back to article Ebook price-fixing: Macmillan settles with DoJ, Apple fights on

EBooks published by Macmillan will become cheaper as of today, said the US Department of Justice (DOJ), announcing that the publisher has agreed to settle a price-fixing lawsuit. MacMillan and the DOJ came to a settlement today, nine months after the department launched the lawsuit for price-fixing against Macmillan, four other …

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Silver badge
Happy

The older it gets

The more rotten it gets, but then again, what should you expect from a fruit.

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Hardly surprising

Apple must be seen as the ringleader who got all the publishers together and got them all change their conditions in Apple's favour so any deal with the DOJ would, I suspect, be rather severe so probably worth their day in court in case they can get away with it.

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Mushroom

Re: Hardly surprising

Or it could be that they don't know how to say sorry.

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Re: Hardly surprising

If they could get away with a sorry I am sure they would bite your hand off. Its the other constraints and possible fines that the DOJ would insist on as part of any agreement that is the part they are obviously not willing to accept.

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Sod the lot of them

I'd rather these companies all be taken to trial and have 10% of their revenue stripped for price fixing. When companies like this get together to hatch a scheme to make money the only way to deter them is to sock them squarely in the pocket book.

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Devil

Re: Sod the lot of them

RE these prices:

"The department alleges that Apple and the five publishers conspired to send up the average price of an ebook from $9.99 to $12.99 or $14.99 as a result of agreements between them."

Despite the almost complete lack of printing costs, distribution costs, etc., etc., etc... the books should be priced for the lack of these costs, and thus portionally cheaper and those who want them in REAL paper, should have them priced accordingly, to include those costs.

But for the APPLE computers "iprice fixing" for their "ibooks", and the "ibook readers" all available from "itunes", I hope these sleazy corporate types get their heads legally "ikicked".

"Ohhhhh my brain ihurts."

Satan - "ii captain!"

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Re: Sod the lot of them

"Despite the almost complete lack of printing costs, distribution costs, etc., etc., etc... the books should be priced for the lack of these costs, and thus portionally cheaper and those who want them in REAL paper, should have them priced accordingly, to include those costs."

OK. Declaration of interest.

I have been known to write a book. Or two. Or even... well, never mind. And I could say 'well, if you go to the Independant e-publishers, or even self-publishers, you can indeed find e-books at much lower costs. And some of them (no - I'm not saying mine - of course I'm not saying not-mine either :-P) are very good. Maybe even a lot of them.

But then people start saying the same types of thing. 'Yes, but they're all crap.' 'Yes, but none of them have even _seen_ an Editor. Well, crap is a value judgement. But as soon as you start adding in costs like that Editor (or more likely Editors) - you start getting back to similar costs to paper.

This is from the 'Editorial Freelancers Association (http://the-efa.org/res/rates.php). It's their current recommended rates for Editing services:

***********************************************************************

Common editorial rates —regardless of whether a project is flat rate or hourly— tend to fall within the ranges indicated below. These should be used only as a rough guideline; rates vary considerably depending on the nature of the work, the time frame of the assignment, the degree of special expertise required, and other factors. The industry standard for a manuscript page, however, is a firm 250 words.

Editing, basic copyediting 5-10 ms pgs/hr $30-40/hr

Editing, heavy copyediting 2–5 ms pgs/hr $40–50/hr

Editing, website copyediting $40-50/hr

Editing, developmental 1–5 pgs/hr $45–55/hr

Editing, substantive or line 1–6 ms pgs/hr $40–60/hr

***********************************************************************

Of course, not every small-market Editor will charge these rates. One Editor I've worked with personally fell flat on the floor gibbering when I showed them to her - because she would never charge anything that high. On the other hand, she works for one of my publishers, and rarely if ever does Freelance. So lets look at these rates,and take a novel, length 80,000 words.

At 250 words per 'page', our novel is 320 pages long. Let's assume we're going to want Content Editing and Line Editing. Content Editing and 'Developmental' Editing are close enough, so we'll use that for Content, and take mid-range numbers. We could sicuss the difference between 'Copyediting' and 'Line Editing', but for the purposes of the example I'll use 'Substantive or Line' Editing from the chart for Line Editing.

