Are Apple and Publishers Helping Readers by Ripping Them Off?

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Special from FAIR
Thank you, FAIR

by Jim Naureckas, with select comments

The Justice Department alleges that Apple‘s collusion with book publishers to fix ebook prices has cost readers $100 million. So why are so many news reports on the anti-trust suit suggesting that the Apple/publisher alliance is actually good for consumers?

The New York Times‘ David Streitfeld (4/12/12) warns:

Amazon, which already controls about 60 percent of the ebook market, can take a loss on every book it sells to gain market share for its Kindle devices. When it has enough competitive advantage, it can dictate its own terms, something publishers say is beginning to happen.

Likewise CNN‘s Doug Gross (4/11/12):

But some say Amazon‘s lower prices have been the problem all along…. The argument goes like this: By selling most new ebooks for $9.99, Amazon is setting a price that’s too low for other competitors to match in a price war. If that eventually drives the competition away, Amazon (which is already projected to account for more than half of all U.S. book sales by the end of this year) would be essentially unchecked and able to set whatever prices it wants.

And Reynolds Holding on Slate (4/11/12), talking about Apple‘s don’t-let-anyone-undersell-us contracts with publishers:

The scheme seems to be working for publishers, retailers and even consumers…. If readers pay a bit more than they did in the experimental days of ebooks, at least it means publishers will make enough money to keep more books coming.

In the alternative universe where these arguments make sense, Amazon‘s competitors are poor, powerless companies that the online retailer can drive out of business by selling at a loss, and then jack prices up as high as it likes–with no one else able to enter the market ever again. But in this reality, Amazon‘s chief competitor is Apple, for crying out loud–literally the richest company in the world. Believe me, if Steve Jobs wanted to sell ebooks for $14.99, it’s not because he couldn’t afford to sell them for $9.99.

No, he expressed his pricing philosophy very clearly (TheVerge.com, 4/11/12): “Yes, the customer pays a little more, but that’s what you want anyway.” (Remember that “a little more,” or as Slate put it “a bit more,” is actually 50 percent more.)

The other thing you have to keep in mind when you read these stories is that publishers make about as much money selling a $9.99 ebook as they do selling a $26 hardcover (Extra!, 8/10)–despite doing a whole lot less.

It is true that faced with a choice of two formats, one of which costs 38 percent what the other does, many readers are likely to go with the cheaper one. It’s also true that when there’s no physical book to print and distribute, the publisher’s role becomes largely parasitical, and the book industry is likely to move to a model in which authors work directly with retailers and cut out the middlemen.

So one can understand why publishers might see it as being in their interest to conspire with Apple. But please, journalists on the publishing beat, let’s not dress that up as if they’re doing readers a favor by charging them half again as much for an ebook.

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7 Responses to Are Apple and Publishers Helping Readers by Ripping Them Off?

  1. Well said, FAIR. Note also that NPR radio and it’s website does a LOT of book reviews, and they get money back for every sale in ‘revenue sharing’ deals – which sounds like kickbacks to me. Could they be involved in this too? Well I can tell you this. As an indie publisher, it’s almost impossible to get a book to them, let alone get one reviewed.
    BTW if there is price fixing industry wide on e-books, wouldn’t it be likely to be on hard copies too? Their prices are very high.

     
  2. Hi Jim,

    This is a tricky issue. No one involved is doing anything for altruistic purposes. But the question is what the end result is, aside from prices to consumers. You might want to take a look at my colleague Stacy Mitchell’s take on it. For a decade she has worked with independent businesses and against big box retailers, etc. and is a person whose insights I treasure.

    http://www.ilsr.org/why-publishers-not-amazon-should-set-book-prices/

    David

     
  3. Orville H. Larson says:

    I quit buying books years ago. Why? They’re too damn expensive. I mean, $25-$30 for a hardcover, and $10 paperbacks? Enough, already!

    E books are fine, of course, but why do they have to be even $9.99? Why doesn’t some bright boy out there offer books for a dollar?

    Let’s get books down to the price of a candy bar, and everybody–authors, readers alike–will benefit. . . .

     
  4. Jack Jonsom says:

    “…publisher’s role becomes largely parasitical”

    Really how about editing?

    You could use one too!

     
  5. Brux says:

    The problem is that I cannot remember a single e-book out of my 90 Kindle books.

    People get an emotional set, and then they make up facts and opinons to suit them, but rarely do they get tested. What is the problem here really? Book prices too high?

    The expensive books are usually the ones that have some redeeming value, non-fiction or textbooks, or books that people do not seem to want to sell on Kindle or electronically but maybe do at a ridiculously high price.

    The problem is our whole model of information and technology – I think.

    We want to keep knowledge corralled, and information expensive and scarce so it is valuable to publishers. In our economy people are so desperately competing for money they do not give a damn (it is rare) about what they are doing or what they are giving to the people.

    I think eventually books will reduce to public things like Wikipedia entries, where they are growing, dynamic and have multiple authors and contributors. Maybe each subject has a project manager instead of an author, whose job it is to keep the state of the world’s knowlege updated and available.

    That is they we can grow ourselves economically into a powerhouse and fix the environment.

     
  6. Brux says:

    Oops … i meant to say “The problem is that I cannot remember a single e-book out of my 90 Kindle books” that cost $9.95 at Amazon. ;-)

     
  7. Andy says:

    Mr Jonsom–What’s wrong with “parasitical”? In American Standard English, it’s an accepted alternative to “parasitic”. And I would agree with the author, that in this case it’s stylistically more appropriate.

 

 

 

 

 

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