Publishers vs. eBook Price Fix vs. Copyright

Recent developments in the world of publishing, clearly demonstrate yet again that the primary objective of the content industry is to make a tidy profit. Nothing wrong with that, if you ask me; however, it usually turns into a rather sticky mess when that pursuit is clouded by accusations of skulduggery, conspiracy and outright price fixing.

I refer to a recent lawsuit filed by the US Justice Department against Apple and 5 major book publishers, over allegations of conspiracy, collusion and price fixing. According to this article from the Wall Street Journal, it could change the course of a rapidly expanding eBook publishing industry. But how so, you ask?

Well, it is really down to opposing business models, (i.e. the so called agency versus wholesale approach to eBook pricing), where, on one hand, an agent such as Apple will allow publishers to set their own price, and take a cut (in this case 30%) from sales on its iBook platform. On the other hand, a wholesale pricing model is one where the retailer (e.g. Amazon or Barnes and Noble) sets the price for eBooks and can effectively apply discounts as they wish (even if it means selling eBooks at a loss). Obviously, this latter scenario leaves publishers with less control over prices, and consequently profits, hence the opportunity to take advantage of a more favourable option could not fail to be attractive.

However, the question remains about the value proposition for consumers, who are themselves increasingly embracing eBooks for its convenience, ease of use and, perhaps more to the point, a huge potential for significantly lower prices overall. One might argue that eBooks do not require paper, glue, physical stores / shelf space or any significant distribution / transport costs, therefore they really shouldn’t be priced anything close to their physical versions. Surely, this quest to keep prices high can only be in favour of publishers, and their bottom lines, mustn’t it?

So what are the key arguments / rationale for keeping eBook prices artificially high? Perhaps the main reason has to do with high operating costs incurred by large publishers, as well as the need to maintain a powerful marketing and promotional machinery. Furthermore, it may also be argued that lower cost eBooks are somehow cannibalising the margins to be had from physical books. Whatever the case, it seems publishers stand to lose out if they don’t do something (innovative?) to counter the effects of change.

Hmm, now where have we seen this before, (and how did that industry cope / survive)? Ah, yes, the music industry went through something similar, except they chose to sue those pirates and freeloaders (aka the people formerly known as customers), that supposedly ‘stole their bottom line’. However, they seem to have found other ways to complement dwindling revenue streams, e.g. via ticket sales for live performances. By the way, death may no longer prevent artistes from performing before a live audience, assuming this deceased artist hologram idea catches on.

Luckily the book publishing industry don’t have to take quite so drastic a measure, especially as it has been shown time and again that new media formats and channels do not necessarily mean the complete demise of existing ones. This is arguably the perfect time for publishers to embrace even bolder / more innovative thinking to discover complementary initiatives that will bolster an industry under threat, real or imagined. They must observe and capitalise on consumer trends and emergent user behaviours. For example, the sheer capacity, variety and anonymity (i.e. no tell tale covers) of reading material to be found on your average eBook reader means that users now carry, consume and explore hitherto unthinkable (at least in public) subject matter. The current boom in romantic erotica sub-genre, aka Mommy Porn, is an interesting case in point.

Perhaps even more fundamental, is a need to seriously consider the verboten idea of evolving copyright into something much better aligned with the digital age. Unfortunately, that will be a tough sell to the publishing industry, if this report of a speech given by HarperCollins International Chief Exec, at the London Book Fair, is anything to go by. According to the article, “others in the book trade, including the Publishers Association” have criticised the recent Hargreaves Review of Copyright, which some feel could weaken the current copyright regime. As you may have gathered by now, I don’t subscribe to that point of view, but then I am only an author and may not see things in quite the same light as a successful publisher might.

In many ways, this whole situation could be seen as a remix of circumstances surrounding the birth of copyright. In 1710, the printing industry lobbied for creation of a law to govern the rights to print or reproduce works (now known as the Statute of Anne), in order to protect their interests and the authors / creators of said works. Copyright is essentially an artificial system, which routinely needs a degree of manual intervention whenever new and disruptive content technology or consumer trend emerges. That, in my opinion, is the fundamental flaw with copyright which any revision thereof must try to address. In an age of multi-platform, multi-channel and multi-format publishing, there really is no place (or time) for manual intervention each time a new and disruptive trend, challenge and opportunity presents itself. I for one would be more than happy to attempt to demonstrate just how such a system could work (based on real copyright content), but then I would probably need a hefty six figure advance from some far-sighted multi-publisher to make it happen. Who says there is no future for publishing?

Comments (2)

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  • 1
    Patrick wrote on 20th Apr 2012

    Surely a large part of the reason that Apple have been dragged before the authorities with it's e-book pricing is not just the fact that they changed prcing models, but did so in such a way that guaranteed that nobody else could get the same product for a lower price? If that isn't anti-competitive then I don't know what is.

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  • 2
    Jude wrote on 24th Apr 2012

    Patrick, thanks for the comment.
    However, I'm not so sure about not being able to get the same product 'for a lower price'. After all, some might argue that free-of-charge is the lowest possible price for e-books, but that is whole other debate in itself.

    In any case, at this time it is tough to tell who, if any one party, is completely right or wrong on this. It is in the nature of such things that eventually, the victor is often be perceived to have been right right all along.

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About the author
Jude Umeh is a member of the UK's Sector Consulting Group in Capgemini's global Telecom Media and Entertainment (TME) community. His areas of expertise include: music, media and digital rights management; and he contributes to thought leadership development and delivery of solutions and services to the stakeholders in these fields. Jude is the author of The World Beyond Digital Rights Management.

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