Readerlink has sent its own letter to the Department of Justice giving a wholesaler’s perspective on the proposed agreement with HarperCollins, Hachette and Simon & Schuster. According to Readerlink, the settlement, by encouraging a return to predatory pricing, “sets the stage for the systematic elimination of competition by Amazon.”
Readerlink, the new name for the former Levy Home Entertainment, distributes print books to over 24,000 retailers, including most of the major mass merchandisers and warehouse clubs. Before the agency model was introduced, Amazon’s practice of selling e-books below cost both discouraged retailers from carry print books and from entering the e-book market themselves, Readerlink said. Due to the vast difference in price between print books and e-books, many of Readerlink’s retail partners reduced or ceased offering print books in their stores, a move that reduced consumers’ access to books, particularly among readers who can’t afford digital reading devices. (Readerlink noted that many of it retailers, including Wal-Mart, Target, and Costco, “are well known as champions of the cosumer and torchbearers for low pricing.”)
In taking issue with the government’s contention that the agency model led to an increase in all e-book prices, Readerlink maintained that the only prices that actually rose were those on bestsellers that had been “artificially” lowered by Amazon’s below-cost pricing.
The approval of the settlement, Readerlink argued, will “lead to the death of many print book sellers who provide the only way to buy books for an abundance of the American book-consuming public.” If the government protects Amazon’s ability to engage in predatory pricing it will “eliminate less financially strong or diversified competitors,and kill off the only other option for the reading public, the retail sale of print books in brick-and-mortar retail stores. And, then, there will be none; no more competition and on other options.”
According to Readerlink, evidence of companies raising prices after killing off retail rivals has been clear in the case of Netflix, which it said raised prices 60% when Blockbuster and other video stores closed, and when iTunes raised prices on popular music tracks by 30% following the closure of Musicland and other music outlets. The agency model, by allowing for consistent pricing of e-books, will permit other e-book platforms to grow, which will increase overall competition in the sale and consumption of e-books.