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	<title>paidContent &#187; Bob Kohn</title>
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		<title>paidContent &#187; Bob Kohn</title>
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		<title>Ebook case: more poetry and no refund for the judge</title>
		<link>http://paidcontent.org/2012/09/14/ebook-case-more-poetry-and-no-refund-for-the-judge/</link>
		<comments>http://paidcontent.org/2012/09/14/ebook-case-more-poetry-and-no-refund-for-the-judge/#comments</comments>
		<pubDate>Fri, 14 Sep 2012 13:53:12 +0000</pubDate>
		<dc:creator>Jeff John Roberts</dc:creator>
				<category><![CDATA[agency pricing]]></category>
		<category><![CDATA[amazon]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[ebook]]></category>
		<category><![CDATA[emily dickinson]]></category>
		<category><![CDATA[John Masefield]]></category>
		<category><![CDATA[poetry]]></category>
		<category><![CDATA[price-fixing]]></category>

		<guid isPermaLink="false">http://paidcontent.org/?p=217810</guid>
		<description><![CDATA[A lawyer in the high profile case over ebook price fixing is hoping a line of poetry will persuade a judge to stop the proceedings. Meanwhile, the judge said she will not collect a price-fixing refund as new prices go into effect today.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=217810&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>In a case that&#8217;s already featured a comic strip and a full-length Emily Dickinson poem, a lawyer is hoping another line of poetry will persuade a judge to put the brakes on a settlement intended to shake up the ebook market.</p>
<p>&#8220;Your Honor, I appreciate that there is &#8216;No Frigate like a Book,&#8217; but to quote another famous poet, John Masefield, &#8216;All I ask is a tall ship and a star to steer her by,&#8217;&#8221; wrote attorney Bob Kohn in a missive to stop the settlement.</p>
<p>Kohn&#8217;s literary flourish is in response to U.S. District Judge Denise Cote&#8217;s inclusion of Dickinson&#8217;s poem in a decision last week that effectively ends some publishers&#8217; power to set the price of ebooks.</p>
<p>Meanwhile, Cote, who is herself an ebook buyer, issued an order saying that she waives her right to collect under a refund agreement that will pay consumers <a href="http://paidcontent.org/2012/08/30/e-book-buyers-to-get-25-cents-to-1-32-per-book-in-apple-price-fixing-case/">25 cents to $1.32</a> to compensate them for price fixing.</p>
<ul>
<li><em>See also: <a href="http://paidcontent.org/2012/08/31/explainer-what-the-ebook-settlement-means-for-publishers-apple-and-you/">What the book settlement means for publishers, Apple and you</a></em></li>
</ul>
<p>As for Kohn, who submitted a five-page <a href="http://paidcontent.org/2012/09/04/fighting-the-dojs-apple-ebook-settlement-in-comic-strip-form/">comic strip</a> to the judge this month, his latest appeal appears hopeless because today is when three publishers must tear up their contracts with Apple. The publishers must terminate those and other contracts in exchange for the Justice Department shelving an antitrust case against them. The development has already resulted in <a href="http://paidcontent.org/2012/09/10/that-was-fast-amazon-is-already-discounting-harpercollins-ebooks/">new book discounts</a> by Amazon and other retailers.</p>
<p>Kohn, a music executive who has been one of the settlement&#8217;s most vehement critics, is arguing (correctly) that Cote&#8217;s refusal to stay the deal will result in the new pricing system becoming a fait accompli by the time the issue reaches an appeals court.</p>
<p>Apple and two other publishers are continuing to fight the price-fixing charges in court.</p>
<p>Here are the two poems followed by Kohn&#8217;s latest letter to the judge:</p>
<p style="text-align: left;"><span style="font-size: x-large;">&#8220;Sea-Fever&#8221;</span></p>
<p style="text-align: left;">I must down to the seas again, to the lonely sea and the sky,<br />
And all I ask is a tall ship and a star to steer her by,<br />
And the wheel&#8217;s kick and the wind&#8217;s song and the white sail&#8217;s shaking,<br />
