Justice Dept Lawsuit Moving Forward

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Margo
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Justice Dept Lawsuit Moving Forward

Post by Margo » April 11th, 2012, 12:40 pm

In case anyone is interested/hasn't heard, the DOJ is going forward with the lawsuit over ebook pricing:

http://finance.yahoo.com/news/justice-d ... 06457.html
Urban fantasy, epic fantasy, and hot Norse elves. http://margolerwill.blogspot.com/

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Mira
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Re: Justice Dept Lawsuit Moving Forward

Post by Mira » April 11th, 2012, 1:40 pm

Wow. This is really fascinating. Should be very interesting how this all plays out. Sounds like Random House is trying to play it tough and refuse to negotiate, but I'm not sure what leverage it thinks it has. Maybe it just wants more press. Thanks for posting it, Margo.

Add: Oh, I also love how the reporter mentions clandestine meetings in extremely high priced hotels a couple of times. Paints a picture.

Doug Pardee
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Three publishing houses settle

Post by Doug Pardee » April 11th, 2012, 2:33 pm

As expected, Hachette, HarperCollins, and Simon&Schuster have reached a settlement with the Department of Justice. The proposed settlement (to be approved by the court) calls for a 2-year moratorium on retail-price controls, cancellation of Most Favored Nation clauses in e-bookstore contracts, and a promise to be very careful not to collude... at least for the next five years.

Also as expected, Penguin and Macmillan are not prepared to settle.

DoJ announcement: http://www.justice.gov/iso/opa/ag/speec ... 04111.html

Mira: Random House wasn't part of the "iPad launch" mass switch to Agency Model, so they're not under investigation.

Added: The proposed settlements don't include any fines or recompense. No penalties are being exacted over past behavior. It's all about what the companies will do over the next couple of years. To me, that says that the DoJ doesn't really think their case is as strong as they claim: they're not at all sure that they can show that anyone was harmed or that the publishers profited.

Further added: The proposed settlements permit the publishers' contracts to forbid selling at an overall loss. This is determined on a full-year basis and across all titles: the total discounts given by the e-book seller for the year on all e-books cannot exceed the total commission earned by the e-book seller on all e-books for that year. Note that on a $14.99 e-book with a 30% commission, the amount due the publisher is $10.49. If Amazon sells it for $9.99, they're going to have to make up that 50 cents on some other e-books, not on sales of TV sets. So if they return to discounting best-sellers, they're going to have to make it up on mid-list and back-list.

Margo
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Re: Justice Dept Lawsuit Moving Forward

Post by Margo » April 11th, 2012, 5:35 pm

It is particularly interesting that the article mentions the problem with Apple having the "most favored" deal with the publishers...since Amazon/B&N and every other distributor I deal with have similar clauses in their contracts. I agree not to price my ebook lower anyplace else than I do at the distributor in question. So...how can the publishers and Apple get in trouble for a deal that all the other distributors also make with self-publishers?
Urban fantasy, epic fantasy, and hot Norse elves. http://margolerwill.blogspot.com/

Doug Pardee
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Re: Justice Dept Lawsuit Moving Forward

Post by Doug Pardee » April 11th, 2012, 5:55 pm

The investigation and lawsuit isn't about the contracts themselves. The investigation and lawsuit is about how those contracts came about. Specifically, the DoJ is charging that Apple and the five publishers all got together and decided, "Okay, here's what we're gonna do..." which is collusion.

You'll notice that the proposed settlement doesn't penalize the publishers for their actions, and permits similar contracts to be reinstituted in two years provided that they're negotiated without collusion. This is strictly about the [alleged] collusion, not about the nature of the contracts. The DoJ is just fine with Random House's contract, which is essentially the same but clearly was negotiated separately — almost a year later.

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Mira
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Re: Justice Dept Lawsuit Moving Forward

Post by Mira » April 11th, 2012, 7:52 pm

"Mira: Random House wasn't part of the "iPad launch" mass switch to Agency Model, so they're not under investigation."

Whoopsie. Sorry. All those publishers look alike to me.

Speaking of which, a related topic - many people have been accusing publishers of being a "cartel". They offer the same royalty rates, contract structures, set prices on books the same, etc. You seem to understand business really well, and I'm curious, Doug, (if you want to answer this) if you think that is true, and if so, why it's been ignored.

kghartwig
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Re: Justice Dept Lawsuit Moving Forward

Post by kghartwig » April 12th, 2012, 12:23 pm

An attorney's blogpost in full support of the DoJ as regards collusion (point made one or two comments above).

http://www.litigationandtrial.com/2012/ ... antitrust/

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Mira
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Re: Justice Dept Lawsuit Moving Forward

Post by Mira » April 12th, 2012, 5:15 pm

Great article Kghartwig - thanks for sharing it!

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Re: Justice Dept Lawsuit Moving Forward

Post by kghartwig » April 14th, 2012, 7:10 pm

Couple day old update - expect it's no news to most people here that 3 of the publishers settled at once.

http://www.pcworld.com/article/253593/s ... wsuit.html

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