Wow! A blow against publishers. Now, most know I'm both traditional and self-published, so I'm not totally on the side of the gate-keepers. However, this latest capitulation is troubling.

Here's the gist of the lawsuit as told in the New York Times article. 

In a suit filed last April, the Justice Department accused five major publishers and Apple of conspiring in e-mails and over lavish dinners to set the price of e-books at an artificially high level. The publishers had moved from a wholesale pricing model, which allowed retailers to charge what they wanted, to a system that allowed publishers to begin setting their own e-book prices, a model known as “agency pricing.”

The defendants said they were trying to protect themselves from Amazon, which was pricing e-books books below their actual cost, putting financial pressure on the publishers that they said would drive them out of business over time.

The “two-year cooling-off period” mentioned in the article means that MacMillian and others publishers can’t restrict retailers like Amazon from setting e-book prices. In other words, they no longer have control over what their e-books sell for.  Amazon can now determine what the product's price will be.

This deal is not good for anyone, and here's why:  At the heart of business is the freedom to set prices for products.  Yes, retailers can and do offer sales on merchandise they purchase at whole sale prices. However, a business forced to give up the right to set their prices is hazardous to all.

The problem with Amazon, as discussed before, is they state in their terms that they are free to change the terms anytime they want. So Amazon is free to do what they want with prices for the next 2 years while the publishers aren't.

Macmillan will immediately lift restrictions it has imposed on discounting and other promotions by e-book retailers and will be prohibited until December 2014 from entering into new agreements with similar restrictions. The publisher must also provide the government advance notification to the of any e-book ventures it plans to undertake jointly with other publishers.

Take note of the bold underlined portion from the NYT article. Notify the government!!

According to these restrictions, the one who most benefits is Amazon. Of course, the DOJ claims consumers are the ultimate beneficiary of sales and lower prices. But what about healthy competition if MacMillion and the other publishers must report to the government?  Amazon is already controlling indie authors.  With KDP Select, Amazon requires participating authors to sell exclusively on Kindle - and not even the author's own website! The big publishing houses where the last line of defense in the pricing war - a healthy battle in my mind to generate competition in our supposed "free-market" society. Only Apple is left for the DOJ to corral.

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