The Justice Department is hailing a judge’s finding yesterday that Apple and publishers conspired to fix e-book prices as a victory for consumers, who are paying less since the alleged cabal was thwarted. But readers shouldn’t rest easy. More than anything, Apple’s defeat in court reinforces the key fact of bookselling in the 21st century: Amazon has more power than anyone else to dictate what Americans pay for books.
In a recent piece, The New York Times highlighted authors whose print books “>were getting more expensive on Amazon to insinuate that the company was steadily pushing prices up.
“With Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon,” reporter David Streitfeld wrote. “And for some books, Amazon is, in effect, beginning to raise prices.”
Amazon denied the claim, saying the company was in fact lowering prices. And Streitfeld acknowledged the difficulty of getting any comprehensive data to confirm the existence of a trend. Whether Amazon is at this moment pushing prices up or down, however, is not all that important. What matters is that Amazon could start curbing its storied discounts on books, and no one else — not publishers, not authors, not other booksellers — could do much to stop them.
“Amazon is by far the most powerful force for price-setting in the book business,” says Mike Shatzkin, a publishing veteran who now works as a consultant focused on the industry’s digital future. “The publisher’s price doesn’t mean nearly as much as Amazon’s price—particularly in this day and age when people walk into the bookstore with Amazon’s app on their phone.”
While exact figures on Amazon’s overall share of the U.S. book-selling market are hard to come by (Strietfeld’s piece puts it at about one-quarter of print books sold), the fortunes of its leading competitor are telling. Barnes & Noble’s CEO, William Lynch, resigned this week in a C-suite reshuffling that does not reflect a business confident about its future. Nor does the recent news that Barnes & Noble would stop making its color Nook on its own, the latest sign that e-readers aren’t likely the company’s salvation.
Meanwhile, the government’s success in the e-book price-fixing case demonstrates that neither the world’s largest technology company nor some of the country’s biggest publishers can dent Amazon’s dominance in book pricing, either.
Yes, the case would appear to be a victory for the rule of law and for consumers, at least in the short term. A side-by-side glance at the iBook and Kindle stores reveals competition in the e-book marketplace. Yet the whole purpose of the alleged price-fixing in the first place was to undermine Amazon’s until-then successful effort to convince consumers that $9.99 was the default price for an e-book, much as Apple successfully set 99 cents as the standard price of a song. Amazon was setting prices for e-books then. And nothing has changed since to keep them from undercutting all other comers on prices for e-books now.
As a result, e-book competition could fade much as print book competition already has. Since books are hardly its main business, Apple could weather a face-off with Amazon, which would keep e-book prices down. But that same race to the bottom could sink Barnes & Noble’s effort to stay in the e-book game, leaving its business to rely solely on print — a dubious proposition. If Barnes & Noble does disappear, Amazon would lose the last competitor big enough to exert downward pressure on Amazon’s print book prices.
“It would be totally logical for the prices of books to go up as the number of vendors goes down,” says Shatzkin. “I feel that is sort of inexorable.”
A rise in prices and a drop in sales might just speed the day when the print book become an artifact, a kind of luxury version of literature prized for its beauty as an object but not taken seriously as a vehicle for the everyday business of reading. If that happens, the idea of the book itself could start to fade as a meaningful concept, much as the album in the era of digital music already has. Killing off old media and making way for the new is one thing technology does well. The death throes of the old media are typically viewed with alarm at first, followed by an acceptance of the seeming inevitability of their passing.
But the book industry isn’t prepared to let go gently. And it’s especially not pleased with the prospect of one company alone wielding the axe.
“The Amazon pod intelligence is a viciously savvy thing,” writes Alex Shephard, director of digital media at Melville House, a publisher that’s been particularly outspoken about Amazon’s dominance, “and the mysterious algorithm governing the price increases will likely remain a hard to trace but steadily looming phenomenon, incurring steadily increasing chaos and demeaning the ultimate value of the object known as the book.”
