New Times,
New Thinking.

  1. Business
12 April 2012updated 22 Oct 2020 3:55pm

Much ado about Apple

Is the US Department of Justice making a fuss over nothing?

By Mark Nayler

The perilous future of publishers was highlighted yet again by yesterday’s news that the US Department of Justice is suing Apple, Macmillan and Penguin for conspiring to fix the price of e-books.

The fuss centres on the move these companies have made on the agency model of selling, (where the publishers set the price of the e-book and the retailers take a 30 per cent cut); retailers, unsurprisingly, favour a model where they buy the e-book from the publisher at wholesale price and sell it for however much they want.

Such a model, it’s said, increases healthy competition between retailers which in turn leads to variety and greater customer choice. And according to papers filed in New York’s Southern District Court on Wednesday morning, the collusion of these publishing giants with the world’s most valuable firm (the lawsuit was launched the day after Apple’s worth surpassed $600bn), is a deeply unfair attempt to crush the freedom – and therefore prosperity – of e-book retailers who, after all, need to carve out a living for themselves too.

But this moral and legal outrage needs to be tempered a little. Two things to bear in mind: first, where is this diversity and healthy retail competition that the agency model – which is not illegal, incidentally – supposedly threatens? In every direction you turn, Amazon lurks, offering consumers e-books and books at prices that most other retailers – including high street giants such as Waterstone’s – cannot compete with. Indeed, an adoption of the agency model for e-books is essentially a digital return to the net book agreement, which publishers relinquished in 1997. Waterstone’s, supermarkets and Amazon must have been rubbing their hands with glee when that happened, as the three of them they went on to dominate the market, squashing smaller outlets in the process. What variety!

Second, though the agency model is legal, price fixing obviously is not. No doubt there will be a fair amount of legal hair-splitting over what exactly the publishing CEOs have been up to, but at the moment the circumstantial evidence is pretty thin on the ground.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

The PDF document released by the DOJ reports that in late 2008, the Penguin Group and Macmillan CEOs, along with a few other heavyweights, had dinner together and ‘business matters’ were discussed. You’re kidding, right? They were at it again in January 2009, this time discussing the future of e-books and Amazon’s role in that future.

With their future looking increasingly treacherous, it’s no wonder publishing bosses have a lot to talk about at the moment. The agency model might be their only chance to survive in the cut throat world of e-book and book sales

Mark Nayler is a senior researcher at Spear’s magazine.

Content from our partners
Peatlands are nature's unsung climate warriors
How the apprenticeship levy helps small businesses to transform their workforce
How to reform the apprenticeship levy