Amazon, The DOJ, Publishers, and Readers: A Timeline 2012–

This is part II of a timeline covering the history of ebook publishing, Amazon, Apple, publishers and the DOJ. Part I is here.
My core argument is best summarized by writer Charlie Stross in “What Amazon’s ebook strategy means”:

Amazon seems to be trying to simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector.
. . .
If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store.

Timeline

2012 February 22

Amazon.com removed more than 4,000 e-books from its site this week after it tried and failed to get them more cheaply, a muscle-flexing move that is likely to have significant repercussions for the digital book market.

The books were ebook distributed by the Independent Publishers Group.The New York Times. “Amazon Pulls Thousands of E-Books in Dispute.” David Streatfeld.

2012 April 11 DOJ files its suit: United States of America v. Apple et al

The United States of America, acting under the direction of the Attorney General of the United States, brings this civil antitrust action against Defendants Apple, Inc. (“Apple”); Hachette Book Group, Inc. (“Hachette”); HarperCollins Publishers L.L.C. (“HarperCollins”); Verlagsgruppe Georg von Holtzbrinck GmbH and Holtzbrinck Publishers, LLC d/b/a Macmillan (collectively, “Macmillan”); The Penguin Group, a division ofPearson pic and Penguin Group (USA), Inc. (collectively, “Penguin”); and Simon & Schuster, Inc. (“Simon & Schuster”; collectively with Hachette, HarperCollins, Macmillan, and Penguin, “Publisher Defendants”) to obtain equitable relief to prevent and remedy violations of Section 1 of the Sherman Act, 15 U.S.C. §1

2012 April 11

Via Cnet, DOJ says Lagardere SCA’s Hachette Book Group, News Corp.’s HarperCollins Publishers, and Simon & Schuster have agreed to settle. See also The Wall Street Journal

2012 April 12

Understanding The Agency Model And The DOJ’s Allegations Against Apple And Those Publishers By Graham Spencer for Macstories:

To put it in the most simplistic sense, the DOJ is alleging that Apple and the publishers colluded to raise the prices of e-books by switching to the agency model where retail price competition would cease. More specifically, it alleges that not only did the various publisher executives meet to discuss issues of prices and the Amazon “problem”, but that when Apple negotiated with the publishers to adopt the agency model, Apple acted as a go-between to confirm to each of the publishers that the other publishers were signing up to the same agreement. They allege that the change to the agency model “would not have occurred without the conspiracy among the defendants”.
The DOJ contends that the direct result of this collusion to adopt an agency model is that retailers have lost their ability to compete on price. Further, they allege that the collusion meant that once publishers had control over prices, they limited retail price competition amongst themselves as well. Consequently, the DOJ estimates that “millions of e-books that would have sold at $9.99 or for other low prices instead sold for…$12.99 or $14.99”.

2012 April 14

Writer Charlie Stross on What Amazon’s ebook strategy means:

Amazon seems to be trying to simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector.
. . .
If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store.

2012 April 16

Indie book publishers call Amazon, not Apple, a ‘predator’:

According to Steve Jobs’ biography, it was the late Apple CEO who gave them the idea.
After that, prices on the major titles went up and the DOJ began sniffing around. It is now indie publishers who are rushing to Apple’s rescue.
Coker stepped up for Apple two weeks ago. He had heard that the Justice Department was preparing to sue and arranged a conference call with DOJ representatives. He offered details about how the agency model had resulted in lower prices on titles from self-published authors and those from some indie publishers. Coker told them that higher-priced books from major publishers were driving readers to lesser-known authors and less-expensive titles and competition in this area was fierce
“My message to the DOJ was that self-published authors are benefitting from the agency model,” Coker said.

2012 April 24

Tor Books, a subsidiary of Macmillan, announces that all Tor ebooks will be DRMless by July 2012.

