{"id":2221,"date":"2012-03-08T20:03:41","date_gmt":"2012-03-09T01:03:41","guid":{"rendered":"http:\/\/quackingalone.com\/blog\/?p=2221"},"modified":"2012-03-09T08:04:08","modified_gmt":"2012-03-09T13:04:08","slug":"ma-book-should-go-the-way-of-ma-bell","status":"publish","type":"post","link":"https:\/\/quackingalone.com\/blog\/2012\/03\/08\/ma-book-should-go-the-way-of-ma-bell\/","title":{"rendered":"Ma Book Should Go The Way Of Ma Bell"},"content":{"rendered":"

Today news broke <\/a>that the Justice Department\u00a0warned Apple and a number of big publishers\u00a0of its intent to file suit against them.\u00a0 The DOJ\u00a0alleges\u00a0that Apple and the publishers conspired to increase the price of ebooks.\u00a0 Publishers affected apparently include the following:\u00a0<\/p>\n

The five publishers facing possible Justice Department action are Simon & Schuster Inc, a unit of CBS Corp (CBS.N<\/a>); Lagardere SCA's (LAGA.PA<\/a>) Hachette Book Group; Pearson Plc's (PSON.L<\/a>) Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc, a unit of News Corp (NWSA.O<\/a>).\u00a0 -- Reuters<\/a><\/p><\/blockquote>\n

If DOJ wants confirmation, it might check with consumers, particularly those who owned Kindles and bought them based upon Amazon's promise to try to keep ebook prices below $9.99.\u00a0 Yes, Virginia the roosters coming home to roost this time arise from the publisher's battle with Amazon over ebook pricing that resulted in publishers and Apple concocting the \"agency model\" of pricing. What is the agency model?\u00a0 It's where the publisher decides what its price will be and the retailer is not allowed to change it.\u00a0<\/p>\n

Think of the agency model like this (and this is only an example, based on nothing more than the odd imagination of a certain duck lady) - imagine that Wrangler is really peeved at Wal Mart for selling its blue jeans for $19.99.\u00a0 Wrangler has decided it wants it's blue jeans to have an upscale image and a price tag to match.\u00a0\u00a0Wrangler\u00a0decides that Wal Mart can only sell its jeans if they are priced at\u00a0the numbers on the tags shipped with the jeans and they start at $49.95 a pair.\u00a0 If Wal Mart doesn't like it, then they can't sell Wrangler jeans.\u00a0<\/p>\n

Well, that wouldn't work if just Wrangler did it, now, would it?\u00a0 Wal Mart would say to Wrangler - screw you and the horse you rode in on.\u00a0 Where will you sell your jeans with those terms, Wal Mart would ask.\u00a0 The store that Sam Walton built might reply that it would just\u00a0sell Levis\u00a0instead.\u00a0 But what if\u00a05 or 6 big companies control all the well known jean brands? And what if \u00a0all of them say the same thing to the big chain store?\u00a0 And when the chain store asks, in a much softer voice, well, where will you sell your product, then - who will ever accept those terms?\u00a0 And the merchants answer - Target.\u00a0 We've all reached a deal with Target on exactly those terms and Target will keep a set percentage for profit based on the price we set.\u00a0\u00a0 Well, Target would be making a chunk of change too, wouldn't it? \u00a0And Wal Mart would lose all the customers who wanted to buy big name jeans.\u00a0 AND, worst of all, the customers would pay a lot more for the product.\u00a0<\/p>\n

Now,\u00a0 understand that the big publishers are the blue jean companies and Apple is Target. That's\u00a0agency pricing and in the long run, the victims are the consumers.\u00a0<\/p>\n

Federal Antitrust legislation exists to prevent monopolies that destroy competition and damage consumers.\u00a0 The most famous example of DOJ's heavy hand with Antitrust action was the break up of the old Ma Bell network of AT&T.\u00a0 Since that time - look at what's happened to telephone service.\u00a0 Consumers have options at every price point and every service level.\u00a0 And as much as I dislike the Feds regulating most things, Antitrust legislation has an important and valuable purpose.\u00a0<\/p>\n

So, DOJ may very well be right on target in breaking up\u00a0this scheme\u00a0because prices consumers pay should be set by the merchants from whom consumers buy.\u00a0 The merchants pay a wholesale price and sometimes they'll sell some items below wholesale in order to promote some other items.\u00a0 That's what Amazon was doing with ebooks to sell its Kindle devices - and again, that's what publishers were trying to prevent.\u00a0<\/p>\n

Yes, if agency pricing goes then the whole system will have to adjust.\u00a0 Indies like me would be hurt because we are\u00a0little tiny pebbles caught between\u00a0giant boulders.\u00a0 Amazon says to indies, you can only sell on our platform if you price you ebooks\u00a0at your cheapest price.\u00a0 Oh, and if your price is lower anywhere else - we'll match the low price and base your royalty payment on that\u00a0figure.\u00a0 Presently, the agency pricing system gave indies got a benefit of\u00a0sales platforms mostly selling indie work at the price the indies\u00a0set. So\u00a0indies don't get caught in a price reduction whirlwind at Amazon, often the biggest sales source.\u00a0<\/p>\n

Even though readjusting the system to get it back to a wholesale\/retail marketplace would\u00a0hurt indies, like me, for a while, I expect that\u00a0pricing would work itself out after a period of some turbulence.\u00a0 And\u00a0even if it didn't, and I took a hit along with other indies, well, that's okay.\u00a0 We'd have to adapt because ultimately, the agency pricing results in readers paying high prices across the board when in a wholesale\/retail market, competition would keep prices lower.\u00a0\u00a0READERS\u00a0SHOULD NEVER BE HURT\u00a0BY\u00a0AND OVERCHARGED BECAUSE OF A \"SECRET\" SYSTEM THAT'S KEEPING PRICES ARTIFICIALLY INFLATED.<\/p>\n

It's not something I say often but in this case, I've gotta make an exception - YOU GO, DOJ.\u00a0 Ma Book should go the way of Ma Bell.<\/p>\n","protected":false},"excerpt":{"rendered":"

Today news broke that the Justice Department\u00a0warned Apple and a number of big publishers\u00a0of its intent to file suit against them.\u00a0 The DOJ\u00a0alleges\u00a0that Apple and the publishers conspired to increase the price of ebooks.\u00a0 Publishers affected apparently include the following:\u00a0 The five publishers facing possible Justice Department action are Simon & Schuster Inc, a unit ...continue reading \"Ma Book Should Go The Way Of Ma Bell\"<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[7,1],"tags":[],"_links":{"self":[{"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/posts\/2221"}],"collection":[{"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/comments?post=2221"}],"version-history":[{"count":6,"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/posts\/2221\/revisions"}],"predecessor-version":[{"id":2226,"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/posts\/2221\/revisions\/2226"}],"wp:attachment":[{"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/media?parent=2221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/categories?post=2221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quackingalone.com\/blog\/wp-json\/wp\/v2\/tags?post=2221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}