Publishing still has problems DoJ suit will not fix
April 18, 2012 | 12:02 am
Here are a couple more interesting points of view on the DoJ’s anti-trust lawsuit against some publishers and Apple.
On ReadWriteWeb, Joe Brockmeier points out that for all the noise around the suit, it really isn’t going to change the major problems with the e-book industry right now. He points out three such problems: the rampant proliferation of DRM and platform lock-in, the perpetual copyright implemented by Congress and backed by the Supreme Court, and Amazon’s problematic relationships with publishers (including those who aren’t the Big Six).
If you’re taking sides in the DoJ vs. Apple suit, you might want to think again. The DoJ isn’t doing consumers a big favor here. Amazon isn’t championing your interests by offering cut-rate pricing on Kindle e-books, and the publishers aren’t (necessarily) acting against the long-term interests of the consumer by trying to establish a right to price books how they see fit.
Of course, as Charlie Stross suggested, the effects of the decision could spell the eventual end of DRM as publishers decide to drop it themselves, but that’s not a direct effect of the suit.
Meanwhile, blogger David Pakman takes a look at the question of why e-books have to be $15—because the publishers say they can’t price them at $10 and make a profit. He starts by talking about economics, and how items with zero marginal cost should, in a rational market, be priced lower than objects that have those costs to cover.
If publishers can’t afford to sell e-books for $10, Pakman argues, they should reduce their overhead (by paying execs less and moving to cheaper physical facilities). After selling millions of books and e-books, he adds, Amazon has to have a pretty good idea of what kind of price is going to move the most copies, and that price is closer to $10 than $15.
If the profit-maximizing price for an eBook is $10, then publishers must adapt to set a wholesale price lower than that, even if it means your legacy cost structure doesn’t allow it. And that’s the rub. [By the way, as publishers continue to resist this market force, new "publisher" models are appearing and will replace the traditional functions of publishers with more digital-friendly models.]
He also pokes at the issue of DRM and interoperability, noting (as many have, including Stross) that insisting on DRM was the publishing industry’s biggest mistake prior to agency pricing: not only was it inconvenient for consumers, but it also let e-book sellers build their own empires, keeping consumers locked into their own platforms.
In the end, he suggests, the real winners will be the readers who want to buy e-books at lower prices. And if Amazon does manage to kill off publishers with its insistence on lower prices, it won’t mean the end of books—it will just mean the end of those particular legacy publishers, and leaner digital publishers will arise to replace them. (Found via Techdirt.)
I have to admit, like Pakman I’m not particularly sympathetic to publishers’ moaning and groaning that Amazon Will Kill Us All. If they’re really in that much trouble, they ought to be looking at their budgets and seeing what fat they can cut.
To use an example from my own life, over the last few months I had given up trying to take my lunch to work after people kept stealing my Mountain Dew from it, and gotten in the habit of going out to eat lunch, then buying supper out on the way home, often spending upwards of $10 to $15 a day. But when I came up short in the last couple of weeks of March, I didn’t look for a bail-out from someone (though I undoubtedly could have gotten fifty bucks or so from my parents if I’d asked)—I changed my spending habits, buying a loaf of bread, some lunch meat, peanut butter and jelly, and other cheap staples and spending hardly anything on food until my next paycheck came in. And I’ve made some other changes to support decreasing my fast food spending into the future, obtaining a lunchbox that no one will be able to burgle so my Mountain Dew will be safe again. (Isn’t it awesome?)
Heck, even big businesses have been cutting back lately. Best Buy closed fifty big-box stores, Yahoo is laying off 2,000 employees, T-Mobile is laying off 1,900. Why don’t we ever hear anything about publishers cutting back if they’re so severely under threat?
And those new digital publishers (including self-publishers) are coming. It kind of puts me in mind of an EDS Super Bowl commercial from a few years back—the large, slow competitors aren’t the ones you really need to worry about; it’s the small and nimble ones who are the most dangerous.
Anyway, it seems like something big changes every day in the world of publishing lately. Perhaps the changes are accelerating with this DoJ suit, or perhaps it only seems that way. Either way, it’s past time publishers stopped fighting the change and started adapting to it. Time will tell whether or not they actually can.