Kindle News: WSJ on flawed arguments of Big-5 publisher defenders

Wall Street Journal's Thomas Catan writes, "Critics of E-Books Lawsuit Miss the Mark, Experts Say"

The Passive Voice, a lawyer, summarizes the WSJ article and then links us to the FULL Wall Street Journal article, which few do, and that link may expire at any time so if you want to read the full article, get it now.

WSJ's Catan notes that what Eric Hellman calls the "nightmare narrative being spun by the publishing echo chamber" on behalf of "the Collusive 5 publishers" has been front and center the last week in a circling-wagons formation (with what seems shared boilerplate) decrying the DOJ action against the poor Big5 and the ebooks savior, Apple.  Here is some of what attorney Passive Guy excerpted yesterday from the WSJ article:

' But many experts say that under antitrust law, the department didn’t have much choice.  And even if it did, antitrust experts say, it is far from clear that doing nothing would have been wise.

U.S. antitrust law doesn’t seek to protect little companies against big ones, or even struggling ones against successful ones. Companies can grow as large as they want, as long as they do it through lower prices, better service or niftier innovations. Companies can even become monopolies, as long as they don’t get there illegally or try to extend their power by unlawfully stifling competition.

Companies under pressure from a more successful rival can’t band together to protect themselves, whatever their size.
“A lot of cartels are [composed of] small firms,” says Herbert Hovenkamp, law professor at the University of Iowa. “The criminal cases the Justice Department brings are often family firms—much smaller than these publishers.”
....
“Price fixing is kind of the first-degree murder of antitrust violations,” Prof. Hovenkamp says. “They don’t have discretion to just walk away from what appears to be a strong set of facts that, if true, are one of the most central of antitrust violations.”

The government might already have shown some leniency. For one, the Justice Department brought a civil, rather than a criminal, case, so no executives will go to prison...
....
But as disruptive as Amazon’s pricing may be to publishers, it isn’t illegal, experts say.

“What Amazon does may be harmful to the publishers, but so far it’s been very good for consumers,” says Spencer Waller, a law professor at Loyola University Chicago.
....
....the law is concerned with protecting competition, not competitors, experts say.  Cartels, for example, usually allow more players to coexist by enforcing higher prices.

“The goal of antitrust policy is to protect consumer prices, Prof. Hovenkamp says. “It’s not to protect inefficient firms from having to exit the market.”
'

Mild-mannered Len Edgerly in an unusual, separate blog-posting that was not a podcast entry, at his The Kindle Chronicles Podcast site, pointed to the truly ludicrous column by David Carr for The New York Times, which described the Dept of Justice's action as akin to 'breaking up' "Ed’s Gas ’N’ Groceries on Route 19" (this would be the Big5 Publishers (!) and affecting even little B&N, apparently, which has put so many smaller book stores out of business).  He even refers to Apple as "a minor player in the realm of books" (more route-19-store fantasy -- the minor road-store that could, in one day, successfully encourage a jacking-up of e-book prices an average 50%, nation-wide, on new books, and, furthermore deny wee Random House space for its e-books for not cooperating on the Agency model.

 Big Bad Amazon vs the Gas 'N' Groceries on Route 19.  How do Carr and his editors publish a piece like that with straight faces.  They don't.  It's all about alignment and lack of any appropriate embarrassment when targeting readers they think are that gullible.  Edgerly mentioned other NYT articles of the same caliber and asked,as a 'loyal subscriber to the NYT's Kindle version, "Are ALL of the Times's objective [?], hard-hitting journalists in the pockets of New York publishers?"

The Wall Street Journal article is even stronger than described so far.  "Antitrust lawyers scoff at the notion that the Justice Department would refrain from bringing a case if it believes it has solid evidence."

  In fact, if you haven't, you should actually read the 36-page PDF with the FULL TEXT of the DOJ case against Apple and the Big5 publishers.  It's more eye-opening and truly riveting than most novels you'll buy.  It's also unbelievable at several points that the companies went as far as they did, even 'openly' requesting of one another that they hide what they were doing.

  Again, if you want to read the full WSJ article from yesterday, you should get it now while it's still available via the special email-sharing feature probably paid for by Passive Guy.

  It's interesting to see the photos of the CEOs behind each company after reading so much about them.

  Also, it has very sensible closing paragraphs.  What they describe is a business model that requests demands a form of public welfare from e-book consumers to protect the Big5 from the lower-profit margins they fear will be part of this digital age instead of focusing on how to restructure their businesses to DEAL effectively with the realities of the digital age.


I've gathered a lot of news lately, but will end this with just this one topic, as there is a lot of interesting reading involved in the DOJ case papers and, really, this affects, in a big way, those of us who are book readers via digital media.

