In The Judge that Apple Hates (June 2014), Vanity Fair profiles the federal judge at the helm of United States v. Apple Inc., the case filed by the U.S. Department of Justice against Apple and five traditional publishing companies.
Last summer, in a 160-page landmark opinion, Judge Denise Cote found that Apple and the five traditional publishing companies “conspired to raise, fix, and stabilize the retail price for newly released and bestselling trade e-books” in violation of the Sherman Antitrust Act and other laws, thus explaining “how and why the prices for many [e-books] rose significantly in the United States in April 2010.” All of the publishers had previously settled.
The collusion came in response to Amazon’s e-book pricing, which typically sold new releases for $9.99, regardless of what price the publisher wanted. The publishers wanted e-books to cost more, but didn’t want to leave Amazon, and so Apple came up with a way for them to all shift to a new “agency” model in which they could typically charge around $12.99 and $14.99 for e-books.
Max at Litigation and Trial summed up the case nicely earlier this week in Judge Cote and the Pre-Trial Preview in the Apple-Amazon e-Books Case, writing:
Whatever one thinks of Amazon’s impact on the book publishing world, it’s hard to dispute that Apple and the publishers entered into a collusive agreement for the purpose of raising prices — the primary evil our antitrust laws are designed to prevent.
I agree. As I wrote in What’s Troubling About Amazon?:
Amazon is really no worse than its competitors, like Apple or the big publishers. They are all on a hegemonic quest to dominate the market, except that, while the big publishers and Apple colluded to raise prices to the detriment of consumers, Amazon has been expanding consumers’ access to books by introducing new products for readers (like the various Kindles), having an open market for virtually any writer, and pushing publishers to reduce prices.
Now, the Court of Appeals for the Second Circuit has the task of reviewing Judge Cote’s opinion. We’ll see whether they agree with us. If they don’t, I’m sure those of us who have become fond of e-books will likely see rising prices again.
I’ve previously discussed my aversion to paying a hefty price for an e-book, which is essentially a license to use a computer file that I am often restricted from sharing with others or giving away.
So, rising e-book prices will just mean I won’t buy as many e-books—or, at least, I’ll stop buying the most expensive ones. Price isn’t always correlated with quality anyway.
I am primarily an e-book reader—after swearing for years that I’d never stop reading traditional paper books—and, for now, my e-reader of choice is a Kindle.
It’s through this lens that I read Apple’s pre-trial memorandum of law. Apple filed it last year in the case before Judge Cote, but I hadn’t read it until Max linked to it in his post this week. In singing Apple’s praises, its lawyers asserted: “Apple [] fundamentally transformed the e-reading experience, leaving rudimentary, black-and-white, and expensive single-purpose e-readers (e.g., the Kindle) in the dust.”
I just love hyperbole “zealous advocacy” in legal memoranda. As of October 2013, several months after Apple filed its memorandum, the Kindle was still the most popular e-reader, even in comparison to the iPad. That’s hardly leaving Kindle “in the dust,” even if many e-book readers intend to buy a tablet in the future (a market dominated by Apple).
My kids love their iPad, but they use it only for games and Internet access. They use a Kindle for e-books, and it’s not one of the fancy-pants versions. A “single-purpose e-reader” is ideal for children who may be tempted by the non-reading related activities available on tablets. Actually, it’s ideal for me too. I’d probably get a lot less reading done on a tablet.
How about you? Do you read e-books? What type of device do you prefer?
The Misfortune Of Knowing 
Thanks for letting me know about your post when commenting on my blog last night (my Feedly got out of control so I’d missed it!).
I’m a Nook girl simply because my local B&N was so incredibly good to me as I finished up college and got into music full-time. I enjoy e-books because I often read in situations where they are more handy than print, but I’ve recently rediscovered my love for print as well. I think I’ll be 50/50 for a while.
Not an Apple fan at all, so I hadn’t kept up with the above. The great thing about the Hachette/Amazon thing for me has been the reminder that there are other places to make my purchases. 😉 Since purchasing Amazon Prime last year, I’d been using Amazon pretty much exclusively… and I’m not sure I was okay with that shift. I like the idea of supporting my local B&N (no indie shop here) and other, smaller places online.
