Let’s Begin at the Beginning
And have a look at handbags.
The last time I thought about handbags and ebooks was four months ago. But it was a totally different context and yes, this bag holds an iPad quite nicely. (It seems they don’t make the black one anymore, a fact I will flaunt at the next conference where I see @booksquare, @angelajames and @jane_l.)
I was researching what other consumer businesses besides ebook publishing allow manufacturers to set the prices of their products to retailers and so far have come up with the following:
- Apple products – Apple will not ship to retailers if those retailers discount the prices of their products
- Milk in New York and New Jersey – a dairy board sets milk prices; thank your lobbyist here
There are a couple of factors at play here. One is demand. If the product is in high demand, then the manufacturer can control the pricing by refusing to ship products to retailers who discount – the retailer simply has no choice but to toe the line. However, if the product is not in high demand, then the retailer is more likely to discount it (in order to move it) and probably won’t care about threats from the manufacturer. This puts the big publishers in the catbird seat, as they tend to have the largest percentage of bestsellers. That said, if Amazon isn’t selling “50 Shades of Grey”, it’s not going to kill them – they can just sell a couple of lawnmowers instead.
The other factor is price transparency. Online retailing allows for this, obviously, in a much better way than physical retailing. This is why I think accusations of collusion are a bit weird – you can’t collude if everybody knows what’s going on. If one publisher agrees to sell ebooks at $12.99, it does not take a rocket scientist to go to the iBookstore or anywhere else to see that they, too, can sell ebooks at this price. If two publishers independently agree to it, other publishers will follow suit because they have people on staff who are paid to keep track of what the competition is doing. They’re called the Marketing Department.
A bunch of book publishing CEOs meeting in the Chef’s Wine Cellar at Picholine was probably ill-advised. Doing it twice was…twice as ill-advised. But for the DOJ to pinpoint those meals as the source of more-expensive ebooks is kind of cloak-and-dagger ridiculous. You don’t have to meet in the basements of trendy restaurants to level-set pricing. You just have to look online.