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Publishing News: DOJ settlement, the aftermath

A look at a looming Amazon monopoly and the DOJ settlement effect on ebook pricing. Also, a chat with The Atavist CEO Evan Ratliff.

Here are a few stories from the publishing space that caught my attention this week.

Digital evolution or government-assisted monopoly?

LA Times writers Dawn C. Chmielewski and Carolyn Kellogg took a look this week at Judge Cotes’ decision to approve the proposed settlement in the ebook price fixing case and the turmoil it’s causing in the publishing industry.

Chmielewski and Kellogg cite a statement by the Author’s Guild “warning that the ruling would turn the clock back to 2010, when Amazon sold 90% of all e-books,” but author and publishing attorney Jonathan Kirsch warned that the decision will have much bigger picture implications:

“By putting the legal approval on this settlement, the district court has pushed us over a certain kind of cliff. In terms of the real-life experiences of publishers, authors and readers, this will represent a fundamental change in how books are published and sold … The court says we recognize that we’re in the birth pangs of a revolution of book selling, but we’re not going to torture the antitrust law into permitting one way of doing business over another way of doing business.”

Literary agent Gary Morris told Chmielewski and Kellogg that Cotes’ decision basically handed Amazon a monopoly and that publishers’ biggest fear is “that by solidifying Amazon’s indispensability as a retailer, they’ll drop wholesale prices to a level that’s unsustainable for the publishing business.” On the other hand, Forrester analyst James McQuivey said for the piece that fighting the digital evolution is folly and that “[t]he companies in a position to focus on digital distribution — which is Amazon and Barnes & Noble — those are the companies positioned to take over.”

In a related piece, LA Times writer Michael Hiltzik dug into the background of the case and the history of Amazon’s position in the ebook market, and laid out how the antitrust suit plays into Amazon’s grand plans to build a monopoly. Hiltzik argues that in pursuing the antitrust suit, “the government walked blithely past the increasing threat of an Amazon monopoly and went after the stakeholders who were trying to keep it from taking root.” And he boils down the overall takeaway from the entire situation:

“[T]he most important concern that should be shared by all participants in the publishing world — readers, publishers, retailers, device manufacturers — is that it’s in no one’s interest to have a single company controlling 90% of the market. No one, that is, except the big player, which is Amazon.”

Ebook pricing discounts begin

Though the court’s approval of the DOJ’s settlement with HarperCollins, Hachette and Simon & Schuster is likely to have wide-reaching and long-term effects, the most immediate — and perhaps most tangible for all players involved from publishers to readers — is its effect on ebook pricing. PaidContent’s Laura Hazard Owen offered a nice overview of the pricing situation, including what the settling publishers need to do now, how exactly ebook prices could be affected, and a briefing on restrictions and exceptions.

Owen reports that “[r]etailers will be free of almost all restrictions on pricing,” and as such, deep discounts for readers are likely. Interestingly, Owen notes publishers might actually have reason to raise ebook prices for retailers. She reports:

“HarperCollins, Hachette and Simon & Schuster could raise the list prices on bestselling ebooks from $12.99 to, say, $18.99. A retailer like Amazon would then have to pay those publishers a higher commission and discount their ebooks even more steeply, if the retailer wants to offer the greatest discounts.”

In two follow-up posts, Owen reports that Amazon almost immediately began discounting HarperCollins ebooks and that Apple has jumped into the pricing game. In what may be a sign of an impending pricing war, Owen writes:

“Amazon is already dropping its ebook prices to match Apple’s, in the cases where Apple had priced a book lower than Amazon did. For instance, James Rollins’ Bloodlines and J.A. Jance’s Judgment Call were each $10.94 in the Kindle Store this morning and $9.99 in iTunes. Just a few hours later, both books are down to $9.99 at Amazon as well.”

Up next in digital publishing: direct sales and memberships

The Nieman Journalism Lab’s Justin Ellis sat down with Evan Ratliff, CEO and co-founder of The Atavist, this week. The entire interview is well worth the read, but a couple of points stood out regarding the next steps for digital publishing and the importance (and methods) of connecting with readers, and what they’re planning to do at The Atavist. When asked what’s next in digital publishing, Ratliff responds:

“… as of our next story, which comes out a week, week and a half, we’ll be selling it directly on the web. So, rather than just selling through devices we’ll be selling it on the web and you can read it on devices. We really want to move to a setup where you’re buying the story from us and you’re able to read it wherever you want. So it’s really not driven by whether you have an iPhone or anything else — it’s actually driven by whether you want to read this story and then you can sort of pick your venue.”

In addition to direct sales, Ratliff highlights another method of reaching and engaging readers: subscriptions. He says:

“… we’re gonna start experimenting with some different subscription types — probably we’ll start with something very simple in a few weeks, where it will be just for the iPad and the iPhone. But you’ll be able to subscribe to the stories we have coming for the next few months, get some access to the back catalog of stories we’ve already produced, and have that way of getting readers in. … You could call it a membership, or you could call it some sort of book club. … [For] people who want more than one [story], we have technological ways to give them access to more than one at reduced prices.”

Ratliff stresses in the interview that making content available anywhere is the way to reach readers, that people don’t want to concern themselves with format — they just want to be able to read content wherever they want. You can read his entire interview here.

Photo: Monopoly in the Park by HarshLight, on Flickr

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  • Alice Armitage

    I think Ratliff has it exactly right. It is my experience that most people just want the content they like where ever they happen to be when they have the chance to read. So if they start reading on their iPad at home, they want to continue on the train to work, in the dentist’s office, in the carpool line, etc. And they want to pick up exactly where they left off. Convenience, rather than particular format or device, is what matters. 

    What I personally like most about Atavist’s content is the audio version, which syncs automatically to the digital text. So I can listen while walking or rollerblading and then finish the story- or go back and enjoy all the added visual elements offered in Atavist’s stories- on my device when I get home, again picking up exactly where I left off.

    Perhaps Amazon’s new Whispersync will offer some of the same benefits- although from what I understand, you have to buy both the audible and the digital versions. Atavist includes all the formats for enjoying a story in one integrated price. In my opinion, that’s a better strategy.

    • jwikert

      Your point about Amazon charging more for Whispersync for Voice is valid but it looks like the additional fee is fairly small (Amazon’s website says narration can be added to many titles for $3.95 or less). This is exactly the type of value-add I’ve been thinking we might see, causing book prices go up as the products become richer and support all the capabilities of the device they’re being read on. Today we look at Whispersync for Voice as a separate add-on but over time I bet we’ll come to expect it as part of the core product and we’ll be willing to pay a bit more for it. Whispersync for Voice is a great step away from quick-and-dirty print-to-e conversions which are largely to blame for the race to zero in ebook pricing.

      • Alice Armitage

        What may affect the price charged for Whispersync (and the quality of the narration) is whether Amazon uses the professional narrators used now on audible.com. I have several friends that are voice-over professionals here in LA and they have told me that it is very difficult and time-consuming to narrate a long narrative well. Which is apparently why audio books are so expensive. (The Atavist seems to use the authors to narrate their pieces- but they are much shorter, which is why is may be possible to include the narration as part of the purchase price.) From what I understand, computer-generated audio for narratives is still much inferior to human narration, but that is sure to change over time. 

        • jwikert

          I wondered about that too. Granted, the computer-generated ones are far from perfect but have you tried the one we use on this website? Again, you won’t be fooled into thinking it’s Robert De Niro talking to you but it’s certainly a viable option.