Author Topic: Amazon's getting sued for ebook prices.  (Read 1087 times)

David VanDyke

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Amazon's getting sued for ebook prices.
« on: January 16, 2021, 03:49:46 AM »
https://thehill.com/policy/technology/534364-amazon-hit-with-class-action-lawsuit-alleging-e-book-price-fixing

Hmmm...

Didn't they more or less break the Apple price-fixing attempt? Interesting interpretation.
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Jeff Tanyard

Re: Amazon's getting sued for ebook prices.
« Reply #1 on: January 16, 2021, 07:17:18 AM »
After reading that article, I'm still not sure what's going on or what, specifically, is being alleged.   :confused:

It doesn't even say who the litigants are aside from "other publishing companies."  Does that mean Barnes & Noble, Kobo, Apple, etc. are teaming up against Amazon and the Big 5?  That's the only conclusion I can draw here.
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Cabbages and kings

Re: Amazon's getting sued for ebook prices.
« Reply #2 on: January 16, 2021, 08:30:38 AM »

How does the outcome affect indies?
 

Matthew

Re: Amazon's getting sued for ebook prices.
« Reply #3 on: January 16, 2021, 08:49:32 AM »
Didn't they more or less break the Apple price-fixing attempt? Interesting interpretation.
I don't think Amazon had anything to do with the original case, but I don't have easy access to the court documents. Looks to be this case: https://en.wikipedia.org/wiki/United_States_v._Apple_Inc.

After reading that article, I'm still not sure what's going on or what, specifically, is being alleged.   :confused:

It doesn't even say who the litigants are aside from "other publishing companies."  Does that mean Barnes & Noble, Kobo, Apple, etc. are teaming up against Amazon and the Big 5?  That's the only conclusion I can draw here.
You get more detail if you read the linked court document. ( https://www.hbsslaw.com/sites/default/files/case-downloads/amazon-ebooks-price-fixing/01.14.21-complaint.pdf )

Plaintiffs:
"SHANNON FREMGEN, MARY CHRISTOPHERSON-JUVE, DENISE DELEON, on behalf of themselves and all others similarly situated, "
"Plaintiffs are consumers and direct purchaser plaintiffs from several states who frequently shop for electronic books (“eBooks”) published by the Big Five"

The main allegations in my opinion:
(pg 46)
79. As the largest print and eBook retailer, Amazon’s bargaining power with the Big Five is immense. It could have retained its right to discount their eBooks, but it agreed to let them set their own inflated prices in exchange for high commissions and the Big Five’s guarantee that no other eBook retailer could offer their eBooks at a lower price or better terms.

80. According to the House Judiciary Committee, Amazon has always employed MFNs or their equivalents in its contracts with trade publishers.149 The EU Commission makes clear that even when the Big Five were prohibited from having MFNs in their eBook contracts, they and Amazon got around that restriction by employing notification provisions that had precisely the same effect.

81. Whether using MFN clauses (business model parity, agency price parity, agency commission parity, price promotion parity, selection parity, or discount pool provisions) or notice provisions, the objective is always the same: to prevent “publishers from partnering with any of Amazon’s competitors” and to reinforce “Amazon’s ‘stranglehold’ and ‘control’ over book distribution.” Through these restraints, Amazon has acquired and maintained its monopoly power. Competitors lack any incentive to offer promotional advantages or alternative business models, like eBook rentals, to gain a following because Amazon demands that the Big Five offer that same option on Amazon.com. This results in fewer innovative products or business models and higher prices for eBooks consumers.

(pg 52)

111. The Big Five Co-conspirators employ an agency model to sell their eBooks. Under the agency model, the publishers set the price, and retailers—acting as agents for the publisher—take a commission on the sale to readers. The agency model does not permit the retailer-agent to discount the price unilaterally, e.g., to offer books at a two-for-one price or lower the price of a book through any membership or loyalty program.

