Rare Book Monthly

Articles - October - 2012 Issue

E-Books: A Tentative Settlement, a Challenge, and Some Lower Prices

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Once again $9.99 e-books can be found on Amazon.

The battle over e-book pricing that has ensnared Amazon, Apple, five book publishers, and the U.S. Department of Justice, took some more strange turns over the past few weeks. Some parties have settled, some fight on, some even wish to overturn the settlements. Meanwhile, the effect of some of the settlements has already begun to show up as Amazon lowered the price of some electronic books from $12.99 and $14.99 to $9.99, prices they set before the whole controversy erupted.

To briefly recap what you may already know, Amazon pioneered the e-book business, selling electronic books regularly in the $9.99 price range. That is substantially lower than printed copies, and for Amazon, left little room for profit. At times they sold for a loss. That was fine with Amazon. Their strategy was long term. They wanted to sell lots of their Kindle e-book readers, and dominate the electronic book field. The strategy appeared to be working as they controlled around 90% of the market.

However, book publishers, though getting their desired price from Amazon, were still uneasy. They saw cheap e-books as potentially eroding more expensive paper book sales, and feared the long term consequences of Amazon dominating the retail market. They wanted e-book prices to rise, so consumers would not become accustomed to low prices, and other retailers would be willing to enter the market.

Into this mix came Apple. Apple wanted to sell e-books too, but not for low margins. Apple likes to make lots of money now. So Apple agreed to sell e-books, provided they could charge more, yet still not be embarrassed by Amazon undercutting their prices. Apple and the book publishers had something in common – a desire to see e-book prices rise. So, five publishers and Apple agreed to contracts. These contracts specified that the publishers would now use what is known as the “agency model” to sell books. Instead of selling books at a wholesale price, and allowing retailers to decide what price they would charge, the publishers set the retail prices, and then charged a percentage of that price to the retailers. In other words, the model assured that all retailers would sell books for the same price. With Amazon no longer being able to sell for less, Apple, and others, felt free to enter the e-book retailing business.

The U.S. Department of Justice cried “foul.” This is price-fixing, they said. The D.O.J. sued. Three of the publishers blinked. HarperCollins, Hachette, and Simon & Schuster agreed to discontinue the agency model. Penguin, Macmillan, and Apple did not. Apple not only did not agree to the settlement, but is challenging the right of the others to agree to the settlement. After all, they have entered into an agreement with the publishers that provides for agency model pricing, so, they say, the publishers have no right to agree to a settlement that infringes on their contracts. If their contracts are illegal, then a court of law must determine so, not some private parties agreeing to abridge Apple's contracts. Apple seeks to strike down the settlements and uphold their “agency” contracts.

That has not stopped Amazon from acting quickly. Already, we are seeing $9.99 e-books return to the Amazon website where new agreements have been reached with the settling publishers. How do consumers feel? Apple and others have argued that the agency model is good for consumers because it enables more vendors to compete. Usually, consumers like competition. However, where you are selling a commodity item – all units are the same, as is the case with e-books – my guess is that consumers prefer to have one vendor who sells for less, than a whole mess of vendors, all charging the same higher price, from which to choose.

