Indie booksellers object to U.S. e-books deal

Fri Jun 15, 2012 1:07pm EDT

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(Reuters) - The American Booksellers Association, which represents U.S. independent bookstores, has objected to the U.S. government's proposed settlement of its price-fixing lawsuit against top publishers, saying it would strengthen Inc's dominance.

The association, in a letter to the U.S. Justice Department dated June 14, said the settlement would create "a significant danger that Amazon will again regain a monopoly share in the sale of e-books."

Booksellers and publishers have been frustrated with Amazon, the world's largest Internet retailer, for using books as a loss leader to attract customers for more expensive products. They say the practice hurts bookstores.

A spokesman for the Department of Justice declined comment. A spokesman for Amazon did not immediately return a request for comment.

Independent booksellers started selling electronic books in late 2010, three years after Amazon introduced its first Kindle e-reader.

In an antitrust lawsuit in April, the Justice Department sued Apple Inc and two publishers, saying they, and three other publishers, with which it simultaneously settled, conspired to fix the prices of e-books to break Amazon's dominance.

Apple had successfully convinced publishers to use the "agency model" that allows publishers to set the price of e-books, and in turn Apple would take a 30 percent cut, the government said at the time.

Under the proposed settlement, the three publishers would agree not to use the agency model for two years, in contrast to the "wholesale model" in which retailers pay for the product and charge what they like.

The settlement the government reached in April with the three publishers would allow Amazon to resume discounting books. Amazon said at the time that it planned to lower prices on books associated with its Kindle e-reader.

The booksellers association said in its letter that the adoption of agency pricing had helped lowered Amazon's share of the e-book market to 60 percent from 90 percent.

The three publishers that agreed to settle are News Corp's HarperCollins Publishers Inc, CBS Corp's Simon & Schuster Inc, and Lagardere SCA's Hachette Book Group.

Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, and Pearson Plc's Penguin Group, have said they plan to fight the Justice Department charges, along with Apple.

Last week, Barnes & Noble Inc, the largest U.S. bookstore chain, also objected to the settlement, making many of the same arguments.

(Reporting by Phil Wahba in New York and Diane Bartz in Washington, D.C.; Editing by Leslie Adler)

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Comments (1)
I hate to say this — because I grew up loving to spend time in independent bookstores — but this is shameless. All the brick and mortar bookstores, from the giant B&N down to the tiny local storefront, are facing the brutal reality that the reading world is moving swiftly and certainly to e-books — a product that is purchased online and really cannot be sold through physical stores. They will do anything to slow this process down, most blatantly by making ebook prices much higher than they should be, in a pact with the big publishers, who have the same motive. The independents are claiming that the issue is dominance by Amazon when the real issue is just ebooks generally. The fact that Amazon was the first and biggest to make ebooks happen puts them naturally way out in front, the way Apple is for example with the iPad (and I don’t hear people demanding that Apple charge even more for the iPad so that its competitors have more room to compete). Independent bookstores are facing a bad lookout, but that’s only because of the same natural technological progress that but record stores out of business a few years back. Sorry, but Amazon charging a fair (meaning realistically low, like $10 maximum) price for ebooks, instead of artificially raising prices to keep print books competitive, is entirely consistent with the public interest. Forcing Amazon to charge the same for an ebook as a paperback is outrageous, and it’s the traditional job of the Justice Dept to take on price collusion agreements in any industry.

Jun 15, 2012 1:51pm EDT  --  Report as abuse
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