112. Plaintiffs overpay when they buy the Big Five’s eBooks directly from the Big Five Co-conspirators on the Co-conspirator’s own website or through a retail eBook platform that competes with Amazon. As required by the MFN, when Amazon’s Co-conspirators sell their eBooks through an agency model (or also in the case of Co-conspirator HarperCollins through its own website), they sell at a retail price that is equal to or higher than the price they sell their eBooks on Amazon.com. It is in the Big Five Co-conspirators’ economic self-interest to expand their share of the retail sales of their eBooks and diversify their distribution. It would serve this interest to allow Amazon’s retail rivals to develop alternative business models that cost less to consumers but increase the Big Five’s revenue. Offering Amazon’s retail rivals special edition or enhanced eBooks would also attract new customers, increase sales, and reduce the Big Five’s dependency on Amazon. Similarly, avoiding the commissions charged by Amazon and selling through their own websites at a greater discount or allowing Amazon’s retail rivals to add their own discounts and promotions to steer more sales to their platforms would also serve the Big Five’s economic self-interest. But Amazon and its Co-conspirators agree not to do this, so as to preserve the supracompetitive prices of the Big Five’s eBooks. Plaintiffs and class members who purchase directly from Amazon’s Co-conspirators through Amazon’s retail rivals are harmed because they pay prices fixed by Amazon and its Co-conspirators and without the benefit of discounts, promotions, and potentially lower-cost alternative business models that would exist in a competitive market, where these agreed restraints did not exist.

There's also some pretty graphs that show a correlation between deals with Amazon and ebook price hikes





How does the outcome affect indies?
Probably not at all, this class action is for readers of books published by the Big 5.
EDIT: actually, who knows really what the outcome will be. If some terms can't be in the contracts the Big 5 have, that may affect terms Amazon can offer to indies as well, such as Kindle Select. Regardless, we'll have to wait to see a ruling before we see any change.
« Last Edit: January 16, 2021, 08:53:18 AM by Matthew »
 
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LilyBLily

Re: Amazon's getting sued for ebook prices.
« Reply #4 on: January 16, 2021, 12:55:38 PM »
It's an interesting angle, basically, "Hey! You're conspiring to overcharge me!" It might be considered ironic that the underlying assumption that these prices are too high is that indie prices, which are dramatically lower, are the true market prices.

Compare this to perfume sales by Chanel and its ilk. It's difficult to find Chanel at any kind of discount. Most stores that carry Chanel and issue coupons do not issue them for fragrances. The closest thing to a deal is the duty free shop at the airport. This is price fixing, and it's not an accident that the prices are the same at multiple regular retail outlets. Do the perfume companies enter into contracts with the stores to prevent the stores from discounting their product? Very likely. Other brands of perfume are sold for much lower prices. Additionally, there doubtless are knockoff fragrances that scuttlebutt claims are "just like" the famous brands. I don't hear anyone complaining, or suing, or claiming that it isn't right that nobody sells Chanel cheap.   
 

Matthew

Re: Amazon's getting sued for ebook prices.
« Reply #5 on: January 16, 2021, 01:56:42 PM »
I don't hear anyone complaining, or suing, or claiming that it isn't right that nobody sells Chanel cheap.
This lawsuit isn't about one company, which is the major difference. If you had five perfume companies agree with each other to not sell their perfumes cheap, that would be illegal.

We don't actually know yet if what these companies or Amazon have done is illegal. They'll use whatever they find in discovery to make that determination.
 

notthatamanda

Re: Amazon's getting sued for ebook prices.
« Reply #6 on: January 16, 2021, 10:40:04 PM »
So if this agreement is determined to be illegal, then the trade ebooks will be start being cheaper everywhere?
 

Matthew

Re: Amazon's getting sued for ebook prices.
« Reply #7 on: January 17, 2021, 01:57:10 AM »
So if this agreement is determined to be illegal, then the trade ebooks will be start being cheaper everywhere?
That's one of the assumptions the lawsuit states, and I'm inclined to agree. Based on the charts above, after the United States v. Apple case, Big 5 prices dropped 20-30%. We could see more competition between the Big 5 on Amazon itself, or more competition between Amazon and other e-book retailers
 

TimothyEllis

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Re: Amazon's getting sued for ebook prices.
« Reply #8 on: January 17, 2021, 02:22:42 AM »
So if this agreement is determined to be illegal, then the trade ebooks will be start being cheaper everywhere?

