Aftermath Of The Department of Justice Lawsuit: Amazon Customers Getting Refunds

Some folks have received emails from Amazon informing them they'll be getting money because of the settlement reached between "several major e-book publishers and the Attorneys General of most U.S. states and territories". Specifically:

While we will not know the amount of your credit until the Court approves the settlements, the Attorneys General estimate that it will range from $0.30 to $1.32 for every eligible Kindle book that you purchased between April 2010 and May 2012. (past e-book purchases)

There are conditions of course. To read all about it click here: Customer FAQ for Attorneys General E-book Settlements.

Other articles you might like:
- Amazon's KDP Select Program: The Power Of Free
- Amazon's KDP Select Program: Is Exclusivity Worth The Perks?

Photo credit: 401(K) 2012

The Department Of Justice Accepts Publishers' Settlement

I just read this and I must admit I'm jumping up and down. The DOJ rejected objections its proposed settlement with HarperCollins, Hachette and Simon & Schuster. A number of authors I read regularly were singled out for mention in the ruling, among them, Joe Konrath, David Gaughran, Lee Goldberg and Laura Resnick.

This isn't an excerpt from the ruling itself, it's from The Bookseller:

Barnes & Noble's objections to the settlement had claimed it would injure booksellers. The Authors Guild had said the proposed settlement was "not in the public interest". Referring to Amazon, the US authors body had stated: "The Justice Department is sanctioning the destructive, anticompetitive campaign of a corporate giant with billions in cash and boundless ambitions."

In a response published today (23rd July), the DoJ said: "In the course of its investigation, the United States examined complaints about Amazon's alleged predatory practices and found persuasive evidence lacking . . . Even if there were evidence to substantiate claims of 'monopolization' or predatory pricing' they would not be sufficient to justify self-help in the form of collusion."

Responding to Barnes & Noble's comments, the DoJ asserted that Barnes & Noble was "worried that it will make less money after the conspiracy than it collected while the conspiracy was ongoing" and that that was not a matter for the court to consider. Many of the benefits B&N attributes to collusive pricing could be achieved in other ways, such as lowering costs, the DoJ said.

The DoJ also rejected an implication it said it drew from the Authors Guild submission, that price-fixing should be permitted in the publishing industry because of the cultural role books play in society. "An argument that a particular industry or market deserves a blanket exemption from the antitrust laws should be directed to Congress, rather than the United States or the court," the DoJ stated. It also noted that some members of the Authors Guild, including authors Joe Konrath and
David Gaughran, had written in support of the Final Settlement.

The DOJ said that after "careful consideration" of the public comments, it had concluded that the proposed final judgement was an "effective and appropriate remedy for the antitrust violations alleged in the complaint".

You can read the rest of the article here: DoJ rejects B&N/Authors Guild objections to settlement.

Here is the DoJ's entire response. I just finished reading it. It was, IMHO, very well written and what I would call a 'good read'. Joe Konrath, Lee Goldberg and Laura Resnick, amoung others, are mentioned on page 41.

It is worth noting that members of the Authors Guild also wrote in support of the
proposed Final Judgment and against the Authors Guild’s position. Joe Konrath, author of 46 books, clarifies that letter-writing campaigns by the Authors Guild and the Authors
Representatives “did not solicit the views of their members, that they in no way speak on behalf of all or even most of their members.” Konrath (ATC-0144) at 1. He observes that agency pricing has slowed global growth and hurt consumers and writers. Lee Goldberg, a published author and member of the Authors Guild writes, “I believe that it’s detrimental to authors and readers, as well as to the establishment of a free and healthy marketplace, for publishers to collude with Apple to create artificially inflated prices for ebooks.” (ATC-0553). Author Laura Resnick writes, “breaking the law is not a reasonable reaction to being faced with aggressive business competition.” (ATC-0801).

David Gaughran is also mentioned (page 42):

Many comments from self-published authors, in particular, expressed appreciation that
Amazon opened a path to publication that was immune from Publisher Defendants’ hegemony. David Gaughran, writing on behalf of 186 self-published co-signors, writes that “Amazon is creating, for the first time, real competition in publishing” by charting a “viable path” for selfpublished books. Gaughran (ATC-0125) at 1, 3. Mr. Gaughran observes that “[t]he kind of disruption caused by the Internet is often messy,” and those who “do quite well under the status quo” naturally resist change. Id. at 2. He compares publishers and literary agents to “[a]ll kinds of middlemen,” which have “gone from being indispensible to optional” with the rise of the Internet. Id. Writing in support of the proposed Final Judgment, Mr. Gaughran confirms that self-published writers, in particular, see opportunities in a market not subject to collusive pricing.

I'd encourage you all to read at least the summary at the top.

Happy reading!

Related articles:
- Joe Konrath's Letter To The Department Of Justice
- 17 More States Join The Class Action Suit Against Apple et al
- The Passive Guy writes about monopolies

Joe Konrath's Letter To The Department Of Justice

Joe Writes:

Dear Mr. Read,

I’m writing to you as the author of forty-six books--eight legacy published, two Amazon published (with three more on the way), and thirty-six self-published, all of which inform the views I express in this letter.

As you doubtless recognize from the mail you’re receiving, there is currently underway a letter-writing campaign coordinated by the Association of Authors’ Representatives, the Authors Guild, and other parts of the publishing establishment attempting to persuade you that the DOJ’s suit against five of the Big Six and Apple is without merit, and that the Agency model is, at best, good for everyone, at worst, harmless.

