Skip to main content

A dark day for the future of books

By Mark Coker, Special to CNN
updated 10:01 PM EDT, Sun April 15, 2012
People looking at an e-book reader app on the Apple iPad.
People looking at an e-book reader app on the Apple iPad.
STORY HIGHLIGHTS
  • The Justice Department filed an antitrust lawsuit against Apple and five publishers
  • Coker: Government's intention to protect consumers could end up harming consumers
  • He says threat to the agency pricing model hurts retailers, authors and publishers
  • Coker: Pricing decisions should rest with authors and publishers rather than retailers

Editor's note: Mark Coker is the founder of Smashwords, an e-book publishing and distribution company. Follow him on Twitter.

(CNN) -- Wednesday was a dark day for the future of books.

The Department of Justice charged Apple and five large book publishers with conspiring to raise e-book prices. Three of the five publishers quickly capitulated rather than face the risk and expense of a protracted legal battle.

Much of the case revolves around the decision of five of the largest six publishers to simultaneously adopt the agency pricing model immediately before Apple launched the iPad and iBookstore in April 2010. At that time, Amazon commanded about 90% of the e-book market. Amazon priced many books at $9.99 -- which was below the cost at which Amazon was paying the publisher -- in an effort to drive e-book adoption among consumers and capture market share.

Mark Coker
Mark Coker

Publishers balked at Amazon's strategy out of concern that low prices could cannibalize their print sales, set unrealistic expectations in the minds of consumers, and lead Amazon to demand e-book price concessions from publishers.

When Steve Jobs offered Apple's proposed agency pricing model to publishers, large publishers welcomed Apple's market entry because they wanted a strong counterbalance to Amazon's market dominance. Under the agency model, publishers set the prices and retailers don't discount.

Critics of the agency model viewed it as an attempt to raise e-book prices. They believe retailer discounting serves an important public service. I see it differently.

While I'm a big fan of discounting and price competition, I think the responsibility for pricing decisions should rest with authors and publishers. If they price fairly and competitively, customers will reward them. If they price too high, customers will migrate to lower-cost books.

Most important, the agency pricing model levels the playing field for e-book retailers. It prevents deep-pocketed retailers or device makers from engaging in predatory price wars to harm competitors or discourage formation of new competitors. It would enable the marketplace to support more retailers, which would mean more bookstores promoting the joys of reading to more readers. And it would force retailers to compete on customer experience rather than price. Customers are best served when we have a vibrant e-book retailing ecosystem.

For authors and publishers, the agency model provides them with greater control over the timing of their promotions and higher per-unit earnings of 70% of the list price as opposed to 50% for the conventional wholesale pricing model. It allows publishers to price their books lower -- to the benefit of customers -- and yet earn the same or greater profit.

There's already indication that some publishers and authors who use the agency model are dropping prices as they compete for customers. At my company, where we distribute over 100,000 e-books on behalf of 40,000 self-published authors and small publishers, the average price of our books is about $3.41, a drop of 25% over the last 18 months.

If the Justice Department prevails with its antitrust lawsuit, the decision might have unintended negative consequences for those who write, publish, sell and enjoy e-books. The government's intention to protect consumers could end up backfiring on consumers by harming retailers, authors and publishers.

It could inadvertently hasten the downfall of the world's largest book publishers by forcing them to comply with onerous conditions outlined in the Justice Department's Competitive Impact Statement. These conditions -- including restrictions on collaboration with fellow publishers and increased federal auditing and reporting requirements -- will increase publisher expenses and slow their business decisions at the very time when publishers need to become faster, nimbler competitors.

I'm not normally a defender of big publishers. They price their books too high, while most of their authors earn poverty wages. They take 12 to 18 months to publish a book -- an anachronism in today's world of instant self-publishing. They often reject talented writers who don't offer the celebrity platforms of more marketable "authors" such as Snooki or Justin Bieber.

Despite the mistakes of the largest publishers, I don't want them to go away. I want them to thrive by becoming more responsive to their customers and authors.

Unfortunately, the self-inflicted wounds of large publishers have already begun to render their businesses less relevant to the future of publishing. Authors are beginning to turn their backs on traditional publishers in favor of self-publishing. Authors are now hiring their own editors, cover designers and marketing consultants. By assuming responsibility for the roles once played by publishers, authors are earning up to 70% of the list price as their e-book royalty versus the 17.5% paid by traditional publishers. They're publishing low-cost e-books that are hitting all the bestseller lists. The all-important access to distribution -- once exclusively controlled by publishers -- is now available to all self-publishing authors.

The next time you see an overpriced e-book, blame the publisher but not the agency pricing model.

