DOJ Suit Elicits Strong Media Response

In the wake of the U.S. Department of Justice’s filing of a civil suit in district court in New York against Apple and five of the major publishers with agency model pricing for e-books, there were a lot of opinions about the nature and fairness of the suit, as well as some of the implications for the industry. Here is a roundup of some of the press coverage.

In the New York Times article “Book Publishing’s Real Nemesis,” David Carr compares the DOJ going after publishers and Apple instead of Amazon (particularly in the wake of the big banks nearly toppling the global economy) to “taking on Standard Oil but breaking up Ed’s Gas ‘N’ Groceries on Route 19 instead.”

Carr wonders why — if the goal of the DOJ is to protect consumer interest — it is acting “as an ally to rebuild [Amazon’s] monopoly and wipe out other players.” Carr questions an action that purports to be good for competition, but caused a major player, Barnes & Noble, to drop 10 percent of its stock price since the suit was announced. He ends the article with, “But after a week of watching the Justice Department and Amazon team up, I’ve learned that low prices come with a big cost. Maybe I’ll order it at my local bookstore instead.”

In “Washington vs. Books,” the Wall Street Journal observed, “In reality, publishers have nothing to collude about, except maybe Clive Cussler’s next advance. Books don’t compete with each other. Nobody walks into a store and says, ‘Toni Morrison looks expensive today. Give me some Stephen Hawking.”

WSJ continued, “In its hyperventilating account of Apple’s negotiations with the publishers, Justice says the industry nefariously worried Amazon’s $9.99 price was becoming a ‘consumer expectation.’ But the concern was entirely legitimate. Publishers would be limited to producing only books that could be justified at an e-book price of $9.99. What about the expensive technical book that needs a big price from a small audience? What about a famous author who gets a big advance but writes an esoteric book?

“The book industry is defending the very survivability of a book industry whose products are anything but uniform.”

Preston Gralla of ComputerWorld  cautioned, “Readers might think that the federal suit against Apple and publishers will be good for them because it may lower prices for e-books. In fact, if the suit is successful it will be the worst thing that could happen to readers, cutting down on their choice of books, establishing a book-selling monopoly, and eventually leading to higher prices, not lower ones.”

In “The Real Bad Guy in the E-Book Price Fixing Case,” Slate’s Barry C. Lynn said, “The DOJ’s action effectively robs publishers of the ability to price their own products and robs other retailers of any hope of competing effectively with Amazon. Hence the DOJ has all but guaranteed a future in which readers end up with fewer well-edited books — both physical and electronic — and in which writers feel less free to speak against concentrated power.”

An article proclaiming “The Justice Department has just made Jeff Bezos dictator-for-life” in The Atlantic noted, “Amazon will have two years to consolidate its hold over the fast growing eBook market by offering virtually any sort of discount it pleases — a marketing strategy it can afford thanks to the volume of business it already does. The question, then, is what happens after that time is up? Will there be any company that can challenge Amazon in the digital market? Maybe not.”

Time magazine interviewed Emily Gould (And the Heart Says Whatever, Free Press) and Ruth Curry of the e-bookstore Emily Books in “How Small E-Booksellers Could Help Break the Amazon-Apple Duopoly.” The upshot of the article is that perhaps innovators like Gould and Curry, as well as other indie booksellers, could “at least provide a small counterweight to the Apple and Amazon juggernaut. At the very least it would encourage innovation in an industry that desperately needs to find a new way to sell books.”

Bloomberg Businessweek considered whether the “The DOJ’s Publishing Lawsuit May Doom Digital Rights Management.”Bloomberg quoted Lorraine Shanley, a publishing consultant of Market Partners International, who said that some publishing executives are discussing removing DRM restrictions. “It would allow individual publishers much more flexibility with their own content and in making it available directly to consumers,” said Shanley. Others in the industry aren’t convinced.

The blog of the Dystel & Goderich Literary Management Agency considered the news from the author’s perspective and said, “Ultimately it means that Amazon, which has had a very strong market share in discounting e-books recently with Barnes & Noble starting to catch up under the agency model, will now virtually have a monopoly on selling e-books.  The company, which as we know, sells many products other than books, can afford to lose money on their sales of e-books because they have so much other merchandise to make a profit from.”

And in her piece “And the Winner Isn’t…”about the Pulitzer Board not naming a fiction winner, Ann Patchett of Parnassus Booksin Nashville, observed that the DOJ’s decision “to be Amazon’s bodyguard” has the left the publishing industry struggling.

CNET columnists Declan McCullagh and Greg Sandoval believe that the Justice Department is likely to lose its case. “The U.S. Justice Department’s legal pursuit of Apple for alleged e-book price fixing stretches the boundaries of antitrust law and is likely to end in defeat,” they wrote in the April 12 column “DOJ is likely to lose e-book antitrust suit targeting Apple.”

“That’s what happened in 1982, when an embarrassed Justice Department admitted its antitrust lawsuit against IBM was ‘without merit’ and abandoned the case,” McCullagh and Sandoval said. “And in 2001, a federal appeals court nixed the Justice Department’s ambitious attempt to rewrite antitrust law by carving Microsoft into two separate companies.”

And though CNET reported that DOJ has a better case against the publishers, some legal experts offered the opinion that are “difficulties” with the Justice Department’s case against publishers as well.