So:

Copy Editing: 320 pages, 2.5 pages per hour, $50 per hour. 320 pages = 128 hours = $6,400

Line Editing: 320 pages, 3 pages per hour, $50 per hour. 320 pages = 106 and two thirds hours = $5,333

Total: $11,733

Riiiiiight .

Now. Don't get me wrong. Like I said, not every small market Editor, maybe not even close to every Editor will charge these. And don't get me even wrong-er. I would never under-value the, um, value of an Editor's services.

But if you use those services (or your publisher does), the costs still have to be recovered. And we haven;t even _touched_ Cover Art yet.

But you can still get Independantly e-published and self-published books for a fraction of the price of Big Five or Main-Street e-published. Who knows. You might even like it!

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Re: Sod the lot of them

There used to be an old saying, that is still very true. I can't remember the exact wording, which was in the idiom of the time. It went something like "If three or more tradesmen are engaged in discourse, it will only be to the detriment of the customer". And this was in the 19th Century. How times have not changed

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@peladon - that's not the point.

When the eBook edition costs the same or more than the paperback, something is wrong.

When it's the same or more than the hardback, something is very wrong.

That's the comparison - why is an otherwise-identical something that clearly has a near-zero reproduction and distribution cost sold for the same (or higher!) price as something that clearly has a relatively high reproduction and distribution cost?

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Re: Sod the lot of them

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Adam Smith, the Wealth of Nations, 1776: and a quote you never, ever find the privatise everything government is evil libertarian fruit bats making.

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Anonymous Coward

Re: @peladon - that's not the point.

There are many reasons why the digital version could be artificially priced higher.

Firstly it is more convenient and convenience is useful to people.

Another reason is a romantic attachment to book shops, so by ensuring books in a book shop are cheaper it keeps them going.

It's because record shops are less convenient and more expensive that they are all closing down.

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Re: @peladon - that's not the point.

"When the eBook edition costs the same or more than the paperback, something is wrong."

The reality is that, where the author is big enough to have a Publisher who puts out both the e-book and a paper edition, a large number of people will in fact pay the same price for both.

Should they? Buggered if I know. I try to avoid deciding what other people should or ahould not do :-).

My point was that there are in fact markets where e-books exist for which there is _no_ paper edition. And that even though, in those markets, there are still costs to be recovered (some people I've spoken with have expressed views that there should in fact be no costs since 'it's just, like, a file on a server, innit?'), you can buy books in those markets for a lot less than paperback costs.

But people often won't. And, of course, I respect that choice. But to then claim e-books are over-priced, and lump them all in one basket seems, to my poor wit, a little less than fair :-).

Thoughts? Comments? (Yes - including 'you're a fat-head, Peladon - it's all good :-) )

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Thumb Up

Re: Sod the lot of them

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. "

Adam Smith, "The Wealth of Nations" 1776. Still a very relevant book today!

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Anonymous Coward

Re: @peladon - that's not the point.

Part of the problem is that books are front loaded with the publishing/marketing costs. Perhaps what we should be talking about is the break even point, because after that point it's almost all pure profit ... and especially so with ebooks.

Perhaps there simply isn't a place for niche market writers, or perhaps they should accept that for the first few 10000 books - (until the fixed costs of editors etc are paid off) neither they nor the publisher will see any return - and as after that it's almost all profit, the cost of a book will more accurately represent the real cost of it's production.

Of course the real problem here lies with the consumer, that publishers can easily fix prices shows that they are willing to pay well beyond what would be considered a reasonable price within a sane marketplace ... and therein lies the problem with our modern world, people simply have no idea of value.

Of course another paradigm would suggest that like the movie and music industries, the publishing industry has had a free lunch off mass reproduction technologies and now that the world has changed so must they, and like the 18thC trades that fell to the might of industrialisation, so must they.

Perhaps it'll no longer be possible for an 'artist' to live a lifetime off a few days work, perhaps would be writers should just accept that unless they can sell millions they should just give up or do it for fun!

Perhaps like the highly skilled carpet, lace silk weavers etc they have to accept that there's no longer a place in the world for them.

On the one hand I like reading books ... on the other 99% of published books wouldn't really be missed by anyone.

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Re: @peladon - that's not the point.

My thanks indeed sir (or indeed ma'am :-) ) for a reply I personally consider both well reasoned and interesting.

