Pulitzer Prize author, Richard Russo bucks the trend by insisting that his new book will be print only and not be available online.
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| Richard Russo |
"Readers can't survive on e-books alone," Richard Russo
The author feels that the rapid rise of eBooks puts bricks and mortar bookshops in danger and will also stop new writers breaking through.
Stephen King is also insisting that his forthcoming novel, Joyland will be print only
" I loved the paperbacks I grew up with as a kid, and for that reason,
we're going to hold off on e-publishing this one for the time being,"Stephen King
It's a small token the writing seems to be on the eWall regarding eBooks V Print, and the current high profile case against Apple and several major publishers is dealing traditional publishing a blow they may never recover from, and the result looks like being to strengthen Amazon's grip on the book business. Only this week the Author's Guild have written a letter to the US DOJ claiming that the law suit will harm readers in the long run.
American author, Jonathan Franzen abhors eBooks and claims that consumers have been conned into thinking they need eReading devices. The 52-year-old writer became a literary superstar with The Corrections, published in
2001, which sold close to three million copies.
“
I think the combination of technology and capitalism has given us a world
that really feels out of control. If you go to Europe, politicians don’t
matter. The people making the decisions in Europe are bankers. Jonathan Franzen
THE FULL LETTER IS POSTED BELOW THIS ARTICLE
However whilst many can see the need for book prices to be protected the Agency Model is flawed in that it sets publishers against their customers, the readers. The Agency Model means that we have to pay more for our books and that is all the readers sees. The reader doesn't look at the high price of a book fell a warm glow, because they are helping to keep the publisher in business.All the reader feels is that they are getting ripped off. For years we had the Net Book Agreement in the UK And in many ways this was sensible - it meant we created a level playing field for new authors to compete with the big names, but it was eventually found to be anti-competitive and thus illegal.
The modern reader is used to massive discounts - waterstones, Barnes and Noble, Borders and others were discounting books and running two for one offers, long before anyone sailed the digital Amazon. And by adopting the agency model publishers made the same mistake as the music industry and set itself apart from the best interests of its customers.
This story is going to run and run.
THE AUTHOR'S GUILD LETTER TO THE DOJ
The Guild does not support the DOJ’s proposed e-book settlement. We
believe it will allow Amazon to resume its predatory pricing practices,
discouraging competition in the e-book marketplace. We thank those who
have sent their comments on the settlement to the DOJ. Here is the
Guild’s Tunney Act filing:
June 25, 2012
John R. Read, Esq.
Chief, Litigation III
Antitrust Division, United States Department of Justice
Washington, D.C. 20530
Re: United States v. Apple, Inc., et al., 12-cv-2826 (DLC) (SDNY).
Dear Mr. Read,
I’m writing to express the Authors Guild’s firm belief that the
proposed settlement of the Justice Department’s lawsuit alleging that
five publishers and Apple colluded to introduce agency pricing to the
e-book market is not in the public interest. The settlement is flawed by
an astonishing provision, specifically requiring three large publishers
to allow e-book vendors to routinely sell e-books at below cost, so
long as the vendors don’t lose money over the publisher’s entire list of
e-books over the course of a year.
The proposal, by allowing targeted predatory pricing of e-books,
would give governmental sanction to a practice long considered
destructive to a free and fair market. It was precisely this practice –
selling frontlist e-books at below cost to discourage and destroy
competition – that helped Amazon capture a commanding 90% of the U.S.
e-book market. Agency pricing, which the Justice Department believes was
introduced through collusion, has allowed Amazon’s competitors to gain a
foothold, driving Amazon’s market share down to 60% in two years.
The Justice Department has made clear that it intends to irreversibly
reshape the literary market. Allowing Amazon to resume its predatory
ways with e-books will likely accomplish that, but not in the way the
Justice Department intends. The proposed settlement will almost
certainly backfire and harm readers in the long run.