2012 May 1

Target announces it is no longer going to carry Kindle:

What we aren’t willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices

as quoted in The New York Times

2012 May 3

ABA Members Urged to Make Their Voices Heard Re Agency Model:

As ABA made clear in a meeting with DOJ on March 19, we could not believe more strongly that the agency model has been good for our channel, good for all bricks-and-mortar bookstores, good for publishing, and, most importantly, good for readers and book buyers. Since its introduction, the agency model has corrected a distortion in the market fostered by below-cost pricing, predominantly led by Amazon.com, the ultimate result of which is, we believe, to reduce or to eliminate competition among both retailers and publishers.
Since the introduction of the agency model many more independent booksellers are selling e-books, and those sales have shown steady growth. The agency model has lowered prices to indie bookstore customers, and indies themselves have seen significantly increased price competition among publishers in regard to promotions, discounts, and special offers, all of which have allowed bricks-and-mortar bookstores to offer customers a wider array of titles at a greater value.
In short, since the introduction of the agency model, the e-book market for consumers has become far more competitive — not less so!

2012 May 9

AAR Urges Members to Write to DoJ Opposing Antitrust Settlement

2012 May 15

DOJ’s Judge Denise Cote denies Apple and the “Agency 5” publishers’ motion to dismiss the class action suit filed against Apple and the publishers last summer.

2012 May 18

Simon & Schuster settles e-book antitrust suit with state Attorney Generals.

2012 May 22

UNITED STATES OF AMERICA Plaintiff, v. APPLE INC., et al. Defendants:

The Government starts from the false premise that an eBooks “market” was characterized by “robust price competition” prior to Apple’s entry. This ignores a simple and incontrovertible fact: before 2010, there was no real competition, there was only Amazon. At the time Apple entered the market, Amazon sold nearly nine out of every ten eBooks, and its power over price and product selection was nearly absolute. Apple’s entry spurred tremendous growth in eBook titles, range and variety of offerings, sales, and improved quality of the eBook reading experi- ence. This is evidence of a dynamic, competitive market. These inconvenient facts are ignored in the Complaint. Instead, the Government focuses on increased prices for a handful of titles. The Complaint does not allege that all eBook prices, or even most eBook prices, increased after Apple entered the market.
The Government alleges that Apple conspired to eliminate retail price competition. This is absurd. Nothing Apple did reduced competition or fixed prices. As an agent, Apple did not set prices. Nor did Apple have an interest in higher prices for eBooks. Indeed, Apple negotiated two limits on Publisher pricing – maximum prices to make sure electronic books cost considera- bly less than physical books, and the right to require a publisher to match in the iBookstore a
Case 1:12-cv-02826-DLC Document 54 Filed 05/22/12 Page 3 of 31
lower competitive price on new release titles being offered elsewhere. The price matching term allowed exceptions for promotions, was not rigidly self-executing, and encouraged, not discour- aged, competition, as publishers’ respective titles could directly compete at retail against each other on the merits, including price.
Apple’s entry has benefitted consumers. Apple’s entry brought competition where none existed. Amazon still has a dominant share in eBook and physical distribution, with significant power it often leverages over the producers and consumers of books to the detriment of both. But prior to Apple’s entry, Amazon effectively stood alone and unchallenged. No longer. Amazon is now forced to compete with Apple, Barnes & Noble, and others. And the pace of innovation has quickened, enticing more and more consumers to try eBooks. Apple introduced a number of innovative features, such as color pictures, audio and video, the read and listen feature, and fixed display (critical for graphics-intensive books like cookbooks, travel books, and textbooks, many of which were unavailable before Apple’s entry). As a result—as even the Government is compelled to admit—output has exploded. Consumers enjoy vastly increased choice. Amazon has had to compete and innovate beyond its small black and white eReader, enriching the experience for consumers across all platforms.

2012 May 25

Apple Responds To DOJ eBook Lawsuit, Calls it “Fundamentally Flawed” and “Absurd” TechCrunch

2012 May 26

Publishers Weekly: IPG, Amazon Strike Deal on E-books:

Three months after Amazon pulled e-book titles off of its site from clients of the distributor IPG over a dispute on terms, the two sides have reached an agreement. Terms of the deal weren’t disclosed. Amazon’s actions in February came after negotiations between the online retailer and IPG over Amazon’s request for better terms and higher co-op broke down. Since late in 2011 Amazon has been meeting with publishers and distributors looking for, among other things, co-op on e-books.
IPG president Mark Suchomel said in February that if he agreed to Amazon’s terms his clients would not be able to make money selling Kindle titles.

