Judge In Ebook Price Fixing Case Takes Briefing Filed As A Comic (Somewhat) Seriously
from the well,-that's-impressive dept
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:
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Filed Under: amicus briefs, bob kohn, denise cote, ebooks, economics, graphic novels, price fixing
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.
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blind leading the blind
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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Re: blind leading the blind
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Re: Re: blind leading the blind
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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Re: Re: blind leading the blind
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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Ever try to draw in pure text?
Wait can't PRE.
Pictures speak to some in thousands of words.
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Re:
Ever heard of ASCII art?
Kids these days...
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As I pointed out.
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Re:
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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This Isn't About Amazon
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.
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Re: This Isn't About Amazon
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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Exactly. That's why it's called subliminal shading.
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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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Re:
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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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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(Man, I feel like I need a shower now.)
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We all know how honest and accurate those are...
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