Thinking, and Quoting Copiously, about the Current Publishing Debacle

So I've been wanting, since last week, to say something intelligent about the whole Department of Justice/Agency Five/Apple/Amazon debacle (long story short for those outside of publishing: the DoJ is investigating five big publishers and Apple for "colluding" to price ebooks higher on the Apple store than what Amazon had been charging). People I've talked to casually, again outside the industry, have generally had the attitude of good modern skeptics--namely, that if a bunch of corporations are in trouble for trying to monopolize and fix prices, they're likely guilty as hell. And, of course, I can't know what kind of back-room deals went on in all of this. But I've found myself in the odd position of wanting to defend these corporate muckety-mucks, and here's why: Sure, when publishers, both big and small, want to charge more than Amazon's decreed $9.95 for ebooks, they do it because they want to make money, yes. But they also do it because they truly believe that content--the words (or in the case of the books I work on, images) of an author--have value. That a whole book's worth of content has greater value than, say, a 90-minute-long 3D movie, greater value than a big mac, fries, coke, and one of those fried apple pies. Surely it wasn't just the pound of paper we were all paying $29.95 for in hardcover all these years? Surely it was also the valuable--some might even say invaluable--content?

So, as I say, I've been wanting to find something smart and apropos to say about all of this. And then I discovered that the industry newsletter Publisher's Lunch had already done an admirable job of rounding up the dissenting opinion, as expressed in various major publications. And this article sums it up so well that I cannot resit taking the unusual, for me, step of quoting it here more or less in full:

"It's rare to see the New York Times and Wall Street Journal philosophically aligned on how the government uses its power, but they and others in the press seem to be coming together to raise questions about why the Department of Justice is beating up on publishers, apparently serving the interests of a retailer bigger than the entire industry.

Holman Jenkins Jr. writes in the Wall Street Journal, 'in essence, Justice says that, beginning in 2008, several plankton, in the form of five publishers, conspired against a whale, Amazon, whose monopoly clout had imposed a $9.99 retail price for e-books.' He argues: 'Given Amazon's dominance, it's hardly offensive that all five used the opportunity of Apple's arrival in the market to reclaim that power. Justice calls it collusion. In reality, publishers have nothing to collude about...Books don't compete with each other. Nobody walks into a store and says, "Toni Morrison looks expensive today. Give me some Stephen Hawking."'

Jenkins says, 'let's face it: Publishers have every reason to fear Amazon's exploitative behavior.' He adds, 'the book industry is defending the very survivability of a book industry whose products are anything but uniform.' His closing line: 'Judging by Justice's slobbering over Amazon, as if whatever Amazon wants is the Lord's ordained order in the e-book market, many of those résumés are headed to Seattle.'

David Carr, writing in the New York Times calls the lawsuit and settlements 'the modern equivalent of taking on Standard Oil but breaking up Ed's Gas 'N' Groceries on Route 19 instead.' He suggests that 'why the crumbling book business is worthy of so much attention from Justice while Wall Street skates is a broader question we’ll leave for another day.' But Carr concludes that 'after a week of watching the Justice Department and Amazon team up, I’ve learned that low prices come with a big cost.'

For one more voice, there's Barry C. Lynn writing at Slate, who also believes 'the DoJ got this issue...spectacularly wrong.' He writes: 'Lower prices enable horizontal predation; when a fatly capitalized retailer (like Amazon) wants to bankrupt its less-wealthy direct competitors, it simply undersells them day after day after day. Furthermore, lower prices can be used in vertical predation, against producers; when a powerful retailer (like Amazon) wants to extract more wealth from its now-captive suppliers, it can set prices to promote those firms who accept its terms and to punish those who resist....

'Over time, it became clear that the best way to lower prices over the long run was in fact to allow producers to set higher prices today. That’s because doing so forces producers to compete with producers rather than retailers. And it forces retailers to compete with retailers rather than with producers. The result being that we end up with both producers and retailers doing a better job of serving the consumer.'

Michael Shermer writes another op-ed, for the LA Times: 'The Justice Department should have left things alone. Essentially, two titans — Apple and Amazon — clashed, and competition was working.... Amazon will gain a government-aided advantage over the competition.'

He adds: 'What this lawsuit probably will do instead is return to Amazon the power to monopolize the e-book market through predatory pricing to the detriment of publishers, authors and, ultimately, readers.'"

So, yeah, wow, if you've read this far thanks for sticking with me through such a long text-heavy post. To reward you, and in honor of the one plucky publisher who hasn't yet settled with the DoJ, here is a cute picture of a penguin wearing a sweater:

image sources are here and here