ABA Members Urged to Make Their Voices Heard Re Agency Model

On Thursday, May 3, ABA CEO Oren Teicher e-mailed member stores about an important opportunity to make a public comment about the Department of Justice consent decree in regard to the agency model. The full e-mail follows.

Dear ABA Member Bookseller:

Since the Department of Justice made international front-page headlines earlier this month with its filing about e-book pricing, I have been asked by scores of booksellers nationwide, What can we do? How can we make our voices heard about this issue of paramount importance?

I’m writing today to share news about a step that every independent bookseller in the United States can take to advance the argument that the agency model must be preserved to help maintain diversity and competition in our industry. It will involve some work, but rarely has there been a more important issue before us — or a clearer path to allow our views to be known. I know there is a certain degree of skepticism about whether anything we say will have any effect, but to remain silent at this critical juncture would, in my opinion, be a bad mistake.

As you recall, on April 11, the Department of Justice (DOJ) filed a civil suit against Apple and five major publishers with agency model pricing for e-books. In announcing the civil suit, DOJ also announced that Simon & Schuster, HarperCollins, and Hachette had settled with the government. While denying that they had violated antitrust laws and while defending the agency model, the three publishers agreed that they would no longer employ the agency model for e-books for two years. And, while Apple, Macmillan, and Penguin have stated that they intend to vigorously fight the civil suit, clearly this dramatic federal incursion into the marketplace has sent highly disruptive tremors across the publishing landscape.

Importantly, there is federal legislation —  the Antitrust Penalties and Procedures Act (often referred to as the “Tunney Act,” after the law’s sponsor, former California Senator John Tunney) — that gives us a crucial opportunity to make our views known about DOJ’s proposed settlement with the three publishers.

That settlement must be approved by the court, but, before that can happen, the Tunney Act requires DOJ to accept comments from the public, to publish the comments, and to submit a written summary of the comments to the federal court charged with considering approval. A federal judge will then determine whether the remedy being proposed is “in the public interest.”

The comment period extends for 60 days, and the deadline for submitting comments is Monday, June 25.

Even if you have already written letters this year about other important issues — be it sales tax or free expression — I’m calling on you to please once again pick up your pen. It’s hard to imagine a more pressing or important moment.

The law requires that these letters be published, summarized, and considered by the court. We often use the phrase “speak truth to power.” Here is the issue, the time, and the opportunity to do so. Please join ABA, the regional booksellers associations, and your colleagues in writing.

As ABA made clear in a meeting with DOJ on March 19, we could not believe more strongly that the agency model has been good for our channel, good for all bricks-and-mortar bookstores, good for publishing, and, most importantly, good for readers and book buyers. Since its introduction, the agency model has corrected a distortion in the market fostered by below-cost pricing, predominantly led by Amazon.com, the ultimate result of which is, we believe, to reduce or to eliminate competition among both retailers and publishers.

Since the introduction of the agency model many more independent booksellers are selling e-books, and those sales have shown steady growth. The agency model has lowered prices to indie bookstore customers, and indies themselves have seen significantly increased price competition among publishers in regard to promotions, discounts, and special offers, all of which have allowed bricks-and-mortar bookstores to offer customers a wider array of titles at a greater value.

In short, since the introduction of the agency model, the e-book market for consumers has become far more competitive — not less so! 

Deeply discounted books were among the key components in the fuel stoking Amazon’s engines of growth. It’s frankly somewhat stunning that DOJ would accept the possible upending of an industry as important to the cultural and intellectual life of our nation as bookselling and publishing so that one retailer could pursue a policy that is nearly certain to result in monopolization of the e-book market.

Before the introduction of the agency model, Amazon had a 90 percent market share in e-books, when they were selling below cost, a price far lower than indie booksellers could purchase e-books from publishers. Today Barnes & Noble, Google, Apple, Kobo, along with indies and others have joined the market, which has become far more competitive and diverse.

If the agency model goes away for a significant period of time, there is every reason to believe that Amazon will again price below cost and increase its e-book market share. We believe this can only be bad news for the reading public, resulting in a cultural landscape offering a far less diverse range of titles being published and a much-diminished range of publishers.

If you agree that the preservation of the agency model is essential for our industry, please, take the time today to share those thoughts in a public comment letter. As an independent business that will be directly affected by the proposed consent agreement you have the opportunity to join what could be a powerful, and eloquent, choir of voices explaining just how misguided this proposed consent agreement is.

You can send your comments to:

 John Read
Chief, Litigation III Section
Antitrust Division
U.S. Department of Justice
450 5th Street, NW, Suite 4000
Washington, DC 20530

Importantly, there are publishers that adopted the agency model that are not cited in the civil suit (notably Random House), and there have been no indications yet that those publishers are abandoning the agency model. Also, it’s not yet clear what will happen in the short term vis-à-vis agency for the publishers that are fighting the legal action.

So, as is often the case, in the short term it is critically important to focus our attention and energies where they have the potential of creating the greatest positive effect.

I hope that you will share your views with DOJ as soon as possible.

Over the years, I know many of you have heard me say that as a group we often tend to under-estimate our capacity to influence public policy, but we’ve had numerous successes when we’ve joined together and have expressed our views in a clear and concise manner. It’s important, however, that every letter reflect your own individual style and opinion.

In issues such as this — in which many of the players are massive corporations and the issues sometimes can seem frustratingly complex — all of us can feel daunted and can wonder whether our contribution might make a difference. But as all of us have seen, many voices joined together can channel the power of important ideas. And, as Nelson Mandela said, “It always seems impossible until it’s done.”

This is one of those moments that we might just be able to look back at and say that we made a real difference. Send in a letter. Don’t delay.

And, as always, if you have any questions about this critical issue — or any other ABA-related matter, don’t ever hesitate to contact me.

Warm regards.

Sincerely,

Oren Teicher, CEO
American Booksellers Association
200 White Plains Road
Tarrytown, NY 10591
oren@bookweb.org [3]
(914) 591-2665, ext. 6611