Tag Archive | Hachette Book Group USA

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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