And a grey mist on the sea&#8217;s face, and a grey dawn breaking.</p>
<p style="text-align: left;">I must down to the seas again, for the call of the running tide<br />
Is a wild call and a clear call that may not be denied;<br />
And all I ask is a windy day with the white clouds flying,<br />
And the flung spray and the blown spume, and the sea-gulls crying.</p>
<p style="text-align: left;">I must down to the seas again, to the vagrant gypsy life,<br />
To the gull&#8217;s way and the whale&#8217;s way where the wind&#8217;s like a whetted knife;<br />
And all I ask is a merry yarn from a laughing fellow-rover<br />
And quiet sleep and a sweet dream when the long trick&#8217;s over.</p>
<p style="text-align: left;">By <span style="font-size: large;">John Masefield, English Poet Laureate</span> (1878-1967).</p>
<div id="poem-top">
<h1 style="text-align: left;">There is no Frigate like a Book</h1>
</div>
<div id="poem">
<div>
<div style="text-align: left;">There is no Frigate like a Book</div>
<div style="text-align: left;">To take us Lands away</div>
<div style="text-align: left;">Nor any Coursers like a Page</div>
<div style="text-align: left;">Of prancing Poetry –</div>
<div style="text-align: left;">This Traverse may the poorest take</div>
<div style="text-align: left;">Without oppress of Toll –</div>
<div style="text-align: left;">How frugal is the Chariot</div>
<div style="text-align: left;">That bears the Human Soul –</div>
<div style="text-align: left;"></div>
<div style="text-align: left;">By Emily Dickinson (1830-1886)</div>
<div style="text-align: center;"></div>
<div style="text-align: center;"></div>
</div>
<div></div>
</div>
<p><a style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block; text-decoration: underline;" title="View Kohn Letter Sept 12 (1) on Scribd" href="http://www.scribd.com/doc/105913343/Kohn-Letter-Sept-12-1">Kohn Letter Sept 12 (1)</a><iframe id="doc_86751" src="http://www.scribd.com/embeds/105913343/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-blvhnefbi0by1poo7tn" frameborder="0" scrolling="no" width="100%" height="600" data-auto-height="true" data-aspect-ratio="0.772727272727273"></iframe></p>
<p><em>(Image by  <a href="http://www.shutterstock.com/gallery-351592p1.html" data-bitly-type="bitly_hover_card">Vikulin</a> via Shutterstock)</em></p>
<br />  <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=217810&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" /><p><a href="http://pubads.g.doubleclick.net/gampad/jump?iu=/1008864/PaidContent_RSS_300x250&#038;sz=300x250&#038;c=465723"><img src="http://pubads.g.doubleclick.net/gampad/ad?iu=/1008864/PaidContent_RSS_300x250&#038;sz=300x250&#038;c=465723" /></a></p>]]></content:encoded>
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			<media:title type="html">Poetry</media:title>
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			<media:title type="html">jeffjohnroberts</media:title>
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		<item>
		<title>What the DOJ settlement means for ebook prices now</title>
		<link>http://paidcontent.org/2012/09/10/what-the-doj-settlement-means-for-ebook-prices-now/</link>
		<comments>http://paidcontent.org/2012/09/10/what-the-doj-settlement-means-for-ebook-prices-now/#comments</comments>
		<pubDate>Mon, 10 Sep 2012 15:31:23 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[agency pricing]]></category>
		<category><![CDATA[amazon]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[department of justice]]></category>
		<category><![CDATA[ebook pricing]]></category>
		<category><![CDATA[ebooks]]></category>
		<category><![CDATA[legal]]></category>
		<category><![CDATA[michael cader]]></category>
		<category><![CDATA[Mike Shatzkin]]></category>

		<guid isPermaLink="false">http://paidcontent.org/?p=217519</guid>
		<description><![CDATA[Last week, a federal judge approved the DOJ's proposed settlement with Simon &#038; Schuster, Hachette and HarperCollins for allegedly conspiring with Apple to set ebook prices. What does the settlement mean for ebook prices now?<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=217519&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>On Thursday, U.S. District Judge Denise Cote <a href="http://paidcontent.org/2012/09/06/breaking-judge-approves-e-book-price-fixing-settlement/">approved</a> a proposed settlement put forth by the Department of Justice to resolve allegations that three publishers had colluded with Apple to fix ebook prices. Here&#8217;s what will happen next.</p>