2012 May 29

Macmillan’s response to the DOJ:

Absent any direct evidence of conspiracy, the government’s complaint is necessarily based entirely on the little circumstantial evidence it was able to locate during its extensive investigation, on which it piles innuendo on top of innuendo, stretches facts and implies actions that did not occur and Macmillan denies unequivocally.

2012 May 31

The New York Times2 Publishers Deny Claim of E-Book Price Fixing:

The government’s complaint “piles innuendo on top of innuendo.” It is based “entirely on the little circumstantial evidence it was able to locate.” And it “sides with a monopolist.”
These arguments were part of a response by two publishers, Penguin Group USA and Macmillan, to a Justice Department lawsuit filed in April that accused five major publishing houses of conspiring with Apple to fix the price of e-books.
Three of the publishers, Simon & Schuster, HarperCollins and the Hachette Book Group, denied violating antitrust laws but agreed last month to settle with the government.
In its 74-page response, Penguin called Amazon “predatory” and a “monopolist” that treats books as “widgets.” It asserted that Amazon, not Penguin, was the company engaging in anticompetitive behavior, to the detriment of the industry.

2012 August

Microsoft EOLs MS Reader

2012 September 6

Federal District Judge Denise Cote approves the settlement between the Justice Department and [three major publishers] regarding collusion to fix ebook prices via the agency model.

2012 November 8

Amazon removes Buy buttons for Big Six Publishers’ Kindle titles

2012 November 9

Was it indeed a “technical” issue, as Amazon described it? Or, as many in the publishing industry believe, was it a deliberate action designed to threaten major publishers?

2012 November 15

Fictionwise is in the process of winding down its operations, and Fictionwise.com (including eReader.com and eBookwise.com) will end sales on December 4, 2012. Please note, you will not be able to access your Fictionwise Bookshelf after December 21, 2012.

2012 December 10

“Ebook prices were lowered for Simon & Schuster titles over the weekend on sites like Amazon and Nook.com to levels several dollars below what they had been earlier in the week. Amazon is no longer displaying its usual disclaimer for agency-priced ebooks, “this price was set by the publisher,” for Simon & Schuster titles.”

2012 December 10

Pocket Goddess on Baen Books moving to Amazon:

The good news is that Baen ebooks will be available directly from Amazon, making it easier than ever for new readers to discover some fantastic fantasy and science fiction. . . . The bad news is that those fantastic bundle deals will no longer be available once the distribution agreement takes effect, which will be in just a few days. If there is anything you’ve been thinking about getting, now is the time to do it. The early bundles (starting way back in 1999) are the best deal; as little as $10 for four full length novels, many of them omnibus editions that actually comprise 2-4 novels each. Prices gradually increased over the years, so current bundles are now $18 each and generally include seven full length novels.

Baen’s announcement.

2012 December 13

European Commission regulators have accepted a concession offer from Apple and four major book publishers and halted an antitrust investigation into e-book pricing.

2012 December 18

Penguin settles DOJ lawsuit over alleged e-book price-fixing via Cnet:

Penguin confirms that it has reached an agreement with the U.S. Department of Justice to settle claims relating to the establishment of agency pricing agreements in 2010. Penguin has always maintained, and continues to maintain, that it has done nothing wrong and has no case to answer. Penguin continues to believe that the agency pricing model has encouraged competition among distributors of both e-books and e-book readers and, in the company’s view, continues to operate in the interest of consumers and authors. But it is also in everyone’s interests that the proposed Penguin Random House company should begin life with a clean sheet of paper.

Penguin’s settlement leaves Macmillan and Apple as the only defendants who have not settled.