Follow us on Twitter @CNNOpinion

Join us on Facebook/CNNOpinion

The opinions expressed in this commentary are solely those of Mark Coker.

ADVERTISEMENT
Part of complete coverage on
updated 12:50 PM EDT, Tue July 29, 2014
LZ Granderson says the cyber-standing ovation given to Robyn Lawley, an Australian plus-size model who posted unretouched photos, shows how crazy Americans' notions of beauty have become
updated 7:56 AM EDT, Mon July 28, 2014
A crisis like the Gaza conflict or the surge of immigrants can be an opportunity for a lame duck president, writes Julian Zelizer
updated 2:22 PM EDT, Sat July 26, 2014
Carol Costello says the league's light punishment sent the message that it didn't consider domestic violence a serious offense
updated 8:51 AM EDT, Mon July 28, 2014
Danny Cevallos says saggy pants aren't the kind of fashion statement protected by the First Amendment.
updated 2:52 PM EDT, Mon July 28, 2014
Margaret Hoover says some GOP legislators support a state's right to allow same-sex marriage and the right of churches, synagogues and mosques not to perform the sacrament
updated 2:31 PM EDT, Mon July 28, 2014
Megan McCracken and Jennifer Moreno say it's unacceptable for states to experiment with new execution procedures without full disclosure
updated 2:50 PM EDT, Mon July 28, 2014
Priya Satia says today's drones for bombardment and surveillance have their roots in the deadly history of Western aerial control of the Middle East that began in World War One
updated 12:35 PM EDT, Mon July 28, 2014
Jeff Yang says it's great to see the comics make an effort at diversifying the halls of justice
updated 11:55 AM EDT, Sat July 26, 2014
Rick Francona says the reported artillery firing from Russian territory is a sign Vladimir Putin has escalated the Ukraine battle
updated 2:22 PM EDT, Sun July 27, 2014
Paul Callan says the fact that appeals delay the death penalty doesn't make it an unconstitutional punishment, as one judge ruled
updated 6:25 PM EDT, Thu July 24, 2014
Pilot Robert Mark says it's been tough for the airline industry after the plane crashes in Ukraine and Taiwan.
updated 11:10 AM EDT, Fri July 25, 2014
Jennifer DeVoe laments efforts to end subsidies that allow working Americans to finally afford health insurance.
updated 11:33 AM EDT, Sat July 26, 2014
Ruti Teitel says assigning a costly and humiliating "collective guilt" to Germany after WWI would end up teaching the global community hard lessons about who to blame for war crimes
updated 8:45 AM EDT, Fri July 25, 2014
John Sutter responds to criticism of his column on the ethics of eating dog.
updated 9:02 AM EDT, Fri July 25, 2014
Frida Ghitis says it's tempting to ignore North Korea's antics as bluster but the cruel regime is dangerous.
updated 2:50 PM EDT, Fri July 25, 2014
To the question "Is Putin evil?" Alexander Motyl says he is evil enough for condemnation by people of good will.
updated 2:03 PM EDT, Thu July 24, 2014
Laurie Garrett: Poor governance, ignorance, hysteria worsen the Ebola epidemic in Sierra Leone, Guinea, Liberia.
updated 9:49 AM EDT, Thu July 24, 2014
Patrick Cronin and Kelley Sayler say the world is seeing nonstate groups such as Ukraine's rebels wielding more power to do harm than ever before
updated 6:05 PM EDT, Wed July 23, 2014
Ukraine ambassador Olexander Motsyk places blame for the MH17 tragedy squarely at the door of Russia
updated 7:42 AM EDT, Thu July 24, 2014
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
updated 2:53 PM EDT, Thu July 24, 2014
Les Abend says, with rockets flying over Tel Aviv and missiles shooting down MH17 over Ukraine, a commercial pilot's pre-flight checklist just got much more complicated
updated 9:17 AM EDT, Thu July 24, 2014
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
updated 12:37 PM EDT, Thu July 24, 2014
Gerard Jacobs says grieving families and nations need the comfort of traditional rituals to honor the remains of loved ones, particularly in a mass disaster
updated 10:13 AM EDT, Thu July 24, 2014
The idea is difficult to stomach, but John Sutter writes that eating dog is morally equivalent to eating pig, another intelligent animal. If Americans oppose it, they should question their own eating habits as well.
updated 12:30 PM EDT, Wed July 23, 2014
Bill van Esveld says under the laws of war, civilians who do not join in the fight are always to be protected. An International Criminal Court could rule on whether Israeli airstrikes and Hamas rocketing are war crimes.
updated 10:08 AM EDT, Wed July 23, 2014
Gordon Brown says the kidnapped Nigerian girls have been in captivity for 100 days, but the world has not forgotten them.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT