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Is the Department of Justice’s Suit Against Publishers Good for Authors?

Last week, the Department of Justice sued five publishers and Apple and charged them with collusion in the implementation of the agency model for e-book pricing. The charge is civil, not criminal.  Three of the five publishers, Hachette, HarperCollins and Simon & Schuster are settling their suits, but Macmillan U.S. and Penguin Worldwide are not.  Here is what Publishers Weekly reported followed by statements from John Sargent CEO of  Macmillan and John Makinson, Chairman and CEO of the Penguin Group.

So, what does this mean to authors?

Ultimately it means that Amazon, which has had a very strong market share in discounting e-books recently with Barnes & Noble starting to catch up under the agency model, will now virtually have a monopoly on selling e-books.  The company, which as we know, sells many products other than books, can afford to lose money on their sales of e-books because they have so much other merchandise to make a profit from.

Barnes & Noble and other accounts, however, cannot afford to lose money and they will do if they are forced to compete with Amazon’s steep discounting.  In fact late last week, B&N stock took a substantial dive for this very reason.

And, if as a result of this, Barnes & Noble is forced out of business, it will be a disaster for publishers and authors alike.  There will be nowhere to display physical books any longer.

I am not a lawyer and so I can’t discuss the legalities of any of this.  What I can suggest is that if authors agree that giving Amazon a true monopoly in the e-book publishing business will be hugely destructive to the business as a whole, then they should blog, write op-ed columns, and get as much publicity possible in order to attempt to turn this situation around.  It is myopic, in my humble opinion, to believe that allowing Amazon to become a monopoly in the e-book business will ultimate benefit consumers (see David Carr’s piece in today’s New York Times).

What do you all have to say about these developments?

10 Responses to Is the Department of Justice’s Suit Against Publishers Good for Authors?

  1. Kaitlyne says:

    What I don’t understand–and I admit I’m not well-versed in the legal sides of these things–is why Amazon itself isn’t coming under fire for its practices. Granted, I also don’t understand why Walmart can get away with much of what it does. It seems like these big companies should have either been broken up long ago or penalized for their actions.

    If Amazon did become the only major ebook seller, wouldn’t the government be required to step in and prevent that? I feel like there is a complete lack of understanding right now concerning the reasons why the payment model was instituted in the first place.

    If I’m being honest, as an author Amazon sort of terrifies me. No company should have that much power. I’ve actually stopped buying books from them because I don’t feel comfortable supporting the company.

  2. Kiana says:

    To be honest, I wouldn’t be surprised if the DOJ wasn’t receiving some sort of kick back from Amazon for bringing this lawsuit against the publishers. It just doesn’t make sense for the DOJ to do this. The only one who is going to benefit from this is Amazon. As a reader, I am not going to benefit at all if Barnes and Noble closes its doors.

  3. Catherine Whitney says:

    Conspiracy theories aside, this is high drama. The Justice Department is trying to manage a new technological reality with old models. I admire Penguin and Macmillan for standing up on behalf of us all. Just because Amazon has the wherewithal to control the market, doesn’t mean they should.

  4. The thing that puzzles me is the topic of my own blog this morning: aside from the fact that it looks like the DoJ is going after publishers and Apple for colluding to break Amazon’s monopoly on e-books, there’s much too little consideration coming out of the community of authors, publishers, agents, editors, readers, and pundits about what it would mean if Amazon _did_ sew up the market on e-books; if print-books faded away as some suggest they will; and then if Amazon … died!?! Companies do that, as everyone knows. Would all those Amazon-only-e-books be lost to Amazon’s creditors and a black hole of legal limbo? The threat to culture may be as great — greater in the long run — that the threat to commerce.

    FWIW, my post is here: http://stevemasover.blogspot.com/2012/04/its-culture-stupid-blindered-blather-on.html

  5. Aonghus Fallon says:

    What’s the difference between a (hypothetical) monopoly by a behemoth like Amazon and a failed attempt at a monopoly by a cartel? Apart from the fact that Amazon’s practices actually benefit the customer?

    I’m ignoring how the rise of ebooks will eventually render any sort of publishing monopoly largely redundant. Anybody (e.g. J.K. Rowling) can sell from their own website if they so desire.

  6. I don’t think that B&N will go out of business soon, but I do think that ebooks are the wave of the future. The problem is that anyone can epublish whatever they’d like to, edited or not. The overall quality of books will go down if B&N were to stop selling and this isn’t good for anyone.

    But self-publishing on Amazon can be a very good thing for already established authors as they can get a higher commission rate per sale. It’s just going to be harder to sift the few good books out of the mess that has already been created by Amazon’s model.

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