First Round Of Ebook Price Fixing Settlements Are Announced

from the when-crime-does-eventual-pay dept

When the Department of Justice decided to sue Apple and five of the major book publishers for price fixing ebooks, we were glad to see some justice coming to purchasers of overpriced ebooks. Shortly after filing the suit, three of those publishers, HarperCollins, Hachette and Simon & Schuster, decided to settle rather than fight. Now, the first round of settlements have been reached between these three companies and 49 states (sorry Minnesota) and 5 US territories. The settlement totals to around $69 million to be split among the states and territories.

In a press release on this settlement, Connecticut AG George Jepson states that while it is fine for companies to seek profit, they shouldn't harm the public in the process.

While publishers are entitled to their profits, consumers are equally entitled to a fair and open marketplace. This settlement will provide restitution to those customers who were harmed by this price-fixing scheme, but it also will restore competition in the eBook market for consumers’ long-term benefit.

By restoring competition in the market, these publishers agree to allow retailers pricing control of ebooks in the future. This could bring us back to $10 and below new releases that we have sorely missed.

While this settlement is getting underway, the settlement between these companies and the DOJ is still being reviewed. That may take a while as District Court Judge Denise Cote has 868 public comment letters to sift through. Hopefully, she can ignore the ignorant pleas of those opposed to the current settlement proposal and agree to a positive result. All that would be left is that actual lawsuit against Apple, Macmillan and Penguin which are all holding their ground that they did nothing wrong. 

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Companies: hachette, harpercollins, simon & schuster

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Comments on “First Round Of Ebook Price Fixing Settlements Are Announced”

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Re: Re: $10 Text Files?

Fair enough, but you realize the market has spoken pretty vocally that $10 is an acceptable price for a new book by a big-name author.

Also, I’m not sure why you think $10 is unacceptable for a text file with a thumbnail, but it’s acceptable for a paper book. There’s not really much more inherently valuable with a paper book. It costs less than $2 to print a hardcover book (printed in bulk, of course). So it’s equally valid to say “I refuse to pay $10 for ink on wood pulp.”


Re: Re: Re: Re: $10 Text Files?

“Fair enough, but you realize the market has spoken pretty vocally that $10 is an acceptable price for a new book by a big-name author. “

I agree with Iron up there. Maybe the market has “spoken”, but that still isn’t going to make me buy it. I can’t justify such a high price for so little in return. I’m never going to pay that price, just as I never buy the hardback or paperback at the manufacturer’s recommended price.

But, guess what? Real competition with physical books mean that I’m rarely asked to do so. Many hardbacks retail at less than half the cover price, supermarkets regularly sell paperbacks as loss leaders and Amazon can sell older/used copies at a penny if they wish. I can’t remember the last time I paid the retail cover price on a book, but it’s a rare occurrence.

The other problem with your claim is that if price fixing is going on, the market hasn’t actually “spoken”. If there’s no competition allowed, the market doesn’t “say” anything – people either buy the new Grisham or they don’t. Amazon regularly sell Kindle books at prices higher than the physical product – which they’re clearly not worth as the physical item has values that the Kindle version doesn’t (ability to lend & resell, etc.). even arguing the convenience factor, it’s clear that this shouldn’t happen. If that’s the market in action then so be it, but if price fixing is occurring there’s no reason why the prices should be anywhere near that high.

It’s their own decision, of course. But don’t let me hear people whining about piracy when they lose money because people recognise overpriced crap for being just that, and opt to buy something else instead.


Re: Re:

Sure you can – just depends on how wobbly it is. If it is not too bad, your iPhone 4 should level it fine. More wobble may require an older model that is thicker. Either way, just make sure the device is face up so that you can see the pretty thumbnail as you place the table leg on the screen.

Best thing I can think of to do with iCrap…


Failure To Punish

Price fixing and retail price maintenance has a very long and dishonourable history. It has been around for hundreds if not thousands of years, possibly right from the start of the invention of money. The legislature and the judiciary have no excuse for not knowing this.

The penalty imposed for price fixing has to be large enough to wipe out any financial benefit to the perps of engaging in the behaviour. Otherwise, the punishment is simply written off as a cost of doing business and then it all happens again, come the next opportunity.

$69 million sounds to be an awfully low figure. This was being done to tens of millions of customers. Maybe hundreds of millions of customers. Each customer lost at least $5 each time. Great mathematical ability is not required to work out that the settlement should have been of the order $1 billion, or more.

This is hardly a victory for consumers. The bad guys got away with it, cheap.