I don't think that will happen.

What might happen is that the practice of price matching vanishes.

As far as my reading of the complaint goes, I don't think they know what they're talking about. And I can't see it succeeding.
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notthatamanda

Re: Amazon's getting sued for ebook prices.
« Reply #9 on: January 17, 2021, 03:08:45 AM »
I don't know if trade prices dropping is good for indies or not. More competition in our price brackets.
 

LilyBLily

Re: Amazon's getting sued for ebook prices.
« Reply #10 on: January 17, 2021, 03:11:47 AM »
Re perfumes, Chanel is not the only company with rigidly high prices that are never--or extremely seldomly--discounted at regular retail stores. It's just the company I know the most about. Every perfume item in the airport duty free stores is the same: high prices, no discounts. It's quite possible that Dior, etc., do talk to each other.

Also, the lawsuit has to prove that the Big Five agreed on the prices explicitly, rather than playing follow the leader, which is much more their usual style.

Price fixing is an old crime and most companies are fairly smart about not doing it overtly.
 
 

LilyBLily

Re: Amazon's getting sued for ebook prices.
« Reply #11 on: January 17, 2021, 03:19:23 AM »
If trad pubs drop their prices to match ours, many trad pub authors will flee to becoming indies because their royalties will drop to almost nothing. Their standard 25% on a $7.99 ebook is not even equal to our 70% on a $2.99 book. The trad pubs are not going to raise its authors' royalty share. 

So, yes, a lot more competition on price alone, and quite a bit on quality, too. Trad pub authors have had the benefit of free developmental editing by editors who usually know their business, unlike the hit and miss editing many of us hire. At least some of those authors will have learned from the experience and will write better books out of the gate as indies. 
 

Cabbages and kings

Re: Amazon's getting sued for ebook prices.
« Reply #12 on: January 17, 2021, 05:01:18 AM »
I don't know if trade prices dropping is good for indies or not. More competition in our price brackets.

That would be horrible!  :icon_sad:

If trad pubs drop their prices to match ours, many trad pub authors will flee to becoming indies because their royalties will drop to almost nothing. Their standard 25% on a $7.99 ebook is not even equal to our 70% on a $2.99 book. The trad pubs are not going to raise its authors' royalty share. 

So, yes, a lot more competition on price alone, and quite a bit on quality, too. Trad pub authors have had the benefit of free developmental editing by editors who usually know their business, unlike the hit and miss editing many of us hire. At least some of those authors will have learned from the experience and will write better books out of the gate as indies.

That would be even more horrible!  :icon_cry:
 

The Masked Scrivener

Re: Amazon's getting sued for ebook prices.
« Reply #13 on: January 17, 2021, 07:51:12 AM »
Corporate publishers have too many mouths to feed to price their ebooks at $4.99 or less.
 
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Arches

Re: Amazon's getting sued for ebook prices.
« Reply #14 on: January 18, 2021, 02:05:31 AM »
Corporate publishers have too many mouths to feed to price their ebooks at $4.99 or less.

Right now, the Randy Penguin has priced Naked in Death, the first Nora Roberts/JD Robb book at $2.99 for the Kindle version. But the first John Sanford Lucas Davenport book and the first Michael Connolly Harry Bosch book are each $9.99. So, traditional publishers haven't made up their minds about whether to use aggressive pricing/loss leaders for their older series yet.

I think the reason they haven't is they're continuing to resist the trend toward selling ebooks, at least for genre fiction. They could make tons of money at very low cost by converting most of their backlists to ebooks and cutting prices, but they instead keep fighting a losing battle to prop up brick and mortar stores. That stubbornness has probably helped self-published authors survive by undercutting the Big 5 on price.
 

