Tuesday, January 19, 2021

Class Action Suit: Amazon & Publishers Face Price Collusion

Attorney's Sperling & Slater acting on behalf of three eBook buying plaintiffs are suing Amazon and the "big 5" publishers (Hachette, Macmillan, Penguin Random House, Simon & Schuster, Harpercollins) for eBook price collusion in the Southern District Court in Manhattan.  These plaintiffs are deemed representative of the following class:  

All persons who, on or after January 14, 2017, purchased in the United States one or more eBooks sold by the Big Five Publishers through any other retail e-commerce channel in the United States other than the Amazon.com platform.

The filing alleges that Amazon.com employs anticompetitive restraints to immunize its platform from the negative effects of the Big Five’s inflated eBook prices and that these 'inflated prices' are a result of the imposition by publishers of the agency pricing model.

There are several exhibits in this filing including the following:

As the following chart shows,15 the Big Five’s eBook prices decreased substantially from 2013-2014, as long as the consent decrees prevented the Big Five from interfering with retailer discounts, but they immediately increased their prices again in 2015 after renegotiating their agency agreements with Amazon and have continued to maintain supracompetitive prices


What the above chart seems to be suggesting is that eBook prices from the big five are now at a level comparable to the 2014-15 time period which is when they were lowest.

In their argument the attorneys focus on the use of 'most favored' pricing models which Amazon requires of its vendors. Basically no other vendor (including the publisher) can offer better prices to consumers. Due to this according to the suit, Amazon removes any opportunity for price competition and therefore perpetuates higher (anticompetitive) pricing of eBooks. As follows:

27. Amazon’s and the Big Five’s continued anticompetitive use of MFNs in the United States is astonishingly brazen, given the DOJ’s high-profile enforcement against Apple and the Big Five in 2012 and the EU’s own proceedings against the Big Five and Apple in 2011 and subsequently against Amazon in 2015 for its own use of anticompetitive MFNs in eBook sales. Despite multiple investigations and censure, Amazon and the Big Five have engaged and continue to engage in a conspiracy to fix the retail price of eBooks in violation of Section 1 of the Sherman Act.

28. Amazon’s agreement with its Co-conspirators is an unreasonable restraint of trade that prevents competitive pricing and causes Plaintiffs and other consumers to overpay when they purchase eBooks from the Big Five through an eBook retailer that competes with Amazon. That harm persists and will not abate unless Amazon and the Big Five are stopped; Plaintiffs seek a nation-wide injunction under the Clayton Act to enjoin Amazon and the Big Five from enforcing this price restraint.

29.Amazon’s conduct also violates Section 2. Amazon has obtained monopoly power in the U.S. retail trade eBook market, where it accounts for 90% of all eBook sales. Through its conspiracy with the Big Five Co-conspirators, Defendant Amazon has willfully acquired its monopoly power in the U.S. retail trade eBook through anticompetitive conduct, fixing the retail price of trade eBooks and causing supracompetitive prices for eBooks sold by or through Amazon’s eBook retailer rivals. Such conduct is an abuse of monopoly power in violation of Section 2 of the Sherman Act.

In stating thie case, the attorneys believe that Amazon and its co-conspirators (Big 5 publishers) did not act unilaterally or independently, or in their own economic interests, when entering into these agreements, which substantially, unreasonably, and unduly restrain trade in the relevant market, and harmed Plaintiffs and the Class thereby.

They seek damages in the case due to the higher costs of eBooks purchased.

Thursday, January 14, 2021

Connecticut AG Investigating Amazon & Publishers for Unfair Practices

 According to a news report in the WSJ, Amazon is under investigation to determine whether their dealings with certain publishers are anti-competitive.

From the article:

The investigation is examining whether Amazon engaged in anticompetitive behavior in the e-book business through its agreements with certain publishers, Connecticut Attorney General William Tong said in a statement.

Connecticut asked Amazon to provide documents related to its dealings with five of the largest U.S. book publishers, according to a subpoena issued in 2019. The Tech Transparency Project, a nonprofit that investigates technology platforms, obtained the subpoena through an open records request and shared it with The Wall Street Journal.



Tuesday, December 29, 2020

Making 2020 Hindsight: Reflections, Recommendations and Running

For the first time in probably 40 years I did not have a seat on an airliner in 2020. Each year, I'd expect to travel to the UK at least once to see family and trips to Europe and other sundry trips in the US would round out my normal travel schedule. In December 2019, I had just returned from a trip to London not realizing it would be a long time before I was back, and I already had firm upcoming travel plans for Florida and Seoul. I've had years where I've overdone my travel, such as the three years I commuted to Oxford (which turned out to be a complete waste of time), but I realize now how much I miss air travel even if to places I have visited frequently. Of course, perspective is important: The planes and the places will be there in the coming months (and years) and it's a small consideration given the plight we are in due to COVID. The PND household's circumstances are hardly catastrophic and I am more than comfortable with the restrictions and it is stunning to me how many people believe they are above even simple sacrifices. Even the people making the rules!

As a by product of the above I took perhaps a quarter as many photos (400) in 2020 than in a normal year. Notably many fewer photos of New York (and none of London). I spend decent amount of time in arm chair travel looking at my past photo collections.

When gyms closed in March I was still of the mind that COVID wasn't a big deal and I was at the gym the day before they all closed. Within days, my attitude radically changed as the NY news reported on the body bags being carried out to mobile refrigerator trucks. So the gym was off limits which meant outside exercise was the only viable option and I upped my running game. I track my running activity and in a normal year I usually run between 1000 and 1100 miles. In the past 24 years of diligently tracking my running, I've run as much as 1,200 miles and as few as 500. 

In 2020 I ran 1,400 miles - which is a lot! My goal next year will be a little less but if I do it I will have run 25,000 miles in 25 years. But don't be intimidated because I get slower and slower as the years go by and each year more and more other runners pass me. Occasionally, I'll get a friendly wave from a cute girl who I know is thinking that "it's nice to see the old guys out here." Cold bothers me less than when I was younger but as you get older it is harder to deal with the heat. Bodies can't cool down as quickly as you get older. I am not entirely sure if I will ever go back to New York Sports Club.

As a consultant, working from home is often the norm but had it not been for COVID I would have been spending some time each week in a client office. I miss this more than I would have anticipated and the casual conversation, connections and serendipity that are always part of the work environment is very difficult to create in Zoom. I do think workers will continue to adapt and evolve to this new model but I don't see businesses continuing to be fully online once the restrictions are lifted. COVID will have a lasting influence on work conditions and experiences leading to more flexible arrangements and benefits for both employers and employees. I think it will be more incremental than revolutionary. Dry cleaners will struggle though.

Despite the lack of commuting, there wasn't a lot of extra free time. Placing a m/in/law in care and fixing up her house for rental in the middle of a pandemic didn't help. Mrs PND also spent a lot of time saving democracy with phone banking and writing postcards. I think it helped.

In most years I will read 20+ books a year and this year was similar; however, I read more non-fiction in 2020 than in other years. In December 2019, I was wandering around Politics and Prose and resolved myself to read more political history during 2020. I achieved this and read about Henry VIII, FDR, Grant, Carter, Churchill and others. I interspersed these books will my more normal roster of espionage and crime books. My five favorite books this year were:

About the first year of Churchill's prime ministership, the book interested me because it added in a lot personal history about the personalities and relationships of the people surrounding WSC at this time. I've read some of Martin Gilbert's biography of WSC but this book - by no means as detailed - filled in some gaps. I have many mixed feelings about Churchill and see the American infatuation with him as distinctly odd. Later in the year, I read FDR (below) and it was interesting to read about the same time period from FDR's perspective.
Alter's book is engaging and really well written. He clearly likes Carter but he is also critical about the President which leads to a balanced and interesting narative. My family came to the US in 1977 and we had watched news reports and election news during 1976 from an external perspective. Carter to me was the peanut farmer and little more. As the late seventies progressed my impressions of Carter as a failed leader were cemented and like many others I saw the comparison with Reagan a stark. As it turns out, Carter by many criteria, was one of our most effective Presidents with many initiatives which were either (or both) ahead of his time or long in impact. By chance, one of my last 2020 books was a fictionalized espionage story of the Shah's downfall which also played large in Alter's book.

I read a review of this book in The Economist and as a fan of Conrad, I thoroughly enjoyed the book. Jasanoff places Conrad in context which adds scope and perspective to many of the titles he wrote.  Later in the year, I also read King Leopold's' Ghost about how the King of Belgium carved an empire out of central Africa. In the latter book, there are many references to Conrad and Heart of Darkness which aided my understanding of both stories.

This book is long and while comprehensive and well written I thought it was a light read. JE Smith is well known for this book and while I enjoyed it, I thought it was more an appetizer than a full blooded investigation of one of the most successful US presidents. As a side note, as outrage grew over trump's supreme court appointment and calls to pack the court accelerated, one of the more interesting sections of this book concerned FDR's court packing scheme and how it torpedoed his mandate. What a powerful personality. It was a tragedy how his doctors ignored is health issues. With better care he would have lived far longer.
The last in the Cromwell trilogy, I hope Mark Rylance comes back to film this book as well. I enjoyed this book but found it labored at times. Mantel is such a master of language that it is difficult to criticize but I thought the first two titles seemed to flow easier than this one. Perhaps it was because of the inevitable outcome. It is still a compelling story.
 



 

If interested, here are my books on Librarything.

The ability to binge video and tv shows has been one of civilization's greatest inventions. To be untethered to the network schedule and eliminate advertising in the process is real progress! Some highlights this year included:

Call My Agent - Based around on the offices of a french film star agenting business. (Netflix) 

Better Call Saul - Possibly the best written show on tv at the moment (AMC)


Marvelous Mrs Maisel - Housewife turned comedienne (Amazon)

Rake - Australia show which follows the antics of an unconventional attorney (Netflix)

The Queen's Gambit - About chess (Netflix)


After Life - From Ricky Gervais about a widower. (Netflix)


 

 

 

 

For more see my year end newsletter.

Looking forward to a better 2021.

*******
Michael Cairns is a publishing and media executive with over 25 years experience in business strategy, operations and technology implementation.  He has served on several boards and advisory groups including the Association of American Publishers, Book Industry Study Group and the International ISBN organization.   Additionally, he has public and private company board experience.   He can be reached at michael.cairns@infomediapartners.com



Monday, December 21, 2020

Martyn Daniels

Martyn Daniels passed away suddenly on Friday. He suffered a fatal heart attack and despite the efforts of emergency services he died at home.

I did not know Martyn well but he was a frequent commentator in the book community via his Brave New World blog. He reached out to me on several occasions with positive comments about this blog particularly on posts about digital media. This is something I always appreciated and enjoyed. Martyn preceded me by many years at Ingenta (Vista) and had a few thoughtful comments - mostly concerned with my mental health - when it was announced I was going to work for the company.

In 2010, I was invited to attend the Seoul Book fair and Martyn (and his partner Annie) were also part of the same group. The three of us spent a relaxing five days being escorted around Seoul bookstores, publishers and the conference itself, and we had many interesting and fun meals together with our hosts. 

Martyn had a great enthusiasm for publishing and opinions on many things. I didn't necessarily agree with him all the time but he was consistently supportive of my work here. And I appreciate and will miss that.

RIP.

Monday, December 14, 2020

Newsletter - Happy Holidays. It's The End of 2020!

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Happy Holidays and Best Wishes for the New Year

from
Information Media Partners


Many of us will be glad to see the back of 2020. And while politics, personal freedom, racial inequality and public health issues have dominated our thoughts this year, the events of the past twelve months have also highlighted some critical business issues which will continue to play out in 2021 and beyond. For example, how will work and office life realign as offices reopen? Will transformation forced on businesses due to COVID continue to accelerate as customer interactions migrate online? And will the economy recover rapidly next year or meander as the COVID migraine lingers?

At our firm we expect to continue to help clients address these strategic questions while also helping them to execute in more direct, tactical ways. During 2020, we counseled our clients to evaluate and experiment with new business models, make technology enhancements and improve employee relations, all of which will position these companies to emerge better prepared and stronger over the next few years.

At Information Media Partners we are always happy to take a call (908 938 4889) or email to discuss your particular challenge.

Check out the following business articles of interest:
Few people will miss BookExpo now that Reed Elsevier has closed the BookExpo and BookCon conferences. BookExpo has been on deaths door for 10 years.
A weekly magazine for media and publishing buffs
Apparently the one thing which unifies Goodreads users is that they all agree that the user experience sucks.
 
Consulting: Profiles of some of our consulting work
Publishing & Industry News Clips
Information Media Partners Consulting
Where we have been spending our consulting time recently...
  • We conducted a finance function re-engineering review and defined options for new software and process improvement
  • A prominent association publisher asked us to help redefine their fulfillment and distribution options
  • A large library association asked us to facilitate a series of meetings with a key retail partner
You can review more of our project citations by following this link

The coming year will be challenging and you may need help: Please get in touch to discuss a project and/or your long-term management needs.  (michael.cairns@infomediapartners.com)
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