Talking points

Last week, New York's senior senator, Chuck Schumer, contributed an op-ed piece to the Wall Street Journal asking the U.S. Department of Justice (DOJ) to drop its eBook lawsuit. It's a maddening read.

I know that much of traditional publishing is headquartered in New York, and phone logs would likely confirm that senior staff from various houses have appealed to Schumer's office for relief from this whole "collusion" thing. Still, the senator could have at least tried to write something that was not a recitation of traditional publishers' talking points.

Consider the first paragraph, in which Schumer claims that "the suit could wipe out the publishing industry as we know it, making it much harder for young authors to get published." Really, Senator? Have you not heard of Amanda Hocking, who sold her novels digitally at prices that would make any large publisher flinch?

Or perhaps it's politically savvy to pretend that "50 Shades of Grey" was miraculously picked out of the slush pile. Certainly it's easier to believe Scott Turow than confront the fact that something like three times more books are published each year outside of traditional publishing houses.

Pursuing the DOJ, Schumer mangles reality left, right and center. The senator attributes Amazon's "early lead in eBook sales" to "its large product catalog", which allowed Amazon "to sell eBooks below cost."

But at the time the Kindle launched, Amazon and Barnes & Noble had product catalogs of similar sizes. Digital selection (which Amazon pursued relentlessly) and ease of ordering gave Amazon the early lead; the ability to monetize the customer relationship over time gave Amazon incentives to test prices that maximized total digital book revenue.

And don't even get me started on DRM, demanded by publishers in a move that effectively guaranteed first-mover platform lock-in.

Schumer cites the often-quoted statistic that the average price for eBooks fell to $7 after the start of agency pricing, an apples-to-oranges comparison that included thousands of eBooks not sold by one of the publishers named in the lawsuit (and not priced using agency terms).  Claiming that the DOJ "misses the forest for the trees", he also sidesteps a core contention: that publishers colluded to make the agency model happen.

In repeating the claim that low eBook prices threaten the survival of the publishing industry, the senator also assumes that lower prices mean lower total revenue. There's no doubt that lower prices put pressure on demand for and the price of hardcover books. And there's little doubt that traditional publishing models are built on a set of assumptions about the sales of physical books.

But total digital revenue can grow at lower prices. Yes, digital disrupts. Get over it.

The ironic part of Schumer's open letter to the DOJ was captured by Publishers Marketplace [registration required], which pointed out that the senator sits on the subcommittee that oversees antitrust, competition policy and consumer rights. Schumer could try to organize a Senate hearing that would air his issues directly.

Of course, that could get awkward. Senators are supposed to represent their states, and in New York, that adds up to 19.5 million people. Defending higher eBook prices to save the business model of five publishers (three of whom have settled the lawsuit) might feel a bit out of touch, even in a year in which the senator is not running for re-election.

Brian O'Leary

About Brian O'Leary

Founder and principal of Magellan Media Consulting, Brian O’Leary helps enterprises with media and publishing components capitalize on the power of content. A veteran of more than 30 years in the publishing industry and a prolific content producer himself, Brian leverages the breadth and depth of his experience to deliver innovative content solutions.