Hopscotch

Re: Amazon's getting sued for ebook prices.
« Reply #15 on: January 18, 2021, 03:20:21 AM »
Wouldn't trads settling on a uniform ebook price for their own goods help indies?  In my far distant youth, every paperback novel of average length was 25¢.  No one bought by price as a category.  Perhaps the Zon's preferred $2.99 ought to be it.  (BTW, 25¢ in 1960 = $2.20 today.)
« Last Edit: January 18, 2021, 03:24:15 AM by Hopscotch »
 

Cabbages and kings

Re: Amazon's getting sued for ebook prices.
« Reply #16 on: January 18, 2021, 04:08:56 AM »

Good competition never helps anyone, it just makes things harder.

And if the competition is better than you, well there can only be one winner.

Somebody's gonna win each specific dollar or dollars in that point in space-time, and it's a new competition for every new dollar and new time.

You might think, that you'll just win next time, well that's what everyone else is thinking too.

 

R. C.

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Re: Amazon's getting sued for ebook prices.
« Reply #17 on: January 18, 2021, 04:22:45 AM »

Good competition never helps anyone, it just makes things harder.

And if the competition is better than you, well there can only be one winner.

Somebody's gonna win each specific dollar or dollars in that point in space-time, and it's a new competition for every new dollar and new time.

You might think, that you'll just win next time, well that's what everyone else is thinking too.

Not sure I agree... Winning is a matter of degrees. Of course, second can be correctly classified as the first loser. However, I would LOVE to be second in one or two global categories.

I agree: There is no free lunch.

I do not agree the pie is too small to share.

Cheers,
R.C.
 
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Cabbages and kings

Re: Amazon's getting sued for ebook prices.
« Reply #18 on: January 18, 2021, 04:42:08 AM »

I meant only one salesman can win each unit of currency at that point in time, it can't be spent twice by the person spending it at that point in space-time. Ergo, only one winner for that unit of currency.

The problem with success stories and successful people is that they get the news spotlight.

No one ever hears about all the writers, actors, athletes, singers, and other artists, who never made it.

For every Stephen King, how many millions never made? We'll never know.

Until it happens and they feel it in their bank account, some people won't understand the ramifications of a large influx of good competition entering their field.
 

R. C.

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Re: Amazon's getting sued for ebook prices.
« Reply #19 on: January 18, 2021, 05:32:39 AM »

I meant only one salesman can win each unit of currency at that point in time, it can't be spent twice by the person spending it at that point in space-time. Ergo, only one winner for that unit of currency.

The problem with success stories and successful people is that they get the news spotlight.

No one ever hears about all the writers, actors, athletes, singers, and other artists, who never made it.

For every Stephen King, how many millions never made? We'll never know.

Until it happens and they feel it in their bank account, some people won't understand the ramifications of a large influx of good competition entering their field.

Ah, I see, you are referring to the fight over an limited disposable income/limited purchase ability.  My premise stands: The pie is huge. Failure in finding how to get your slice is not the fault of the system.

The players who win the Super Bowl will receive a bonus of $201 USD. The LOSERS will receive a bonus of $137k USD*.

I am not advocating settling for second. I am saying, the pie is huge, figure out how to grab a slice.

Cheers,
R.C.

*Aggregated for all post season wins.

Cheers,
R.C.
 

LilyBLily

Re: Amazon's getting sued for ebook prices.
« Reply #20 on: January 18, 2021, 08:18:30 AM »
I regularly see discount prices on trad pub backlist books on BookBub. I don't see them elsewhere, probably because trad pubs don't think the many other discount newsletters are worth their time. Trad pubs are already competing with indies for ad space on the most effective newsletter there is. Their backlist titles are usually priced at $1.99 or $2.99. Seldom are they 0.99 or free. That does leave space for indies who can't afford to buy the higher priced ads or who target the bargain basement mentality readers who only want free or 99 cents. 

Trad pub titles on Amazon in ebook are still firmly in the high price bracket--with exceptions. A title or two by a bestselling author may be discounted to $2.99 while the others are $5.99 and up. There's a Julia Quinn Bridgerton title that has been $2.99 recently (and may still be today) while the three-book box set ebook was $19.99. The rest were $7.99 each last time I checked, so the box set is a deal for some readers, especially those who don't regularly buy ebooks.

