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ABA, B&N – Please, Mister DOJ Sir, Protect us From Amazon

Barnes & Noble is not one to give up a fight, and today we get to see that trait be displayed in a new court filing. The ABA is joining B&N in filing an amicus curiae brief. They want the DOJ to reconsider the  anti-trust settlement that 3 of the conspiring publishers agreed to.

Under the terms of the settlement the 3 publishers have to cancel any existing distribution contracts on ebooks and they are blocked from controlling the price of their ebooks for the next 2 years. As you can imagine, this is expected to give Amazon free range with the ebook market.

Here’s the relevant part of the press release:

In the joint filing, the ABA and Barnes & Noble argue that elimination of the current pricing and distribution method for e-books, known as the agency model, will injure innocent third parties, including ABA member bookstores, Barnes & Noble, authors, and non-defendant publishers; hurt competition in an emerging industry; and ultimately harm consumers. "The end loser of this unnecessary and burdensome regulatory approach will be the American public, who will experience higher overall average e-book and hardback prices and less choice," the filing said.

And to think that B&N operates over a thousand stores across the US, yet they want protection from Amazon.

Do you know what I find amusing about this story? It’s the lack of historical perspective.

Had the agency pricing situation come up in the mid 1990s (over paper books), the ABA and B&N would on opposite sides of the issue. The ABA would be asking the DOJ to hobble B&N because at the time B&N was launching big box bookstores and driving independents and smaller chains into the grave. The ABA, IBPA, and all the other industry acronyms would be lined up to argue that B&N was a dire threat to all of publishing, verily a black hole which would consume them all of it weren’t restrained.

Obviously that never happened, because we sit here today with 2 formerly mortal enemies lined up against an even scarier villain. Both are swearing up and down that their survival depends on Amazon continuing to be hobbled.

The thing is, folk, publishing and bookselling didn’t need B&N to be hobbled for it to survive the 1990s. (Some stores failed, yes, but when were you ever promised stasis?)

I would argue that the arguments today are made by companies who could survive just fine without them (if not then the market would be healthier without them). I bet you dollars to donuts that the ABA will still be around 10 years down the line. The same goes for B&N, though I wonder if they’re psyching themselves out and thus setting themselves up to fail.

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Syn July 31, 2012 um 9:30 pm

B&N needs agency model. They don’t want to compete with Amazon on price or customer service. Amazon has a 7 day return policy for ebooks. If you bought it by mistake, or the books description is in English but the actual download is in Spanish, well you are SOL with Barnes and Noble.

Basically they want customers handed to them without having to work for it. There is no proof Amazon will raise prices and I’m a bit sick of the scare tactics. I bought more Agency six books before the agency model, but now I’ve bought very few and I buy more small press release books.

Anyway, Barnes and Noble needs to find things their customers like and use it. Stop trying to have business handed to them. Work for it as Amazon did, and still do. (love the prime book borrowing!)

Mostly, improve customer service. There is no comparison between what Amazon’s customer service can do for you vs B&N. If it involves a refund on ebooks, most times you are out of luck, even if it wasn’t your fault. It isnt just lower prices that made people like Amazon.

Jon Jermey July 31, 2012 um 9:30 pm

Never underestimate the cohesive power of a common enemy.

Richard Adin August 1, 2012 um 7:30 am

I’m wondering, Nate, what the factual basis for this statement is: "Had the agency pricing situation come up in the mid 1990s (over paper books), the ABA and B&N would on opposite sides of the issue." If what you mean is that ABA would have supported agency pricing and B&N opposed it, I think you are wrong. I think both would have supported agency pricing. B&N was never enamored with discount pricing and didn’t really heavbily do it until Amazon and Borders forced it to.

Nate Hoffelder August 1, 2012 um 7:51 am

I was thinking that B&N would have been the one who had been hobbled by agency.

flyingtoastr August 1, 2012 um 11:14 am

BN’s strategy in the 90’s was never heavy discounting, though. Yes, they had more discounts than a typical indy, but it wasn’t anywhere near what we see from Amazon today with eBooks (selling below cost).

BN’s strategy was always depth of selection. Agency wouldn’t have affected that in the slightest.

Nate Hoffelder August 1, 2012 um 11:28 am

Except that I think Amazon merely took discounting one step further than B&N. They only did it more than B&N, not differently.