Rare Book Monthly

  • <b>Bonhams: Results from Fine Books and Manuscripts on March 9, 2018</b>
    <b>Bonhams, Mar. 9:</b> BEETHOVEN, LUDWIG VAN. Autograph Manuscript sketch-leaf part of the score of the Scottish Songs, "Sunset" Op. 108 no 2. [Vienna, February 1818]. Inscribed by Alexander Wheelock Thayer. SOLD for $131,250
    <b>Bonhams, Mar. 9:</b> Violin belonging to Albert Einstein, presented to him by Oscar H. Steger, 1933. SOLD for $516,500
    <b>Bonhams, Mar. 9:</b> EINSTEIN, ALBERT. Autograph Letter Signed ("Papa") to his son Hans Albert, discussing his involvement with the atomic bomb, September 2, 1945. SOLD for $106,250
    <b>Bonhams: Results from Fine Books and Manuscripts on March 9, 2018</b>
    <b>Bonhams, Mar. 9:</b> HAMILTON, ALEXANDER. Autograph Letter Signed, to Baron von Steuben, with extensive notes of Von Steuben's aide Benjamin Walker, June 12, 1780. SOLD for $16,250
    <b>Bonhams, Mar. 9:</b> NEWTON, ISAAC. Autograph Manuscript in Latin, being detailed instructions on making the philosopher's stone. 8 pp. 1790s. SOLD for $275,000
    <b>Bonhams, Mar. 9:</b> 1869 Inauguration Bible of President Ulysses S. Grant. SOLD for $118,750
  • <b>Doyle, April 25:</b> E.H. SHEPARD, Original drawing for A.A. Milne’s The House at Pooh Corner.<br>$40,000-60,000
    <b>Doyle, April 25:</b> BERNARD RATZER, Plan of the City of New York in North America, surveyed in the years 1766 & 1767. $80,000-100,000
    <b>Doyle, April 25:</b> THOMAS JEFFERSON, Autograph letter signed comparing Logan, Tecumseh, and Little Turtle to the Spartans. Monticello: 15 February 1821. $14,000-18,000
    <b>Doyle, April 25:</b> JOHN C. FREMONT, Narrative of the Exploring Expedition to the Rocky Mountains, in the Year 1842.. Abridged edition, the only one containing the folding map From the Sporting Library of Arnold “Jake” Johnson. $3,000-5,000
    <b>Doyle, April 25:</b> ZANE GREY, Album containing 94 large format photographs of Grey and party at Catalina Island, Arizona, and fishing in the Pacific. From the Sporting Library of Arnold “Jake” Johnson. $5,000-$8,000
    <b>Doyle, April 25:</b> WILLIAM COMBE, A History of Madeira ... illustrative of the Costumes, Manners, and Occupations of the Inhabitants. produced by Ackermann in 1821; From the Sporting Library of Jake Johnson. $2,000-$3,000
    <b>Doyle, April 25:</b> ERIC TAVERNER, Salmon Fishing... One of 275 copies signed by Taverner, published in 1931,From the Sporting Library of Jake Johnson. $2,000-$3,000
    <b>Doyle, April 25:</b> JOHN WHITEHEAD, Exploration of Mount Kina Balu, North Borneo. Whitehead reached the high point of Kinabalu in 1888. Part of a major group of travel books from the Sporting Library of Jake Johnson. $2,000-$3,000
    <b>Doyle, April 25:</b> JOHN LONG, Voyages and Travels of an Indian Interpreter and Trader, describing the Manners and Customs of the North American Indians... The first edition of 1791. $3,000-$5,000
    <b>Doyle, April 25:</b> SAMUEL BECKETT, Stirrings Still. This, Beckett’s last work of fiction with original lithographs by Le Brocquy, limited to 200 copies signed by the author and the artist. From the Estate of Howard Kaminsky.. $1,500-$2,500
  • <b>19th Century Shop:</b> Charles Darwin on sexuality and the transmission of hereditary characteristics: Autograph Letter Signed to Lawson Tait. Down, 17 January [1877].
    <b>19th Century Shop:</b> MILTON, JOHN. <i>Paradise Lost. A Poem written in ten books.</i> London: 1667. A very rare example with the contemporary binding untouched and with a 1667 title page.
    <b>19th Century Shop:</b> Hamilton secures the ratification of the Constitution: <i>The Debates and Proceedings of the Convention of the State of New-York, assembled at Poughkeespsie, on the 17th June, 1788.</i>
    <b>19th Century Shop:</b> The social contract “Man is born free, and everywhere he is in chains”: ROUSSEAU, JEAN-JACQUES. <i>Principes du Droit Politique [Du Contract Social]</i>. Amsterdam: Michel Rey, 1762
    <b>19th Century Shop:</b> “The first English textbook on geometrical land-measurement and surveying”: BENESE, RICHARD. <i>This Boke Sheweth the Maner of Measurynge All Maner of Lande…</i>
  • <b>Swann Auction Galleries Apr 26:</b> Jacques-Émile Ruhlmann, wallpaper sample book, circa 1919. $15,000 to $25,000.
    <b>Swann Auction Galleries Apr 26:</b> Archive from a late office of the Breuer & Smith architectural team, New York, 1960-70s. $3,500 to $5,000.
    <b>Swann Auction Galleries Apr 26:</b> William Morris, <i>The Story of the Glittering Plain or the Land of Living Men,</i> illustrated by Walter Crane, Kelmscott Press, Hammersmith, 1894. $2,500 to $3,500.
    <b>Swann Auction Galleries Apr 26:</b> Gustave Doré, <i>La Sainte Bible selon la Vulgate,</i> Tours, 1866. $15,000 to $25,000.
    <b>Swann Auction Galleries Apr 26:</b> Gustav Klimt & Max Eisler, <i>Eine Nachlese,</i> complete set, Vienna, 1931. $15,000 to $25,000.
    <b>Swann Auction Galleries Apr 26:</b><br>Eric Allatini & Gerda Wegener, <i>Sur Talons Rouges,</i> with original watercolor by Wegener, Paris, 1929. $5,000 to $7,500.
    <b>Swann Auction Galleries Apr 26:</b><br>C.P. Cavafy, <i>Fourteen Poems,</i> illustrated & signed by David Hockney, London, 1966. $5,000 to $7,500.
    <b>Swann Auction Galleries Apr 26:</b> Jean Midolle, <i>Spécimen des Écritures Modernes...</i>, Strasbourg, 1834-35. $3,000 to $4,000.
    <b>Swann Auction Galleries Apr 26:</b><br>E.A. Seguy, <i>Floréal: Dessins & Coloris Nouveaux,</i> Paris, 1925. $3,000 to $4,000.

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