Much Ado About Nothing?

An indie publisher wonders who the government is protecting in its e-book-pricing lawsuit

By Martin Shepard |

Jun 21, 2013

I’ve been going nuts lately reading about the government’s prosecution—or is it persecution?—of Apple and five major e-book publishers (who account for the majority of trade book sales), and I feel impelled to get some things off my chest and clarify my mind about this confusing issue. The longer the lawsuit plays out, the more absurd it becomes. The U.S. attorneys accuse the defendants of collusion. “We must protect the public from those conspiring to control prices of e-books.”

To my mind, authors need more protection than the public. In the end, any book is an author’s creation, and the writer deserves the fairest shake he or she can get. No two books are alike—all are individual creations—and the idea that e-book prices would uniformly rise if Apple and the publishing conglomerates got their way, as the government suggests, is hard to accept. I don’t know how the Big Six divvy up e-book sales with their authors, but I’d surely like to find out. Maybe the prosecution could ask the witnesses from the five publishers accused in the case about this, since the government’s attorneys are on a fishing expedition and can ask anything that stirs the pot and creates drama. Could there be collusion among the publishers on this score, too—figuring out a system to shortchange their authors? It’s certainly a possibility. Perhaps they pay royalties on e-book sales on a scale equivalent to royalties paid on sale of physical books. But then again, the Department of Justice is not committed to protecting authors’ rights, but rather to protecting those of consumers, who want to pay less for e-books. Perhaps another investigation is in order.

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I think it’s proper for publishers to treat electronic sales the same way we do all subright sales: dividing the income on a 50/50 basis with writers. After all, it represents income that comes into our hands out of the blue, without us having to do anything further as publishers and without requiring further investment on our parts—just like income from film options, foreign and domestic sales, and excerpts. I also believe that publishers have the right to set prices on the e-books they publish—just as they have a right to set prices on the physical books they publish. If Apple allows publishers to set their own prices, that’s a good thing. If wholesalers wish to give greater discounts, that’s up to them. But if Apple only takes 30% of the e-book selling price, then a $10 sale nets the publisher $7, and the author—under our system—earns $3.50 per sale. On the other hand, if Amazon takes 50% and overrules the publisher’s asking price by deciding to sell the same book for $8, the publisher nets $4 and the author earns $2. Big difference, wouldn’t you say?

The very idea that the public needs protection in these instances seems absurd, since a book is not a necessity like food or fuel or electricity. Books and e-books are, in the end, entertainment: entertainment that the public can purchase, or take from any public library at no cost whatsoever. But if the Justice Department starts prosecuting publishers and book retailers in order to “protect the public against price rises,” who knows what other forms of entertainment might come under investigation in the future.

Frankly, we adore Kindle sales, though Amazon often lowers prices to less than those we suggest. But it pays on time (unlike many bookstores and wholesalers) and accounts for over 80% of our e-book sales. If anything, authors would benefit if publishers could have some certainty about the net receipts they’ll earn on e-books sold through different retailers. Amazon would still have the choice of lowering its discount or not, in order to compete with Apple and others—and publishers would have a guarantee about what the net will be.

To me, this lawsuit is a glaring example of government excess, providing big headlines concerning “conspiracy” and “protecting the public,” while wasting taxpayers’ money and going after the wrong people, for all the wrong reasons. But America thrives on confrontations and conflict—be it between sports teams or legal teams, or publishers and retailers.

Ultimately Shakespeare, and Faulkner, said it best: the case is “much ado about nothing” and “sound and fury”— quite dramatic, but empty of substance, other than burnishing prosecutors reputations and defense lawyers incomes.

Martin Shepard is copublisher of the Permanent Press.

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