Doesn't seem fair

It says a lot that Samsung competes with Apple, breaches a few patents whilst trying to give the customers what they want and is “fined” $1 billion. 3 publishers admit to colluding to inflate prices and rip off their customers on millions of ebook sales and the are “fined” $69 million. At least Apple could fight Samsung by inventing a better product. Consumers on the other hand have nowhere else to buy ebooks for a majority of the most popular titles. Consumers can’t fight back yet the penalty is a fraction of the Samsung fine. I know they are different laws but I would guess the publishers still made a profit on those ebooks even after the fine. Maybe the penalty should be the same as the breach of copyright fine. $150,000 (??) per infringement x how many ebooks sold under the arrangement.

Josef Anvilsays:

Re: Re: Doesn't seem fair????

Doesn’t SEEM fair???? You have got to be kidding me. The Apple v Samsung case was a civil issue. The US v Publishers issue was a CRIMINAL issue.

It doesn’t seem fair it absolutely IS NOT fair. Conspiring to artificially inflate prices does far more harm to consumers than violating a few “patents” does to Apple.

Fair would be if the DOJ were to use the jury award from the Samsung case as a measure to determine the penalty for Apple in this case.

The eejitsays:

Re: Re: Re: Re: Doesn't seem fair????

No, FAIR would be dissolving Apple’s assets, removing the entire board and prohibiting them from holding stock for 5 years in any company. The shareholders get the current value in refund and can then re=invest.

See, here’s the thing: small fraud gets you a jail sentence; large fraud gets you a bonus, and extra capacity to shaft everyone over.

The Next Round

Jean Zimmerman, in her excellent book on the 1991 Tailhook sexual assault scandal, Tailspin: Women at War in the Wake of Tailhook (1995), observed (p. 67) that “Any investigation mounted by the United States government will have certain common characteristics, but alacrity and perspicacity are not chief among them. An Internal Revenue Service audit, say, or a General Accounting Office investigation is lethal not because it floats like a butterfly and stings like a bee. It kills by grinding its subjects down, like a steamroller stuck in low gear.”

Very well, the grinding has commenced. The Feds will be back, over and over again, asking the same questions, or variations of them. The publishers will get used to being ordered to issue and automatically distribute rebates at intervals. The next price-fixing investigation will probably have to do with college textbooks, especially e-textbooks automatically vended as part of the college registration process. That is where the publishers can really get burned.

Colleges will begin to set up rules about using textbooks where the professor has a financial interest. Rule one will of course be that if the professor makes the book freely downloadable over the internet, by anyone, anywhere in the world, he’s good to go. If not, then he has to fill out a form resembling his income tax return, to determine how much he has to refund to the students. He’ll have to report what textbook salesmen visited him, and when, and if they gave him any gifts. Under the circumstances, the vast majority of professors will try to make their books freely downloadable. To that end, they will devote their energy to working out copyright clearances.


Re: Re: The Next Round

The Feds will be back, over and over again, asking the same questions, or variations of them. The publishers will get used to being ordered to issue and automatically distribute rebates at intervals.

Except that they haven’t. Early this century, the music publishers were found guilty of price fixing CDs. They settled, and as of yet, no new price fixing charges have been brought. Yet the companies still seem to manage to sell all CDs for $15. Itunes sells music for $.99 a track, regardless to how well known an artist is, and buying music for Rock Band/Guitar Hero is still in the $1.99-2.99 per song.

I agree that they need to look into e-textbooks, but I suspect it will be a while before that happens.


Re: Re:

Ah monopolies.

These aren’t natural monopolies, they are man made. Natural monopolies are fine (sure, the customer gets screwed, but there isn’t much preventing a competitor from entering the market and competing.) Government granted, unnatural monopolies need to die, as they are anti-capitalist relics of a feudal society.

At the very minimum, copyright should be rewritten to tax copyright based on sale price of the copyrighted item (yes, that would mean open source/free stuff wouldn’t be taxed.) That way, those who are still selling something get to keep their copyright, but “orphaned works” disappear because anything that is “orphaned” usually hasn’t had the taxes paid for and thus is in the public domain. Tax would go into warehousing the works (LoC style) and making a database for the public to check to see whether a work is current. That would keep Disney happy and yet prevent them from f*cking up everything for everyone else.

Re: Re: Disney Wants Protective Coloration. (to ltlw0lf , # 21)

Disney doesn’t want to be in the position the patent trolls are in, with every man’s hand against them. That means that Disney does not want to be the only copyright-holding entity. Disney wants there to be a lot of people who hold copyrights, and have an exaggerated idea of their market value. It suited Disney just fine to have a large number of neighborhood teen-age music groups laboring under the belief that if they just met an official talent scout, they would suddenly become as rich and famous as the Beatles or the Rolling Stones. Once large numbers of artists begin experimenting, and find that they can have a moderately substantial audience at zero price, but that a higher price leads to a zero audience, these artists will disconnect ideologically from the price system. This means that Disney wants there to be lots and lots of Orphan Works still under copyright.

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