If I were to take the liberty of considering it an ongoing discussion (and I'm entirely comfortable if everybody else is bored already and would prefer me to shut up :-P), I'd probably start to get repetitive. Because while it is indeed true that main-street publications have all costs front loaded, it's a lot less true of the Independant Publisher and self-published market.

It's also true that market prices are generally fixed by what people will pay. That if people en-masse stopped buying main-street e-books at prices they consider 'inflated', something would change. I have no idea what, but something would. However - there is no current sign (in terms of reported sales) that 'people' are going to go down that route.

"Perhaps it'll no longer be possible for an 'artist' to live a lifetime off a few days work, perhaps would be writers should just accept that unless they can sell millions they should just give up or do it for fun!"

Heh. I'll bite my tongue at what is either an, um, 'interesting' view of how long it takes to produce a book or maybe a more deliberate button push :-). In either case, the second point is true. For the small market writer, writing 'for the money' is about the worst possible reason for writing at all. I'd go further and say 'if you need a reason to write, then writing's probably not for you', but then everyone knows I'm an Idiot :-). To misuse a quote from Barry B Longyear in 'City of Baraboo' - 'it's a disease' (blush).

May you continue to like reading books - and even find books worth your enjoyment :-).

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Re: @peladon - that's not the point.

The perception that manufacture and distribution is a significant fraction of the cost of a standard published book ( which has been repeatedly disproved) is one issue.

The front loading of book creation costs is the far bigger one, and one which few have a good answer for.

How do you ensure an author or "content creator" is paid enough up front to be able to take the time to write the book, while redistributing the costs over the whole lifecycle of the book.

And how do you do that, when (as has been conclusively proven) the current market for media is heavily weighted to new and shiny. In other words, for most products the vast percentage of sales happen in the first few weeks or months the product is out. Once that finishes, there will continue to be sales but the Long Tail is not going to keep a midlist author fed in a hurry, let alone the minnows. It might barely even recoup the advance after several years, and I doubt the beancounters or short term interest laden shareholders will be happy having that kind of debt on the books.

I really feel for the book publishers here - they've really done their best to avoid falling into the traps of the music and film industries by making enemies of their customers. And instead they've been strung up by their suppliers. Amazon selling cheap books is not your friend. It is exactly the same as Tesco and the local suppliers. They are the dominant player in the market, so they can dictate supplier prices, not the seller.

And it is trivially easy for them to extort a very low supply price, and sell at a good profit, while offloading blame for any quality or marketing issues back to the suppliers.

To be fair, I haven't seen a horse write a book yet, but going by the slushpiles I've seen, they may not be as bad as some humans.

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Anonymous Coward

Apple, bent as a rainbow, rotten as old fruit.

These guys are worse than MS and Oracle combined.

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Pushed into a corner ...

As an author published by Macmillan, I got the letter from John Sargent (the CEO) earlier today.

Let me quote from it (it's public):

(BEGIN QUOTE)

There are two reasons we did not settle earlier. First, the settlement called for a level of e-book discounting we believed would be harmful to the industry. [snip]

The second reason was simpler. I had an old fashioned belief that you should not settle if you have done no wrong. As it turns out, that is indeed old fashioned.

Our company is not large enough to risk a worst case judgment. In this action the government accused five publishers and Apple of conspiring to raise prices. As each publisher settled, the remaining defendants became responsible not only for their own treble damages, but also possibly for the treble damages of the settling publishers (minus what they settled for). A few weeks ago I got an estimate of the maximum possible damage figure. I cannot share the breathtaking amount with you, but it was much more than the entire equity of our company.

(END QUOTE)

Here's the important bit: Macmillan is pretty much the smallest of the big six. Facing a judgement that would potentially exceed the entire value of the company isn't somewhere any CEO can go, even if they're convinced they're innocent.

From my POV, the real insanity is that the bad guy in the case -- Amazon -- have got away with monopolistic behaviour, peaking at 90% of all ebooks sold, while the DOJ opened fire with the big guns on the folks who were trying to claw their way up from a minority position.

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Re: Pushed into a corner ...

The point of the DOJ case is that all the charged publishers colluded to change the way they charged for ebooks at the same time to a method favoured by Apple which gave Apple a guarantee that the books could not be sold for less elsewhere. If they did do that they yes, in the eyes of the law, they did "do wrong".

