It’s On Like Donkey Kong

As reported by the Wall Street Journal, the Justice Department has followed the EU’s lead and let the other shoe drop in the Apple / Big Publishing “agency pricing” scheme. There had been talk that some of them were trying to settle before things went this far, but it looks like DOJ is in the mood to set some examples.

Even if they win, ask Microsoft how fighting Capitol Hill worked out for them back in the 90’s. Forbes has a bit of a different take on this, but in my opinion they’re blinded by anti-administration bias. Understandable, since if the Big Six were selling semi-automatic weapons to Mexican drug cartels or organizing vigilante posses in Florida, this DOJ would probably give them a pass.

But I digress…

Politics aside, I doubt they’ll win – especially if this accusation proves true:

The government’s lawsuit, filed in Manhattan federal court, described CEO-only meetings of publishers at which the alleged conspiracy was hashed out. The suit alleged that the publishers’ chief executives met starting in September 2008 or earlier “in private dining rooms of upscale Manhattan restaurants” and “no legal counsel was present at any of these meetings.”

The suit describes the shift from the traditional “wholesale” pricing model, under which retailers set the price of both electronic and physical books, to an “agency” model under which publishers set the price and retailers take a commission.

Now I’m no lawyer, but I’m pretty certain that’s called price fixing and it’s illegal. The Big 6 were desperate to prop up their revenues by treating e-books essentially the same as paperbacks (both from the customer’s perspective – price, and the author’s perspective – royalties), and were alarmed by Amazon’s breaking down those barriers.

Hey, it happens. Disruptive change causes all kinds of nutty decisions in the affected industry – some airlines tried the same thing back in the heyday of 80’s deregulation, and got their pee-pees spanked pretty hard for it. When you throw in an industry that was already unmoored from most rational notions of supply and demand, desperate decisions are sure to follow.

Much more on this can be found at The Passive Voice.

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