2012 December 28

Pearson invests 89.5 million cash in NOOK Media

New York, NY and London (Dec. 28, 2012) – NOOK Media, LLC, a subsidiary of Barnes & Noble, Inc. (NYSE: BKS), the leading retailer of content, digital media and educational products, today announced that Pearson (NYSE:PSO), the world’s leading learning company, has agreed to make a strategic investment in NOOK Media, LLC. Pearson has agreed to invest $89.5 million in cash in NOOK Media, LLC at a post-money valuation of approximately $1.789 billion in exchange for preferred membership interests representing 5% equity stake. Following the closing of the transaction, Barnes & Noble will now own approximately 78.2% of the NOOK Media subsidiary and Microsoft, which also holds preferred membership interests, will own approximately 16.8%. Subject to certain conditions, Pearson will earn the option to purchase up to an additional five percent ownership in NOOK Media.
Pearson’s strategic investment in NOOK Media will accelerate customer access to digital content by pairing its leading expertise in online learning with NOOK Media’s expertise in online distribution and customer service. This will facilitate improved discovery of available digital content and services, as well as seamless access.

2013 February 8

Macmillan agrees to settle with DOJ.
Macmillan’s John Sargent:

Our company is not large enough to risk a worst case judgment. In this action the government accused five publishers and Apple of conspiring to raise prices. As each publisher settled, the remaining defendants became responsible not only for their own treble damages, but also possibly for the treble damages of the settling publishers (minus what they settled for). A few weeks ago I got an estimate of the maximum possible damage figure. I cannot share the breathtaking amount with you, but it was much more than the entire equity of our company.

2013 February 8

Judge Denise Cote approved a $70-million plus settlement with 49 states (all but Minnesota) and U.S. territories to settle e-book price-fixing charges.

Following a swift, 15-minute fairness hearing, Judge Denise Cote quickly approved a $70-million plus settlement with 54 states (all but Minnesota) and U.S. territories to settle price-fixing charges. The approval clears the way for consumers to soon begin receiving credits under a deal reached last year. With a handful of a lawyers present representing the states and the U.S. Department of Justice, as well as Apple and the lawyers from the five publishers accused of colluding with Apple to inflate e-book prices (Hachette, HarperCollins, Penguin, S&S, and now Macmillan), Cote deemed the settlement and the settlement amount “utterly fair and reasonable,” and signed the final order from the bench.

Note that Apple is still scheduled for a June 2013 trial, and there’s an on-going consumer class-action suit.

2013 March 28

Amazon buys Goodreads

2013 April 29

Macmillan finalizes ebook settlement with both the state and consumer class law suits regarding ebook price fixing accusations. Macmillan denies any wrongdoing, and the filing also includes a stipulation that Macmillan will not participate in the DOJ ebook trial scheduled to start June 3. Apple and Penguin are the only remaining defendants. Macmillan’s settlement is capped at $26,250,000.

2013 April 29

Tor Books UK announces that “we’ve seen no discernible increase in piracy on any of our titles, despite them being DRM-free for nearly a year.”

June 3, 2013

John Paczkowski of All Things DHere’s the DOJ’s E-Book-Pricing Case Against AppleIncludes DOJ attorney Lawrence Buterman’s slides.

2013 June 20

In the morning Apple’s attorney Orin Snyder summed up Apple’s

argument that it did not conspire with publishers to set ebook prices; rather, he said, the negotiations that took place before the launch of the iBookstore were “standard, normal, lawful business activity.” He described this as “an extraordinary antitrust case,” but “[this was a] standard, ordinary business negotiation,” and the retailer’s contracts with publishers for ebooks were the same type of contracts that Apple has for other kinds of content like apps. If US District Judge Denise Cote rules against Apple, Snyder said, it would create “a chilling and confounding effect not only on commerce” but on “content markets throughout this country.”

via Gigaom. In the DOJ’s summation via Gigaom

DOJ attorney Mark Ryan argued on Thursday afternoon that the case was a simple antitrust suit — Apple’s conduct was “a per se violation of the Sherman Act,” an “old-fashioned, straightforward price-fixing agreement” that caused ebook prices to go up. (See the DOJ’s summation slides embedded below.)

2013 July 4

“As Competition Wanes, Amazon Cuts Back Discounts.” By David Sttreifeld. New York Times

Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money, has been cutting back its deals for scholarly and small-press books. That creates the uneasy prospect of a two-tier system where some books are priced beyond an audience’s reach.. . . Now, with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon. And for some books, Amazon is, in effect, beginning to raise prices.

2013 July 8

William Lynch resigns as CEO of Barnes & Noble.

