Kindle News: Amazon announces more on the eBook pricing settlements. What it means, what's next with Apple's part?

Amazon announcement about "eBooks Settlements"

An announcement came in our emails today and in Amazon's Kindle Forum late last night (Friday, Aug 30, by David A., Forum Moderator), but some don't always see their emails and most don't know about the Kindle Forum, so I'm quoting the info, as written, here (emphases via italics are mine), as their announcements are meant for wider circulation.

' Last fall we notified eligible Kindle customers that they may be entitled to a credit for some of their past Kindle book purchases as a result of legal settlements between several major book publishers and the Attorneys General of most U.S. states and territories.  Since then, two more publishers have settled and these new settlements have increased the amount of the credits customers will receive.

Eligible customers will not need to do anything to receive this credit. If the Court approves the settlements in December 2013 and there is no appeal, a credit will appear automatically in eligible customers' Amazon.com accounts that can be used to purchase Kindle books or print books.

  We will notify eligible customers when the credit is applied to these accounts. While we will not know the amount of each customer's credit until the Court approves the settlements, it is estimated that it will range from $0.73 to $3.82 for every eligible Kindle book that was purchased. To be eligible, customers must have a U.S. billing address and must have purchased a Kindle book published by Hachette, HarperCollins, Simon & Schuster, Penguin or Macmillan between April 1, 2010 and May 21, 2012.

These publishers will provide the funds for the settlement. You can learn more about the settlements at http://www.amazon.com/help/agencyebooksettlements.

We think these settlements are a big win for readers because they will return over $165 million directly to customers and they also impose limitations on publishers' ability to raise eBook prices.

Thanks for being a Kindle customer. '

And this is before any settlement related to the DoJ-Apple case and Judge Denise Cote's 'remedies' to be announced this coming week, as well as whatever happens in connection with Apple's responsibilities with regard to the several antitrust lawsuits brought by a coalition of state Attorneys General and by a Plaintiff Class.

  The July 10, 2013 Wall Street Journal article (written by Chad Bray, Joe Palazzolo and Ian Sherr, with contributions from Jeffrey A. Trachtenberg and Jacob Gershman) reported on federal judge Denise Cote's ruling that Apple had colluded with five major U.S. publishers to drive up the prices of e-books.

  The WSJ report explains that, "As a result of the ruling, Apple is exposed to "as-yet undetermined damages and opens the door for the Justice Department to take a closer look at its other business lines."

  The DOJ's proposed remedies, including their revised proposal about a week ago, are likely to be met by a somewhat softer approach by the judge, who would prefer to not interfere with Apple's day-to-day business dealings as much as the DoJ proposes.

  Apple's response to the ruling is that they've "done nothing wrong" and they're appealing the ruling.  While the Big5 publishers and Apple have 'explained' that they were working against a monopoly power (Amazon) to make the e-book market more competitive, the WSJ team writes, "... the ruling raises questions about the leverage Apple may have when negotiating future content deals" since they are known to drive hard bargains.  What's important:

' "Under antitrust law, you can not only prevent the unlawful conduct, but also prevent other conduct that can lead to a similar result," said David Balto, former policy director at the Federal Trade Commission.

Because Apple was found liable for violating U.S. antitrust laws, a separate trial on damages will take place in a lawsuit against the company brought by 33 state attorneys general, who are seeking to recover money on behalf of consumers who paid higher prices for e-books.
  Apple also faces a private class-action suit alleging price-fixing.   The private plaintiffs could recover damages from Apple, provided their legal claims are distinct from the states'. '

At any rate, the credits for individual books appear larger than most had been expecting.

REMINDER These are the last two days -- 11:59 pm on September 1 is the ending date -- for the large Kindle Fire tablet discounts available for college students who have, or who join, the Prime membership program for $39/yr, with free access to something like 18,000 instant videos and the ability to borrow one book a month from the 400,000+ Kindle books Prime Lending Library (Link is (http://amzn.to/kprimebooks ), with no waiting times or due dates.