The Justice Department needs to rethink and revise its proposal: it
can stop the alleged collusion without requiring publishers to allow
Amazon to resume predatory pricing.
The Competitive Landscape: Amazon’s in Control
The Justice Department’s assessment of the literary market offers but
a pinhole glimpse of the genuine competitive landscape. Its competitive
impact statement fails to discuss the relationship between the print
book market and the e-book market, for example, or the critical
distinctions between the online book market and the brick-and-mortar
market. Most importantly, it fails to mention Amazon’s monopolistic
reach and reflexive anticompetitive habits, the dominant features of the
current competitive landscape.
Nowhere does the Justice Department’s competitive impact statement discuss the components of Amazon’s monopolistic reach:
• that Amazon held 90% of the market for trade e-books prior to the
introduction of the agency model in 2010, and that its e-book market
share still stands at roughly 60%;
• that Amazon has long controlled about 75% of the online market for trade books in print form;
• that Amazon’s dominance of the online market for print books gives
it control of the market for an estimated 90% of in-print titles, since
only a sliver of in-print books (frontlist books and certain backlist
titles) have substantial sales in brick-and-mortar stores;
• that Amazon, through its purchase of Audible.com, has control of the fast-growing downloadable audio book market; and
• that Amazon, through a series of acquisitions, has gained control of the online market for used books.
There simply is no growing segment of the book market that Amazon doesn’t dominate.
Even more troubling is the competitive impact statement’s failure to
discuss how Amazon uses its command of the online book market and its
deep pool of capital to undermine competition. The statement doesn’t
point out:
• that Amazon achieved its $9.99 price for e-books from November 2007
through April 2010 (and through today, for many publishers) by selling
frontlist titles at a loss, a classic anti-competitive tactic;
• that Amazon managed to undermine its brick-and-mortar competitors
while maintaining profitability by selling only a select set of e-books
at its below-cost $9.99 price point, focusing its predation on digital
editions of the frontlist hardcover books that attract customers to its
brick-and-mortar competitors;
• that Amazon removed buy buttons from thousands of “long-tail” books
in 2008, in a successful effort to force author focused on-demand
publishers to use Amazon’s costly printing service, a maneuver that
continues to reduce royalties for thousands of authors, while preventing
rivals from effectively competing with Amazon’s author-focused
CreateSpace;
• that during Amazon’s showdown with Macmillan over e-book terms in
2010, it retaliated by removing buy buttons not just from Macmillan’s
e-books (which would have been fair play in such a business dispute),
but from the publisher’s print books as well, tying access to Amazon’s
vital print book market to acceptance of Amazon’s preferred e-book terms
(the complaint does blandly mention this, without noting the
market-tying strategy);
• that Amazon has continuously used its market leverage, in the U.S.
and abroad, to dictate terms to its suppliers by removing buy buttons,
in at least one instance punishing a recalcitrant British publisher for
more than a year;
• that when Amazon entered the e-lending market for public libraries
in 2011, it struck an unprecedented deal with OverDrive, the leading
e-lending service provider, requiring it to redirect borrowers from
their local public library websites to Amazon’s own commercial website
and servers, turning thousands of public library websites into virtual
storefronts for Amazon, while compromising library patrons’ reading
privacy;
• that Amazon, in November 2011, brought its predatory campaign to a
new level with its Kindle Owners’ Lending Library, offering free e-books
to gain a loss-leading competitive advantage for its new tablet, the
Kindle Fire; and
• that Amazon has aggressively moved in the past seven months to
protect its horizontal control of the online book market through a
series of vertical acquisitions, buying exclusive rights to thousands of
titles, including Ian Fleming’s James Bond books, Avalon Publishing,
and Marshall Cavendish Children’s Books, leading to an unprecedented and
dangerous balkanization of the literary marketplace.
Each of these acts represents behavior that should set off alarm bells
in the Justice Department’s Antitrust Division. Assessing the effects of
the proposed settlement without taking these into account is
impossible.