Great, thoughtful post!
Hi Monika! Sorry for my delayed response to your comment (I thought I had responded!). The B&N in my college town was wonderful, but my local one isn’t very good. I almost never buy a book off the shelves there.
As for Hachette v. Amazon, I can see why Hachette authors are troubled by it, but I don’t understand why anyone else is. It’s two big corporations fighting over the terms of their contract. Amazon is under no obligation to sell all books, and Hachette is permitted (and already does) sell its books through a number of retailers (as they note on their press release). In fact, I think those individuals who are concerned about Amazon’s dominance in the market should be very happy that Amazon isn’t carrying all books (for immediate purchase). This controversy has served as a good reminder that there is more than one way to buy books.
I’m reading this on my iPad, which is heavy to hold in one hand! I read ebooks here, too, and I like the iPad because it’s backlit and I can enlarge the font. My poor, tired eyes! I read a lot, but will purchase paperbacks occasionally (for the beach).
As an author, I price my ebooks at $3.99 (the first book is $2.99). I consider it a fair price for my work, and doubt I would ever charge more than that, even if I ever become the smashing success I dream about 🙂
It’s hard to beat a paperback on the beach! I did take my Kindle last summer, though (I managed not to get any sand in it). I like being able to carry my library around with me. I think $3.99 is a fair price for an established indie author like you are. Good luck!
E-readers have changed the reading experience drastically, and book blogging too!. I don’t have an e-reader and don’t really plan on getting one (a book in hand is still my preferred route). Though I’ve noticed that the pricing of e-books is just all over the place! There are 99 cent ebooks, then you get e-books more expensive than the price of the paperback.
Hi! ebook prices are definitely all over the place. Most traditionally published new releases seem to be in the $8.99 – $14.99 range, depending on the seller, genre, and length of the book. Indie books tend to be less expensive, but not always. I’m certainly willing to pay higher prices on occasion, but it’s a hard sell when I know that all I’m getting is a license to a file that I usually can’t share or give away.
Yep, an iPad for me and I do read e-books. It does seem a price war has happened and I would think higher pricing would be better for authors if the money gets to them. I know it is less costly than print, but it seems the authors get shortchanged.
Hi Donna! I hope you had a nice trip. It’s hard to know what prices will help traditionally published authors (I’m sure that Apple and the publishers have done a lot of speculative research on it, though). There are certainly some readers willing to pay a higher price for a license to a computer file than I am willing to pay on a regular basis. The question is whether there’s enough of them. If not, the authors’ books will be read by fewer people and will make less money overall. That doesn’t help anyone.
I’m reading this on an iPad and I write in the iPad or my Mac Book and take the photos for my blog on an iPhone so I’m a lover of Apple but I read my books on the Kindle. The iPad is useless in the sun and I like to read outside and I like the way Kindle feels more book like with the turning of pages and the black and white.
The iPad definitely has its pluses, but reading outside on a sunny day isn’t one of them. Thanks for the comment!
“Apple fundamentally transformed the e-reading experience” from reading words to Angry Birds.
Ha! So true! While many people enjoy reading on an iPad, it seems that the tablet is less about reading and more about other forms of entertainment.
I have an older Nook ereader that is much easier on the eyes than my Google Nexus 7 tablet. I really, really wish they would come out with some hybrid device that could do both. In truth though, I still find myself holding a paperback in front of my eyes more often than not.
I never thought I would stop reading paperbacks, but my collection is just collecting dust now. It’s hard to believe! I don’t think I could easily use a hybrid device. I would just switch back and forth between books and other forms of entertainment. I like reading on a single-purpose e-reader.
Thanks for stopping by!
Have Amazon’s recent tactics of delaying shipments, raising prices and removing books from their site because of disputes with publishers affected your opinion of them?
That’s a good question. If Amazon was the one and only place where a person could buy books, I’d be deeply concerned about every negotiating tactic they used with publishers. But as Hachette’s own statement on the dispute says (http://www.hachettebookgroup.com/news/), “HBG’s titles are widely and immediately available on barnesandnoble.com, powells.com, booksamillion.com, and in thousands of great chain and independent bookstores across the country.”
