Authors Guild Favors Big Six eBook Price Cartel

Letter from Scott Turow: Grim News

The Justice Department has been investigating whether those publishers colluded in adopting a new model, pioneered by Apple for its sale of iTunes and apps, for selling e-books. Under that model, Apple simply acts as the publisher’s sales agent, with no authority to discount prices.

We have no way of knowing whether publishers colluded in adopting the agency model for e-book pricing. We do know that collusion wasn’t necessary: given the chance, any rational publisher would have leapt at Apple’s offer and clung to it like a life raft. Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open.

Boldfaced emphasis added by me.

Turow would have every one of you — and the AG membership — believe that revisionist bullshit.

And I want everyone to notice his weasel wording: “making it uneconomic for physical bookstores” — not, “making books more affordable for customers.”

Let’s see just what the history of book publishing and pricing — before Amazon ever existed! — was really like.

 

New York Times, June 25, 1990: Aggressive Discounting Pays Off for Crown Books

Crown Books’ policy of discounting every book has long made the retailer a burr under the saddle of its rivals. But the book chain especially aggravated them recently when it announced a 40 percent discount on hardcover best sellers.

That discount will be difficult, if not impossible, for rivals to match. But book industry executives say it will also leave Crown with precious little margin for error.

Boldfaced emphasis added by me.

Feb 1, 2011: The Bargain Book Business: Why the Deals Are so Good

Formerly, publishers determined each title’s retail price, which all the bookstores observed. Not every title made a profit, but the publishers usually kept slower sellers available for sale until they sold out. At that time, they could either decide to print more copies if there was still reasonable demand, declare the book out of print and delete if from their catalog. Sometimes, publishers decided a title was not worth keeping and sold remaining copies to remainder companies for pennies on the dollar; the remainder companies marketed the books at deeply discounted prices.

In the late 1970s two big shocks affected the book business. Crown Books, which opened its first store in 1977, offered discounts on everything it sold, challenging the publishers’ right to impose their prices on stores. Barnes & Noble and Borders soon started their own nationwide chains of very large bookstores.

Boldfaced emphasis added by me.

Gale Encyclopedia of US History: Publishing Industry

In the 1970s, national chain bookstores such as Barnes and Noble and Waldenbooks began to open retail outlets in malls across the country. By buying in volume, chains could earn more profit on each copy of a book sold, allowing them to pay higher rents. Buying in volume also meant that they could negotiate deeper discounts from publishers. By passing this discount on to book buyers, the chains were able to attract customers away from the smaller independent bookstores.

Boldfaced emphasis added by me.

Barnes & Noble History

In 1975, the company took a bold and audacious step by becoming the first bookseller in America to discount books by offering New York Times bestsellers at 40% off publishers’ list prices. Barnes & Noble expanded on that idea by opening a 40,000-square-foot Sale Annex directly across from its flagship store.

Dec 3, 2002: Why do books cost so much?

According to Bowker, the average price for mass-market paperback fiction has gone up a whopping 328 percent (from $1.35 in 1975 to $5.78 in 2000), poetry and drama have increased by 252 percent, and juvenile titles cost a staggering 387 percent more now than they did in 1975. (No figures were available for nonfiction mass-market paperbacks.) Adjusting for inflation, Sahr found that the average price of mass-market paperbacks has gone up almost 40 percent, poetry and drama almost 15 percent, and juvenile titles just under 60 percent.

Boldfaced emphasis added by me.

The Agency Model itself is a violation of the First Sale Doctrine, which finally legitimized the video rental market. Had that First Sale Doctrine never come about, who knows what the prices for everything would be today?

Have any of you ever seen heavily-discounted Apple merchandise as you do for other computers, tablets, and media players? No, because Apple keeps an iron grip on those who sell outside of its stores, tying advertising incentives and supplies to maintaining its list price. Now imagine a world where every price is like that!

Turow either doesn’t know history or is deliberately hiding the facts from everybody.

Don’t be fooled by his bleating or by the weak chorus of others who repeat that same tune.

The Agency Model must be abolished.

9 Comments

  1. fjtorres10 March, 2012

    And in breaking news, the DOJ just subpoena’ed Mike Cane as a witness for the prosecution.

    Reply
  2. George10 March, 2012

    Your ideas intrigue me & I would like to subscribe to your newsletter. But only if there’s a Kindle version available. 😉

    Reply
  3. Lacey10 March, 2012

    What amazes me is that publishers are acting like this is a new problem, brought about by Amazon and ebooks. It isn’t. The publishing market faced a similar problem when paperback books were first introduces. While the lower prices made books more accessible to the general public, publishers didn’t like it because the books “devalued” the industry.

    Reply
  4. Timothy Wilhoit11 March, 2012

    Excellent account of the BPH’S struggle to remain faithful to the ancient ways, Mike. Joe Konrath also dismantled Turow’s screed very nicely:
    http://jakonrath.blogspot.com/2012/03/barry-joe-scott-turow.html

    Reply
  5. Tyler12 March, 2012

    The Big Six could have just raised their prices to the point that Amazon could not sell at a wholesale loss the books. Look at the video market and why some movies you can not purchase when they are first released. The cost of the movie is like $90 a piece to the movie rental companies.

    Reply
  6. […] crime to continue rather than give Amazon the chance to dominate the ebook market again.On Saturday Mike Cane penned the first post of what I have decided is going to be a new series on this blog. Mike disproved a couple of the […]

    Reply
  7. […] have any sympathy for Barnes & Noble. That company had no sympathy for the smaller bookstores it put out of business. Now it might be Barnes & Noble’s turn to go away, as Borders did. Did anyone of you have any […]

    Reply
  8. […] is being hailed as a way to limit Amazon’s power and let publishers regain control (something they lost in the 1970s, but who’s quibbling).But none of the major publishers are in quite as strong a position as […]

    Reply
  9. […] their way into the market and become a dominant player, slowly edging out the established Big 5 cartel? Or did they innovate their way in the door and then pull the customers in after in order to get […]

    Reply

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