Several of these points merit further description, to illustrate the
myriad, creative ways in which Amazon leverages its market power to
destroy competition.
Amazon, On-Demand Publishing: Making Room for CreateSpace
For years, the Authors Guild staff had heard whispers of Amazon’s
buy-button removal tactic as a means of getting publishers to agree to
new terms. In January 2008, during the Association of Writers and
Writing Program’s annual conference, Amazon’s market-denying maneuver
hit hundreds of Guild members, as it removed the buy buttons from more
one thousand books in the Guild’s Backinprint.com program.
The Guild had launched Backinprint.com in the summer of 1999,
allowing authors for the first time to republish their out-of-print
books without incurring any set-up costs. (The Guild had negotiated an
agreement with on-demand publisher iUniverse to prepare the books for
on-demand printing.) The service was an immediate hit with members;
within two years, more than 1,000 titles were available to readers
again, including books by Mary McCarthy, Thornton Wilder, William F.
Buckley, Jr., and Victor Navasky. The books, all of which had fallen out
of print after being published by traditional U.S. publishers, are
among the more than one million in-print books that make up
bookselling’s “long-tail,” low sales-volume works that rarely appear on
bookstore shelves. Long-tail books, more than any other, depend on
virtual bookstores: Amazon largely defines their market.
Sales of all on-demand books grew steadily in the early 2000s. By
2005, sales of on-demand books had reached a new high. Backinprint
titles sold 41,000 units that year. Amazon, the storefront for most
on-demand sales, took notice. It purchased BookSurge, an on-demand
printer, to compete with Lightning Source, the industry-leading
on-demand printing service run by Ingram.
Three years later, however, few on-demand publishers had moved their
printing to BookSurge. Small wonder, since it charged more for its
printing services than Lightning Source and had a reputation of offering
lower quality service. So Amazon turned to aggressive tactics to win
market share, reportedly removing the buy buttons from all iUniverse
titles during the 2008 AWP conference. Author Solutions, which had
acquired iUniverse, saw its sales plummet. It quickly agreed to use
BookSurge for its Amazon sales, and Amazon restored access to its
millions of customers.
While a traumatic event for iUniverse, the episode went unnoticed in
the book world, which was focused on Amazon’s November 2007 introduction
of the Kindle, with its predatory pricing scheme for select frontlist
books. Even our members with books in the program took no notice,
because when Amazon removes a buy button from a book’s sales page, the
sales page looks almost identical to a page for an out-of-print or
out-of-stock book. Reports of Amazon’s strong-arming of on-demand
publishers didn’t surface for more than a month, in March 2008, with
reports in the Wall Street Journal and elsewhere.
Amazon got away with this gambit, suffering barely a scrape.
On-demand publisher Booklocker did file a class action lawsuit in Maine
against Amazon over the episode. After Amazon’s motion to dismiss
failed, Amazon quietly settled the suit for a reported $300,000 in
attorneys’ fees. Amazon has doubtless earned back those fees many times
over. Thousands of authors continue to see their on-demand royalties
reduced by ten to fifteen percent as a result of Amazon’s squeeze. (This
wasn’t a maneuver justified by efficiencies that ultimately benefit
consumers, incidentally. Amazon appears to sell the books at precisely
the same price as other online retailers. Amazon just makes more money
at it than they do.)
More importantly and profitably to Amazon, by forcing iUniverse and
other author centered on-demand service providers to use BookSurge,
Amazon severely constrained effective competition for its own author
centered on-demand service provider, which became known as CreateSpace
in 2009. Amazon’s vertical integration of on-demand printing eliminated
the ability of iUniverse, PublishAmerica, XLibris and others to offer
authors better royalties when selling through Amazon. CreateSpace
appears to have thrived ever since.