Tyler August 1, 2012 um 11:55 pm

B&N have always been a bit stingy with their discounting. I was buying lots of books from Borders with their weekly cycles of discount e mails. It would be several weeks of 20% and then 25% and then 30% etc until it was back to 20%. I think that is one grave mistake they made because plenty of people waited for the heavier discount coupons.

Barnes and Noble only gives them out once in a while and it is rarely even 20%.

Ravi August 2, 2012 um 4:48 am

I’d also say that thinking of the issue as "agency" obscures what’s really going on.

Suppose that publishers had been threatened enough by B&N and Borders that they decided to get together and neuter store loyalty programs. Maybe they went after discounting and/or maybe they came up with other restrictions on what benefits could have been offered with respect to their books. That certainly would have helped independent bookstore by neutralizing an important advantage the chains had. Would that have made it OK? Of course not.

Please, Mister DOJ Sir, Protect us From Amazon | The Passive Voice August 1, 2012 um 11:01 am

[…] overall average e-book and hardback prices and less choice,” the filing said.Link to the rest at The Digital Reader and thanks to Russell for the tip.Click to Tweet/Email/Share This Post wpa2a.script_load(); […]

William Ockham August 1, 2012 um 11:54 am

Define your acronyms! In an article about the DoJ and amicus briefs, I initially read that ABA as the American Bar Association (a frequent filer of amicus briefs). I assume that you were referring to the American Booksellers Association. Because if it was the other ABA, it would be much bigger news.

Jeff Rutherford August 1, 2012 um 2:22 pm

Completely agree with you Nate. It’s been fascinating, and very sad, to watch the reaction to the DOJ’s suit from the book publishing and independent bookstore industries.

Bezos, as much as I might not like him at times (I’m still wondering if he’d want his wife or kids working in one of his warehouses – I think the answer is absolutely not), has innovated like hell since the day launched. Book publishing’s innovations during that time – not very much at all.

We all know. B&N and Riggio wouldn’t even have a website right now if it hadn’t been dragged kicking and screaming by Amazon’s threat.

And, now, with almost zero innovation in the past 15 years, the established players resort to trying to win and innovate in a court of law. Ain’t gonna work.

And, frankly, it’s not all that surprising. Volumes of business case studies have been written about this topic. Companies – as a whole – are unable to blow up their business models and burn them to the ground in the face of seismic change. Instead, they try to hold on and defend a an outdated business model – in the face of change – and they eventually shrink drastically or disappear completely.

Reading isn’t going anywhere but up. When you’re despairing about the book publishing industry, spend a few minutes perusing to remind yourself that people love to read.

While reading remains a passion for many people, I don’t see a healthy future at all for the established publishing companies that are trying to compete in a court of law.

Peter August 1, 2012 um 4:53 pm

"Obviously that never happened, because we sit here today with 2 formerly mortal enemies lined up against an even scarier villain. "

What do you mean that never happened, that EXACT lawsuit did happen.

Barnes and Noble/ Borders looked like they would win the cases against ABA, but settled anyways.

But a little later the DOJ, working with ABA and -Amazon- DID succeed in blocking Barnes and Noble’s acquisition of Ingram.–Noble-wont-buy-Ingram/2100-1017_3-226584.html

So, yeah, it’s a bit the pot calling the kettle black.

Although, not really, because this is defensive whereas the trials against Barnes and Noble were offensive. Barnes and Noble has consistently been on the side of telling the DOJ to just p*** off and let us run our own business.

If the agency model stinks, then let capitalism take care of it instead of plea bargains with government lawyers.

Nate Hoffelder August 1, 2012 um 4:56 pm

That’s a different situation and a different lawsuit.

Also, my point was that B&N didn’t kill off publishing or bookselling (in spite of the claims they would).

Peter August 1, 2012 um 6:43 pm

Not totally, and neither would Amazon, even under the wholesale model, I agree with you there.

But the claim wasn’t that they (either Amazon today or Barnes and Noble in the 90’s) would "kill off" publishing or bookselling, just that they would harm competition. That’s true in both cases.

My point is that it is the DOJ who’s flip-flopping the issue. In the 90’s, Barnes and Noble and Border’s successfully negotiated schemes that clearly lowered prices for the consumer, but the DOJ banned them just because it would hurt competitors. Today, the DOJ is trying to resurrect Amazon’s failed scheme just because it MIGHT lower prices for the consumer, and the fact it would hurt competitors doesn’t matter.

What’s up with that?