Amazon is the dominant bookseller, but it’s not a monopoly in the way Standard Oil or AT&T were, or that Comcast–Time Warner Cable will be if that merger is approved. Anyone who wants to buy any of those books can do so from a variety of competitors, including well-financed ones like Apple and Google.
The big difference to me is: Amazon plays hardball with publishers to demand lower publisher royalties for books sold on Amazon, whereas Apple and five of the publishers played hardball with Amazon to raise prices everywhere. Amazon isn’t above reproach, and their ability to influence the book market should be followed closely, but I don’t see their dispute with Hachette as enough reason to throw our lot in with Apple — particularly not when Hachette’s and Apple’s last venture was a conspiracy to hike up the prices of ebooks by a third.
Yeah, well, I’m certainly not an Apple fan either. Thanks for your thoughts. I guess I’m concerned that Amazon is eventually going to become a monopoly and I am responding to current events with that in mind. But it’s a fair point that they aren’t a monopoly yet.
We certainly need to have the antitrust tools in place to handle Amazon if it becomes a monopoly that harms consumers. The publishing and book selling business is really messy, and there aren’t any purely good actors in it. Still, Amazon tends to be much more pro-consumer than any of the publishers or Apple has been. I have a very hard time feeling sorry for Hachette right now. As for the authors caught in the middle, I do feel sorry for them. I certainly hope that their fans will find ways of buying their books from non-Amazon outlets. It’s good for us to be buying books from a variety of sources.
The only e-books I read are review copies, so I don’t worry too much about price.
I think you make a good point about the limited use of them, though. I think one of the greatest reasons to purchase a book is to share it with people and when you can’t do that, it certainly loses some of the value of ownership.
“I think one of the greatest reasons to purchase a book is to share it with people and when you can’t do that, it certainly loses some of the value of ownership.” Well said! It’s a lot to ask consumers to pay more than a few dollars for a license we can’t transfer to others.
Prices do make a difference, especially, I think, for those of us who buy books frequently.
I considered getting a Tablet for awhile, but couldn’t afford it. I settled for a Kindle Fire, which works very well for me. I also have a Kindle Paperwhite, which I wanted because I thought it might be easier on my eyes. I love it. I do most of my e-reading on it now and my Fire is used for other purposes, mostly games or reading the occasional children’s book with my daughter. I also have a Nook GlowLight, which I also use frequently. Both the GlowLight and the Paperwhite are solely for reading–no games or videos or anything like that. And I don’t mind. That’s why I got them.
We really like “single-purpose e-readers,” too. The iPad is great, but we use it mostly for games.
I agree that ebook prices matter most for those of us who buy books frequently. I really wouldn’t want to spend an additional $3-5 dollars on each book I buy. I would still buy new releases, just not as many of them, and I’d probably read more out-of-copyright classics, which are often free or nearly so. I should reserve more new releases at the library too.
Thanks for the comment!
We use iPads but we mostly use the Kindle reader app when purchasing e-books. I use iBooks for anything I can get for free. 😉
Sounds good! I just haven’t gotten used to reading on the iPad. Thanks for stopping by!
I use a Kindle Fire, a birthday present from work colleagues. I still get to read the odd paperback though.
A 160-page judgement – and some other poor guy has to review it? I’d just skim it and say ‘yeah it’s OK.’
Oh, I dissent from you and Theo. I find books of all types amazing value for what are pretty nominal prices. I’m old enough to remember resale price maintenance (in the UK anyway) and its abolition has been great for consumers and rubbish for authors.
Well, I certainly hope the Second Circuit will just say “yeah it’s OK”! The review will likely be much more complicated than that, though.
As for ebook prices, I’m sure you’re not the only person willing to pay a much higher price for an ebook than I am willing to pay. I don’t know whether the higher prices Apple and the publishers want to charge would raise their profits (maybe the extra money raised per book will outweigh the lower sales). It’s also possible that the higher prices would lower their profits by driving too many consumers away (perhaps making less expensive Indie books look more attractive).
