Apple, Amazon, and the DOJ Lawsuit

I admit it. I purchase most of my books from Amazon these days. However, I’m starting to rethink that. Amazon has become a monster and it looks like things are about to get worse. For those unaware, the DOJ (Department of Justice) recently filed a lawsuit against Apple and a number of the big publishing houses (Simon & Schuster, HarperCollins, Hachette Book Group, Penguin, and Macmillan). The DOJ suit accused the defendants of colluding and fixing prices. Basically, at issue is the Agency Model that Apple devised for legal agreements between itself and the other book publishers. According to this model, the publishers in question were allowed to set their own prices for ebooks as long as the price stayed consistent with other retail outlets. So, if HarperCollins wanted to sell an ebook through Apple for $12.99, that’s fine, as long as it sets the price at $12.99 when it sells through Amazon. Prior to that, Amazon had been negotiating contracts with the publishers that allowed it, as a retailer to set the price of the ebook it sells. So, it would often sell books for $9.99, or other lower prices, even willingly eating into its own profits to capture market share. It was an effective strategy that promoted faster growth for an already enormous company.

 

Apple’s Agency Model, however, stymied Amazon’s interest here. It prevented Amazon from undercutting other retailers and kept profits for the publishers at a reasonable level. Then, the DOJ stepped in and filed a lawsuit against Apple and those mentioned publishers. Three of the publishers settled (Simon & Schuster, HarperCollins, and Hachette Book Group) while Apple, Penguin, and Macmillan intend to fight it out in court. The lawsuit concerns me for a number of reasons (I’m rooting for Apple, in case you were wondering).

 

One, the whole monopoly issue is of concern. Amazon is a monster in the retail industry. It’s kind of a habit; whenever, I want to purchase a new book on-line, I go to Amazon. It’s been that way for about ten or fifteen years or so. How many other people are like that? And now, all the regular bookstores are gone in my town. All we have is a used bookstore and our own computers. So, if we want to purchase a new book, on-line is the way to go, and Amazon is the biggest name out there.

 

Two, I’m also an indie writer of fantasy fiction. As a rule, indie authors have to start small and grow big (actually, all authors… actually everyone has to take that route). Anyway, since I’m not carried by a big publishing house, the biggest advantage I have over a Brandon Sanderson or a Tad Williams is my ability to set the price on my ebook low (currently it is selling for $2.99 at Smashwords). So, my question is: how long will it be before Amazon’s cost cutting practices take that advantage away? How long will it be before I’m in direct competition with Brandon Sanderson’s latest smash-hit ebook selling at a mere $1.99? I know, those are the perils of capitalism, but it is certainly a cause for concern.

 

For those interested here are a number of other articles on the DOJ lawsuit I scrounged up off the Internet: padgadget article, the news tribune article, and a business week article.

 

Anyway, whatever the outcome of the DOJ lawsuit, one thing is clear, the book publishing industry is changing even as we speak.

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About atoasttodragons

The author, Matthew D. Ryan, lives in northern New York on the shores of Lake Champlain, one of the largest lakes in the continental United States, famous for the Battle of Plattsburgh and the ever-elusive Lake Champlain Monster, a beastie more commonly referred to as Champy. Matthew has studied philosophy, mathematics, and computer science in the academic world. He has earned a black belt in martial arts.

6 responses to “Apple, Amazon, and the DOJ Lawsuit”

  1. Ginny says :

    I didn’t know about the law-suit. Thanks for the heads up. I always thought that Amazon was a monopoly of sorts.

  2. Steve says :

    It’s an interesting issue, and these are interesting times. We’re forced into battle with ourselves. The consumer wants these artificially low prices, the small business owner/entrepreneur needs the higher, sustaining prices. What’s a person to do?

    • atoasttodragons says :

      Yeah, having been on Smashwords the notion of paying $12.99 for an ebook on Apple, even it is a big name, seems almost absurd to me. But if the prices keep dropping, I don’t know how the writers can eke out a living. Interesting quandary we are in.

  3. KB says :

    I personally don’t see why Apple or Amazon should sell a digital book for nearly the same cost as the print version. I was kind of pissed when I heard that Apple might have fixed prices. I love Apple and Amazon. I have pretty much given up on the dream of making a living as a writer. I have my reasons, most I hope for is to actually finish my characters’ story and get as many people to read it and fall in love with my characters too, in whatever format I can, even if it’s self-publishing or whatever.

    • atoasttodragons says :

      I have mixed feelings. On the one hand, something like $12.99 for an ebook is ridiculous, but on the other hand, if Amazon decides to run a special selling a big name like Brandon Sanderson for $0.99, none of the indie competition will have a chance.

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