Monday, October 15, 2012


By Moniqe

The leaves may be falling all around us but anti-trust suits seem to be blooming. Perhaps it’s because of the economic environment with more companies looking to consolidate and protect their profit platforms. Computer technology has changed the way companies do business. Of course, for last twenty plus years, cyber market and digital content have become an increasing chunk of the profit pie—especially with digital technology. There has been a lot of modernization in the publishing field as a result. 

I've been watching, with interest, the whole debacle over e-book price fixing. The publishing giants were slow to move on this new technology, but less narrow-minded entrepreneurs saw the possibilities almost from the inception and set about developing and adapting the technology for their own profit. That’s not to say the giants didn't move toward it, they did, but more as an afterthought than with the focus of utilizing it proficiently for future profits.

Reactive versus proactive.

wikimedia commons
The problem with reactive is you’re already behind by the time you realize what’s going on. You’re playing catch up while those who watch the trends in technology were already reaping the profits of their hard work and long vision. If you’re accustomed to being a leader of the pack, your short sighted decisions have left you with bits of fur and stringy meat on left over bones and envious of those who have the juicy fat haunch of the profits to feast on. You’re used to being in the alpha position and to carry the analogy further, you resort to cunning to get the choice bits. Chancy decision because the new alphas might not be as experienced in this particular hunting ground but they didn't get the position by being stupid. They’re lean and mean and intend to keep their juicy bits. Being reactive can get you hamstrung or dead.     

It looks like Hachette, Harper Collins, and Simon & Schuster have settled an antitrust lawsuit about e-book prices. A U.S. court approved the settlement on Sept. 6, which has allowed Amazon to start discounting some of those companies' titles. Amazon has already sent out letters of notification of funds for a credit, pending court approval of the settlement in February 2013. The Attorney General estimates a credit of between 30¢ to $1.32 on eligible e-books purchased between April 2010 and May 2012—unless you are a Minnesota resident. The Attorney General of Minnesota chose not to participate in the settlements. 

The above mentioned companies have agreed to pay $69 million in restitution to e-book consumers to settle U.S. litigation. 

That's a lot of dollars, ladies and gents.

I'm curious what Apple will be offering here in the United States. The last I heard, Apple and Macmillan refused to talk settlement with the Justice Department, opting for their day in court. Penguin is still trying to sit on the sidelines while polishing the dents and mud off their halos and look innocent of any wrongdoing. The trial is scheduled to begin in New York Federal court June 2013. So, they have offered to settle with the European Union but are gearing up to fight a court battle here in the United States. A lot can happen in eight months, including a similar settlement, now that the precedent has been set in Europe.

Apple and Macmillan have formally have offered to settle with the European Union. The offer under consideration, according to the European Union, for the four publishers--CBS Corp's Simon & Schuster, News Corp unit Harper Collins  French group Lagardere SCA's Hachette Livre, and Verlagsgruppe Georg von Holtzbrinck, which owns Macmillan in Germany, is as follows:

"For a period of two years, the four publishers will not restrict, limit or impede e-book retailers' ability to set, alter or reduce retail prices for e-books and/or to offer discounts or promotions."

They also will suspend, for five years, contracts that effectively barred publishers from selling e-books at prices lower than Apple's. A side note to this—the discounts allowed by Macmillan is only for European retailers and not for the US vendors.

Some grievous wounds indeed in the battle for the proprietorial alpha positions.

The anti-trust suits have caused others to cast a speculative look around for a target. There are several contenders out there. Google is one of them. So far, nothing has come of it, but you can bet Google isn't being shortsighted but taking a real close look at eliminating any vulnerability in their proprietorial alpha position.

Yet another side to proactive vs. reactive. 


L.G.Smith said...

Got my notice from Amazon. I'll probably reap about $2 worth of refund from it at most. :)

In hindsight, it is surprising how slow the old publishing houses were to get in on the e-book trade. I think you've summed it up well, especially the vicious way they're all fighting over that scrap of profit meat.

~Sia McKye~ said...

I got mine too, LG.

I think it was largely because they became accustomed to the way things always were and the fact they really didn't see the potential. They thought it a fad because, after all Paper books were the norm and no way would ebooks ever surpass traditional books. Or at least that's the take I got as I read various industry rags a few years ago.

Of course there were many who didn't see this coming, or happening as fast as it did, despite many touting the wonders of the new digital technologies and demonstrating the applications.

Digital technology changed the face of publishing and the technical age will continue to challenge what has been the *norm* over the next few years.

Alex J. Cavanaugh said...

Be interesting to see what happens.
What about Amazon? I heard they don't allow authors and publishers to sell eBooks at a lower price anywhere else.

Mark Koopmans said...


While I won't be getting a refund (I haven't read an ebook - prefer to hold the paper in my grubby little hands:) I wanted to say thanks for the post, which reads more like a newspaper feature than a simple musing :)

It *will* be so very interesting to see how we are reading in ten, twenty years.... (and I hope I can still hold my paperbacks in my hand :)

Tara Tyler said...

its crazy!! i'm still confused! i think i get some money back, but its hardly worth the skirmish! too bad they cant be goid to start out...

~Sia McKye~ said...

Mark, Thank you. Digital technology has been a particular interest of mine since 2007. I was amazed with the potential of the technology. I've written quite a bit about it and publishing in general.

I muse about all sorts of things, simple and not so simple, lol! Trust me when I say, had I submitted this to my former newspaper editor, he'd have been all over this one and while I have all my sources the beauty of a blog is you can get a bit more creative in your presentation.

Jo said...

Interesting post Sia. I buy a lot of ebooks, but have not heard anything about a refund. I have also wondered why some of my favourite authors are not in e-book form, your post gives me an answer.

Personally I love my Kindle and although I have enjoyed reading paper books all my life, not sure when I started reading for myself, but at least 68 years, I like being able to read electronically. I am presently re-reading The Deed of Paksenarrion which is a huge book and I so wish it was an e-book.

~Sia McKye~ said...

Tara, I doubt that these publishers saw this as a skirmish. More of a war, as they lost quite a bit of blood (money) and suffered a dent to their international reputations.

It's a matter of principle and boundaries. These guys stepped all over those legal boundaries both here and in Europe and they left tracks.

The European Commission started their investigation a bit sooner than the United States and filed charges based on solid evidence of a well thought out conspiracy.

The precedent is now set and it will effect how other large proprietorial corporations and they way they do business on the digital frontier. That's actually a good thing.

~Sia McKye~ said...

Alex, I know that Amazon has come under scrutiny and there have been complaints filed just as there have been numerous complaints filed with regard to Google's proprietorial properties. So far as I know, there isn't legal action pending.

What's also interesting is these publishers were looking for a way to circumvent Amazon's cut in the low pricing of books and e-books.

Not that Amazon is as innocent in all this as they'd like to portray. They're on a fine edged sword right now. That legal blade cuts both ways.

In my opinion, in this issue anyway, the consumer was seen to benefit whereas with the others the consumer was gouged.

Hilary Melton-Butcher said...

Hi Sia .. thanks for posting - it's interesting to read and learn more about things ... great post title too - cheers Hilary