Image credit: readingebooks.net


Related articles
TIMELINE:  Ebook Pricing Wars - what DOJ would have seen.
Also, History of the e-book pricing wars
  and some recent articles:
  DOJ, Apple, and Judge Cote -- status, as of August 27
  Links to the latest stories that were written after the blog article here on August 12 about DOJ recommendations and Judge Cote's consideration of proposals for remedies in the e-book pricing case.
  1. Citing Steve Jobs email, DOJ claims Apple changed in-app purchase to retaliate against Amazon - by Laura Hazard Owen for GIGAOM
  2. E-Books Judge Pledges to Avoid Unnecessary Intrusion Into Apple's Business - by Julie Clover for MacRumors
  3. Apple E-Books Judge Cote Says She’ll Limit Antitrust Remedies - by Bob Van Voris for BloombergBusinessweek
  4. Apple says tempered e-book penalties still go too far - by Joan E. Solsman for CNET.

Judge Cote said that she'll sign a final order spelling out the remedies next week.

---

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

US: Updated Kindle Fire 2 Basic  7" tablet - $159 Kindle Fire HD 7" 16/32GB - $199/$229 Kindle Fire HD 8.9" 16/32GB - $269/$299 Kindle Fire HD 8.9" 4G 32/64GB - $399/$499 Kindle NoTouch ("Kindle") - $69/$89 Kindle Touch WiFi - $99 Kindle Paperwhite, WiFi - $119/$139 Kindle Paperwhite, WiFi+3G - $179/$199 Kindle Keybd 3G - $139/$159, Free slow web Kindle DX - $379 $299 (Yes)

UK: Kindle Basic, NoTouch - £69 Kindle Touch WiFi, UK - ~£89 Refurb'd Kindle Keyboard 3G, UK - £149   Keybd: w/ Free, slow 3G WEB Kindle Paperwhite, WiFi - £109 Kindle Paperwhite 3G, UK - £169 Kindle Fire 2, UK -  £129 Kindle Fire HD 7" 16/32GB, UK - £159/199 Canada - Kindlestore, CDN-$ Kindle Basic, NoTouch - $79 Kindle Paperwhite, WiFi - $129 Kindle Paperwhite, 3G - $199 Kindle Fire HD 7" - 214.00 KFire HD 7" $214,  8.9" $284

*OTHER Int'l pages* Kindle NoTouch Basic - $89 Kindle Keybd 3G - $189   Keybd: w/ Free, slow 3G WEB Paperwhite WiFi $139, 3G/Wifi $199 KFire HD 7" $214,  8.9" $284 France Boutique Kindle Deutschland - Kindle Store Italia - Kindle Store Spain - Tienda Kindle Brazil - Amazon BrazilRp China - Amazon China [?] Japan - Amazon Japan

[College students with Prime membership: discounts of up to $70 off Kindle Fire tablets until just before midnight Sept 1.]

---

Check often: Temporarily-free recently published Kindle books
  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

Read More

Kindle News: Apple/DoJ Lawsuit Judge mulls proposals for remedies in e-book pricing case - Updated

DoJ/Apple case: Judge Cote proposes ways to prevent further collusion and high e-book prices in near future

Judge Cote, to no one's surprise, denied Apple a stay of all proceedings pending its Appeal.

  She further denied "Apple’s proposed schedule for its damages trial, and ordered the parties to finish discovery by the end of December, 2013 with summary judgment motions to be fully briefed by February 28, 2014."

  Apple's lead counsel Orin Snyder received no sympathy from the judge about the "excessively aggressive" schedule.  Andrew Albanese's report in Publishers Weekly is very detailed, and trial watchers will want to read this one.

  The Christian Science Monitor's Molly Driscoll also writes in some detail about all this.

  While the DoJ would like to see the publishers and Apple not just return to the Agency Model and its restrictions on lower pricing in only two years and would prefer that Apple, who did not settle, not be allowed, in the next 5 years, to use the Agency model in that same way (rather than be restricted to only two years).

  Judge Denise Cote doesn't think that latter interval would be necessary but would want separate agreements with individual publishers staggered by months (maybe 6-8 months between) to avoid the kind of collusion noted.

  She added that a monitor appointed by the court that would work with Apple, might not be needed as long as Apple set up a program within the company focusing on antitrust efforts.