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Anonymous Coward

Re: Pushed into a corner ...

From my POV, the real insanity is that the bad guy in the case -- Amazon -- have got away with monopolistic behaviour, peaking at 90% of all ebooks sold, while the DOJ opened fire with the big guns on the folks who were trying to claw their way up from a minority position.

Now you know why the larger ones spend so much in lobbying. Paying protection money never really disappeared, it just got legalised..

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Silver badge
FAIL

Re: Pushed into a corner ...

"From my POV, the real insanity is that the bad guy in the case -- Amazon -- have got away with monopolistic behaviour, peaking at 90% of all ebooks sold, while the DOJ opened fire with the big guns on the folks who were trying to claw their way up from a minority position."

... as opposed to let the publishers enter into a cartel with Apple, ensuring their ability to raise prices across the board? Because that was the point over the DOJ case. It would serve them awesomely, as Apple would say "oh publishers set the price" and publishers would go "Apple said I can't sell 'em cheaper elsewhere".

Favoured-nation distribution contracts should be declared illegal.

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FAIL

Re: Pushed into a corner ...

Here is the important bit: both you and Macmillan are full of shit.

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Anonymous Coward

Re: Pushed into a corner ...

As the old saying goes two wrongs don't make a right. While I agree the DoJ needs to look at Amazon and if it's creating artificial barriers to entry into the market that doesn't mean it can turn a blind eye to the actions of Apple and the publishers who appear to have indulged in outright price fixing. Kobo and B&N appear to have made some inroads into Amazon's position over the last couple of years and first mover advantage may well be declining, after all it's hard not to be a monopoly when there is no real competition as there was in the early days of the Kindle.

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Bronze badge

5 guys

If a prosecutor had sufficient evidence that you, me and three others conspired to rob a bank for $100k, we'd be in jail by now. Apple and their publisher buddies conspired to rob people of millions. So why aren't the respective CEOs in the dock facing jail time?

Betcha there'd be lots of bank robbers who, if they get caught, would be happy to "settle" their case for a fraction the cash they stole before going on their merry way.

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Boffin

Re: 5 guys

I wouldn't rob a bank with you as you are clearly hard of thinking, it's probably your fault we got caught anyway.

Apple and their publisher buddies didn't conspire to rob people of millions, they are accused of price fixing, that is offering goods for sale at a higher price than they would if they were competing properly.

Offering goods for sale at a high price and forcibly taking peoples cash from them are two different crimes with different levels of severity and hence different penalties.

DO YOU UNDERSTAND NOW or should I say it again, S-L-O-W-E-R?

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Re: 5 guys

The purpose of price fixing is to financially benefit the price fixers at the expense of everyone else. The purpose of bank robbing is to financially benefit the bank robbers at the expense of everyone else. So feel free to explain it slowly for the hard of thinking, and using crayoned diagrams if necessary, is there any difference in the net result? In both cases, the victims are financially worse off as a result of the criminals' behaviour.

I'll concede that they are legally speaking, two different crimes but, for the life of me, I can't understand the rationale behind imprisonment for one but not the other. If people should go to jail for (for example) "theft" then the amount stolen is irrelevant - put all thieves in jail. If the punishment should be related to the amount of damage done by the criminal activity, then price fixing to rob people of (quoting from the article) "millions of dollars" should be more harshly punished than robbing a bank for $100k.

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Stop

Re: 5 guys

If the price fixing happens between two (or more) sellers, you have the option of buying the product at that price, buying elsewhere (possibly at a different price) or not buying the product at all.

If someone robs you then you don't have the option not to be robbed.

Theft can also include assault, threat of assault, damage to property etc etc which price fixing does not.

Do you really not see a difference?

(AFAIK) Laws against theft are fairly universal, you can't take something that doesn't belong to you. Laws against price-fixing aren't. They vary from country to country and from market to market within countries. E.G. in the UK Magazines and newspapers are price-fixed and this is legal.

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I see the usual morons are out to attack , becuase apple is mentioned!

The reason they got together is because Amazon is in the position whereby they are the main seller of ebooks on the net. They can and have forced discounts on publishers with the threat of taking all their stock off the virtual shelves.

What the apple deal allowed is a way for them to make profit and stop amazon from destroying them.

You all cheering on the judgement against apple is the same as turkeys voting for Christmas!