  We're faced with a corporate mentality that would now deprive our public libraries of their new books in digital form for reading, with Penguin and others having voiced a need for "friction" in making it harder for anyone to borrow such a book (even if library reading has been shown to spur the general reading of authors and buying of books) so that, for instance, even if the library is an hour away, they should go there in person to borrow a book.  Four of the five publishers involved are not making their current new e-books available at public libraries at all now -- that's the depth of their fear of e-books and people who read them.

  Also, see Wired's Tim Carmody on DOJ Announces Terms of Settlement With Three Publishers in E-Book Suit.  He lists them and includes the proposed settlement doc.

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Current Kindle Models for reference, plus free-ebook search links

US: Kindle Fire  7" tablet - $199 Kindle NoTouch ("Kindle") - $79/$109 Kindle Touch, WiFi - $99/$139 Kindle Touch, 3G/WiFi - $149/$189 Kindle Keybd 3G - $189, Free, slow web Kindle DX - $379, Free, slow web

UK: Kindle Basic, NoTouch - £89 Kindle Touch WiFi, UK - £109 Kindle Touch 3G/WiFi, UK - £169 Kindle Keyboard 3G, UK - £149   Keybd: w/ Free, slow 3G WEB

OTHER International Kindle NoTouch Basic - $109 Kindle Touch WiFi - $139 Kindle Touch 3G/WiFi - $189 Kindle Keybd 3G - $189   Keybd: w/ Free, slow 3G WEB

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  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.  Liked-books under $1
UK-Only: recently published free books, bestsellers, or £5 Max ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.

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KINDLE NEWS: WSJ: The Justice Dept Warns Apple, Publishers on Collusion over e-book pricing)

US TECHNOLOGY ALERT: U.S. Warns Apple, Publishers on E-Book Pricing

THAT is the headline for this Wall Street Journal story alert sent by the always-alert Edward Boyhan.
  Excerpts:

' The Justice Department has warned Apple Inc. and five of the biggest U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, according to people familiar with the matter.

Several of the parties have held talks to settle the antitrust case and head off a potentially damaging court battle, these people said. If successful, such a settlement could have wide-ranging repercussions for the industry, potentially leading to cheaper e-books for consumers. However, not every publisher is in settlement discussions. '

Involved are Simon & Schuster Inc., Hachette Book Group, Penguin Group (USA), Macmillan, and HarperCollins.

Many will remember that Random House stayed out of this the first year, feeling that a bookstore would know better what works for selling their books.

All have declined to comment.

The WSJ was the first to report, LONG AGO, that it was Apple and Steve Jobs, who suggested moving to the 'agency mode,' under which the publishers would set the price of the book -- and this included the stipulation that publishers couldn't let rival retailers sell the same book at a lower price.

  This was so clearly a case of price fixing, in an area with a long history of special sales, that many of us were perplexed that no action was taken before.  But now it's here.

WSJ's Thomas Catan and Jeffrey A. Trachtenberg add (taking a passage said by Steve Jobs to his biographer Walter Isaacson

' "We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway,'" Mr. Jobs was quoted as saying by his biographer, Walter Isaacson...
...
The Justice Department believes that Apple and the publishers acted in concert to raise prices across the industry, and is prepared to sue them for violating federal antitrust laws, the people familiar with the matter said. '

MUCH MORE in the story by the Wall St. Journal.

The history and some possible solutions are discussed in the article.  It also mentions that the European Union has said it is also investigating the allegation and there are several class-action lawsuits filed and consolidated in a New York federal Court.


Detailed history
Here is my earlier set of stories on "The Email-Pricing Wars" with sourced and linked detail from reporting at the time by The NY Times, The Washington Post, WSJ, and several other newspapers, as it happened.

  (Most of the other newspapers did not pay much attention to the details at the time).  The stories are linked in chronological order and will give you more detail reported as it occurred and includes key video clip that pretty much told the story back then and would be complementary to Jobs's description of what was agreed upon. "The prices will be the same" was the key phrase in the video and was an answer to a question by Walt Mossberg on why customers would buy a $14.99 book from iStore when they could find it at Amazon for $9.99.



Kindle Touch 3G, US-only   Kindle Touch WiFi (US)   Kindle Touch WiFi-Only, outside US    Kindle Basic   (UK: KBasic)   Kindle Fire
Kindle Keybd 3G   (UK: Kindle Keybd 3G)   K3 Special Offers   K3-3G Special Offers   DX

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Check often: Temporarily-free recently published ones
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.  Liked-books under $1
UK-Only: recently published free books, bestsellers, or £5 Max ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.