Lynch’s resignation as CEO, and from the B&N board as well, comes three-and-a-half years after he was appointed to the position and more than four years after he first joined B&N from HSN to head up Barnes & Noble.com. Lynch was credited with overseeing B&N’s aggressive expansion into device manufacturing and with seeing through Microsoft’s investment in what would become Nook Media. Following disastrous sales of Nook devices over the holidays that continued into 2013, B&N announced in late June it was sharply scaling back its manufacturing efforts, particularly in the color tablet area.

2013 July 10

Judge Denise Cote files her opinion in United States of America v. Apple, Inc, et al

2013 July 10

via TidBITS: Explaining the Apple Ebook Price Fixing Suit

Again, there is nothing inherently illegal with the agency model, price tiers, or an MFN clause. And there isn’t even anything wrong with combining them in negotiation with a single company. The problem comes when they’re combined in negotiation with six publishers that between them control nearly 50 percent of the book market, and over 90 percent of the New York Times bestsellers.

2013 August 2

DOJ’s proposed settlement in its case against Apple requires Apple to:

1. … terminate its e-book deals with Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin and Simon & Schuster
2. … refrain for five years from entering new e-book distribution deals which would free it from having to compete om price.
3. … allow for two years rival e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their own e-bookstores without paying any fee or commission to Apple on sales made through them.
4. … refrain from entering into agreements with other providers of music, movies, TV shows or books that might increase the prices at which rival retailers sell that content.
5. … appoint, and pay for, an external monitor to ensure that its internal antitrust compliance policies are sufficient and rigorously observed.

See also Publishers Weekly DoJ Seeks Comprehensive Injunction in Apple E-book Case.

2013 August 2

Apple files a response to the DOJ’s proposed settlement:

“Plaintiffs’ proposed injunction is a draconian and punitive intrusion into Apple’s business, wildly out of proportion to any adjudicated wrongdoing or potential harm. Plaintiffs propose a sweeping and unprecedented injunction as a tool to empower the Government to regulate Apple’s businesses and potentially affect Apple’s business relationships with thousands of partners across several markets. Plaintiffs’ overreaching proposal would establish a vague new compliance regime—applicable only to Apple—with intrusive oversight lasting for ten years, going far beyond the legal issues in this case, injuring competition and consumers, and violating basic principles of fairness and due process. The resulting cost of this relief—not only in dollars but also lost opportunities for American businesses and consumers—would be vast.”

2013 August 2

via TidBITS: DoJ Proposed Remedies in Ebook Price-Fixing Suit Miss the Point

It’s hard to see how the DoJ’s proposed terms would have any positive effect on the ebook industry, given what has already happened. Plus, the Court explicitly noted that agency agreements, and both MFN clauses and price caps, were perfectly acceptable in general, so it seems unreasonable to prevent Apple from using them. In fact, the publishers have filed a motion with the court, saying that the DoJ’s proposals would hurt them, by limiting Apple’s ability to discount books.
More worrying for Apple, and what would seem to be a case of overreaching on the part of the DoJ, the proposed injunction steps outside of Apple’s ebook business to attempt to dictate terms — the requirement to allow purchasing links — for ebook retailer apps in the App Store.

2013 August 8

Publishers file letter objection to DOJ’s settlement and injunction against Apple via Publishers Weekly

2013 August 9

DOJ Rejects Publishers’ Objection to DOJ’s proposed settlement and injunction against Apple. U.S Attorney Lawrence Buterman filed a letter to the court in which he rejected publisher objections that the government’s proposed injunction for Apple would rewrite publisher settlements:

Apple has been found to have orchestrated and facilitated a horizontal per se price fixing conspiracy-amongst these very Publisher Defendants,” Buterman wrote. “Apple should not be rewarded with the same terms received by those that chose to settle to avoid the risks of litigation

2014 February 28

Audible Lowers Royalty on Self-Published Audiobooks via Publishers Weekly. Audible is a wholly-owned subsidiary of Amazon.

Up until now, Amazon was offering an escalating rate of 50%-90% on ACX titles sold exclusively; now it is dropping the rate to a non-escalating 40%. (ACX audbiobooks distributed non-exclusively are dropping to a non-escalating rate of 25%.)