<h2>Now that the settlement is approved, when will we see changes?</h2>
<p>According to the terms of the settlement, the settling publishers &#8212; HarperCollins, Hachette and Simon &amp; Schuster &#8212; have seven days to terminate their agency contracts with Apple. They also must terminate agreements with other retailers, like Amazon, &#8220;as soon as each contract permits,&#8221; i.e., when the contract expires, or the retailers can terminate the contracts on 30 days&#8217; notice. Then the settling publishers and retailers can enter into new contracts. <del>If appeals are denied, we could see new agreements with Apple by this Friday, September 14 and new agreements with other retailers in mid-October</del>. <strong>Update, 5:30 PM:</strong> <a href="http://paidcontent.org/2012/09/10/that-was-fast-amazon-is-already-discounting-harpercollins-ebooks/">HarperCollins has already entered into new agreements with ebook retailers and Amazon is already discounting its titles</a>. The approaching holidays provide publishers and retailers with extra impetus to reach new agreements quickly so that they don&#8217;t miss out on sales.</p>
<p>Entertainment industry attorney Bob Kohn, who also filed an amicus brief, has <a href="http://paidcontent.org/2012/09/10/lawyer-files-urgent-request-to-stop-ebook-price-changes/">asked Judge Cote to suspend the proceedings</a> until an appeals court weighs in. Apple is also likely to appeal. However, Judge Cote is likely to reject the request for stay.</p>
<h2>How low will prices go?</h2>
<p>Retailers will be free of almost all restrictions on pricing. As I wrote in April, we are likely see deep discounts on bestselling titles from HarperCollins, Hachette and Simon &amp; Schuster &#8212; and while those discounts are especially likely at Amazon, retailers like Barnes &amp; Noble and Kobo will want to match at least some of the prices in order to compete.</p>
<p>Apple is a bit of a wildcard: Because of the MFNs in its contracts for all types of content, it hasn&#8217;t had to think about matching discounts before. &#8220;Without that protection, how will Apple compete? They’ve never had to do competitive pricing of commodity products before,&#8221; <a href="http://www.idealog.com/blog/hats-off-to-amazon/">writes publishing industry consultant Mike Shatzkin on his blog</a>. &#8220;I will be very impressed if Apple can get through the price fights about to take place without an obvious black eye. They haven’t been training for this.&#8221;</p>
<p><a href="http://paidcontent.org/2012/04/16/what-does-the-doj-e-book-pricing-lawsuit-mean-for-readers-now/">As I noted in April</a>, the settlement also allows for new types of pricing promotions like bundling, buy-one-get-one-free or subscriptions. In her approval of the settlement, Judge Cote agrees with the DOJ that agency agreements &#8220;eliminated potential pricing innovations, such as &#8216;all-you-can-read&#8217; subscription services, book club pricing specials, and rewards programs.&#8221; Those are back on the table now.</p>
<p>Amazon could also begin including Hachette, HarperCollins and Simon &amp; Schuster titles in the Kindle Owners’ Lending Library for Amazon Prime members. It doesn&#8217;t have to have their permission; as it has already done with some <a href="http://paidcontent.org/2011/11/04/419-kindle-free-book-lending-holy-sht/">titles from some other publishers</a>, it could just pay the wholesale price each time an ebook is borrowed.</p>
<h2>What are the restrictions or exceptions?</h2>
<p>Macmillan and Penguin, the two publishers fighting the Department of Justice in court (along with Apple) don&#8217;t have to enter into new contracts, nor does the final big-six publisher, Random House, which wasn&#8217;t named in the DOJ lawsuit. Those publishers may have to drop their own prices, though, in order to compete.</p>