' The judge, however, was also unimpressed with the publishers, calling them “unrepentant.”

“None of the publisher defendants have expressed any remorse,” Cote said.

Representatives for Apple and the DOJ will now have meetings to discuss the measures, and Cote has asked for an outline from the two companies on proposed restrictions for Apple sometime this week. '

The Wall Street Journal's Joe Palazzolo explains that Judge Cote made these proposals "during a hearing Friday in federal court in Manhattan, roughly a month after finding that Apple provided five of the largest publishers 'with the vision, the format, the timetable and the coordination that they needed to raise e-book prices' in violation of federal antitrust laws when the company entered the market in 2010."  He adds:

' Judge Cote said she was seeking to impose conditions on Apple that would ensure price competition for e-books without disrupting innovation at the second-most valuable company in the world.

"I have no desire to regulate the App Store," Judge Cote said. '

  A Reminder - The traditional wholesaler arrangement was that the publisher set the Retail or Suggested List Price, and booksellers would pay (guarantee) the publisher 50% of that.
  Now, some of those e-books were set at $26 retail and therefore Amazon paid the publisher $13 while charging $10 for the e-books, taking a loss on those (while taking much better margins on some older e-books).

  Other booksellers could not afford to do the same, but the basic reality is that publishers have no need to charge $26 (!) for an e-book as a retail price. If they set it at even $15 booksellers would pay the publisher $7.50 per e-book sold and take a profit of $2.50 -- no one has to take a loss.

  But this has always been about keeping hardcover, printed books at the higher cost.
 In fact, the publishers had more revenue from the wholesaler method from which to pay their authors but they often obfuscated this, even though at least one publishing house told its authors that with the Agency model the authors would have to take 20% of net profit rather than 25% on e-books.

  The idea has been to keep the hardcover or printbook prices at a higher price level and not to 'devalue' them by allowing e-books to be sold so inexpensively despite the lower cost of producing the the digital versions.  This has been stated often, by the publishers (out loud), but at the same time they also worked to paint Amazon as pricing e-books so low that no other booksellers could do that.  Obviously, that never had to be.  But it's all about traditional printed book pricing and protecting that.

  As with any transition in technology, methods change and pricing along with that.  It's one of those changes in the world order and inevitable battles for survival of older ways.

  Support for the government's case made in the form of Amicus briefs by Kobo (affected badly by Apple's restrictions on in-app links to their store) and by The Consumer Federation of America (CFA).

  Publishers Weekly's Andrew Albanese described the situation.  Publishers Weekly is unusual in that while they are part of the publishing industry, normally aligned against Amazon's pricing mode and their fear that Amazon may eventually be able to set terms less favorable to the larger publishers, their articles are very balanced.  The American Booksellers Association, on the other hand, paints Amazon as the Devil on his worst day and Apple as protective Angel.

  Kobo's retail partner is, ironically, The American Booksellers Association, which is adamantly for the Agency Agreement as it was structured from the start, with its focus on keeping e-book prices high.
  Kobo, though, lost 75% of its new-customer conversions when Apple, in the summer of 2011, suddenly imposed a large fee on the store-linking function in its apps by e-book sellers.  The 30% commission on an in-app book sale would have taken all of Kobo's 30% profit on that sale price.

  The DoJ has proposed that Apple allow the in-app links for the next two years.  Amazon and Barnes & Noble e-book apps would be affected also if Judge Cote decides to go with this.

  The CFA's noted antitrust lawyer David Balto explains why, Albanese adds, the proposed remedy is "not unusual" and is "appropriate" (the details are in the linked article).  The Consumer organization stresses:

'...“the underlying conduct was willful and [Apple] remains unrepentant.” The brief also notes that the DoJ proved “conduct of a sort often prosecuted criminally, that was knowingly orchestrated by defendant’s highest management.”

Failure to take “strong remedial steps” in a case involving such egregious conduct, the brief concludes, would send a message that “antitrust compliance can be an afterthought and that antitrust penalties are merely a cost of doing business.” '

Believe it not, I wrote this blog entry as the 3rd topic for my blog article for today, as I had not posted over the weekend.  As you can see, that would have been an impossibly long entry, but then, so is this one.  I put together bits and pieces of reports I saw but it's not exactly coherent.  If there's anything you'd like clarified a bit more, let me know in the Comments area. Thanks.


