March 12, 2012
Authors Guild head (and attorney) Scott Turow warns DOJ about the effects of law suit
by Paul Oliver
The Department of Justice’s confounding lawsuit against five of the Big Six publishing companies and Apple, Inc. for price-collusion has been widely regarded as a “out of the frying pan and into the fire” sort of move. The tragic lawsuit seemingly damages competition in benefit of the expansion of the leading market influence (Amazon) and thus undermines the supposed goal of the laws it seeks to uphold.
The list of the suit’s many detractors was joined on Friday by Author’s Guild President Scott Turow when the bestselling author and lawyer offered a clear-eyed and damning open letter concerning the suit. Turow’s letter opens with a grim warning that strikes at the heart of the matter:
Yesterday’s report that the Justice Department may be near filing an antitrust lawsuit against five large trade book publishers and Apple is grim news for everyone who cherishes a rich literary culture.
The Justice Department has been investigating whether those publishers colluded in adopting a new model, pioneered by Apple for its sale of iTunes and apps, for selling e-books. Under that model, Apple simply acts as the publisher’s sales agent, with no authority to discount prices.
We have no way of knowing whether publishers colluded in adopting the agency model for e-book pricing. We do know that collusion wasn’t necessary: given the chance, any rational publisher would have leapt at Apple’s offer and clung to it like a life raft. Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open.
This is not a feel-good lecture about the essential role of indies in literary culture. Nor is it an intricate legal argument meant to defend Apple and the Big 5 from the DOJ. In fact Turow’s admission of having “no way of knowing whether publishers colluded” is the most telling component of the letter. It’s not about guilt or innocence but instead about the spirit of the law. As Turow puts it at the close of his letter:
Let’s hope the reports are wrong, or that the Justice Department reconsiders. The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.
This would be tragic for all of us who value books, and the culture they support.
There is a didactic component to the letter as well, where Turow reminds publishers and authors of the decisions they have made to help create the precipice they now stand before:
Just before Amazon introduced the Kindle, it convinced major publishers to break old practices and release books in digital form at the same time they released them as hardcovers. Then Amazon dropped its bombshell: as it announced the launch of the Kindle, publishers learned that Amazon would be selling countless frontlist e-books at a loss. This was a game-changer, and not in a good way. Amazon’s predatory pricing would shield it from e-book competitors that lacked Amazon’s deep pockets.
Critically, it also undermined the hardcover market that brick-and-mortar stores depend on. It was as if Netflix announced that it would stream new movies the same weekend they opened in theaters. Publishers, though reportedly furious, largely acquiesced. Amazon, after all, already controlled some 75% of the online physical book market.
Turow also goes beyond the typically metaphysical argument concerning bookstores and literary culture, and lays out the blueprint of a post-brick-&-mortar world with emphasis on the effect such a marketplace will have on new writers, and it isn’t pretty:
For those of us who have been fortunate enough to become familiar to large numbers of readers, the disappearance of bookstores is deeply troubling, but it will have little effect on our sales or incomes. Like rock bands from the pre-Napster era, established authors can still draw a crowd, if not to a stadium, at least to a virtual shopping cart. For new authors, however, a difficult profession is poised to become much more difficult. The high royalties of direct publishing, for most, are more than offset by drastically smaller markets. And publishers won’t risk capital where there’s no reasonable prospect for reward. They will necessarily focus their capital on what works in an online environment: familiar works by familiar authors.
The lawsuit is as baffling as it was the day it was announced and when confronted with the history of the issue as Turow (and MobyLives) have laid out, it smacks of malfeasance more than it does ignorance. There is only one corporate entity that stands to gain by this lawsuit and that is always a suspicious thing, especially when they’re currently the closest thing to a monopoly in the market. Again, Turow writes:
Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90% to roughly 60%. Customers are benefiting from the surprisingly innovative e-readers Barnes & Noble’s investments have delivered, including a tablet device that beat Amazon to the market by fully twelve months. Brick-and-mortar bookstores are starting to compete through their partnership with , so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition.
In this light the DOJ’s actions are more than ill-informed—they’re downright suspicious.
Paul Oliver is the marketing manager of Melville House. Previously he was co-owner of Wolfgang Books in Philadelphia.