It seems like the higher e-book prices are intended to encourage more people to buy the hardcover copies (see the quote from a Salon article in my response to Allison’s comment below): I don’t balk quite as much at paying more for a book I may use as decoration on my shelves or loan to others. The only problem is that those books just don’t fit in my modern life. My static bookshelves are full; my portable Kindle is not.
So, I’m not a consumer they can easily push to buy a hardcover or even a paperback book, and I’m not a consumer who is willing to pay above a certain price for most e-books. I’ll still have plenty to read even if new releases become too expensive for me. Most out-of-copyright classics are free or nearly so. There are probably more of them than I could read in a lifetime.
If I’m going to read a traditional paper book, I’ll get it from the library.
I use a Kindle to read, like you I resisted for ages but once I got the Kindle I never looked back. There are so many books I’d never have read if I didn’t have it simply because they aren’t available any other way. Reading on a tablet or computer makes my eyes tired and isn’t anywhere near as convenient. I agree about the pricing though. I paid $12.99 for one ebook because it was something I wanted desperately but I will never do it again. Generally if the book is more than $6 or $7, depending on length, I won’t buy it. The majority of the books I buy are $5 or less though. There is so much less cost involved with producing an ebook they must charge less if they want me to purchase it.
I agree with you: “There is so much less cost involved with producing an ebook they must charge less if they want me to purchase it.”
The publishers’ response, per Salon’s article on the HarperCollins lawsuit against Open Road Integrated Media, is: “Publishers counter that, while much of the cost of producing a book is loaded onto the hardcover edition, they do also need sufficient income from e-book sales to pay for the editors, designers, publicists and other marketing staff members (as well as overhead) required to bring a title to market, no matter the format. If the e-book edition subtracts from the potential sales of the new hardcover, then the e-book must help make up the difference.”*
I don’t know what the production numbers look like for these publishers, but I still don’t see how they can reasonably ask consumers to pay $12.99, $14.99 or higher (like the $17.99 price tag on JK Rowling’s A Casual Vacancy when it first came out). There are some people who are willing to pay those prices. The question is whether the increase in money raised per book is enough to offset the likely decline in the number of sales.
Thanks for the comment!
*Here’s the Salon article: http://www.salon.com/2014/03/27/you_cant_buy_that_the_great_e_book_royalty_war/; I wrote about it here: https://misfortuneofknowing.wordpress.com/2014/04/02/the-harpercollins-lawsuit-keeping-authors-aboard-as-traditional-publishing-sinks/
Reblogged this on Lee Fullbright's Room.
Thank God for libraries! I saw the “Netflix for ebooks” article you tweeted yesterday-I like seeing the feed on the blog. Maybe that will help?
Yes, libraries are very important! All I know about the “Netflix for ebooks” plan is from that La Times article. It sounds interesting, though I do wonder whether the selection is good (with Simon & Schuster being only the second of the big five publishers to make its backlog available).
I use a Kindle. In fact, I have two of them. And the outrageous prices publishers stick on their e-books annoys the crap out of me. One, I’m not made of money. Two, it is, as you point out, a computer file I can’t even loan to a friend. When you charge more for an e-book than a paperback, I will wait for the paperback. You recently reviewed a book I really wanted to purchase, and then I saw the price on it was $12.99) and balked. Um, no. I’ll see if I can borrow it from a library first. The publishers are shooting themselves in the foot by attaching such high prices to an electronic file.
Generally speaking, my limit with ebooks is $9.99 unless I have a good reason to pay more for it. I don’t accept books from publishers/authors, and sometimes I feel like I just can’t wait until a library copy is available or until the price goes down. That’s how I felt about Frog Music. Right now, I’m reading an ebook I’ll review next week that I spent WAY too much on and I can’t understand why I did. Sometimes that “buy now with 1 click” is just too easy for me. I like what Amazon offers customers (and I would never regularly pay the prices the publishers are demanding), but I am also wary of giving them too much of my business. I need to reduce the number of ebooks I buy overall.
I really want to read Frog Music, but at that price, I’m waiting. It’s too much to pay. 😦