September 21, 2012

Apple and four publishers settle in Europe

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The European Commission announced Wednesday that it was prepared to drop its nine-month price-fixing investigation of Apple and four publishers — Simon & Schuster, HarperCollins, Hachette Livre, and Holtzbrinck  if the companies, according to a New York Times report by Kevin J. O’Brien, “refrain from making ‘most favored nation’ arrangements” and end their practice of agency pricing, “which thwart[ed] the ability of large online sellers like Amazon to dictate reduced prices for their titles.”

The European Commission’s other target, Penguin, “did not participate in the proposed settlement.”

The investigation by the European Commission of course follows a U.S. Justice Department action against Apple and the same five big publishers. The Times doesn’t attempt to explain why Apple and Holtzbrinck, which are joining Penguin in fighting the antitrust action in the U.S., are settling in Europe. The paper only notes that the cost of losing an antitrust action in Europe is huge, potentially costing “10 percent of global sales” — a fine that could have reached billions of dollars considering the size of the companies involved. By comparison, HaperCollins, Hachette, and Simon & Schuster have only paid the modest sum of $69 million to settle the U.S. cases brought by 49 states and five U.S. territories.

As for the impact of the settlement on the book market, the Times weirdly quotes Damien Seamen, a British author who believes the deal will somehow help lesser-known writers by “allowing them to price their novels competitively to attract readers.”

It’s hard to know what Seamen means by this. If he means that self-published authors will be free to price their novels low, he must not know that independent authors have always had this power, even after the big six publishers moved to agency pricing. But Seamen surely meant something else: that smaller publishers will somehow benefit from the settlement. (Seamen himself is published by the Glasgow-based Blasted Heath, an independent.)

But the opposite is almost surely true, as Amazon almost certainly intends to lower ebook prices across the board after the agency model is weakened in Europe— indeed, it’s already doing so in the U.S. — a move that will soon flatten any price advantage that non-agency publishers have had.

In actual fact, consumers will benefit from lower prices in the short term, but the book trade, especially independent publishers and booksellers, will almost surely suffer as a result of the settlement.

 

 

Kelly Burdick is the former executive editor of Melville House.

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