Recent Department of Justice Ruling
I don’t understand how the Department of Justice (DOJ) can accuse five publishers on price collusion, when these publishers switched to the agency model in order to address the stronghold Amazon has begun to take by discounting their digital books. The digital publishing industry is functioning on pennies, not dollars like the print industry. Thus I see the agency model as a way for the publishers to attempt to gain back pennies they were losing in new and relatively unexplored digital pricing. As we pioneer the digital field, pricing experimentation should be one of the major concerns and strategies of publishers, hoping to understand the best pricing point for revenue. We as publishers have to gain experience in the new cost structure of digital publishing but as the DOJ enforces regulations for the settling publishers, e-tailers will continue to establish the pricing differential, setting back these publishers back.
Attorney General Eric Holder states this case was an example of the “latest progress in protecting American consumers from anticompetitive harm, ensuring fairness in the marketplace, and making certain that cutting-edge technologies are available at the lowest possible price.” But the way I see it Amazon has been harming competition in the publishing industry as a whole, establishing their dominance as an e-tailer cutting away from profits in print retailers and independent book stores. These brick-and-mortar stores can’t simply keep pace with the discounts and aggregator capabilities that Amazon offers. Amazon is becoming the Walmart of the publishing industry.
I am concerned by the regulations the DOJ is implementing for settling publishers, because the digital publishing industry is still in a liquid, malleable state where value networks, resource allocation, cultures, and values have not yet been established. The digital realm is in its infancy. To try to make a baby walk in a straight line before it has learned to even sit up is premature and unjustified.