Related articles
TIMELINE:  Ebook Pricing Wars - what DOJ would have seen.
Also, History of the e-book pricing wars



For daily free ebooks, check the following links:

Temporarily-free books - Non-classics USA: by:    Publication Date      Bestselling   High-ratings UK: PubDate   Popular The Kindle Daily Deal What is 3G? and "WiFi"?       Battery Care Highly-rated under $1,  Newest: $1-$2, $2-$3

Most Popular Free K-Books U.S. & Int'l (NOT UK):    Top 100 free UK-Only:    Top 100 free Guide to finding Free Kindle books and Sources. USEFUL for your Kindle Keyboard (U.S. only, currently):   99c Notepad 1.1,   99c Calculator,   99c Calendar,   99c Converter

  *Click* to Return to the HOME PAGE.  Or click on the web browser's BACK button

Read More

DOJ-APPLE LAWSUIT: Clues, on the last day of the trial, that Apple had lost the lawsuit after Eddy Cue had resorted to saying Steve Jobs was "confused" and a key e-mail piece was passed off as an early draft though the judge wasn't fooled

Why Apple's loss of this lawsuit was inevitable

As anyone interested in the e-book pricing wars and the US/DOJ vs Apple lawsuit will have heard on Monday, Apple lost the lawsuit.  Here's Judge Cote's decision ("Opinion & Order").  It's written very clearly for a legal document and she answers each of Apple's points.

  Bear in mind that the DOJ just went for a civil case rather than a criminal one.

Apple took a chance on the trial because, most agree, it didn't want the government oversight (over the type of negotiations with content companies) that the five settling publishers had to accept, some concern over private lawsuits, and because Apple management has a strong faith in their ability to market, even to a judge who, in her denial of Apple's Motion to Dismiss the case, had already explained why the main arguments they would use during the ensuing trial would not be successful.


One general point:
  Apple's defense team pushed the point that they were trying to ensure a healthier, free market atmosphere against a company (Amazon) that dominated it and which would possibly eventually cause competitors to have to leave the arena -- but the Wall St Journal (a fairly conservative site that is itself a publisher with some colorfully-expressed enmity toward Amazon from its owner Robert Murdoch) quoted Herbert Hovenkamp, a law professor at the University of Iowa, who explained, as others have, that:
  "The goal of antitrust policy is to protect consumer prices ... It’s not to protect inefficient firms from having to exit the market."

  and again, from PaidContent's Matthew Ingram on the same point, which Apple lawyers should have known:

' ...antitrust law in the U.S. isn’t designed to help prevent competitors from being squashed by a large player in an industry — even if that player has what amounts to a monopoly position.  The key point is whether that particular company’s behavior alters or damages the marketplace in a way that harms consumers.  And when it comes to that, the DoJ is on rock-solid ground. '

  and Monday, Judge Cote wrote:

'...it is essential to remember that the antitrust laws were enacted for "the protection of competition, not competitors." '

Apple's response yesterday was to restate their role of white knight saving the e-book world from Amazon and "We've done nothing wrong and we will appeal the judge's decision."


Background:
Those new to the case and curious about it can see original news sources in a Timeline and a set of articles that are a news history of the e-mail pricing wars

  The page of articles also provides links to the primary court documents, some of which are fascinating reading, as they consist of private mails between several companies' executives and give insight into the thinking and atmosphere of higher management in those companies.

  They even come with some admonitions from the writers to delete the email received (and most of us know this doesn't mean they are truly deleted).

  So, anyone interested in the nitty gritty of the lawsuit, after being puzzled by news summaries, can get some original-source reading of intrigue-ridden moments.


COURT MOMENTS

1. Apple insisted it was no "ringleader" of the publishers' effort and that Apple was just going along with the publishers who were driving the price hikes.  Well, there is a lot of data there -- but for those not interested in too much detail, there was a whiff of gunsmoke from Simon and Schuster's chief executive, Carolyn Reidy, when the DOJ introduced an email from Reidy to Apple's Eddy Cue (the negotiator) in which she said she "looked forward" to his progress in "herding us cats."

