e-Book Price Fixing Here and Abroad

by Nancy Humphreys on February 15, 2011

Michael Moore, the documentary filmmaker, had a great time in The Big One leading a group of auto workers in bashing the name of the “United States” as meaningless and unsexy. Actually, the US is a very significant name, even when it comes to book publishing.

The meaning of the name, the United States

The 13 “colonies” were actually “states” in their own right. That is, each one was an independent self-governing state just like France, Holland, Spain, or Germany, some of the current members of a similar type of experiment called the European Union.

Many of the states in the “New World” had contractual trade agreements with European monarchs. In return for land and military protection from these kings, they would export raw materials and their goods to their sponsors.

Many American felt that Britain overstepped when it attempted to tax Americans as if they were British citizens. Its contract with Bostonians didn’t include taxation. But there was no international court to settle the issue.

Some Americans feared the British army and navy were too big to fight. Others decided to take that chance. They formed the United States. The rest is our history.

Regulation of ebook pricing by the states

In the beginning, powers not granted in the U.S. Constitution to the federal government, belonged primarily to the individual states. This has set up a balance of tensions between federal and state levels as interesting as the balance of powers among the three branches of the federal government.

And that’s precisely where ebook pricing has landed. e-Books didn’t exist when the Constitution was written. So ebook pricing sits squarely on the desks of state attorney generals.

The states belonging to the United States have clearly specialized in what they do in terms of regulation. California tends to do behind-the-scenes research. Texas and Florida tend to be in the lead with public investigations and issuing “cease and desist” orders. New York State tends to bring court cases.

This time, Connecticut, perhaps because of it’s proximity to New York City publishers, opened the investigation of ebook industry price-fixing. It was quickly followed by Texas.

What will happen next?

If the leading state regulators find there has been price-fixing of ebooks they’ll each issue some kind of recommendation to their legislature and/or order the companies involved to cease any behaviors deemed illegal. When (if) a critical mass of states decide that the current method of eReader ebook pricing, called “the agency model,” is illegal, action will be taken to alter it, with perhaps court cases being brought by Connecticut, New York and Texas.

The interesting thing is that the two lead states abroad in Europe, France and Germany, have already issued legal edicts on ebook pricing according to their own laws. (If you wonder why France and Germany are the lead states on this issue please read my free three-part report, The State of The Publishing Industry in the 21st Century.)

Regulators in Europe are actually in favor of price-fixing for ebooks, but they are using price-fixing in a “protectionist” way. France has ordered that e-books must be sold for the same price as print books. [It has also banned libraries from holding ebook copies when the print book is first issued.] Germany too has ordered that ebooks be sold for the same price as their print version.

What do you think of all this? Will the US stand up for freedom of pricing by authors instead of price-fixing by the major ebook publishers and distributors? Will Europe change its mind about “price protectionism” of ebooks?

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Marketing Your Book to Libraries Marketing Your Books to Libraries: An Insider's Guide for Authors by former librarian Nancy K. Humphreys includes: 
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  • Types of librarians and books they order
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  • Right ways to approach librarians most likely to order your book

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