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April 13, 2012

Thinking About the E-Book Lawsuit and What Is To Come

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Posted by Alan Wexelblat

Today I want to spend a few minutes on a couple reflections posted in response to the DOJ's suit against publishers and Apple.

First, the practical response. has a very nice (if lengthy) guide to "What happens next?" It's complicated, in part because some of the publishers accepted a settlement and some rejected it. So what happens with your e-books (both as an author and as a reader) depends on who the publisher is. Also bear in mind that the settlement doesn't yet have the official court stamp of approval, which could take as much as 60 days to get.

For example, it's quite likely that those publishers that signed the consent agreement will quickly negotiate new agreements with Amazon, which still has a dominant position in the e-book market. Because of the terms of the agreement, books will appear in Amazon's Marketplace at variable prices. There will be an ability to discount, to manage prices, and I suspect Amazon will not pass up the opportunity to promote its (re)acquisitions, possibly with sales and offers. If you were holding off on buying some e-books because of pricing in the past few months now is an excellent time to start scanning for bargains. Assuming, of course, that your preferred books are published by certain publishers and are on your locked-in platform. But I digress.

Dearauthor seems to think that the prices on physical books are due for another rise, and that the entire concept of a mass-market edition is at risk. I generally agree, but don't think it will happen this year, for reasons I think will become apparent as 2012 unfolds, particularly the end-of-year shopping/gifting season.

To wit: I believe that the dedicated e-book reader may well have plateaued already. In 2013 I think we'll start to see the dedicated e-reader go the way of the point-and-shoot camera as tablet computers start to become less pricey and expand their reach and function in accordance with some version of Moore's Law. Just as peoples' mobile phones took over every function that a point-and-shoot had, tablets will do everything that e-readers do. Yes, phones and tablets cost more, but people want mobile devices for other reasons and once you have those devices you don't want or need a second single-purpose device. In the mass consumer electronics market, special-purpose hardware tends to lose badly to general-purpose hardware. Your set-top box is a DVR (and maybe a DVD/Blue-Ray player too). Your home movie camera is called "iPhone" or "Droid." Et cetera.

E-book readers will not be immune, and their demise will shake up the market significantly. If Apple continues to be this hostile, what will be the fate of a "Kindle app" for iPad? Will Apple even allow such an app in the store? Disruption of this sort always hurts consumer adoption, as does a failure to converge to a single standard. A slowdown in consumer adoption of e-readers may well delay the demise of the mass-market paperback, at least for a year.

To close out the Dearauthor piece, I think they hit the nail on the head where they say

[P]ublishers have sustained a big public relations blow. People who never read an ebook or haven’t followed this issue closely now are exposed to this idea that publishers stand accused of engaging in price fixing

As I said earlier this week, it really looks like the publishers need to work on their PR.

The second good thinky piece comes from Scott M Fulton, III on ReadWriteWeb, who published a column titled "Does Amazon Have a Right to a Price Monopoly?" This is an excellent question, to which the answer seems to be "no" on the face of it, but do read Fulton's thinking because really it seems nobody has yet put forth a good answer.

Fulton makes a couple good points, the first of which is that Amazon's behavior in arousing the book publishers' ire is remarkably akin to what Apple itself did with its iTunes store pricing. Jobs wanted a certain price for songs and he got that price. The music publishers fumed and fought and flailed but 99 cents it stayed. His other point is that the publishers (and Apple) who are fighting the suit may be in position to counter at least the prima facie evidence of collusion that the government seems to be making its case on. Whether that's a wise move is still debatable. Making yourself look bad in front of customers is rarely a winning strategy.

Finally, In delightful counterpoint to Jon Sargent, we get US DOJ (acting) Antitrust Chief Sharis Pozen claiming that the point of the settlement is to "[open] up the competitive marketplace and the competitive landscape." So now both sides claim they're all about open competition - isn't that wonderful? And that brings me to John Scalzi's Whatever column published yesterday in response to the public drama. As he points out, all of the players here are in it for their own (and their shareholders') pocketbooks.

You, and me, and those who read or might read e-books are here solely for the purpose of giving these companies money. That's what they're in business for. Statements about the public interest, or open competition are just part of the PR maneuvering game. Corporate strategies have everything to do with profit and nothing to do with "good" or "evil." Really.

Comments (2) + TrackBacks (0) | Category: Big Thoughts


1. Eric on April 13, 2012 3:10 PM writes...

Dedicated eBook readers are e-Ink devices. Tablets are not. Tablets are all but useless for long form reading - their battery life doesn't cut it, they're useless outside, and they hurt your eyes if you stare at them for the same durations a heavy reader stares at a book.

eBook readers don't thrive because the iPad is too expensive. They thrive because they're good for reading books, and the iPad isn't and never will be as long as it features an LCD screen.

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2. Alan Wexelblat on April 13, 2012 8:05 PM writes...

I generally agree with you, but I don't think the purchase decision is going to be based on those factors. It's like saying Beta had higher quality than VHS - true, but not something people thought about when laying down their $$.

People are going to think "Well, I have this pad. I can get an app to read books on it, or I can spend another $99 on another device." That's a no-brainer decision.

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