2. Especially for sleuths.  Apple's SVP of Internet Services, apparently tried to mislead the judge after a key DOJ document indicated that Steve Jobs sent an email to Apple's Eddy Cue January 14, 2010, Subject title "Re: Book Prices Thoughts" saying:

' I can live with this, as long as they move Amazon to the agent model too for new releases for the first year.  If they don't, I'm not sure we can be competitive...'

  Does this even matter?  Two Apple execs (Keith Moerer and Kevin Saul) had both testified that Apple was "indifferent" to what kind of agreement the publishers signed with Amazon.  Steve Jobs's email posed a conflict with Moerer and Saul's testimony.

  When Eddy Cue didn't want the email to be evidence that Apple had planned to require that the publishers move Amazon to the agent model too, for new releases, Orin Snyder, Apple's Chief Counsel, came back by asking Moerer:

  "Are you aware that the e-mail was never sent?"

  Judge Cote ordered Snyder's question removed from the record.

  Apple's Snyder came back the next day to introduce a longer version of the email, stamped with the same date, suggesting that the email introduced had been a discarded draft.

  This led to Apple siders in the blogosphere arguing even after the trial ended, that the DOJ had introduced an early, discarded draft, but the people writing this in commenter areas probably never followed up on that story to find out what actually happened when the judge decided to analyze the pieces that were part of an odd sequence.

  The DOJ returned to ask Eddy Cue, on the stand, what the longer email meant and if he'd ever received it, and Cue said he hadn't.
  It's interesting that each email version has a timestamp header line: "Received(Date):" ... with the time filled in.

  Not leaving well-enough alone, Apple Counsel Snyder came back to this on a later date, introducing FIVE different versions of Jobs's email.  The key wording about Amazon did not appear in the other four versions.  CNN Fortune's Philip Elmer-DeWitt wrote that Snyder seemed to be implying that Jobs's thinking had evolved over the first four email versions drafts.

  The problem for Snyder was that the version that the government had introduced was time-stamped LATER than the other four versions.

 Apple's Snyder explains this by saying that's the timestamp that's applied when a computer window is closed. (?)

  DOJ lawyer Buterman pointed out, furthermore, that the DOJ-introduced version not only had the latest time stamp, but it was the ONLY one that was signed in Jobs's usual manner, "Steve"...

Then the sleuthy judge put her analytical ways to work on this -- and noted that the first version's wording appeared on the 2nd version but part of the text was moved down and replaced in the paragraph by other wording, while the original words were left dangling below the body of the message (probably meant for deletion but forgotten) in all subsequent copies.

' Anyway, so it's like hanging down there just sort of riding at the bottom of the e-mail for the rest of the chain, which, to me, is additional confirmation that this is the last in the series. '

That's when Cue tried to explain it all away by saying about Steve Jobs, "He's writing that first one, he's confused about it... This was before the iPad launch, which most of us watched.

(NOTE: See another story, by CNet's Shara Tibken, showing how often Cue had to say Jobs was 'confused' to get away from any idea that they ever thought about insisting that publishers require all retailers to go the Agency Agreement route.

  Tibken writes:
  "Apple's initial proposal sent to publishers on January 4 and 5 of 2010 said publishers working with Apple had to move all retailers to agency..."

 The judge thanked him.  But she has shown a tendency to analyze thoroughly everything submitted to her (not taking at face value declarations from either side) and this was not a good moment for Apple's defense, as it showed clearly a desire on Snyder's part to get this clearly weak set and the idea of the last one as an early draft past the judge (or, even worse, the Defense team had not even taken the time to take a logical look at the 5 versions they submitted).

  At the weakest, it showed some definite intent by Steve Jobs at that time and it contradicted what Moerer and Saul had testified.  While Eddy Cue testified that he changed his mind on this and that explicit language did not make it into the final contract language, the publishers did in fact coincidentally insist that Amazon agree to use the Agency model.

  Judge Cote's Decision describes this in Footnote 24 connected with her statement on Page 50 that "there is no evidence...that Apple ever rescinded its demand that each of [the e-book retailers] move to an agency arrangement with all resellers."

