In a class action lawsuit brought last year in the Southern District of New York, Amazon and the world’s largest publishers — Hachette, HarperCollins, Macmillan, Penguin Random House and Simon & Schuster — agreed to fix the price of e-books. It artificially keeps prices up, so consumers pay more. Last week, US Magistrate Judge Valerie Figueiredo recommended a motion to dismiss the case brought by Amazon and that the Big Five should be granted, Publishers Weekly Reported.
He said: “Each publisher can rationally conclude that it is in its own self-interest to reach an agency agreement with Amazon, a critical bookselling partner, to preserve its ability to distribute e-books through the largest retailer in the United States. Even if the MFN clause requires it to agree to Amazon’s request.” And, publishers with a single dominant retailer. Competing in a concentrated market, each publisher can reasonably expect that other publishers have come to the same conclusion about the need to secure an agreement with Amazon.”
From the beginning of the case, lawyers for Amazon and the publisher insisted that the alleged conspiracy was “illogical” and “inconceivable” and that there was no evidence to suggest any kind of collusion. “I submit to your honor that it is completely unreasonable for the publishers to conspire to make Amazon a monopoly in the retail market,” Amazon lawyer John Schmidtlin told the court at the hearing, arguing on behalf of the publishers along with Scott Lent. , there was no evidence showing that there was a “meeting of the minds” between the publishers to strike a deal with Amazon — and no “coherent theory” behind the case.
I have a feeling this case will be dismissed because there was no trickery this time, but because it happened in the past. When Apple wanted to sell books, the landscape was different and it was the Wild West. Retailers had a recommended MSRP, but they didn’t have to follow it. Amazon took a loss on every ebook sold to attract more customers and buy Kindle e-readers. Barnes & Noble, Kobo, and Google all price match each other. This was a huge win for consumers, as a new ebook cost less than a new hardcover, and the paperback was often priced at $9.99 or less. While Apple contracts with all major publishers to set the price of e-books and create agency pricing, the publisher determines the price of the ebook and retailers must abide by it. This prompted a lawsuit by the US Department of Justice and all the publishers paid hundreds of millions of dollars to settle out of court. Apple continued to fight, but they eventually lost.
If Steve Jobs and Apple hadn’t tried to fit in the publishing industry, ebooks would still be cheap. The prices of e-books have now doubled or sometimes tripled. It honestly makes sense to buy the hardcover since the ebook prices are about the same and you actually have the print version. Digital books are licensed to users only, so there is no clear line of ownership.
Michael Kozlowski has been writing about audiobooks and e-readers for the past dozen years. His articles have been picked up by major and local news sources and websites such as CBC, CNET, Engadget, Huffington Post and the New York Times. He lives in Vancouver, British Columbia, Canada.