Nate Hoffelder August 1, 2012 um 7:32 pm

I don’t think that earlier case involved the DOJ. It looks to be a civil anti-trust suit, while the current one is a criminal case. That one failed because the plaintiffs couldn’t convince the judge that actual financial harm had taken place. The current case only requires the DOJ to point at the emails to prove conspiracy.

If the ABA files an anti-trust suit tomorrow against Amazon because the latter heavily discounts ebooks then that lawsuit would be similar to the one from the 1990s.

And that earlier case didn’t have any evidence of a conspiracy; B&N and Borders were simply negotiating a better price. That’s why the DOJ never got involved.

Peter August 1, 2012 um 11:19 pm

On a case by case basis I agree:

I think there were actually two cases brought directly by the ABA against Barnes and Noble and Borders; they were civil cases and they really didn’t have much substance, which is why they were settled.

Evidence of a conspiracy is only needed in multi-firm price-fixing; most anti-trust cases don’t fall into that category. In that case the main charge was unlawful price discrimination under the Robinson Patman act. It could also have been termed predatory pricing.

There was also the prevented merger with Ingram; that was a direct DOJ action, although backed by Amazon and the ABA. It never went to court as Barnes and Noble backed out, but the DOJ was within their right to prevent a merger that would lead to market concentration.

The current case has merit: On the face of it, agency is not illegal, but Steve Jobs never should have mentioned specific prices. That’s a conspiracy and can be price fixing. It hasn’t gone to trial and the settlement terms are unprecedented and bizarre. But beneath all that the case has some kernel of merit.


The problem is when you take a step back and realize you’re watching a game where the referees are continuously calling fouls only on one team. Even if the calls themselves are legitimate it starts to look fishy.

Pretty much everything Amazon does flagrantly violates some law, anti-trust or other. Most of it doesn’t even get called and nothing sticks. They negotiate the same sort of backdoor discounts Barnes and Noble used to get in trouble for, and don’t even bother to hide it. Distributing ebooks exclusively in a proprietary format when multiple open formats are available is a tieing violation. They made exclusivity agreements a standard clause! They have any number of questionable mergers every year. Then you have all the tax evasion, labor, and accounting irregularities they get away with.

But the lack of anti-trust action is most perplexing because, you know, technical monopoly. You would think that would register.

Part of it may be that Amazon is very well connected politically, and part of it is that they have excellent lawyers. But for the most part it is totally unexplainable. Amazon is just made of teflon.

Nate Hoffelder August 2, 2012 um 8:18 am

First, the merger was stymied by the FTC, not the DOJ. And the suit against B&N was found in B&N’s favor, not settled.

My main issue here is that I don’t see that B&N did anything wrong back then in negotiating better deals nor Amazon now when they negotiated even sharper deals. Larger buyers get better discounts; that’s a fact of the market.

And even if Amazon is skating laws (I do not concede the tax, labor, or other arguments), it doesn’t change the fact that the current case against the price fix 6 is a much bigger deal than anything else we’ve mentioned. We’re talking about 6 conspirators, 5 of whom represent a large chunk of an industry. No matter what you think of Amazon, you have to admit that the scheme the Price Fix 6 tried to pull off was much bigger.

Ravi August 2, 2012 um 4:58 am

"Distributing ebooks exclusively in a proprietary format when multiple open formats are available is a tieing violation."

Hold on there. Amazon is perfectly willing to distribute books DRM-free if publishers ask for that. And with DRM-free books the specific distribution format used is (mostly) irrelevant, at least for the purposes of most consumers. But when publishers insist on DRM, the distributed ebook is inevitably proprietary. I know there are people who talk about "interoperable DRM", but, practically speaking, it’s a myth.

Peter Turner August 8, 2012 um 9:02 am

Seems like a lot of red herrings and misplaced sympathy and mis-guided tough lovin'. I’d say the whole DOJ issue, and the larger question of predatory pricing, price fixing, etc. etc. boils down to one thing: DOJ’s prime interest in protecting the consumer.

So I put it to you. Are we as consumers better off with physical bookstores or without them? One can argue that protecting a weak business is not any of the DOJ’s concern, but what if doing just that is better for the customer in the long run?

Chris Meadows August 5, 2015 um 4:32 am

You’re only about a year late wondering this, you know. 🙂

Nate Hoffelder August 5, 2015 um 6:06 am

I don’t see how a post from 2012 can be a year late compared to a post from 2014.

Chris Meadows August 5, 2015 um 9:33 am

Huh. I’d swear I saw this post on the front page a few days ago. Maybe it was a different post that had Robinson-Patman in it…

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