So, if somehow you couldn't hear my insane cackling, the U.S. Department of Justice is totally going to sue the tar out of five major publishers and Apple for fixing the prices of e-books. (If you can't read the Wall Street Journal, the Passive Voice has excerpts, but you're missing some funny bits.)
HAHAHAHAHAHAHAHA!!! Oh, I'm sorry. But: HA. I mean, they collude on prices. Steve Jobs makes a public statement about how publishers colluded on prices. [ETA: And there was a whole story in the New Yorker about how they colluded, and how they knew they could get into trouble for it--amazing!] And somehow--this is a very mysterious process indeed--they got into trouble for price fixing!
Life is so unfair!
Now, if you've been reading the propaganda generated by traditional publishing, you're going, Wait a minute, isn't Amazon the one that exercises evil monopoly powers that would draw the ire of the DOJ?
But of course, that's what traditional publishers have been claiming in the talking points they create for their dupes. (ETA: And oh my God, speaking of dupes.) And the really hilarious part is--that's what they claimed in their arguments to the Department of Justice! Note that, once again, large publishers and Barnes & Noble are working in...oh, what's the word...it starts with a c....
The publishers have denied acting jointly to raise prices. [Too bad Steve Jobs said they acted in collusion with Apple, huh? ETA: Not to mention that story in the friggin' New Yorker--how dumb are you people?] They have told investigators that the shift to agency pricing enhanced competition in the industry by allowing more electronic booksellers to thrive.
William Lynch, chief executive of Barnes & Noble, gave a deposition to the Justice Department in which he testified that abandoning the agency pricing model would effectively result in a single player gaining even more market share than it has today, according to people familiar with the testimony. A spokeswoman for Barnes & Noble declined to comment.
Prior to agency pricing, Amazon often sold best-selling digital books for less than it paid for them, a marketing stance that some publishers worried would make the emerging digital-books marketplace less appealing for other potential retailers.
The punch line? "The publishers' argument that agency pricing increased competition hasn't persuaded the Justice Department, a person familiar with the matter said. Government lawyers have questioned how competition could have increased when prices went up." [Emphasis added, because it's hilarious.]
I bet they have!
I also bet that when the DOJ lawyers talk about competition, they mean competition with publishers--you know, like if there was competition with publishers, they couldn't fix prices. But when publishers talk about competition, they mean competition with Amazon. They want to see a lot more of that, because they think it will make things easier on them.
But honestly, while I think there will be a lot more competition with Amazon to sell e-books, I don't think it's going to help publishers at all, because I don't think the competition will focus on books that come from traditional publishers. Why deal with their up-front costs?
So, yeah, it's all looking bad for publishers. For the record, it's looking much worse for publishers than it is for Apple. Apple has a ton of cash floating around--that's cash that could have been paid out as dividends to shareholders, but c'est la vie! More important, Apple entered into this pricing scheme to help out its iBookstore, but the iBookstore flopped anyway, and that still hasn't affected Apple's bottom line in any kind of serious way--they're a device company, and as long as people snap up iPhones and iPads, they're fine.
For publishers, well, their pockets are not as deep as Apple's (nobody's pockets are as deep as Apple's). And the pricing scheme was more important to them, because it pumped up margins on e-books, which have become a major product.
In addition: Hello, they pissed off Amazon! And what did Amazon do? Oh, it found a whole new slew of suppliers! It turns out that products from these suppliers sell like crazy! And--this is key--Amazon almost always makes money off these suppliers, even when they sell stuff for 99 cents! Oh, and look! Now the suppliers increasingly don't want to deal with traditional publishers!
The irony is delicious, is it not?