Judge In Ebook Price Fixing Case Takes Briefing Filed As A Comic (Somewhat) Seriously

from the well,-that's-impressive dept

Fri, Sep 7th 2012 10:33am — Mike Masnick

Yesterday, we wrote about the judge in the ebook price fixing case quickly approving the settlement the government had reached with three of the book publishers involved (Harper Collins, Simon & Schuster and Hachette). There was one side note that I thought was amusing enough to be worth a separate post. One of the stranger filings in the case was an amicus brief filed on Tuesday by Bob Kohn, protesting the settlement. After Judge Cote made it clear that such filings should be no more than 5 pages, Kohn decided to file his in a graphic novel format, that both (slightly) mocks the 5 page limit and tries to explain the basics of his argument. The full filing is embedded below, but here's a clip:

Of course, much of the "argument" made by Kohn is really a thinly veiled suggestion that the judge look at the 93-page "comment" he had filed earlier in the case. The Justice Department was not impressed by Kohn's stunt. As for Judge Cote? She doesn't even mention the nature of the "graphic novel" filing -- but repeatedly addresses Kohn's points and calls him out by name. In the end, she doesn't find his theories or arguments persuasive -- noting that his comments "are insufficient to compel denial of entry of the proposed Final Judgment" -- but this may be the first time that I know of where a judge took a filing done in cartoon form seriously. That doesn't mean I would recommend it, or that I would expect to see more such filings. It's also unclear to me how what he did via the cartoon couldn't have been expressed just as easily in pure text.

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Filed Under: amicus briefs, bob kohn, denise cote, ebooks, economics, graphic novels, price fixing

20 Comments

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Reader Comments

The First Word

“

This Isn't About Amazon

A friendly reminder to all the interested parties in this lawsuit.

This is not a lawsuit about Amazon

When a bunch of companies get together and decide to engage in price-fixing, the legal defense is not "Well, if we didn't this other company would run us out of business". If you think Amazon is engaging in predatory business practices, that's a separate lawsuit. Amazon was not a party to this lawsuit, it's actions are not on trial.

A bunch of companies getting together to craft a system where products have higher prices than if they didn't work together is price fixing. End of story.

—Brad Hubbard

”

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Designerfx (profile), 7 Sep 2012 @ 10:39am

blind leading the blind
does this guy really think fundamentally misleading the argument via a comic is somehow accurate? This is like a "self-congratulatory pat on the back for harming consumers"

By the first of the 6 panes it's already incorrect. They're implying that amazon's prices are below marginal cost, which they are not. The rest just falls after that.

Then again, he's a copyright/royalty guy, so it shouldn't be a surprise.
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Anonymous Coward, 7 Sep 2012 @ 10:54am

>> It's also unclear to me how what he did via the cartoon couldn't have been expressed just as easily in pure text.

Ever try to draw in pure text?

Wait can't PRE.

Pictures speak to some in thousands of words.
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Anonymous Coward, 7 Sep 2012 @ 10:57am

Re:
"Ever try to draw in pure text?"

Ever heard of ASCII art?

Kids these days...
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Anonymous Coward, 7 Sep 2012 @ 10:59am

Re: blind leading the blind
It's actually incorrect before it even gets to that point. As the judge sensibly points out Amazon's conduct for good or ill can't make price fixing legal period. It fails before even evaluating Amazon's conduct.
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Anonymous Coward, 7 Sep 2012 @ 11:09am

Re: blind leading the blind
I don't get why it's wrong to use the phrase marginal costs. Amazon was pricing the books lower than what it paid for them in some cases weren't they?
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Anonymous Coward, 7 Sep 2012 @ 11:12am

Re: Re: blind leading the blind
I don't get why it's wrong to use the phrase marginal costs. Amazon was pricing the books lower than what it paid for them in some cases weren't they?

Some of their books were priced below wholesale cost as loss leaders, which is a fairly common marketing practice to get people in the door and shopping around. Their e-books division as a whole was operating above cost, so was not practicing predatory pricing. (yey, alliteration)
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Mike Masnick (profile), 7 Sep 2012 @ 11:28am

Re:
Pictures speak to some in thousands of words.

Yeah, but the pictures here are just two people talking. Might as well write a "script". If the images actually demonstrated something there would be a point.
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Brad Hubbard (profile), 7 Sep 2012 @ 11:29am

This Isn't About Amazon
A friendly reminder to all the interested parties in this lawsuit.

This is not a lawsuit about Amazon

When a bunch of companies get together and decide to engage in price-fixing, the legal defense is not "Well, if we didn't this other company would run us out of business". If you think Amazon is engaging in predatory business practices, that's a separate lawsuit. Amazon was not a party to this lawsuit, it's actions are not on trial.

