In E-Book War, the Independent Publishers Strike Back

In the fight between Apple, Amazon, the government, and publishers to set prices for electronic books, independents were overlooked. Now, they're banding together and voicing complaints.

bookstoreee.jpgGarrett Gill/Flickr

To briefly recap: In April, the Department of Justice filed anti-trust cases against Apple and five publishers -- Penguin Group USA, Hachette Books Group, HarperCollins, Simon & Schuster, and Macmillan -- alleging that they had joined in a scheme to raise the price of newly released and bestselling e-books. Three of the publishers -- Hachette, HarperCollins, and Simon & Schuster -- insisting they had done nothing wrong, settled with the DOJ rather than undergo protracted and extremely expensive litigation and accepted stringent terms on future pricing strategies. Apple, Penguin, and Macmillan refused to settle, and U.S. District Court Judge Denise Cote has set a trial date for June 3, 2013.

Now, nine of the country's leading independent publishers have taken a bold step, and deserve public recognition for their action. On June 25, they submitted a cogent, twenty-page comment to the court objecting to the Department of Justice's settlement with the three publishers on the grounds that it would "adversely impact competition -- harming independent publishers, authors, booksellers and consumers -- and should be rejected." The case itself would still go forward, unless it is dismissed by the judge or is settled in some way that remains to be devised. At first glance, this may seem like a complex legal dispute far outside the general concerns of most bookbuyers. But stay with me and hopefully you will appreciate why the publishers deserve credit, and why this contentious issue matters to readers.

At the core of the case is the role of Amazon, which has dominated the e-book market since its release of the Kindle in 2007 set off the enormous surge in digital reading. Publishers, booksellers, and authors generally agreed that Amazon's practice of selling bestsellers and many newly released e-books at below the price they were paying to publishers was to encourage Kindle sales and, eventually, to monopolize the market by driving any potential competitors into untenable losses. The dispute is essentially over how e-book prices should be determined: by the retailer under the longstanding practice known as "wholesale" pricing, or by the publisher in the "agency" model, in which the bookseller takes a commission on each sale. The Department of Justice contends that the publishers colluded to satisfy Apple's preference for agency pricing when the iPad was unveiled in 2010. Unexpectedly, the agency concept came to be seen as a way to expand opportunities for bookselling and to limit Amazon's ability to undercut the prices of its competitors.

As the iPad gained in popularity and other e-readers became available, Amazon's share of the e-book market dropped from 90 percent to about 60 percent. Then came the DOJ suit that was widely interpreted by most publishing industry insiders and observers as a likely boost for Amazon, assuming it once again would be permitted to lower any prices below what other retailers could afford. While Judge Cote decides whether to accept the Department of Justice agreement with Hachette, HarperCollins, and Simon & Schuster, there was a sixty-day period for comments to be submitted by parties with an interest in the case in an effort to influence the outcome.

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Peter Osnos is a contributing writer for The Atlantic. He is the founder and editor at large of PublicAffairs books and a media fellow at the Century Foundation.

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