<p>Agency pricing has been declared legal, and it doesn&#8217;t go away now. The settling publishers can still sell their ebooks to retailers under agency contracts, where they set a book&#8217;s list price and the pay the retailer a commission. The difference now is that retailers can discount the ebooks however they want.</p>
<p>However, there are limited exceptions: The settlement allows HarperCollins, Hachette and Simon &amp; Schuster to negotiate new contracts that include &#8220;a commitment from an e-book retailer that a retailer’s aggregate expenditure on discounts and promotions of the Settling Defendant’s ebooks will not exceed the retailer’s aggregate commission under an agency agreement in which the publisher sets the ebook price and the retailer is compensated through a commission.&#8221; The settling publishers can also negotiate one-year contracts that “prevent e-book retailers from cumulatively selling that Settling Defendant’s e-books at a loss over the period of the contract.&#8221;</p>
<p>It&#8217;s not clear, though, how those &#8220;commitments&#8221; will be enforced or what kind of reporting the retailers would have to do to show publishers that they&#8217;re not selling all of their books at a loss. &#8220;If you were a publisher wanting to make sure that a retailer had not exceeded their allowed discounting, you would want to know precise data about how many units were sold at which price points,&#8221; <a href="http://lunch.publishersmarketplace.com/2012/09/hurry-up-wait-and-what-the-life-under-agency-lite/">Michael Cader writes in a really excellent explainer post at Publishers Lunch</a> (paywall). &#8220;But retailers have never provided that kind of the data in the past, and are expected to resist strongly on that point.&#8221;</p>
<h2>Will ebook prices actually go up?</h2>
<p>Publishers Lunch&#8217;s Cader raises the seemingly counterintuitive point that settling publishers may actually raise their ebooks&#8217; list prices. Nothing in the settlement prevents them from doing so, and &#8220;higher list prices could &#8216;use up&#8217; a retailer&#8217;s annual discount pool more quickly and provide some protection against devaluation in the marketplace of a publisher&#8217;s biggest properties.&#8221; In other words, HarperCollins, Hachette and Simon &amp; Schuster could raise the list prices on bestselling ebooks from $12.99 to, say, $18.99. A retailer like Amazon would then have to pay those publishers a higher commission and discount their ebooks even more steeply, if the retailer wants to offer the greatest discounts.</p>
<p><em>Photo <a href="http://www.shutterstock.com/pic.mhtml?id=107655140">courtesy of Shutterstock</a></em></p>
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			<media:title type="html">Books and e-reader ebooks e-reader</media:title>
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			<media:title type="html">laurahowen38</media:title>
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		<title>Lawyer files Hail Mary request to stop ebook price changes</title>
		<link>http://paidcontent.org/2012/09/10/lawyer-files-urgent-request-to-stop-ebook-price-changes/</link>
		<comments>http://paidcontent.org/2012/09/10/lawyer-files-urgent-request-to-stop-ebook-price-changes/#comments</comments>
		<pubDate>Mon, 10 Sep 2012 14:15:36 +0000</pubDate>
		<dc:creator>Jeff John Roberts</dc:creator>
				<category><![CDATA[amazon]]></category>
		<category><![CDATA[antitrust]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[e-books]]></category>
		<category><![CDATA[ebook settlement]]></category>
		<category><![CDATA[hachette]]></category>
		<category><![CDATA[harpercollins]]></category>
		<category><![CDATA[Peter Toren]]></category>
		<category><![CDATA[simon&schuster]]></category>

		<guid isPermaLink="false">http://paidcontent.org/?p=217520</guid>