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Anonymous Coward

Re: I see the usual morons are out to attack , becuase apple is mentioned!

They acted as a cartel by colluding with an alternative vendor to fix prices!

If they had a problem with a vendor, "all" they needed to do was set up an alternative, open industry marketplace with an explicit aim of lowering distribution costs. Even if it were initially less efficient initially they'd completely eliminate the vendor problem FOREVER.

But, just like the music industry, they just couldn't do it because then they'd have to compete in an open market and companies don't like open markets. This is why there are anti-trust laws.

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Just remember ...

If it weren't for apple you would be paying insane prices and massive DRM on your music !

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Anonymous Coward

Re: Just remember ...

Very funny. That was irony, right?

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Anonymous Coward

DOJ :1, customers: 0

Where's the MONEY from the price-fixing?!

Oh, I see, they can keep it. Right...

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Gold badge

Too expensive

"But then people start saying the same types of thing. 'Yes, but they're all crap.' 'Yes, but none of them have even _seen_ an Editor. Well, crap is a value judgement. But as soon as you start adding in costs like that Editor (or more likely Editors) - you start getting back to similar costs to paper."

I'm not expecting 99 cents or anything. But, when a paperback is under $10, it's no surprise that people aren't going to be happy being expected to pay $9.99, $12.99, or $14.99 for an E-Book. Of course, those publisher that do try to charge more for the EBook than the physical book are then just SHOCKED that those new-fangled E-Books don't seem to be catching on.....

I had this trouble recently with a sci-fi magazine. I considered switching from physical subscription to electronic... but, when I got an electronic copy, it was the same price as the physical magazine, while losing the formatting and most of the detail on the illustrations (and some illustrations were missing entirely.) No thanks!

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Re: Too expensive

Lord Henry

And (at the risk of repeating my getting repetetive :-P), there's my point. to a degree, at least :-).

I think I can safely say that the prices you're quoting here ($9.99, $12.99, or $14.99) are main-street, Big Five (or Big Six - it depends on how much you squint) prices. They're the prices you're paying for (and not in any way taking any shots at these authors - the names are for example only) John Grisham. For WEB Griffin. For... well, mostly they're the prices you'repaying for the names people know.

There's another market out there. I could say two markets - because there are differences between self-publishing and Independant Publishers (and not necessarily that one offers 'better' books than the other). But I can say both of them offer books at much less than the prices above.

Of course, whether they're any good is a value judgement for each reader. And hence finding out is, to a degree, a gamble. But so can buying from main-street be too... :-).

Thoughts? Comments?

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I still can't jump on the ebook bandwagon. Can I transfer from one ebook reader to another? What about drm? What about format compatibility with future software?

I suppose for many things isn't an issue, but for me, if there is a particular book I thoroughly enjoyed or want to keep for future reference, I don't want to lose access for purely technical reasons. We already run into problems compatibility problems with office documents, do we need to have the same thing happen to all our older ebooks?

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Jumping...

Lord MrRtd

" Can I transfer from one ebook reader to another? What about drm? What about format compatibility with future software?"

As with many things - the answer tends to be 'it depends' :-).

If oyu buy from main-street, from the large publishers, DRM may be an issue. If you buy from some of the bigger online retailers, DRM may be an issue. You may, or may not be able to transfer books between devices (I mean legally. A discussion of other means is not one for a public plpace :-) ).

But that's main-street. Those are the big online retailers :-).

If you buy direct from many or indeed most Independant Publishers, it's a lot more likely DRM won't be present. For instance, one of my Publishers (for every book they sell) gives you (for a single purchase price a lot less than main-street):

A PDF of the book

_and_

a PRC (Kindle) of the book

_and_

an EPUB (Most e-readers that aren't Kindle) of the book

_and_

an HTML file of the book

And not one of the files has DRM.

does this mean it would be easy for you (if you bought one) to give it to 99999999999999999999999 of your friends for nothing?

Yup.

It's both a risk the small publishers take - and a benefit they offer. How it's used (or indeed abused) is down to readers.

Would that maybe nudge you to give Independant Publishers a try sir? :-)

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Anonymous Coward

If I were Apple, I'd be pretty keen to settle this out of court. The pile of cash that they have hoarded would do wonders for the economy if it were to be leveraged away from them by an angry court.

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