In what is ostensibly a post on the latest Apple v DOJ tussle (the hearing scheduled for tomorrow), Kathleen Sharp has managed to drag in Amazon several times, misstate historical details, and bring up multiple irrelevant arguments. I am always a fan of short-form fiction published by Salon.com, so I am overjoyed to once again have an opportunity to discuss Salon.com’s latest flight of fancy.
It’s a good one, and starts out with a whopper:
You may remember that Amazon helped persuade the U.S. Department of Justice to sue Apple in April 2012, claiming that Apple conspired with five of the nation’s largest publishers to fix the price of e-books at a level different than what Amazon had set.
I don’t remember that Amazon persuaded the DOJ to do anything. What I remember is that at least 2 of the state’s attorney generals were investigating Apple and the 5 publishers since August 2010 (so said the WSJ).
So Amazon hoodwinked the DOJ and the attorneys general for nearly 50 states into conducting a 2 year long investigation? Really?
Amazon, the web’s biggest retailer, had been selling published books at a money-losing rate of $9.99. Why? To get us to buy its Kindle e-book reader, and to dominate the e-book market. Amazon’s strategy worked. According to court documents, the firm soon controlled 90 percent of the e-book market.
And as I also pointed out in that post, not all of the ebooks sold by Amazon in the pre-agency era cost $10 or less. I know I regularly paid more, and I’m not the only one.
This meant that publishers — who had invested in the writing, production, promotion and distribution of these books — couldn’t sell their wares at the recommended retail price of $14.99.
Um, the publishers weren’t selling the ebooks, Amazon was, but is Sharp really trying to argue that publishers were unable to set the retail price they wanted and let Amazon take a loss?
That doesn’t make any sense.
Nor could brick-and-mortar stores match Amazon’s money-losing discounts. Amazon’s product-dumping and predatory pricing helped bankrupt many small-town bookstores. Yet, neither publishers nor independent booksellers sued Amazon, even though they might have had a good case (as we’ll soon see).
B&N was often matching Amazon price for price on new hardcovers. And if Amazon was killing small-town bookstores then why did the ABA have more members in 2013 than in 2012? And why did Forbes and the Washington Post report that indie bookstores are thriving?
Also, Sharp never does explain why publishers and indie booksellers would have had a good case for suing Amazon (not that I can see, anyway).
So how did this wacky e-book case get so far?
It started in the Rainier Tower in Seattle, home of Steve Berman and his law firm, Hagens Berman Sobol Shapiro LLP. …
Sharp spends the next 8 paragraphs focusing on one of the anti-trust lawyers who sued Apple and the 5 publishers on behalf of consumers. I’m not quite sure why she wrote about him at such length, but I suspect she was trying to imply that because this lawyer is based in Seattle he must be Amazon’s patsy.
But never mind her motive; let’s look at the details she got wrong:
Allegations of collusion attracted the DOJ and other government agencies charged with upholding state and federal laws. In April 2012, the DOJ picked up Berman’s argument and sued Apple.
So what does Sharp think the state’s attorneys general and the DOJ were doing in the 20 months since August 2010, twiddling their thumbs? She doesn’t offer a clear explanation, but she does go on to raise an irrelevant argument:
Every year, the “Library & Book Trade Almanac,” an authority in the field, reports annual sales by book category. It 2008, when Amazon had a lock on the market, it reported that the average price of an adult fiction e-book in the U.S. in was $8.71. In 2009, as more people self-published books, the average dropped to $8.21. In 2010, when Apple introduced its agency model for e-books, the price dropped 14 percent to $7.06. And when publishers were up and running against Amazon in 2011, the average price of an e-book sank by an astonishing 32 percent — to $4.83. “That’s a steal,” said Al Greco, a professor of marketing at Fordham University.
The average selling price of ebooks on the US market-is irrelevant to this lawsuit; it is no more or less than a red herring and has been a red herring no matter whether it is Mark Coker, Joe Wikert (or rather his guest), or Sharp who makes the argument.
For one thing, the phrase “raise ebook prices” is itself a red herring (the publishers conspired to gain control, not simply to raise prices). And then there’s the point that (as I pointed out in August 2012) the 5 publishers were only trying to control their own prices, not everyone else’s.
And the DOJ has already shown that the average price of ebooks published by the 5 publishers actually went up as a result of agency pricing. There’s even a convenient chart:
I’d love to see someone refute that one.
I don’t think Sharp will be able to, but she does go on to muddy the waters even more:
Which gets to the heart of this bizarre case: The numbers show that, far from hurting the market, the publishers’ and Apple’s agency model actually helped it. They allowed Barnes & Noble to gain a foothold in the e-book market, provided relief to the independent brick-and-mortar stores, and gave consumers lower rather than higher prices.
I’m sorry, but I was under the impression that the whole price-fixing issue involved ebooks. Indie booksellers have only a negligible share of the US ebook market, so how exactly did agency pricing provide relief?
And as for the lower vs higher claim, see the above chart.
Apple and the DOJ are going back to court tomorrow to argue over the conduct of and fees charged by the court-appointed monitor, Michael Bromwich, and that’s why Sharp spent the rest of her article slanting all of the disagreements between the DOJ, Bromwich, and Apple in favor of Apple.
I won’t repeat them here, but I suspect that the judge will see things differently.