2014 March 28Apple Loses Two Key Decisions in E-book Case in the damages phase of the DOJ’s case against apple. Judge Denise Cote granted class action status in the state and consumer cases pending before her regarding price fixing and ebooks, and rejected Apple’s two expert witnesses for trial. Judge Cote denied Apple’s motion to strike the testimony of the plaintiff’s expert witness, Roger Noll, which suggests that Noll’s model will be used in determining a final damage award. Cote described Noll’s analysis “straightforward,” and rejected Apple’s expert witnesses—economists Joseph Kalt and Jonathan Orszag and their evaluation of Noll’s model.

2014 May 9

Writers Feel an Amazon-Hachette Spat

Among Amazon’s tactics against Hachette, some of which it has been employing for months, are charging more for its books and suggesting that readers might enjoy instead a book from another author. If customers for some reason persist and buy a Hachette book anyway, Amazon is saying it will take weeks to deliver it.
The scorched-earth tactics arose out of failed contract negotiations. Amazon was seeking better terms, Hachette was balking, so Amazon began cutting it off. Writers from Malcolm Gladwell to J. D. Salinger are affected, although some Hachette authors were unscathed.

2014 May 14

Vanity Fair June 2014 issue. “The Judge that Apple Hates.” David Margolick.

To each of the Big Six publishing houses, Cue offered the same deal: rather than selling e-books wholesale and letting retailers price them, the publishers themselves would set e-book prices; Apple would only be an agent, collecting 30 percent of sales. By January 26, five of the publishers—only Random House refused—had agreed. Amazon, too, quickly fell in line. E-book prices quickly rose. Soon came the lawsuits—class actions on behalf of consumers; cases filed by various state attorneys general. And then, in April 2012—largely, Apple has charged, at Amazon’s instigation—came the Justice Department’s case. All said Apple and the publishers had conspired together in violation of federal anti-trust laws.

2014 May 16

Will the Agency Model Survive? Hachette, Amazon and the future of agency pricing via Publishers Weekly

2014 May 22

The New York Times Bits blog reports Amazon is now removing Hachette books from sale:

The retailer began refusing orders late Thursday for coming Hachette books, including J.K. Rowling’s new novel. The paperback edition of Brad Stone’s “The Everything Store: Jeff Bezos and the Age of Amazon” — a book Amazon disliked so much it denounced it — is suddenly listed as “unavailable.”

See also PublishersLunch Amazon Removes Pre-Order Capability On Many Forthcoming Hachette Titles

2014 May 23

Farhadd Manjoo in The New York Times Bits blog Amazon’s Tactics Confirm Its Critics’ Worst Suspicions:

Now Amazon is walking right into its detractors’ predictions. There are a couple obvious reasons this is a bad strategy. It’s bad public relations — if it doesn’t already, Amazon may soon control a monopolistic stake of the e-book market and its tactics are sure to invite not only scorn from the book industry but also increased regulatory oversight.
But the more basic problem here is that Amazon is violating its own code. To win a corporate battle, Amazon is ruining its customer experience. Mr. Bezos has long pointed to customer satisfaction as his North Star; making sure customers are treated well is the guiding principle for how he runs Amazon.
Now Amazon is raising prices, removing ordering buttons, lengthening shipping times and monkeying with recommendation algorithms. Do these sound like the moves of a man who cares about customers above all else?

2014 May 26

Mark Coker of Smashwords blogs Amazon’s Hachette Dispute Foreshadows What’s Next for Indie Authors

The publishers viewed agency as a better model. The US DoJ viewed the In 2014, publishers are more disposable to Amazon than they once were, thanks in part to the rise of indie authorship, and thanks also to better business diversification. Amazon’s business is no longer as dependent upon books as it once was. . . . Books represent only one of hundreds of layers of icing on the cake of Amazon. Amazon can lose money on books while still operating a profitable business.Pure-play book retailers — Kobo and Barnes & Noble for example, must earn money from book sales. Unlike Amazon, they don’t have the financial resources to sell books at a loss forever. Publishers must also earn money from book sales, otherwise they can’t keep the lights on.
The other alternative is for Hachette to capitulate to Amazon, which is akin to Hachette accepting a long term death sentence. Amazon views publishers as unnecessary intermediaries. Amazon works to disintermediate the intermediaries so it can control the relationship with the creators (authors) and the customers.
The other Big 5 publishers might do well to play their nuclear cards before it’s too late.