Amazon’s Exercise of Its Buy Button “Nuclear Option”
In June 2008, Doreen Carvajal of the New York Times called buy-button
removal “the literary equivalent of a nuclear option for rebellious
publishers who balk at [Amazon’s] demands.” Ms. Carvajal was discussing
Amazon’s removal of buy buttons in the United Kingdom from hundreds of
Bloomsbury titles while in negotiations with the publisher.
The Authors Guild began preparing for the next incident, which
everyone in the industry knew would come. Since stealth appeared to be a
significant weapon for Amazon (authors may not notice, if the incident
is over quickly enough, and publishers are fearful of blowing the
whistle), the Guild hired developers to build a tool to e-mail authors
when Amazon removed one of their buy buttons. When Amazon removed the
buy buttons from Macmillan’s print and digital books in January 2010,
the Guild launched the tool through a dedicated website,
WhoMovedMyBuyButton.com.
Amazon’s buy button removal campaign persists unabated. Independent
Publishers Group markets and distributes titles from independent
publishing houses to the book trade at large. When IPG’s Amazon contract
came up for renewal in 2012, Amazon pressured IPG for more favorable
terms. When IPG resisted, Amazon took down all IPG e-books from its
site. After X months, IPG came to terms, etc.
Amazon and E-Lending by Public Libraries
In September 2011, Amazon entered an arrangement with OverDrive, the
largest supplier of e-books and audio books to public libraries, making
possible e-book library lending through the Kindle device. OverDrive’s
implementation of the Kindle lending program, pursuant to its agreement
with Amazon, required it to redirect patrons to Amazon’s servers. A
columnist for the Los Angeles Times compared it to “walking into your
public library then finding yourself at the Target checkout counter.” No
other e-book vendor has such an arrangement.
Amazon Pursues Its Own “Monopoly Over Its Titles:” the Balkanization of the Literary Marketplace
Since its e-terms battle with Macmillan in January 2010, during which
Amazon protested that it had to “capitulate” due to Macmillan’s
“monopoly over its titles,” Amazon has turned toward pursuing its own
monopoly. With the launch of the Kindle Fire, Amazon’s drive to acquire
exclusive rights to books, by acquiring publishers with substantial
backlists and other arrangements, has taken on a new urgency.
In September 2011, Amazon’s acquired the exclusive digital rights to
one hundred popular DC Comics graphic novels. If a customer wanted to
read any of these on an e-device, it had to be on a Kindle Fire. Barnes
& Noble, trying to break into the e-device market with its Nook,
retaliated by pulling all print copies of DC Comics titles from its
shelves. Books-a-Million, the third largest bookseller, followed suit.
“As Amazon seeks over the next few years to expand its tablet line,”
predicted the New York Times, “these collisions over content are likely
to become routine.”
Amazon is moving quickly. In December, Amazon entered the children’s
book market, acquiring more than 450 titles of Marshall Cavendish
Children’s Books. In April, Amazon announced it had acquired the
exclusive North American rights to publish Ian Fleming’s James Bond
novels — in both digital and print formats. Earlier this month, Amazon
expanded its holdings of genre fiction, purchasing the publisher Avalon
Books and the exclusive rights to its 3,000-title backlist of romance,
mystery and Western fiction.
Balkanization of the literary market is something new and deeply
troubling. “Bookstores used to pride themselves on never removing any
book from their shelves,” reported the Times, “but that tradition—born
in battles over censorship—is fading as competitive struggles increase.”
Awful as it is for our literary culture, the balkanization of the book
market is but a logical extension of Amazon’s no-prisoners approach to
competition.
The Kindle Owners’ Lending Library
Amazon lagged Barnes & Noble by a full year in developing an
e-reading tablet. While Barnes & Noble prepared to roll out its
second-generation tablet, Amazon prepared to introduce its first, the
Kindle Fire. To gain an advantage, Amazon proposed to do something
Barnes & Noble couldn’t afford to do: give away e-books, including
front list e-books, for free.
