A Year in Publishing: Secret Meetings and the Powerful Threat of Digital

Wharton University of Pennsylvania - The Week in Review

December 20, 2012

“Publishing is dead.” Reputable news sources like USA Today, The Huffington Post and The Guardian have all printed stories with this headline. And everyone points to digital innovation as the culprit. Are eReaders the funeral song of publishing?

“t is always painful to see a familiar business model go away, but the publishing industry has no choice.”

The iPad, the Kindle, the Nook and the Sony Reader, the strongest players in the eReader market, are four of the biggest threats to the print publishing industry. Digital books, otherwise known as eBooks, make up an increasing percentage of overall book sales in the U.S. — 8.3% in 2011, up from 3.2% the previous year, according to industry reports from IBISWorld, a market research firm. Publishing houses are scrambling to determine how to cope with the rise in digital reading. With everyone reading on a screen, how do publishers make a profit?

Losing Control
Once upon a time, when books were printed with ink and on paper, publishing houses charged an average of $26 for a crisp, new hardcover. Amazon.com, the world’s largest online retailer, prices most of its new eBook releases at $9.99, according to The New York Times. With such competition, publishing houses can no longer control book pricing as they once did.
Apple, resenting Amazon’s reign over the eBook market, in the past few years arranged secret meetings with the major players in publishing, known as the Agency Five — Hachette, Penguin, Simon & Schuster, Macmillan and HarperCollins — to disrupt the online retailer’s power. These meetings were used as evidence in a lawsuit brought against these corporations in May 2012 when they were charged with conspiring to fix prices, which is a violation of U.S. anti-trust law.
Anti-trust laws protect competitive markets and prevent monopolies from gaining power over an industry by making it illegal for companies to collude or fix prices. According to a release from the attorney general of Connecticut, George Jepson, Apple and the Agency Five “conspired and agreed to increase retail eBook prices for all consumers” and “agreed to eliminate eBook retail price competition between eBook outlets, such that retail prices to consumers would be the same regardless of the outlet patronized by the consumer.”

Full article.

Thanks to Gordon Dryden, commentator and educational publisher, for bringing this story to my attention.