. . .

Indies are already divided and conquered at Amazon, but most don’t realize this. These indies all have direct-upload relationships with Amazon. They don’t have the collective bargaining power of a large publisher to advocate on their behalf. As the unfolding events indicate, it’s questionable if even a large publisher has leverage over Amazon.
If Hachette doesn’t have the power to maintain 70% earnings, how will million-copy-selling New York Times bestselling indie authors have any power when Amazon decides to put the squeeze on them? And how about the rest of the indie community which has even less leverage over Amazon?

2014 Jun3 3

The Wall Street Journal reports that the DOJ has contacted Hachette, HarperCollins and Simon & Schuster (the three publishers who first settled the 2012 suit over collusion on e-book pricing—Hachette is currently in a pricing dispute with Amazon—) “asking about any recent pricing discussions they may have had with others in the industry.” See U.S. Goes Back to Publishers on Prices.

2014 June 3

Gigaom reports that the U.S. Court of Appeals for the Second Circuit denied Apple’s appeal for a stay and ruled that the July 14 trial trial can go forward. The trial will determine Apple’s damages for, according to the DOJ, conspiring with book publishers to fix the price of ebooks.

2014 June 10

“Amazon Stops Taking Advance Orders for ‘Lego’ and Other Warner Videos” by David Streitfield for Bits The New York Times:

The retailer’s refusal to sell the movies is part of its effort to gain leverage in yet another major confrontation with a supplier to become public in recent weeks.
In a standoff with the Hachette Book Group, Amazon is refusing to take advance orders and delaying shipments. Amazon and Hachette are wrangling over e-book terms. The retailer is in a third standoff in Germany, with the Bonnier Media Group.
Disputes between retailers and vendors happen every day. What is unusual here is not Amazon’s relentless desire to gain margin from its suppliers, but the suppliers’ growing resolve to hold the line. If other suppliers adopt the same attitude, that might have significant implications for Amazon’s pell-mell growth.

2014 June 16

Apple Settles E-Book Pricing Antitrust Civil Suit

July 28, 2017

Is Amazon getting too big? By Steven Pearlstein for The Washington Post

Amazon is reported to be in the market for an antitrust economist, and in the wake of the Whole Foods announcement, it has engaged the services of two former heads of the Justice Department antitrust division, one Democrat and one Republican.
I can’t tell you exactly at what point the government should step in to block Amazon from buying another company or curtail some of its business practices. I am, however, fairly confident in saying that it ought to be well before Amazon achieves a 40 percent market share in books, groceries, clothing, hardware, electronics and home furnishings. And it ought to be before Amazon pulls even with UPS in shipping, Oracle in computing and Comcast in media content. Khan’s reasonable insight is that if we don’t yet have the tools to identify when companies have reached that competitive tipping point, then someone ought to invent them.

The 2010s were supposed to bring the ebook revolution. It never quite came

The Amazon Kindle, which was introduced in 2007, effectively mainstreamed ebooks. By 2010, it was clear that ebooks weren’t just a passing fad, but were here to stay. They appeared poised to disrupt the publishing industry on a fundamental level. Analysts confidently predicted that millennials would embrace ebooks with open arms and abandon print books, that ebook sales would keep rising to take up more and more market share, that the price of ebooks would continue to fall, and that publishing would be forever changed.
Instead, at the other end of the decade, ebook sales seem to have stabilized at around 20 percent of total book sales, with print sales making up the remaining 80 percent. “Five or 10 years ago,” says Andrew Albanese, a senior writer at trade magazine Publishers Weekly and the author of The Battle of $9.99, “you would have thought those numbers would have been reversed.”
And in part, Albanese tells Vox in a phone interview, that’s because the digital natives of Gen Z and the millennial generation have very little interest in buying ebooks. “They’re glued to their phones, they love social media, but when it comes to reading a book, they want John Green in print,” he says. The people who are actually buying ebooks? Mostly boomers. “Older readers are glued to their e-readers,” says Albanese. “They don’t have to go to the bookstore. They can make the font bigger. It’s convenient.” . . . The case of US v. Apple encapsulates the dysfunction of the last decade of publishing. It’s a story about what we’re willing to pay for books — and about an industry that is growing ever more consolidated, with fewer and fewer companies taking up more and more market share. What happened to the ebook in the 2010s is the story of the contraction of American publishing. . . . But while Cote’s sanctions required publishers to briefly modify the agency model so that resellers could set their own prices, within a few years, those sanctions expired. Today, the agency model that Apple developed is once again the standard sales model for ebooks.
“The Department of Justice suit in hindsight was corporate squabble,” says Albanese. “It hasn’t done much to address Amazon’s market position. Would the ebook trajectory have continued to grow had that suit not happened? Probably we would be in about the same place.”

January 17, 2021

New lawsuit accuses Amazon of e-book price fixing

Amazon is facing a new lawsuit alleging that a deal between the company and five book publishers has created higher prices on e-books, The Wall Street Journal reported.
The lawsuit filed by law firm Hagens Berman in a federal district court in New York, alleges that the publishers pay high commissions and other costs to Amazon, which in turn increases the retail price of e-books sold on the platform. Due to the deal between Amazon and the publishers— HarperCollins Publishers, Hachette Book Group, Penguin Random House, Simon & Schuster, and Macmillan — the Amazon price is the price the publishers charge other retailers as well, preventing other sellers from offering the e-books at lower prices, according to the lawsuit.
The lawsuit claims the five publishers account for 80 percent of books sold in the US, and calls the arrangement a “conspiracy to fix the retail price of e-books,” which it argues is a violation of antitrust law.

In other words, we’ve come full circle.

In another e-book lawsuit back in 2012, the Justice Department accused Apple of conspiring with major book publishers in an attempt to compete with Amazon, by inflating e-book prices above the $9.99 price that Amazon preferred. Hagens Berman was lead counsel in the Apple case as well. The publishers settled, but Apple went to court and lost, eventually agreeing to a $450 million settlement, with $400 million issued as refunds to consumers. Apple denied any wrongdoing in regard to e-book pricing.

July 27, 2022

Magistrate judge Valerie Figueredo

after a marathon July 27, 2022 hearing, Figueredo recommended that the presiding judge in the case, Gregory Woods, toss both cases for lack of evidence. In two brief September 29, 2022 orders, Woods accepted Figeuredo’s “well-reasoned” and thorough reports, and dismissed the cases without prejudice, giving the plaintiffs a chance to file amended complaints (Andrew Albanese. “Judge Finds Revived Amazon E-book Monopoly Suit Should Proceed.” Publishers Weekly.. August 1, 2023) .

November 11, 2022

In a 125-page Second Consolidated Amended complaint filed last November, Hagens Berman revised and refiled their claims, including arguments that Amazon’s dominance in the e-book market enables it to “coerce” e-book publishers into “entering into contractual provisions that foreclose competition on price or product availability,” which ultimately harms consumers by keeping e-book prices artificially high. “In a but-for competitive market, Amazon could not earn such a supracompetitive profit without losing sales to a competitor and experiencing reduced profits,” the amended complaint argues. “Yet Amazon has been able to both maintain its market share and extract its supracompetitive transaction fees by exercising its market power to block competition” (Andrew Albanese. “Judge Finds Revived Amazon E-book Monopoly Suit Should Proceed.” Publishers Weekly.. August 1, 2023).

July 31, 2023

In a 59-page report, magistrate judge Valerie Figueredo found sufficient facts at the pleading stage to “plausibly allege that Amazon’s conduct has allowed it to charge supracompetitive commission fees, leading to reduced competition in the e-book platforms-transaction market and higher e-book prices for consumers.” Publishers Weekly.. August 1, 2023).

Part of the pricing issue is that people think of a book as a printed, physical object. They thibnk, therefore, that the digital book, the ebook, a mere file, should cost much less, not realizing that the costs of the object, the ink, paper, binding glue apd printing costs are the primary costs in book production, ignoring the costs of the advance to the author, the cover art, the book design, the typesetting and editing and proofing.

Moreover, I find it difficult to be patient since the DOJ sued Apple in 2012 created this situation by empowereing Amazon to dominate and control the market.