYC have resulted in widespread fraud and disincentivized creation of new housing. Air travel costs plummeted to point many airlines actually went under after deregulation but the consumers received a plethora of choices and cost reductions. It's hard to separate the effect of Nixon's wage and price controls from the energy crisis but you'd be hard pressed to say they helped anything. Amazon was artificially depressing ebook prices by selling some high profile books below cost. Why they did so is perhaps debatable (at least with lawyers) but that they did so isn't. J.K. Rowling has already done more than the government ever did or ever will to lower overall prices to the consumer by demonstrating a working model for ebook vending that both benefits her and her readers. Of course, very few authors will have the financial wherewithal or built-in buying market to duplicate her effort but it's an example that works nonetheless. More important to me, the Supreme Court has already ruled that a vendor can set minimum pricing to maintain perceived value of his/her product so the DoJ case is both heavy-handed AND specious -- as well as dubious in Constitutional authority.

[deesy58]

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Omnigeek wrote:
deesy58 can you cite any case where heavy-handed government intervention has actually improved things for consumers?

Let's take your assertions one at a time:

"Rent controls in NYC have resulted in widespread fraud and disincentivized creation of new housing."

Rent controls in NYC were instituted during WWII (1943) when the country needed to protect workers from unscrupulous landlords.  Today, "the current system is very complicated, which is especially troublesome as most of the protected renters are elderly ..."  Do you believe that it is perfectly okay for landlords to take advantage of the elderly?  Should these people become homeless?  Do you have no sense of social responsibility?  The quote was taken from: http://en.wikipedia.org/wiki/Rent_control

Air travel costs plummeted to point many airlines actually went under after deregulation but the consumers received a plethora of choices and cost reductions.

Umm ... airline tickets became less expensive, but at what cost?  Some smaller cities and smaller rural areas no longer receive air service.  Consumers have fewer choices, not more.  So called "commuter airlines" that serve smaller cities are demonstrably less safe.  Is that really what is best for America?  "Survival of the fittest" at any price?  My God!  How cold is that!?

It's hard to separate the effect of Nixon's wage and price controls from the energy crisis but you'd be hard pressed to say they helped anything.

I don't believe that you can find anybody (including me) who believes that Nixon's wage-price freeze did anything but make the situation worse.  I will concede that this is a valid and convincing example of government intervention causing more harm than good.  It is telling that it was an avowed conservative who led our country down this disastrous path. 

Amazon was artificially depressing ebook prices by selling some high profile books below cost. Why they did so is perhaps debatable (at least with lawyers) but that they did so isn't. J.K. Rowling has already done more than the government ever did or ever will to lower overall prices to the consumer by demonstrating a working model for ebook vending that both benefits her and her readers. Of course, very few authors will have the financial wherewithal or built-in buying market to duplicate her effort but it's an example that works nonetheless. More important to me, the Supreme Court has already ruled that a vendor can set minimum pricing to maintain perceived value of his/her product so the DoJ case is both heavy-handed AND specious -- as well as dubious in Constitutional authority.

J.K. Rowling is a single author with a successful series of books and movie rights.  It is not clear that she, alone, can affect the e-book market as much as a government as big, and as wealthy, as the United States. 

The Supreme Court has changed in the past, and it will change again.  Do you believe that the Department of Justice is bringing an antitrust suit that it knows it will lose on appeal?  If that is so obvious, why did some of the publishers agree with the DOJ and withdraw from the "Agency Model" contract? 

The US antitrust laws have been repeatedly upheld by the courts since the late 1800's.  That means that they were held to be constitutional.  Do you believe that the US Constitution has somehow changed so that predatory pricing and other anti-competitive behavior is suddenly in accordance with it? 

Here is the relevant information from the New York Times:

WASHINGTON — The U.S. Supreme Court, overturning a 96-year-old antitrust precedent, said manufacturers and distributors in some circumstances could agree with retailers on minimum prices for products.

The justices, voting 5 to 4, said Thursday that the longstanding blanket ban on those accords was too rigid and that a case-by-case approach would promote competition and lead to greater consumer choice. Consumer advocates had argued that an end to the automatic ban would mean higher prices in stores.

Note that the vote was 5 to 4 ... a long ways from unanimity.  Note also that the antitrust laws are suspended only "in some circumstances," so this is not a blanket repeal of any laws.  It appears, then, that in the future, antitrust actions will be decided on a case-by-case basis, and it is not really possible to predict the outcome of the current DOJ action against Apple with any degree of certainty. 

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[keriflur]

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deesy58 wrote:

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Omnigeek wrote:

"Rent controls in NYC have resulted in widespread fraud and disincentivized creation of new housing."

Rent controls in NYC were instituted during WWII (1943) when the country needed to protect workers from unscrupulous landlords.  Today, "the current system is very complicated, which is especially troublesome as most of the protected renters are elderly ..."  Do you believe that it is perfectly okay for landlords to take advantage of the elderly?  Should these people become homeless?  Do you have no sense of social responsibility?  The quote was taken from: http://en.wikipedia.org/wiki/Rent_control

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Apparently NYC agrees with Omnigeek, as they've been phasing out rent control for the last decade.

As a former NYC resident, I agree with the city's choice here.  The system was being heavily abused.  Getting a rent-controlled apartment had very little to do with age or income bracket and a lot more to do with who you knew or were related to, or how ethically compromised you chose to be.

[LarryOnLI]

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deesy58 wrote:

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LarryOnLI wrote:

None of my links have anything to do with the price of eBooks.

I never claimed they did.

What I did claim was that government intervention in a free market had unintended consequences, you asked for examples, and I gave you three links from a quick Google search.

One link argues that government actions to make college more affordable have actually driven up the cost of education.

Another link that argues attempts to make home ownership more achievable has actually inflated the cost of housing (and currently led to the current burst of the housing bubble?).

Whether you agree with the conclusions is another mater.

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Ahh.  Okay.  That is a little more clear.  You are asserting that the "Law of Unintended Consequenses" holds when the government intervenes in a free market.  Do you also assert, however, that the consequences are always negative?  If they are, negative for whom?  For consumers?  Like the antitrust laws?  It doesn't seem that this is actually the case. 

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No the consequences are not always negative, and there is no saying for whom they will be negative.

However a number of other people in this thread have pointed out that B&N and other eBook retailers might not be able to compete with the deep discounting of Amazon and this decision could end up reducing competition in the eBook business.

I don't think this decision is the unmitigated victory that some other seem to believe.

[LarryOnLI]

Perhaps I am misunderstanding some of the posts here, but why are people holding up J. K. Rowlings Pottermore website as the cure for agency model pricing?

In my opinion Pottermore is "pure" agency model. The sale is completed and fulfilled by pottermore and B&N or Amazon, et. al. takes a commission on the sale. THere is no price competition for Harry Potter eBooks, no retailer is allowed to discount the books.

If every publishing house adopted this model how would tings be different for the consumer? There would still be no price competition.