Barnes & Noble Says Government’s Proposed Settlement Would Hurt E-Book Buyers

Barnes & Noble isn’t down with what the Justice Department is selling in regards to a proposed settlement in the e-book price fixing lawsuit involving several book publishers. B&N says if the settlement goes through it will hurt not only the company, but consumers as well.

In a letter to the Justice Department today, the country’s largest bookstore said the settlement would cause consumers to eventually “experience higher overall average e-book and hardback prices and less choice, both in how to obtain books and in what books are available,” reports the Wall Street Journal.

B&N thinks the Justice Department is rejecting “its traditional role of ending alleged collusion” as it seeks to become “a regulator of a nascent technology industry that it little understands.” That, we believe, is like saying, “Hey, government, you’re just old and don’t understand the kids these days.

The Justice Department alleged in its antitrust lawsuit earlier this year that five major publishers worked with Apple to switch to an agency model, which would allow retailers to set the prices of digital books. Those retailers would then receive 30% of each sale for acting as the agent. That model would replace the wholesale scheme, where retailers set prices and then pay publishers a set amount.

In the wholesale model, Amazon was able to heavily discount e-books when it introduced its Kindle e-reader, which is why the Justice Department claims the publishers got together in the first place — they wanted to bring down Amazon a notch.

Despite previously denying that it and the publishers were trying to compete with Amazon and make consumers pay more, in its letter, B&N points out that since agency pricing took hold, Amazon’s share of the e-book market has dropped from 90% to 60%, and that it resulted in lower prices for consumers as Amazon tries to compete for sales.

Thus far, three publishers have agreed to settle with the Justice Department. Apple’s attempt to get the lawsuit dismissed resulted in a judge turning the words of the company’s former CEO, the late Steve Jobs, against it.

Barnes & Noble Objects to E-Book Settlement [Wall Street Journal]

Comments

Edit Your Comment

  1. FatLynn says:

    Again, it is not the agency model that is a problem. It is the way the publishers and Apple colluded to make the agency model happen.

    • spamtasticus says:

      I dissagree and I do believe Apple just handed th DOJ their ass on a platter.

      http://ia701206.us.archive.org/6/items/gov.uscourts.nysd.394628/gov.uscourts.nysd.394628.54.0.pdf

      • dwtomek says:

        I disagree. The fact that Apple was late to market does not change the fact that the prices of ebooks increased across the board after they clearly colluded on pricing. A legitimate increase in competition should not result in increased prices across the board. Yet that is exactly what happened. Are you an apple devotee to not see through the lies?

      • dwtomek says:

        I disagree. The fact that Apple was late to market does not change the fact that the prices of ebooks increased across the board after they clearly colluded on pricing. A legitimate increase in competition should not result in increased prices across the board. Yet that is exactly what happened. Are you an apple devotee to not see through the lies?

        • fantomesq says:

          Apple addresses and dispenses with your claim that higher prices necessitate collusion. Amazon’s prices pre-Apple were not hardly market prices but rather due to the actions of Amazon’s monopoly status and its predatory pricing designed to undercut other print book sellers while simultaneously preventing other entrants to the eBook market. There is no evidence of collusion on Apples part.

  2. dwtomek says:

    I would like a logical explanation on how this is not price collusion. I understand that it is “agent pricing” but if I take a dump in my hand and claim that it is a tulip, well it’s still a turd. Amazon’s massive drop in market share after losing the ability to discount their offerings would seem to indicate to me that this is collusion through and through.

  3. cheri0627 says:

    Wait…doesn’t the agency model have the _publishers_ set the price, not the retailers? Please fact check your articles.

  4. Loias supports harsher punishments against corporations says:

    Wait, wait, wait, wait, wait.

    B&N says this will harm customers because the price collusion is forcing Amazon to lower prices to compete with the agency model pricing.

    So, they are saying we should allow this violation of industry competition to occur so that a different industry competition can occur? But please, don’t let a complete industry competition to occur, as that will be bad for consumer?

    B&N, you are one motherfucking ballsy company.

    • Alessar says:

      Right, they’re totally ignoring reality and trying to spin it as the opposite. Amazon is blocked from discounting due to prices set by the publisher. I, the consumer, have to sometimes pay “trade paperback” prices on books that I could buy as “regular paperbacks” which works out usually to 2 or 3 dollars.

  5. Alan says:

    “B&N points out that since agency pricing took hold, Amazon’s share of the e-book market has dropped from 90% to 60%, and that it resulted in lower prices for consumers as Amazon tries to compete for sales.”

    Ummm where did prices ever drop? As far as my experence goes, all the prices went up? Hence the anti-trust case

    • cosby says:

      Yea really. Amazon lost share because others finally got their acts together to compete against them as the market grew. The prices went up during this.

    • ILoveBacon says:

      Yeah, I don’t get that, either. With agency pricing Amazon can’t lower prices. How does the fact that they can’t lower prices force them to lower prices?

  6. sirwired says:

    Errr… agency pricing HASN’T resulted in lower prices for consumers. Not one bit. The e-book prices now seem to usually be stubbornly pegged to exactly the paperback list price for a book of any note. This was not the case prior to the agency pricing crap.

  7. blinky says:

    “and that it resulted in lower prices for consumers as Amazon tries to compete for sales.” How could it result in lower prices since Amazon wasn’t able to reduce prices?

  8. kevinroyalty says:

    all i can say is i pay more for ebooks now than i did before. i’ve pulled reports from my amazon account on all my past purchases. some ebooks are as much if not more than the dead-tree-paperback version.