		<description><![CDATA[A surprise ruling last week will force publishers to tear up their e-book contracts with retailers. The ruling is scheduled to go into effect in the next few days and, if it does, Amazon and others will be allowed to slash the price of e-books. A prominent lawyer has filed a Hail Mary brief to stop the process.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=217520&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>Just days before a court ruling forces major publishers to tear up ebook contracts, a prominent attorney has asked to suspend the proceedings until an appeals court can weigh in on a price-fixing settlement between the U.S. Department of Justice and three publishers.</p>
<p>In documents filed late Friday, Bob Kohn asked U.S. District Judge Denise Cote to stay her ruling on the grounds that consumers will be irreparably harmed by new e-book prices if the settlement goes forward.</p>
<p>Cote approved the settlement last week as a means to fix what she concluded to be blatant price-fixing by Apple and the publishers. The arrangement calls for Simon &amp; Schuster, Hachette and HarperCollins to truncate their contracts with Apple by this Friday and to notify other ebook retailers that they are no longer bound by contracts that set a minimum price for ebooks.</p>
<p>What this means in practice is that, within weeks, mega-retailer Amazon will be able to resume selling ebooks at bargain basement prices, including below cost.</p>
<p>Kohn, Apple and two other publishers had urged Cote to hold off approving the Justice Department settlement until the price-fixing issues could be addressed at a trial next summer. In a <a href="http://paidcontent.org/2012/09/06/breaking-judge-approves-e-book-price-fixing-settlement/">surprise move</a> last week, however, Cote threw aside planned court hearings and said the settlement could go into effect.</p>
<p>Kohn, a prominent entertainment industry lawyer, now says that the process should be halted until it goes before the Second Circuit Court of Appeals. If Cote doesn&#8217;t grant a stay, he says, &#8220;consumer welfare&#8221; will be harmed immediately as the new ebook prices will take effect and shift pricing power to Amazon. He also points out that, if the Second Circuit ultimately sides with the Justice Department, ebook buyers will not be hurt; they can simply collect more money under a proposed compensation scheme that proposes to pay them between <a href="http://paidcontent.org/2012/08/31/explainer-what-the-ebook-settlement-means-for-publishers-apple-and-you/">25 cents and $1.32 </a>per overpriced ebook.</p>
<p>In an interesting tactical shift, Kohn appears to acknowledge that the publishers did in fact collude to fix prices but that the price-fixing was not illegal. Until recently, publishers have denied that they conspired.</p>
<p>This suggests that the publishers who did not settle are now putting all their hopes on a Supreme Court decision that held that price collusion is not illegal in the case of market failure. The argument is based that on the idea that Amazon, with a 90 percent ebook market share, was a monopsony (a single buyer with all the power) and that publishers had to take a one-time step to fix that.</p>
<p>Kohn first made the argument in <a href="http://paidcontent.org/2012/09/04/fighting-the-dojs-apple-ebook-settlement-in-comic-strip-form/">a remarkable comic-strip </a>he submitted to the court last week:</p>
<p><a href="http://paidcontent.org/2012/09/10/lawyer-files-urgent-request-to-stop-ebook-price-changes/screen-shot-2012-09-10-at-10-05-22-am/" rel="attachment wp-att-217522"><img  title="Screen Shot 2012-09-10 at 10.05.22 AM" src="http://gigaompaidcontent.files.wordpress.com/2012/09/screen-shot-2012-09-10-at-10-05-22-am.png?w=708" alt=""   class="aligncenter size-full wp-image-217522" /></a></p>
<p>Judge Cote will rule on Kohn&#8217;s request for a stay in the next few days. According to <a href="http://www.wmclaw.com/our-team/toren-peter.html">Peter Toren</a>, a veteran federal court litigator, Cote will almost certainly turn down the request. Toren added that this will pave the way for the settlement opponents to make an urgent request for a stay to the Second Circuit.</p>
<p>If the Second Circuit also rejects the stay, it&#8217;s effectively game over. This is so because it would take the Second Circuit many months to address the settlement itself &#8212; and, by that point, the new ebook prices will have gone into effect and changed the market.</p>