So in November 2011, shortly before Amazon began shipping its Kindle
Fire, Amazon also introduced its Kindle Owners’ Lending Library, which
allowed Amazon Prime members to download onto their Kindles any of more
than 5,000 titles, at the time of it was announced. Customers are
limited to one book per month and one book at a time — when a new book
is downloaded, the old one disappears from the Kindle.
Amazon approached the six largest U.S. trade book publishers to seek
their participation in the program. By all accounts, each refused.
Publishers weren’t eager to allow Amazon to undermine the economics of
the e-book market, representing the lone bright spot for the industry.
So books from the six largest trade publishers were not in the Lending
Library program.
Amazon’s attempts to enlist the next tier of U.S. trade book
publishers, major publishers that are slightly smaller than the Big Six,
fared no better. Many, perhaps all, also refused. No matter. Amazon
simply disregarded these publishers’ wishes, and enrolled many of their
titles in the program anyway. Some of these publishers learned of
Amazon’s unilateral decision as the first news stories about the program
appeared.
The use of publishers’ books without permission was due to a tortured
reading of its boilerplate contracts with publishers. Amazon decided
that it didn’t need the publishers’ permission, because, as Amazon saw
it, its contracts with these publishers merely required it to pay
publishers the wholesale price of the books that Amazon Prime customers
download. By reasoning this way, Amazon claimed it could sell e-books at
any price, even giving them away, so long as publishers are paid.
From our understanding of Amazon’s standard contractual terms, this
is nonsense — publishers did not surrender this level of control to the
retailer. Amazon’s boilerplate terms specifically contemplate the sale
of e-books—not giveaways, subscriptions, or lending. Amazon can make
other uses of e-books only with the publishers consent. In other words,
Amazon was boldly breaching its contracts with these publishers. This
was an exercise of brute economic power: Amazon knew it could largely
dictate terms to non-agency publishers, and it badly wanted to launch
the Lending Library program with some notable titles.
So Amazon did just that, conscripting publishers into a predatory
pricing business model that substituted cash for genuine innovation,
further undermining the economics of brick-and-mortar bookstores along
the way.
The Justice Department, through this settlement, would deliver the
lists of three large publishers into Amazon’s predatory scheme. Unless
competitors are willing to forego nearly all profits from these
publishers, the Kindle will likely have an unmatchable competitive
advantage.
Conclusion
Of all the possible remedies to the collusion the Justice Department
alleges, requiring three large publishers to allow Amazon to sell
e-books at a loss is among the most destructive of competition that one
could imagine.
Amazon’s tactic of selective predatory pricing of frontlist e-books
was far more anti-competitive than the Justice Department has
acknowledged. It effectively cut brick-and-mortar retailers – logical
participants in a bricks-and-clicks, showroom approach to marketing
e-books – out of the game. The retailers would need a partner willing to
invest substantial amounts to develop and market an e-reader,
e-commerce site, and accompanying software. What partner would dare
invest, with Amazon plainly willing to earn little or nothing from
e-books? (Google’s commitment to independent bookstores always seemed
half-hearted, and now it’s backing out.) From Amazon’s perspective, the
best competitor is one that never dares enter the field.
Amazon has engaged in baldly anticompetitive practices for years. Its
approach to destroying competition is sophisticated, data-driven, and
endlessly creative. What other company would have thought to arm
smart-phone users with a price-checking app then reward them for turning
on their phones’ geo-location function and report pricing data to
Amazon in the height of the holiday season? (Up to five dollars from
Amazon, every time you deny your local retailer a sale. One Saturday
only; limit three per Amazon customer.) It’s utterly brilliant, and a
game only the richest of corporations can play.
Amazon really doesn’t need the Justice Department’s help. For the
sake of free and fair competition, for the sake of readers who would
like many companies to invest in better e-reading devices, software, and
even in bookstores that one can visit on a weekend, please find another
way to address the collusion you believe you’ve uncovered.
Respectfully,
Paul Aiken
Executive Director