  9. smo0 says:

    Is that why prices for ebooks change every 2 days now?

  10. FilthyHarry says:

    “B&N points out that since agency pricing took hold… it resulted in lower prices for consumers”

    A blatant lie. E-book prices are higher than ever, often costing the same or more as their physical counterparts. It very clearly wasn’t like that before the collusion.

    • Aliciaz777 says:

      They sure are. I was comparing eBook prices to physical book prices and I’m a lot of cases, the eBook cost the same, if not more than the physical book. What’s the point of buying eBooks when they cost the same or more than the physical copy? I thought one of the reasons to buy eBooks was for consumers to save a little money. eBooks don’t cost nearly as much to produce as physical books, yet they cost the same or more. It just doesn’t make any sense.

      Since getting an iPhone I haven’t purchased a physical book, just eBooks through the iBooks apps. I’d love it if the eBook prices were forced to go down.

  11. Geekybiker says:

    So how does the publisher setting the price increase price competition? All it means is that stores never can cut their own margins to make a sale. All that is happening is publishers are trying to artificially keep ebook prices high.

  12. Portlandia says:

    B&N, simply saying this will lead to higher e-book prices does not mean it will happen. I don’t see where you provide any examples of WHY this will happen.

    Yes, Amazon once had nearly ALL the ebook market but now there are numerous other sellers in the market. Not the least of them are Apple and Nook. Two strong competitors who will help keep prices low.

    Some books may increase in price, such as new titles but I will bet that older books will fall in price which are now being artificially inflated by the agency model.

  13. elangomatt says:

    Jeez I really dislike paywalls.

    B&N is just spouting a big steaming load of BS here. I just don’t see how they can possibly believe that the agency has in any way shape or form has led to lower ebook prices. And the only reason that Amazon’s market share has dropped by 30% is because there is zero competition, so you end up buying your ebook from whatever is the most convenient for your device whether that be from Amazon, B&N, iTunes, or Google Play.

  14. cyberpenguin says:

    It’s too bad they don’t adopt a system similar to app developers.

    With Amazon, as an app developer you get the greater of 20% of the list price or 70% of the sales price.

    This allows Amazon to adjust the sales price as they see fit, but also allows the app developer to set a floor price.

    For the most part, Amazon leaves apps at list price to ensure their 30% cut is larger.

  15. Suburban Idiot says:

    One major problem with B&N’s statement is that they’re lying. The whole point of agency pricing is that the publisher sets the price across the board, so no one can compete on price. Therefore, Amazon is not lowering prices to compete, at least not on the same books that are subject to agency pricing.

    Prices for the specific titles that are priced through agency pricing almost exclusively up from before the plan was put into effect.

    It’s only if you assume that any book is the same as any other that you can claim that there’s price competition under the agency model. Most people, though, don’t consider books to be fungible (it’s like saying, “Hey, ’50 Shades of Grey’ may be $9.99 everywhere but some self-published knock-off is 99 cents on Amazon, so it’s there’s competition!’ Any of us who got a GoBot rather than an actual Transformer for Christmas knows that even things that are kind of similar aren’t the same)

    • Peggee has pearls and will clutch them when cashiers ask "YOU GOT A WIC CHECK MA'AM?" says:

      it’s like saying, “Hey, ’50 Shades of Grey’ may be $9.99 everywhere but the original Twilight fanfic where the names are different but everything else is the same is available for free from any random Twilight fansite, so it’s there’s competition!’

      Ftfy…

  16. Libertas says:

    I steal all my ebooks at home.

    Arrr!

  17. Peggee has pearls and will clutch them when cashiers ask "YOU GOT A WIC CHECK MA'AM?" says:

    The only way agency pricing resulted in lower prices for consumers is that many became so fed up with the BS that they started downloading DRM-stripped ebooks for free.

  18. Bagumpity says:

    Meanwhile, I just popped down to the used book store and bought a dozen used sci-fi and fantasy paperbacks for about $15. Some of them are over 40 years old, yet they’re still in fine shape and perfectly suited for their original purpose (to be read). With some TLC, most of those will still be readable when my grandchildren start getting into Golden-Age SF&F.

    It’s not the initial pricing that makes e-books worthless. It’s the fact that the industry desperately wants to control their post-sale use. Theoretically, a 40 year old e-book should be BETTER than a 40 year old real book. Bits don’t wear out from being used (I know, I know, some kinds of storage do wear out, but I’m talking about the logical bits, not the media they’re stored on). Yet, I doubt that my kids or my kids’ kids will ever be able to read any e-books I purchase.

  19. zombie_batch says:

    I like how something that can be infinitely reproduced at negligible cost is expensively priced. Even once production costs are long recouped, the profit:cost of production ratio is heavily out of balance. That really just tickles my fancy and makes me want to buy, buy, buy!

  20. Galium says:

    Most people believe that there is a server with all the E books on file and it would not cost any more to send out a billion copies as it would one. This is not the case. The real reason that E books have gone up in price; is the cost of the E trees. It takes about a million E trees to publish one novel on E book. Having to replace these trees is costly and time consuming. Please do not get the E tree cost confused with the cost of electrons going up from supply demand. This also has an effect on price as there are only so many electrons in the world. Word has it that Monsanto has developed a new electron that it has a patent on and this will eventually affect pricing, but not in the consumers favor. /s BOHICA from B&N and Apple.