<p>Here is Kohn&#8217;s stay request with some relevant parts underlined:</p>
<p><a style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block; text-decoration: underline;" title="View Kohn Request for Stay on Scribd" href="http://www.scribd.com/doc/105482877/Kohn-Request-for-Stay">Kohn Request for Stay</a><iframe id="doc_99725" src="http://www.scribd.com/embeds/105482877/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-hwcfyqmk2jzaymbzu0i" frameborder="0" scrolling="no" width="100%" height="600" data-auto-height="true" data-aspect-ratio="0.772727272727273"></iframe></p>
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			<wfw:commentRss>http://paidcontent.org/2012/09/10/lawyer-files-urgent-request-to-stop-ebook-price-changes/feed/</wfw:commentRss>
		<slash:comments>12</slash:comments>
	
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			<media:title type="html">jeffjohnroberts</media:title>
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		<title>Fighting the DOJ&#8217;s Apple ebook settlement &#8212; in comic strip form</title>
		<link>http://paidcontent.org/2012/09/04/fighting-the-dojs-apple-ebook-settlement-in-comic-strip-form/</link>
		<comments>http://paidcontent.org/2012/09/04/fighting-the-dojs-apple-ebook-settlement-in-comic-strip-form/#comments</comments>
		<pubDate>Tue, 04 Sep 2012 19:52:00 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[antitrust law]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[department of justice]]></category>
		<category><![CDATA[ebooks pricing case]]></category>
		<category><![CDATA[Julia Alekseyeva]]></category>
		<category><![CDATA[legal]]></category>

		<guid isPermaLink="false">http://paidcontent.org/?p=217316</guid>
		<description><![CDATA[Attorney and licensing expert Bob Kohn, who opposes the DOJ's proposed ebook pricing settlement with three book publishers, has condensed his argument into comic strip form. He filed the artsy amicus brief with the court today.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=217316&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>With the Department of Justice&#8217;s proposed ebook pricing settlement pending, last week U.S. District Judge Denise Cote <a href="http://paidcontent.org/2012/08/29/court-lets-authors-guild-digital-licensing-attorney-weigh-in-on-apple-ebooks-case/">granted attorney and licensing expert Bob Kohn</a>, who opposes the settlement, permission to file an amicus brief in the case. But she gave him a restriction: It could only be five pages long. Kohn had previously submitted <a href="http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/">a 55-page brief</a>.</p>
<p><a href="http://gigaompaidcontent.files.wordpress.com/2012/09/screen-shot-2012-09-04-at-3-32-07-pm.png"><img  title="Bob Kohn amicus brief comic strip" src="http://gigaompaidcontent.files.wordpress.com/2012/09/screen-shot-2012-09-04-at-3-32-07-pm.png?w=708" alt=""   class="aligncenter size-full wp-image-217318" /></a></p>
<p>How to get condense 55 pages into five? Kohn went with a comic strip. &#8220;He called his daughter, Katie, who is studying for her Ph.D in film studies at Harvard, who connected him with a fellow student, Julia Alekseyeva. After conferring with Ms. Alekseyeva, Mr. Kohn wrote the script and she drew the illustrations,&#8221; <a href="http://mediadecoder.blogs.nytimes.com/2012/09/04/my-thoughts-on-e-book-pricing-let-me-draw-you-a-picture/">the New York Times&#8217; Media Decoder blog reports</a>. (Here&#8217;s <a href="http://thesoviette.tumblr.com/">Alekseyeva&#8217;s Tumblr</a>.)</p>
<p>The five-page comic strip isn&#8217;t on par with &#8220;Calvin and Hobbes&#8221; or &#8220;Doonesbury,&#8221; but it draws attention to Kohn&#8217;s role as a &#8220;friend of the court&#8221; and is a catchy way to distill his argument <a href="http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/">that the DOJ wrongly defines low prices, not efficient prices,</a> as the true goal of antitrust law. And it&#8217;s definitely more interesting than &#8220;Family Circus.&#8221;</p>
<p>Here&#8217;s the full brief.</p>
