Andrew Richard Albanese talks about the story behind The Battle of $9.99, a new e-book about the Apple price-fixing case.
What motivated you to write the backstory of this case?
A few things, actually. I’ve been covering this case for the better part of two years, and early on this struck me as an extraordinary opportunity to get a peek behind the curtain at Amazon, the publishers, and Apple as well. None of these parties would ever share this kind of detail about their businesses with the press. But, with the lawsuits, all of the major executives sat for testimony and depositions, and had to provide records. So this was a rare opportunity, and as a reporter, I wasn’t going to let it go by.
I’ve pored over hundreds, if not thousands, of pages of legal documents, and sat in court for many hearings, as well as the trial, and the story just crystallized. I had been reading legal documents in this matter for my own daily reporting since 2011, but in mid-May came a flood of filings in preparation for Apple’s trial. I read them all so I could understand each side’s game plan for trial, and how the testimony was fit their strategies. And one night, I just started writing. And after the first chunk was down, it was clear there was really a great, fast-paced, typically thrilling business story here. Since most people don’t want to spend their evenings poring over PDFs of court filings, I thought, why not just pull it into a narrative?
Also, while the case has gotten a lot of media attention, I think few people outside the book business really understand what the case is about, and, for that matter, there are questions even in the book business. Antitrust law is complex, and not easy to digest. I think the trade press has done a very good job covering the case, but at the end of the day, it is rather unsatisfying to hear the trial details reported in dribs and drabs without context. When we look back at this whole affair, as eventually we will, I thought it would be helpful to have this account, rather than have the story out there in pieces.
The biggest surprise to me was how little the publishers negotiated their initial e-book terms back when the e-book market was just beginning. And, more to the point, the thought they did put into e-books was all related to the negative aspects of digital—piracy, DRM, controlling unauthorized use. This is where this whole legal saga begins. When Amazon came to launch the Kindle in 2007, the publishers were so focused on the bad things that digital might bring that they never really considered, hey, what if this really works? What if this Kindle thing takes off?
As a result, they barely negotiated their initial financial terms with Amazon. Amazon officials said that, in some cases, they just accepted the financial terms publishers had already proposed for e-books. In retrospect, I am surprised that no one at any of the major publishers during Kindle negotiations, before the Kindle launch, would have said, “Oh, by the way, how much are you planning to charge consumers for our books?” If they had, things might have been different.
Instead, their eyes were on Google. At the time Amazon was breaking through with bestsellers on its Kindle, publishers were spending their energy and resources suing Google over that company’s library scanning program. Google was spending significant money to index old, out-of-print, long-forgotten books, books that were making money for no one, potentially giving new life to titles long dead, and the publishers were so worried about this, it dominated their digital thinking. So when Amazon came to the table to ask for bestsellers, the only real questions were about security.
In fairness, there was a lot of digital fear out there, and a lot distrust of these big, deep-pocketed digital firms. And there was much skepticism that e-books were going to take off the way they did. Still, in hindsight, the major publishers’ fear of digital piracy blinded them to the prospects of digital success, and they were unprepared for the rise of the Amazon’s Kindle.
The other surprise was really how few surprises there were. A lot of the details we learned in this story involved things many people in the publishing business already suspected, especially when it came to the tense relationship between publishers and Amazon, and the relations between the major publishers.
Beyond the basics (don't go price-fixing), what are the lessons for business? Are there specific lessons for media (radio/TV/Internet/print publications)?
Far be it from me to draw any lessons from this. I think that is best left to the principals in this case. In the e-book, I take no position on whether or not this was price-fixing, because, frankly, I don’t have the background in antitrust to inform that call. Did the parties here break the law, or did Apple and the publishers just seize the moment?
I will say this much: if taking back control of your own business affairs from your retailers requires a two-week plan involving all of your competitors and a major new entrant like Apple to accomplish, that plan may have some problems.
What happens now? How has the e-book business been changed?
Apple’s trial has generated a lot of media coverage, and has captivated the publishing industry, but the final verdict really doesn’t matter much. I mean, it certainly matters for Apple: If they lose, they’ll eventually be paying consumer claims, and will have the Department of Justice setting up an oversight program in Cupertino. If they win, they’ll claim vindication—and the publishers will too.
But for the e-book business, it’s already over: whether the plan was illegal or not, it succeeded in shifting the industry to a new business model. Nothing in the verdict will change that. In 2014, the publishers will come out from under their sanctions, and after that time, we’ll really be able to assess whether this plan worked or did not work for the publishers, and assess the impact on consumers.
But this is far from the last battle we’ll see over e-books. That we can say for sure. In the coming months and years, we’re going to see things heat up between authors and publishers over digital royalty rates. We’re going to see issues about library lending of e-books continue. There are still a mess of technical issues involving e-books, including different formats and platforms, many of which are incompatible.
And there is a thorny consumer issue: what rights do users enjoy with their e-books? With print books, you buy a book and you own it—you can give it away, lend it, use it to level your furniture, whatever. Not true with e-books, which users merely license access to. Generally speaking, you can’t give your e-books away, or resell them, or lend them. This is a fundamental cultural shift in the way we have always enjoyed books, and has implications beyond business, for education and freedom of speech.
One thing is for sure, this battle over e-books is just one of many more to come.
About the Author
Andrew Richard Albanese is senior writer and features editor at Publishers Weekly and the author of The Battle of $9.99: How Apple, Amazon and the “Big Six” Publishers Changed the E-Book Business Overnight (Publishers Weekly, 2013). As a journalist he has covered the publishing and information technology field for more than a decade, and has written about the industry for numerous publications in the U.S., Europe and Asia. He is a former editor of American history at Oxford University Press.
About Publishers Weekly
Publishers Weekly is the international news platform of book publishing and bookselling. Founded in 1872 and published continuously since then, the weekly magazine publishes eight e-newsletters, five blogs, and a robust Web site. Each year, PW reviews nearly 9,000 books, as well as e-books, apps and audio books, in addition to featuring author interviews and news and analysis about the world of publishing.
The Battle of $9.99 is available to the press as a PDF file upon request.
For more information, or to schedule an interview with the author, contact Christi Cassidy, +1-505-986-1142 or +1-917-217-4269, ccassidy@publishersweekly.com.
