Amazon.com and the Anti-Trust Suit by Arline Chase

I have seen many, many, many articles accusing Amazon.com of “ruining” the publishing industry and implying that the Justice Department is after them in an anti-trust lawsuit that is making on-going news.

Recently the NY TIMES (who should know better) posted yet another such inaccurate article. Someone with actual knowledge of the e-book industry dissected it and if you want to see what they said, click here: http://mikecanex.wordpress.com/2012/04/16/the-worst-article-about-the-ebooks-anti-trust-suit/

For those who want to know the facts:

1. Nobody is suing Amazon.com! Anti-trust means the company is cheating their customers.

2. The Justice Department filed the price-fixing anti-trust lawsuit against the Big 6 paper publishers and the Apple computer corporation, not against Amazon.com.

3. Amazon sets prices on the books that they sell. This is Big News? Every retailer in the country sets prices on the goods they sell. Some offer discounts. Customers like discounts.

4. Amazon sold books from the Big Six at $9.99 instead of the $15.99 the paper publishers set as their LIST price. Okay, they discounted the suggested retail price. Nobody gets sued for giving the customer a price break. This means they will clear less money per copy on the discounted books, but that they will likely sell more copies. THIS MEANS THE PUBLISHERS WILL SELL MORE COPIES AND MAKE MORE MONEY. High sales and benefit to the consumer are, and always have been, an Amazon business policy.

5. Each e-book sales site pays the publisher and author whatever percentage of the list price they choose. Some pay as little as 15%. Publishers and authors can decide whether they want to sell through sites like that and take that company’s price or not. NOBODY forces them to sell for lower profits. They can CHOOSE NOT to sell there. The choice is theirs, but they should also remember that selling more books is a desirable outcome for publishers and if the percentage is less, the remuneration from those low-percentage sales will still be more than zero.

6. Before Kindle was ever released –we know because at that time we were selling books on Mobipocket.com, an Amazon company — Amazon learned that another sales site was paying publishers 70% while they paid 35%. Publishers were linking to the other sales site and sending customers there to buy, and why not? They would make double the earnings per sale if customers went to the higher paying site to buy instead of one that paid less. Amazon’s response to this little-known-fact was to immediately raise their royalty percentage to 70% to meet the competition.

Bottom line: Amazon pays more per sale to publishers and authors. Amazon sets prices that give their customers a price break. HOW DOES THAT MAKE THEM THE BAD GUY???

*      *      *      *      *

Arline Chase became a publisher at Write Words, Inc. on Jan. 1, 2000. She is an award-winning author, journalist, teacher, and mentor to authors all over the world. Arline is a long-time member of the International Women’s Writing Guild and has led workshops at their conferences as well as workshops and panels at Malice Domestic and other writers conferences. She is a member of the Author’s Guild, Mystery Writers of America, Sisters in Crime, Romance Writers of American and the Eastern Shore Writers’ Association. You can learn more about Arline on her website.

A version of this post appeared on her blog at Write Words/Arline Chase on April 23, 2012[subscribe2]

Author: Administrators

All Indies Unlimited staff members, including the admins, are volunteers who work for free. If you enjoy what you read here - all for free - please share with your friends, like us on Facebook and Twitter, and if you don't know how to thank us for all this great, free content - feel free to make a donation! Thanks for being here.

10 thoughts on “Amazon.com and the Anti-Trust Suit by Arline Chase”

  1. I think it's pretty obvious why Amazon is being pilloried here.

    The majors have a vested interest in turning public perception against Amazon. They handed effective control of the market to Amazon when they insisted on DRM (see the recent article from Charlie Stross on that) so now it's a case of sour grapes when Amazon actually use their market share sensibly to bring down the price to what readers are more willing to pay.

    Frankly, I hope they get slapped down hard for this. It may not have been price-fixing but all of them had a vested interest in taking control of the pricing back from Amazon, and their tactics look hella shady from here.

  2. That's the way Arline, good article. I still can't understand way the main street media fails to check out their sources before running a story like that. Is it because they are lazy or arrogant.

    1. The major media outlets are part of conglomerates now. Once the conglomerates took power, they dumped their investigative journalists in droves. With investigative journalists, no investigations. Now the 'reporters', not journalists, toe the party line.

    2. Seriously, Bud, as a former reporter, I think they just don't know how to find a good source. Getting good information depends on know who to ask?

  3. Good article.

    The bottom line, of course, is that publishers made a lot more per sale on $25 hardcovers than they did on $15 ebooks (remember, back pre-agency they only made 50% of the suggested retail price on both). So when you consider that every ebook sold was a lost hardcover sale (and therefore lost revenue), Amazon dropping those ebooks to $9.99 was deadly for the publishers *even though* they were still making the same income as they'd make if Amazon was selling them at $15.

    At $15 vs $25, it takes a lot more ebook purchases to make that $189 Kindle (remember, 2010 prices here) make sense. At $9.99, there's a psychological shift in pricing that makes those ebooks suddenly much more appealing.

    Yeah, it scared publishers a ton. 😉 And they reacted by trying to force retailers to keep prices high rather than by making their methods of production more efficient. Ironically, the result of that action was Amazon pushed indie books into the limelight, and indies now control 50-60% of the top 100 lists across all genres of ebook fiction.

    Oops.

    The lawsuit is just insult added to injury. The injury was already done: in the only format of literature not seeing serious decline, the major publishers now hold a minority market share.

  4. For me the bottom line is that I'm finding more books that I love in the indie list on Amazon than I do on the bestseller shelves of my local bookshop. And they are cheaper, allowing me to read /more/.

    This hoo haa is just the Big 6 clutching a straws instead of finding ways to reconfigure their own business model. Does the fate of GM mean nothing to these supposedly astute business people?

Comments are closed.

%d bloggers like this: