Amazon

John Gapper

Perhaps there is good news for book publishers in the talks with anti-trust authorities in the US and Europe on how electronic books are priced. Admittedly, the good news is well hidden.

On the face of it, publishers are in trouble from the threat by the US Department of Justice and the European Commission to strike down their preferred “agency model” for pricing, under which they set their retail prices for ebooks, rather than leaving it to distributors such as Amazon and Apple.

I’ve covered this saga before, and take the view that the anti-trust regulators should not facilitate Amazon’s efforts to control the ebook market with the Kindle by insisting on it being able to discount books as it wishes after obtaining them at wholesale prices from publishers. 

John Gapper

I fear that the US Department of Justice is heading firmly into the territory of unintended consequences by threatening to sue Apple and five of the biggest US book publishers for colluding to raise the price of electronic books.

The Wall Street Journal reports that the Department of Justice is unconvinced by the arguments of book publishers, including Penguin, which is owned along with the Financial Times by Pearson. It is threatening to take action over their “agency” pricing model for ebooks.

I should note that I have an interest in all this since, as well as being a Pearson employee, I wrote an ebook last year which was published by Penguin and sold, among other places, on Amazon’s Kindle store.

I wrote about this issue in a column in December and concluded that eliminating agency pricing, under which publishers rather than ebook distributors, set the prices for their books, would reinforce Amazon’s dominance:

“If some publishers want to set ebook prices above the level Amazon prefers, that is fine providing they do not collude to fix prices and there are alternatives. There is little danger on the latter front – anyone can now become a publisher and new ones are springing up all the time. Amazon has itself become a publisher and displays its titles generously in the Kindle store.

“Minimum prices deals helped to erode Amazon’s initial dominance in ereaders by encouraging competition from B&N and others. Even so, the Kindle still accounts for 60 per cent of ebook sales. It is not the job of antitrust officials to hand Amazon back its monopoly.”

 

John Gapper

The difficulties of Amazon’s Kindle Fire tablet reminds me of how peculiar it was to hold a launch event at which no-one was allowed to try the device. With hindsight, I and others there should have taken that as a warning.

At the launch in New York in September, Amazon executives showed off the Fire and other Kindle models while journalists and others were kept at a safe distance. Outsiders were not given a chance to see how the devices performed for themselves. 

Andrew Hill

No question, for me, about the most interesting business story of the week: the launch in India of a $35 tablet computer called the Aakash (“sky” in Hindi). For perspective, go to the tablet department of Walmart.com, where $35 will buy you – just – a snap-on case for an iPad 2.

For anyone in doubt about the political significance of the announcement, Kapil Sibal, India’s education minister, rammed it home:

The rich have access to the digital world; the poor and ordinary have been excluded. Aakash will end that digital divide.

 

John Gapper

Since he kept on repeating it, there was no difficulty in working out what Jeff Bezos regarded as the most important aspect of the Kindle Fire launch in New York this morning.

Mr Bezos gave a little smirk as he announced the $199 price of his new competitor to the Apple iPad – and to the entire ecosystem of films, music, magazines and books that can appear on Apple’s device:

“This is unbelievable value. We are building premium products at non-premium prices. We are determined to do that, and we are doing it.”

 

John Gapper

There is something strange about the idea of publishers’ attempts to resist the e-book price-setting power of Amazon being investigated by the Connecticut attorney-general.

Given Amazon’s dominance of e-books through its Kindle device and software (it claimed this week to have 80 per cent of the market), it seems like the obvious target for anti-trust concern rather than the weak and divided publishing industry.

On the face of it, the initiative by Richard Blumenthal, the Connecticut attorney-general, is aimed at Amazon and Apple, which is publishing e-books for the iPad and iPod through its iBook service. In practice, however, Amazon would be pleased if he broke the “agency” pricing model. 

John Gapper

Frédéric Filloux has a smart prediction on the Monday Note (a recommended weekly email about media and technology, by the way) about how the iPad and tablet computers could change the book business and help  longer-form journalism.

I have a couple of thoughts about it.