A bunch of companies getting together to craft a system where products have higher prices than if they didn't work together is price fixing. End of story.
[ link to this | view in thread ]
jupiterkansas (profile), 7 Sep 2012 @ 11:30am

Re:
Not those pictures.
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Lord Binky, 7 Sep 2012 @ 12:13pm

"It's also unclear to me how what he did via the cartoon couldn't have been expressed just as easily in pure text."

Exactly. That's why it's called subliminal shading.
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Keroberos (profile), 7 Sep 2012 @ 12:50pm

He also fails in his understanding of marginal cost.
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good.
What is the marginal cost of a single e-book? It's the cost of copying it from the publisher's server, to the store's server, then to my PC/e-reader. So fractions of a penny for bandwidth and electricity.

Yes, Amazon did price some e-books below wholesale cost, but that in and of itself is not illegal (many stores do the same). If Amazon was guilty of predatory pricing, that would have been grounds for a complaint to be filed against them, not creating a price fixing agreement.

Obviously, the publishers saw that a complaint against Amazon would have been dismissed for having no basis in fact, so they entered into the price fixing agreement.
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Anonymous Coward, 7 Sep 2012 @ 12:56pm

Re: This Isn't About Amazon
Yup. And despite all of Kohn's ranting (I actually skimmed through his 93-page brief), he still failed to establish any reasonable point.

He keeps talking about Amazon 'selling below marginal cost', but ebooks have a lower marginal cost than paper books. If Amazon had been selling their ebooks at marginal cost, it wouldn't have made a bit of difference, because the publishers were colluding to drive the ebook pricing up to match the pricing of the paper equivalents. Kohn's arguments about marginal costs miss the point entirely.
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Colin Davidson (profile), 7 Sep 2012 @ 1:14pm

Re: Re: blind leading the blind
I don't get why it's wrong to use the phrase marginal costs. Amazon was pricing the books lower than what it paid for them in some cases weren't they?

First, "Marginal cost" is jargon, a technical term for economics. Using it here is just being pretentious and trying to coat a weak argument in pseudo-respectability. Second, it kinda implies variability based on volume. There is no variability in this situation. Amazon has to pay a fixed price, so the term is inappropriate. Third, the usual use of the term is "marginal cost of production", which properly belongs to the publisher and is 0 (since amazon does the copying).
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Anonymous Coward, 7 Sep 2012 @ 1:25pm

Re:
"What is the marginal cost of a single e-book? It's the cost of copying it from the publisher's server, to the store's server, then to my PC/e-reader. So fractions of a penny for bandwidth and electricity."

If Amazon had a contractual obligation to pay a royalty per e-book sold, then isn't that part of their marginal cost? I'm genuinely unclear on the terminology. Does marginal cost refer only to what it takes to make another copy, or to what it effectively costs them to sell another copy? In other words, for a retailer, is the marginal cost not equal to the wholesale cost plus their own incurred costs per unit (which you listed above)?

Of course, none of that changes the fact that it's not predatory to sell loss leaders below wholesale cost, which is the point.
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Keroberos (profile), 7 Sep 2012 @ 2:12pm

Royalties would be part of Amazon's wholesale cost, and as long as Amazon is paying the distributors for the products they sell it doesn't matter what they sell it for.

Marginal cost is on the production side. It doesn't enter into the retail side of the equation. So even my example is somewhat incorrect--it adds the cost of transfer from retail to end user--so would be even lower (millipenies? nanopenies?).

It's can very difficult to calculate the various costs (fixed/variable/marginal) of digital goods, because many of the things involved in production could fit into any one of the three--or just don't exist for digital goods as they do for physical ones. For example; the publisher/distributer only ever produces/sells/ships one copy of an e-book to Amazon--Amazon then takes care of making the copies when they sell it. So the marginal cost of an e-book can almost be said to be zero--because once you've made one (the original), you can make another copy (or millions--or billions) for so low a cost it might as well be zero.
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BentFranklin (profile), 7 Sep 2012 @ 2:14pm

Re: Re:
Next we'll be seeing briefs filed on YouTube.
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Atkray (profile), 7 Sep 2012 @ 3:02pm

Re: Re:
Great explanation of fixed, variable, and marginal costs --> http://www.youtube.com/watch?v=bBQVaRnHqLs
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Anonymous Coward, 7 Sep 2012 @ 3:14pm

Re: Re:
Actually, yes, but the PRE tag isn't in the list of "Allowed HTML."

As I pointed out.
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Togashi (profile), 8 Sep 2012 @ 3:27am

OMGROFLBBQ! Pirate Mike, why won't you just admit that you're trying to get all legal documents filed in comic form? Obviously when you said 'That doesn't mean I would recommend it' that was just a ploy to get the koolaid drinkers to believe you're not a picturetard comic-lawyer apologist. Because we all know you can't write a blog post about something being interesting without wholeheartedly supporting it.

(Man, I feel like I need a shower now.)
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The Groove Tiger (profile), 8 Sep 2012 @ 11:06am

Look, it's like a Chick Tract.

We all know how honest and accurate those are...
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