Random House refused to sign up for the change to higher book prices, explaining that they felt retailers best understood selling; their e-books were not allowed in the Apple iBookstore for a year (imagine the media uproar if Amazon had banned Random House from the Amazon store for not agreeing to their wholesaler model with lower pricing for bestsellers), until Random House waved the white flag when Apple withheld permission for an app important to Random House.


Things that stood out, in the Decision - as cited by the PublishersWeekly article by Andrew Albanese
  1. "In the final analysis, the case wasn’t even close.  In its defense, Apple had argued on three main points, and lost soundly on all three." (Details in the article)

  2. "Throughout the opinion Cote made numerous observations on the proceedings in her court. She criticized the publishers and Apple executives not only for what she clearly views as their participation in a conspiracy, but also for their lack of credibility on the stand, calling out Macmillan CEO John Sargent and S&S CEO Carolyn Reidy by name as among the most 'unreliable' witnesses...
...
"The poor performances on the stand helped doom Apple.  Indeed, given the vast amount of documentary evidence, Apple needed its witnesses to strongly rebut the facts, but they did not...
...
"Jobs’s statements offered 'powerful evidence of conspiratorial knowledge and intent...'
...
" 'Apple has struggled mightily to reinterpret Jobs’s statements in a way that will eliminate their bite.  Its efforts have proven fruitless.'


Judge Cote's Decision itself has this interesting footnote in connection with publishers insisting they never talked with the other publishers about their contract talks with Apple.

' On December 15, Hachette’s Young spoke to S&S’s Reidy by telephone prior to his meeting with Cue. On December 16, Reidy called Young just minutes after her meeting with Cue had ended. The next day, the two exchanged three calls. '

What's next? - From the same PublishersWeekly article
Albanese quotes Christopher Sagers, a law professor at Cleveland State University "who has followed the case closely." Apple is appealing to the Second Circuit, and Sagers says "I think it's extremely unlikely, however, that the Second Circuit would do anything except resoundingly affirm in all respects."

  Sagers adds that the judge's "fact rulings" are "essentially unassailable on appeal...it will be exceedingly hard because you’ve got a 160-page opinion that is extraordinarily, meticulously detailed as to the findings of fact.”

  While there are a few ways to handle this, he expects a damages trial but they can put that off until after the appeal, which should take about a year..."

  More at the PW article.


Here's an especially good article by Ars Technica's Jon Brodkin on the history of this e-book-pricing battle and a thorough explanation of the differences between the traditional wholesaler arrangement and the agency model
  "How Apple led an e-book price conspiracy—in the judge’s words"
  and a very good summary by Brian X. Chen and Julie Bosman, for the New York Times.


For side interest: Fortune's Philip Elmer-Dewitt and AllThingsD's Peter Kafka detailed Eddy Cue's day spent talking about Steve Jobs and his loving care to the iPad and its content.  Neither writer understood how any of that had any bearing on the case, but the Judge did allow it all in.  The MacObserver's Bryan Chaffin mentions both these articles asking and himself asking "Why?":
  "Long-term Apple watchers and fans of Steve Jobs will enjoy the added context of knowing some of these things.  The question, however, is why did Apple's attorneys spend its time with Eddy Cue talking about them."

  Re the 'marketing' tactic I mentioned earlier, Chaffin mentions "heartstrings" but then points out that "This isn't a jury trial, though; it's a bench trial...[the Judge]..will be deciding the case on law, not emotion."
  Elmer-Dewitt for Fortune, a business-conservative site, wrote, "Orin Snyder, Apple's chief counsel, did his best to exploit the pathos."  These words are from hardnosed business writers.

  I liked the link to Elizabeth Williams' courtroom drawings, drawn for Bloomberg TV.


Downloadable
Judge Cote's decision - the best read of all on this, and no more difficult to understand than a mystery novel.  The intrigue detailed just before (and because of) the launch of the iPad and iBookstore is fascinating stuff.

---

Check often: Temporarily-free recently published Kindle books
  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

Read More

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.

---

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

Check often: Temporarily-free recently published Kindle books
  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

Read More

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

---

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

Read More