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		<slash:comments>5</slash:comments>
	
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			<media:title type="html">laurahowen38</media:title>
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		<title>Court lets Authors Guild, attorney weigh in on Apple ebooks case</title>
		<link>http://paidcontent.org/2012/08/29/court-lets-authors-guild-digital-licensing-attorney-weigh-in-on-apple-ebooks-case/</link>
		<comments>http://paidcontent.org/2012/08/29/court-lets-authors-guild-digital-licensing-attorney-weigh-in-on-apple-ebooks-case/#comments</comments>
		<pubDate>Wed, 29 Aug 2012 20:03:26 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[agency pricing]]></category>
		<category><![CDATA[amazon]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[authors guild]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[ebook pricing]]></category>
		<category><![CDATA[ebooks]]></category>
		<category><![CDATA[hachette]]></category>
		<category><![CDATA[harpercollins]]></category>
		<category><![CDATA[legal]]></category>
		<category><![CDATA[macmillan]]></category>
		<category><![CDATA[penguin]]></category>
		<category><![CDATA[royaltyshare]]></category>
		<category><![CDATA[simon & schuster]]></category>

		<guid isPermaLink="false">http://paidcontent.org/?p=217063</guid>
		<description><![CDATA[The Department of Justice wants the court to accept its proposed ebook pricing settlement with Apple and book publishers, but presiding Judge Denise Cote is allowing more parties who oppose the settlement -- the Authors Guild and attorney Bob Kohn -- to weigh in as amici curiae.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=217063&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>As U.S. District Judge Denise Cote prepares to issue a verdict on the Department of Justice&#8217;s proposed ebook pricing settlement with three publishers, she has granted two parties that oppose the settlement &#8212; the Authors Guild and attorney and licensing expert Bob Kohn &#8212; permission to weigh in as <em>amici curiae</em>, or &#8220;friends of the court.&#8221; Judge Cote <a href="http://paidcontent.org/2012/08/08/as-verdict-on-ebook-pricing-settlement-nears-apple-gets-5-pages-to-respond-to-doj/">previously granted</a> Barnes &amp; Noble and the American Booksellers Association, which also oppose the settlement, permission to file an amicus brief.</p>
<p><strong>A bit of background first:</strong> The Department of Justice’s proposed final settlement with HarperCollins, Hachette and Simon &amp; Schuster <a href="http://paidcontent.org/2012/04/16/what-does-the-doj-e-book-pricing-lawsuit-mean-for-readers-now/">would require the settling publishers to terminate existing agreements with Apple and would end agency pricing for those publishers for two years</a>. Apple, Macmillan and Penguin are fighting the case in court, but <a href="http://paidcontent.org/2012/06/23/doj-e-book-price-fixing-trial-set-for-june-3-2013/">the trial will not begin until June 2013</a>. Apple has <a href="http://paidcontent.org/2012/08/15/apple-bashes-amazon-and-proposed-ebook-settlement/">argued that it is unfair for the settlement to go through before the trial</a>.The DOJ <a href="http://paidcontent.org/2012/07/23/justice-department-slams-apple-refuses-to-modify-e-book-settlement/">received 868 public comments on the settlement</a>, nearly all of which opposed it. For more, see our guides “<a href="http://paidcontent.org/2012/04/16/what-does-the-doj-e-book-pricing-lawsuit-mean-for-readers-now/">What does the DOJ ebook pricing lawsuit mean for readers now?</a>” and “<a href="http://paidcontent.org/2012/04/11/everything-you-need-to-know-about-e-book-doj-lawsuit-in-one-post/">Everything you need to know about the ebook lawsuit in one post.</a>“</p>
<p>Judge Cote has now decided to accept the entirety of a brief that the Authors Guild <a href="http://paidcontent.org/2012/08/16/publishers-and-authors-guild-bash-ebook-settlement/">proposed on August 15</a>. However, she is limiting Kohn&#8217;s submission to five pages. He <a href="http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/">had submitted a 55-page brief</a> and will have to file a new, five-page one by September 4 in order for it to be accepted by the Court.</p>