My point is that trad pubs are already using indie tactics to move their ebooks. They just aren't doing it with every author or every title. Yet.
 

Post-Crisis D

Re: Amazon's getting sued for ebook prices.
« Reply #21 on: January 18, 2021, 08:58:48 AM »
Good competition never helps anyone, it just makes things harder.

And if the competition is better than you, well there can only be one winner.

Pretty sure indies far, far outnumber traditionally published authors.  And a good chunk of those trad pub authors are hybrid as it is.  So, really, any added competition is a drop in the bucket compared to indies already entering the market all the time.

Also, the indie argument has always been not that they are inferior to traditionally published authors, but that corporate gatekeeping kept them out, so if you're trying to say trad pub authors are somehow better, you're bringing back the old argument trad pub authors used to use against indies.
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Post-Crisis D

Re: Amazon's getting sued for ebook prices.
« Reply #22 on: January 18, 2021, 09:10:18 AM »
There is no pie.  grint

Imagine I have $5.

A trad pub book is being sold for $5.

An indie author's book is priced at $5.

Another indie author's book is priced at $2.

Still another is priced at $3.

I can buy one $5 book (trad or indie) or I can buy two indie books (the $2 and $3 books).

They are all competing for my $5 which you might think of as pie.

But, there is no pie.

I could buy in any of the above combinations.

Or I might buy none at all.

Save my money.

Later, I have $15 to spend.

I could buy all the books.

Or I could buy none of them.

Or I could buy the one(s) that sound interesting to me.

So, the pie is both there and not there.

You might think of it as Schrödinger's pie.

It both exists and doesn't exist.

Don't chase after the pie.

Don't try to get your slice of the pie.

It's like chasing after a ghost.

Maybe it's real.  Maybe it's not.

Look for the person that wants to buy your book, then sell it to them.

Real as it gets.
Mulder: "If you're distracted by fear of those around you, it keeps you from seeing the actions of those above."
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Hopscotch

Re: Amazon's getting sued for ebook prices.
« Reply #23 on: January 18, 2021, 10:01:34 AM »
Imagine I have $5.
A trad pub book is being sold for $5.
An indie author's book is priced at $5.
Another indie author's book is priced at $2.
Still another is priced at $3.
I can buy one $5 book (trad or indie) or I can buy two indie books (the $2 and $3 books).

Yes, there are people who buy books by the price.  But what indies offer most readers isn't a lower price but the kind of read that wouldn't get past trad gatekeepers.  Price isn't the decider so much as a the freshness and quality indies promise.
 

TimothyEllis

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Re: Amazon's getting sued for ebook prices.
« Reply #24 on: January 18, 2021, 11:10:19 AM »
I look at it this way.

Readers read. So they're looking for a new read according to their own cycle.

A lot of readers read a book a day.

I release a book roughly every 8-10 weeks. So say 60 days. My book comes out today, and people buy it because they want their next fix of my universe. Tomorrow they buy or read something else. For the next 58 days after, they buy or read something else.

Now if today they've already bought some other book when they find out mine is out there, they'll buy it tomorrow. Or next week. But they will buy it sometime in the near future, within that 60 days before the next one.

The point is though, for each person who buys my book today, for the next 59 days they will buy someone else's book.

So my biggest fans, are still shared among 60 authors. But it isn't 60 authors, because each fan will buy from different authors. It might be 600.

There is no pie. There is no competition.

Its a lake, and the lake is huge, and getting bigger. But the trick is not to settle to the bottom, but to float somewhere near the top, where those looking for their next read between the releases of the authors they always buy, can find you.

Pricing is only one aspect of it. The fact Trads have no idea how to use keywords to get into additional categories is another.

If Trads bring their prices down to 4.99, it means people who buy trad books will suddenly be able to buy 2 or 3 books with the same money they spend now for each book, and suddenly the price point isn't there, so they'll start looking at Indie books without even knowing they are Indie books.

Knock the high price points out of the market, and suddenly there is a lot of spare cash out there to buy even more books with.

In theory.  grint
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