By Sarah Flynn
One of the publishing industry’s most unavoidable news pieces of 2012 is a case so large that the government is involved. In April, the Department of Justice sued Apple and five of book publishing’s “Big Six” for collusion over price-fixing on ebooks, alleging that Apple and the publishers worked together to create pricing structures that significantly raised the price of ebooks in Apple’s iBookstore. The case has been noteworthy for many reasons, but most of all because it’s not simply being reported in publishing trade publications. It’s hit The New York Times, MSNBC, and the ears of consumers everywhere. (The week the lawsuit hit, a colleague heard a TV segment wherein Hachette was pronounced “Hatchet”, a mistake indicative of how rarely considered book publishers are in mass media.)
This case is far from over. In fact, Apple recently sent a five-page memo with a fierce argument against the DOJ’s proposed settlement and calling it “fundamentally unfair, unlawful, and unprecedented.” On September 6th, three of the five publishers officially struck a deal with with the DOJ, agreeing to terminate their existing contracts with Apple and refrain from entering into any other ebook retail contracts that allow them control over pricing for at least two years. If you’re in publishing or in tech, you’re probably still following along with an eagle eye. Otherwise, why should it stay on anyone’s radar?
The answer involves a problem of perception that is deeply rooted in public behavior. To an average consumer, the Department of Justice getting involved in media pricing signals a real problem. If you skimmed the news that week in April, you may have been left with a simple, distinct impression that publishers are trying to make a few extra bucks, and the Department of Justice was acting on behalf of the people. It’s a line of thinking that’s already extremely familiar to anyone who’s worked in the music industry, where “the label” has long had a bizarre public perception of being “the man.” It’s the place where, as a consumer, you start to feel as though you’re doing something morally correct by paying less.
Here’s what’s on the other side of the “Apple vs the DOJ” lawsuit: a little online retailer by the name of Amazon.com. Amazon, as any consumer knows, is usually the cheapest place to buy anything. In fact, it has only one clear business strategy, and that is to undercut the prices of other retailers and make it easier for people to stay in their ecosystem –and thus, buy more. Features they’ve unrolled in the past – such as Amazon Prime and the Kindle Fire– are loss leaders for the brand. When Amazon launched their “Daily Deal” music program in 2009, people slowly but surely began to check Amazon before other retailers – such as iTunes – on Tuesday mornings, knowing that the biggest release of the week was likely to cost them only $3.99. Now, Amazon offers a similar deal on ebooks, and they have already begun a campaign to lower ebook pricing across the board following the Department of Justice ruling. The strongest criticism of the DOJ ruling is, in fact, that it reads as though it were written by Amazon itself.
What does it really mean that the agency model is threatened and that ebook pricing may now become “more competitive”? I’m certain that the party line here – for the DOJ and for Amazon – is that with more “fairly priced” ebooks, more people will make the purchase, and revenue will increase. This kind of thinking is a huge problem, and not just because publishers should have the power to choose their pricing, or because the “agency model” is not inherently illegal (the music industry has held the same agency model with Apple for years). These are both real problems, but the heart of the matter is that once again, Amazon has full license to change consumer expectations.
You see, when Amazon unveiled their $3.99 Daily Deal program, they succeeded in ensuring that more consumers flocked to their site to see which releases they could purchase. However, they struggled – and, I believe, continue to struggle – customer acquisition outside of those sale prices. They can argue that people are buying more books and more music because prices are lower, but those same people are not coming back to buy full-priced products. They only want the deals. They expect, in fact, that those albums and those books are going to cost that lower price. Amazon is – and strives to be – a leader in consumer perception.
As writers and musicians and artists and people who Make Things For a Living, we’re forced to recognize that this is a larger problem than the issue of piracy. There will always be people who steal content and don’t pay for it. Changing those attitudes is a waste of our time. But legally paying for books, for music, for art, and getting it for dirt cheap? This is the biggest problem that we all face as creators, and if we don’t collectively start thinking about how to educate people on the real value of art, we are fucked. An ebook or a digital album may forgo expensive manufacturing costs, but what you are paying for at the heart of things remains the same: you are paying for a work of art, and if that work of art is not worth at least ten bucks to a consumer, we are all going to have serious problems.
It doesn’t matter, conceptually speaking, how much money an artist sees from each purchase. This isn’t about anyone’s shitty label deal, or publisher ties, or about the merits of self-releasing content versus signing with a distribution and marketing solution. Those are problems tangled up in the bigger issue, just as the DOJ suit is a problem tangled up in bigger issues.
I have a general worry that, as so-called “content creators”, most of us are so focused on what we’re being paid on the front end that we, too, are starting to lose sight of what happens at the end. We’re inventing creative – and valuable – ways of funding our projects, from Kickstarter to Pledge Music, to self-publishing tools like iBooks Author. We are considering the possibility that signing a contract isn’t in our best interests. We’re working very hard on making sure people understand that the creation process costs money, but are we really doing anything meaningful to make sure they understand that good art can be worth more than $3.99?
That our government has become part of this dialog – and that their ruling sides in favor of the Amazon model – is scary. That this, above all publishing news, is what is being reported in the NY Times and on MSNBC is yet another major step back in framing consumer opinions about pricing, and about publishers, and helps consumers forget the person at the very beginning of the chain. We make things up and we write them down, and this is important. It’s time we had a more serious conversation about making sure that everyone else knows that.