Opening The Door For Amazon

Publishers, authors, and countless other interested parties all filed statement with the Department of Justice when the nation's lawyers were examining the issue of collusion in e-book pricing.

The Feds believe that Apple and various publishers were in on a grand scheme to set the price of e-books, and that cannot be allowed to stand. It is commonly referred to as the "agency model", which was intended to keep Amazon from cornering the e-book market.

Independent publishers, along with several of the major houses, found that the agency model helped maintain competition among them, and kept Amazon at bay. The last thing they want is for Amazon to be the only game in town, setting the price for them, and therefore controlling how much profit they make.

Amazon publishes now, through its own imprint. Of course they'd want to maximize their own profits, and to do so would require driving their competitors out of business.

Authors fear that Amazon would come to control digital book pricing, in which case, they'd be in no position to negotiate a better deal for themselves. The author's royalties could be whatever Amazon wished them to be, and if that was mere pennies, well, go somewhere else....but there wouldn't be anywhere else to go to.

There are remedies in the law for victims of predatory pricing, but it does a company little good after it's been driven out of business.

That's why the agency model was created. By the time the D of J would act, harm would have been done and once a publishing house has failed or abandoned digital publishing to Amazon, it isn't coming back.

So what good would it do Grove/Atlantic or Chronicle Books if the Feds later decreed that Amazon was a monopoly and it had to be broken up? Jeff Bezos would still make out, and the competition would still be gone.

All those words have had no effect. The Department of Justice has decreed that the agency model violates the law and those participating in the scheme must stop and re-work their contracts. The publishers have several rings to jump through to show that they are behaving, in spite of all their assurances that all the D of J has done is open the door to Amazon's development of a monopoly.

The end result of the lawsuit will give Amazon more power in the marketplace, curtail competition, and harm both authors and the book-buying public. When that happens, the lawyers will come back and tinker, create more problems, and then tinker some more.

What's next?

The lawyers supporting the agency model can dither, file more motions, and generally stall for time, knowing that the election in November could bring in a new mindset at the Justice Department. There's that element of uncertainty that could drag out a final solution.

So are any of the defendants in the suit donating big to the Romney campaign?