Periscope Depth

you can’t choose what stays and what fades away

Everyone else in the industry has seen this already, but here’s the WSJ last week with some bad news for legacy publishers:

The Justice Department has warned Apple Inc. and five of the biggest U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, according to people familiar with the matter.

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The five publishers facing a potential suit are CBS Corp.’s Simon & Schuster Inc.; Lagardere SCA’s Hachette Book Group; Pearson PLC’s Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc., a unit of News Corp., which also owns The Wall Street Journal.

Hey, what’d I tell you?

When I first heard of this model, it sounded oddly familiar. Not because Apple had put it into practice already (for ebooks on iTunes). It sounded like minimum advertised pricing (MAP), a stunt that had cost music publishers hundreds of millions of dollars.

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Telling retailers that you’d like them to advertise your products at a minimum price is not illegal in itself. However, the 43 states (and the FTC, in a parallel lawsuit) alleged that MAP was a tactic used to fix a de facto price floor.

I need to stress that I’m not loving this outcome. I had hoped that the Big 6 would recognize the danger they were in and back down from agency pricing without the threat of a lawsuit. The law is a blunt instrument, treating cancer with a claw hammer instead of a laser. Fortunately, per the WSJ article, it looks like the publishers and the Justice Department are agreeing on a settlement so that no one has to go to court.

What might the end of agency pricing mean for readers? Cheaper ebooks across all platforms. No more Kindle books at $14.99.

What might the end of agency pricing mean for authors? Mike Shatzkin speculated that this could be bad for indie authors, as keeping the $0.99 to $2.99 window free of legacy publishers gave indie authors room to stand out. I don’t know that I buy this. In the app market, for instance, both the small companies and the big ones compete in the $0.99 space. Angry Birds wasn’t locked out by the SimCity app. Consumer demand has a way of forcing cream to the top.

(I recognize that I may be committing the Texas sharpshooter fallacy, picking a successful indie game to prove that an indie game can succeed. But all we have is backward-looking data and experiments in the future)

What does this mean for the craft? For the moment, nothing. Keep writing, keep building a fan base, and keep your options open. The publishing industry has changed overnight in the past. We might have at least one more change coming.