Amazon & Books’ Slippery Slope

It is likely that ebook prices will soon start dropping as a result of a settlement reached between the Department of Justice and several book publishers last week.

The agreement is a blow to Apple, which was also named in a DOJ antitrust suit brought this spring alleging that the technology company and publishers fixed ebook prices. However, Amazon is likely to benefit by being able to sell competitively priced ebooks and attract consumers to its new ereader and tablets, which were introduced last week.

“Based on this ruling Amazon.com will undoubtedly grow its market share,” said Gary Schwartz, “But this ruling is a soft push down a slippery slope for the book industry that dates back to 2007, when we saw the first Kindle. This was the harbinger of a new power game and more important, a new relationship with the digital consumer.

“My concern is that Amazon.com is simply using books to build its m-commerce empire? It is a stepping stone to developing a commerce checkout for sectors such as apparel and electronics and the quality of the bookshelf will suffer.”

The publishers are also required, as part of the settlement, to phase out any contracts with retailers still using the agency model and bans them from imposing similar restrictions on prices for two years.

“Amazon.com says it is ‘pro-consumer’ but you cannot take the agent/publisher out of the value chain and expect the ecosystem to thrive,” Mr. Schwartz said. “The number of self-published titles in the United States has tripled over the past few years and will continue to grow.

“However, by cutting out the agency and publisher, the industry has made the online and mobile storefront into the Wild West,” he said.

“Publishing has become the easy part. Selling and driving profit for authors has become difficult.”

READ MORE: Amazon gains, Apple loses in DOJ ebook price-fixing settlement