In Ray Bradbury’s dystopian sci-fi classic Fahrenheit 451, books are outlawed by the government in the 24th century.
According to Bradbury, this imagined ban didn’t happen overnight. It was preceded by gradual trivialization of information in general. People increasingly preferred TV sound-bites and frivolous, out-of-context nuggets of information over reasoned argument and well-researched books about important ideas.
Eventually, writers and readers of books became so culturally marginalized that it was easy for the government to just eliminate them and their work by burning down any home or building that contained books.
Bradbury’s nightmare is in fact happening, and way ahead of schedule.
Obviously trivial information is being favored over the substantial, not only because of TV and the Internet in general, but a phalanx of cultural forces Bradbury didn’t consider when he wrote Fahrenheit 451 in 1953 — blogs, social networking, online videos, video games, Internet memes and many others.
Despite this general trivialization of content, we still have a book publishing industry that employs full-time professional writers, researchers, editors and publishers. And millions of people still buy relatively long, well-researched, well argued and well-made books on every subject.
If you look at the New York Times Best Sellers List, it’s dominated by people who make their livings writing books.
The existence of professional writers, editors and publishers is inconvenient for every government, which would love to rule an idiocracy too distracted by shiny objects to care about the misdeeds and abuses of those in power.
The continued existence of this profession is not certain. In fact, a bloody battle being waged for the future of book publishing.
Needless to say, electronic books are rising in prominence and will become the dominant medium for the distribution of books.
There are two possible outcomes in this battle for the future of publishing.
The first possible outcome is that Amazon.com will own the entire eBook market. It will use its total dominance to squeeze every penny from book creators, so much so that publishing companies will largely cease to exist, book editing will be eliminated. And books will be written for free by amateurs with something to promote.
In other words, book publishing will be like the news industry would be if The Huffington Post was the only news source.
This is the Fahrenheit 451 future.
The second possible outcome is that Amazon.com does not control the whole eBooks market, but that multiple retail stores for eBooks exist and compete with each other. Publishers exist. Editors edit books. Writers can make a living. High-quality books well researched, well edited and well designed continue to be available to the public.
In other words, book publishing will be more like the the news business is today — lots of trash, but also the New York Times, the Wall Street Journal and the Washington Post continue to exist and somebody out there is doing investigative journalism.
Either Ray Bradbury’s scenario will essentially play out, or it won’t.
The Obama Administration has taken sides in this battle. They are actively supporting the destruction of the book industry as an industry. They are working to end editing and writing as professions, and actively supporting a monopolist using its dominant position to sell books at a loss in order to eliminate all competitors.
President Obama’s DOJ has taken a huge step in bringing about Bradbury’s Fahrenheit 451 scenario.
How? By aggressively shutting down the publishing industry’s only current hope for survival: The “agency model” of selling eBooks.
What the lawsuit is all about
Amazon uses the “wholesale model” of selling eBooks. It buys books from publishers, then sells them at any price it wants to.
Amazon takes advantage of the “wholesale model” to sell many eBooks at a loss. (Note that they sell some of their eBook readers at a loss, too.)
The only possible purpose to sell books at a loss is to drive competitors out of the market. The more competitors are driven out, the more power Amazon has to force publishers to take ever lower wholesale prices for their books, leading to their inability to stay in business.
Apple sells books using something called the “agency model.” This is the same model Apple uses for apps. The content creators in both cases (book publishers or software developers) can charge any price they like, and pays Apple 30% as the “agent” or the conduit through which the content creators sell to users.
Of course, this whole model wouldn’t work if publishers were coerced into a below-cost price from Amazon and sold at an above-cost price through Apple, plus Apple’s 30%. Nobody would buy from Apple because the price of a book that doesn’t destroy the industry is always higher than the one that does. So Apple’s agreement with the publishers is that if they sell the same eBook title elsewhere, it must be sold at the same price or higher than the iBooks price.
And this is the “price fixing” the DOJ is suing Apple over.
However, the lawsuit is bad antitrust enforcement. Here’s why:
1. Amazon is the monopoly, not Apple
I don’t know exactly what Amazon’s market share is, but two years ago they claimed somewhere between 70 and 80 percent of the eBook market.
Amazon’s dominance is so great that authors and publishers must publish on Kindle in order to have a bestselling eBook.
Apple, on the other hand, is a minor, bit player in publishing with little power to dictate prices.
In this lawsuit, the government’s highest anti-trust authority is siding with the monopoly against a tiny player in order to preserve and strengthen the monopoly and give it additional powers to eliminate competition.
2. Apple isn’t “price fixing” because it’s not setting prices
Price fixing exists when two or more companies conspire to control pricing in a market. One example might be if Coke and Pepsi had a meeting and decided that they’d both make more money if they agreed to sell sugary beverages at three dollars per can.
There are many ways price fixing can occur. But all of them involve a conspiracy to raise, lower or set prices.
In the case of Apple’s distribution agreement for iBooks, Apple is entirely uninvolved in the setting of prices, neither up nor down nor at a fixed rate. Publishers can choose to sell an eBook title for a penny or a million dollars — Apple doesn’t care.
More to the point, one publisher may choose to radically discount eBooks and sell each book for a dime. A competitor may decide to gouge customers and sell their titles for $100 each.
Apple’s policies do not involve a conspiracy to drive overall prices down or up.
The DOJ is assuming that Apple’s policies raise prices. Their evidence is that iBook prices are more expensive than Kindle prices. But this is because Amazon is selling at a loss, and Apple isn’t.
Giving retail pricing control to the publishers rather than the tablet maker doesn’t necessarily mean publishers will charge higher prices, or charge anything at all. It just means they have control.
3. Kindle is closed, iPad is open
Anyone can read any Kindle book on any iPad, but you can’t read iBooks on a Kindle, at least not without complicated fiddling and loss of features.
In fact all eBook formats are supported on the iPad, most with free apps.
That’s why Apple’s clause that publishers can’t undercut iBook prices elsewhere is necessary.
Consider: If a book is $9.99 from Amazon and $12.99 on iBooks and you have an iPad, you’ll buy the Amazon version and read it on your iPad because it’s cheaper.
If a book is $12.99 on Amazon and $9.99 on iBooks and you have a Kindle, you’ll also buy the Amazon version because Amazon doesn’t support the iBooks version.
The only way for Apple or any other tablet platform to sell eBooks given Amazon’s price dumping is for the publishers to set the price and sell at the same price on all platforms.
Obama’s DOJ is trying to eliminate the agency model in publishing, the last hope of the publishing industry from an Amazon take-over.
Anti-trust action by the Department of Justice is supposed to protect consumers. Protecting the monopoly player’s ability to sell at a loss until all competitors have been eliminated is not protecting consumers.
Worst of all, this isn’t just about a product. It’s about democracy, freedom of thought and censorship.
For the government of a democracy to side with a book monopoly to help them burn publishing to the ground is something no citizen should stand for.