I’m writing to tell you that these organizations did not solicit the views of their members, that they in no way speak on behalf of all or even most of their members, and that (as I imagine is obvious) they are motivated not by what’s best for consumers, but by what they see as best for themselves.

I recognize that the heart of the DOJ’s suit is collusion, not high prices. But it’s clear that the legacy publishing industry’s strategy is to keep the prices of ebooks high so as not to cannibalize high-margin hardback sales. If the prices of legacy published books are kept artificially high it could be argued that my lower-priced self-published books are made more attractive by comparison, but I believe that a regime of higher-priced books is bad for the industry overall because it slows the growth of the global book market, which indeed hurts all sales. I also believe it’s obviously bad for consumers, especially lower-income consumers, who could buy more of the books they loved if those books weren’t priced so high.

When prices of media are high, they’re a barrier to entry. Many are avoiding buying an ereader because the ebooks they most want are $9.99 - $14.99. If prices came down, more Kindles (and Kobo readers and Nooks and Sony readers) would be sold. That widens the market, which leads to more ebook sales. This is good for authors, and for readers who can get more for their money.

Read the rest here: Joe's Letter to the DOJ

Go Joe!

I'd just woken up when I read Joe's post -- last night I stayed up late getting my short story A Night In The Country ready for publishing on Amazon -- but I hope I managed to write something marginally coherent in the comments.

Very well said Joe, but it was strange to see you write in a more subdued tone.

Anyway, I agree. One thing that has always irked me when folks complain about Walmart artificially lowering prices is that ... well, sometimes I think it's easy to lose sight of how cash poor some folks are, especially families. Getting something for 50 cents cheaper can make a difference.

Of course one doesn't need books in the same way one needs food, but -- and I hope this doesn't sound cliche -- books do feed the soul and, as I said, 50 cents (or less!) can make a dig difference.

Even though I think the Big-6 inflating the prices of books makes lower priced indie books more attractive, you're right. It hurts the book business and that hurts everyone. Writers, booksellers and especially readers.

In any case, wonderful letter Joe, thanks for sharing. :)

Of course now I'm looking at my comment about Walmart artificially lowering prices and thinking about all the mom and pop shops which went out of business because they couldn't compete against the big chain.

Is that what is happening with Amazon? Will the act of Amazon selling books for lower prices drive indie, or self-published, writers out of business?

No, I don't believe so. Amazon is the self-published writers' biggest business ally. That's true right now and I don't see why it would change in the foreseeable future. That said, Amazon isn't a friend to publishers who want to sell ebooks at inflated prices.

Some publishers complain that if they don't have the kind of monopoly control they need to do this, that they'll go out of business. Further, they say that if they go out of business that the world of publishing, the world of books, will be a poorer place and, ultimately, readers will suffer.

Personally, I don't buy it.

Yes, I do think that if publishers are prevented from fixing ebook prices artificially high, or if they are forced to give authors better ebook royalties (a topic for another post), that many of them will go out of business.

Let's say that's true. I believe that although some, perhaps many, publishers will fold that there will be many publishers who will survive and thrive. These publishers will be the new Big-X.

Publishing won't be dead, it'll just be different.

Further Reading:
17 More States Join The Class Action Suit Against Apple et al
The Fungibility of Books

"Joe Konrath's Letter To The Department Of Justice," copyright© 2012 by Karen Woodward.

17 More States Join The Class Action Suit Against Apple et al

Sometimes I get so focused on the Department of Justice suit against Apple and 5 of the Big-6 publishers that I forget a class action suit is still pending against Apple, Macmillan and Penguin. (It used to be against Hachette, Simon & Schuster and HarperCollins as well, but those publishers chose to settle.)

The latest news is twofold: 17 more states joined the class action suit and some documents have been released for public perusal, among them an email from the late Steve Jobs. He wrote:

    As I see it, [Conspiring Publisher] has the following choices:

    1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.

    2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.

    3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.

    Maybe I’m missing something, but I don’t see any other alternatives. Do you?- As 17 more states join class action against book publishers and Apple, new details revealed

Yesterday we learned that Apple et al lost their appeal to throw out the class action lawsuit.

Passive Guy, an attorney practicing contract law, has this to say: 

The basic charge against Apple and five of the six largest publishers is price-fixing. This charge is the antitrust equivalent of first-degree murder – the worst and most despicable act prohibited by this 120-year-old statute, The Sherman Antitrust Act. Its principal author, Senator John Sherman, said the purpose of the law is ”To protect the consumers by preventing arrangements designed, or which tend, to advance the cost of goods to the consumer.”

Based upon the allegations of the Department of Justice complaint, Apple and these big publishers intended to push up the price of ebooks sold through all retail channels and were successful in doing so, increasing the cost of these goods to book buyers.

Antitrust law contains a lot of gray areas, but collusive price-fixing isn’t one of them.
- by Passive Guy, A marketplace defined by collusion is neither a fair nor a free market

I would have never thought, two years ago, that Apple and two of the largest publishers in the US would be facing a suit by the DoJ and as class action lawsuit.

If Apple et al lose both lawsuits, what will be the result? I'm guessing, but it seems likely bestsellers will come down in price and (hopefully!) we will no longer see ebooks priced more expensively than hardcovers.

In the long term I suppose the question is: Will one or more of the Big-6 survive? But, whatever happens to the publishers, there's no question in my mind that Apple will do just fine. (Thank goodness! I want my iPhone 5. ;)

What do you think? If Apple et al lose, what will happen to publishing?