  *Click* to Return to the HOME PAGE.  Or click on the web browser's BACK button Below are ways to Share this post if you'd like others to see it.
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WSJ expands article considerably. WashPo-Techcrunch comments on it.

WALL STREET JOURNAL ADDS INFO TO SAME ARTICLE (LINK) NOW DATED JULY 14

The link to the WSJ article July 13 now leads to a largely-rewritten one putting even more emphasis on Amazon challenging the iPad (a dramatic angle), when, as the Washington Post/Bloomberg/Techcrunch article points out, the Amazon tablet is more of a 'threat' to Google for the reasons they give in their article.

Word changes are interesting.  Yesterday, it was that the tablet would be 'introduced before October' and today it's that it'll be "released by October."

The article now goes extensively into the battlefield aspect of it all, and you can read that at the same link, as I'm not including much of the iPad angle here.

  Newly worded paragraphs of more interest:

' Amazon's tablet will have a roughly nine-inch screen and will run on Google's Android platform, said people familiar with the device.  Unlike the iPad, it won't have a camera, one of these people said.  While the pricing and distribution of the device is unclear, the online retailer won't design the initial tablet itself.  It also is outsourcing production to an Asian manufacturer, the people said.

  One of the people said the company is working on another model, of its own design, that could be released next year. '

  I actually mentioned yesterday that a more advanced model was said to be expected in 2012.

  Then they mention (and the Washington Post does also) that an Amazon tablet might cannibalize sales of its Kindle.   Despite all the current news stories that e-reader sales have been going through the roof while tablet sales have slowed, the idea of a Kindle killer persists.

  More new material:

' A person familiar with Amazon's thinking said it [is] still figuring out how to market the tablet computer.  One issue is whether customers will want to buy both the tablet and Kindle, which is viewed as a dedicated-reading device for bookworms. '

' Amazon spokespersons have said that surveys show that many who value reading books have chosen an e-ink reader AFTER buying a tablet.  Some will want one or the other and some will want both.  I have a Kindle and a NookColor (more of a tablet), as they complement each other.

WSJ writers Stu Woo and Yukari Iwatani Kane, with contributor Amir Efrati, mention that Sony unveiled, yesterday, prototypes of a tablet and a wallet-shaped dual-screen portable device to be available later this year.  That should be interesting.

New wording re the two updated versions of its e-Ink Kindles now omits yesterday's description of an "improved and cheaper adaptation of the current Kindle," which has me hoping again that the second 'improved' Kindle is the 9.7" e-Ink Kindle DX Graphite rather than what they termed "the Kindle" yesterday, which is a term usually used by Amazon, since August, for the WiFi Kindle 3.

 Here's the rewrite:

' Amazon plans to introduce two updated versions of its black-and-white Kindle in this year's third quarter, people familiar with the matter said. One of the new Kindles will have a touch screen, which current models don't have. '

The word "cheaper" for "the Kindle" is gone.

Forrester's "Ms. Epps" mentions that "Amazon is also in a position to offer a cheaper alternative to the iPad" and "could sell the tablet at a loss while hoping to make money on sales of movies, music and books" but says that Amazon lacks a natural brick-and-mortar outlet and that the tablet "may be less refined than the iPad."

The Washington Post/Bloomberg's Techcrunch.com article explains how the tablet could be very successful for Amazon.  They consider the coming tablet a "sort of placeholder until Amazon's own version is ready."

When describing the threat of an Amazon tablet to Google, they point out that the Android appstore is complicated (Amazon's target crowd is one that doesn't want to depend on computers). Their take on this:

' Amazon needs devices they can ship with the store pre-installed.  And more importantly, their stores pre-installed.  As in, any device they ship is going to be filled with Amazon to the brim.  That includes the ability to sign in to your Amazon Prime account [to] buy things with one click...When that happens, Amazon will have an Android tablet that is more compelling than any other Android tablet on the market on day one '

They also say that Amazon will be less dependent on Google 'carrots' (Google branding, Google apps) offered to partners and this will be interesting to watch.  For sure.


Kindle 3's   (UK: Kindle 3's)   K3 Special ($114)   K3-3G Special ($164)   DX Graphite

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Check often: Temporarily-free late-listed non-classics or recently published ones
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.  Liked-books under $1
UK-Only: recently published non-classics, bestsellers, or £5 Max ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.

Below are ways to Share this post if you'd like others to see it.
-- The Send to Kindle button works well only on Firefox currently.

Send to Kindle

(Older posts have older Kindle model info. For latest models, see CURRENT KINDLES page. )
If interested, you can also follow my add'l blog-related news at Facebook and Twitter
Questions & feedback are welcome in the Comment areas (tho' spam is deleted). Thanks!