<p>The Authors Guild and Kohn both argue that the DOJ defines the ebook market too narrowly, disregarding interrelated devices like e-readers. The Authors Guild also says the proposed settlement would harm traditional bookstores and destroy competition. Kohn additionally argues that the DOJ&#8217;s own investigation into Amazon&#8217;s ebook pricing reveals that the company engaged in predatory pricing, and had demanded that the DOJ turn over all documents relating to its investigation of Amazon.</p>
<p>Kohn will now have to choose which of his arguments are most important and can fit into five pages. Both the Authors Guild and Kohn have called for a hearing, <a href="http://paidcontent.org/2012/08/23/doj-compares-apple-and-publishers-to-big-oil-in-ebooks-case/">which the DOJ opposes</a>.</p>
<p>Kohn is an attorney and the CEO of RoyaltyShare, a company that handles royalties for digital music, ebooks and other products. He founded MP3 download service eMusic in 1998 and reports on entertainment law.</p>
<p>Kohn&#8217;s original proposed brief is <a href="http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/">here</a>; the Authors Guild&#8217;s brief is <a href="http://paidcontent.org/2012/08/16/publishers-and-authors-guild-bash-ebook-settlement/">here</a>; Judge Cote&#8217;s motion is embedded below and also <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/paidcontent-court-filing-108.pdf">here</a> as a PDF.</p>
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			<media:title type="html">Gavel</media:title>
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			<media:title type="html">laurahowen38</media:title>
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		<title>DOJ compares Apple and publishers to big oil in ebooks case</title>
		<link>http://paidcontent.org/2012/08/23/doj-compares-apple-and-publishers-to-big-oil-in-ebooks-case/</link>
		<comments>http://paidcontent.org/2012/08/23/doj-compares-apple-and-publishers-to-big-oil-in-ebooks-case/#comments</comments>
		<pubDate>Thu, 23 Aug 2012 13:32:43 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[amazon]]></category>
		<category><![CDATA[american booksellers association]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[authors guild]]></category>
		<category><![CDATA[barnes & noble]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[department of justice]]></category>
		<category><![CDATA[doj]]></category>
		<category><![CDATA[ebook pricing]]></category>
		<category><![CDATA[ebooks]]></category>
		<category><![CDATA[hachette]]></category>
		<category><![CDATA[harpercollins]]></category>
		<category><![CDATA[lawsuit]]></category>
		<category><![CDATA[legal]]></category>
		<category><![CDATA[macmillan]]></category>
		<category><![CDATA[penguin]]></category>
		<category><![CDATA[simon & schuster]]></category>

		<guid isPermaLink="false">http://paidcontent.org/?p=216803</guid>
		<description><![CDATA[In a filing late Wednesday in response to Apple and book publishers, the Department of Justice reiterates its claim that agency pricing and the alleged conspiracy have resulted in "unmistakable consumer harm," but refuses to release its ebook pricing analysis.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=216803&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>In its response to recent filings from Apple, publishers and booksellers on its <a href="http://paidcontent.org/2012/04/16/what-does-the-doj-e-book-pricing-lawsuit-mean-for-readers-now/">proposed ebook settlement</a> with three publishers, the Department of Justice addresses few specific complaints (<a href="http://gigaompaidcontent.files.wordpress.com/2012/08/doj-response-no-highlights.pdf">PDF</a>; full filing embedded below). Rather, citing the &#8220;unmistakable consumer harm that has resulted from the conspiracy in this case,&#8221; the DOJ calls on Judge Denise Cote to approve the settlement without a hearing.</p>
<p>Last week, <a href="http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/">attorney Bob Kohn</a> and the <a href="http://paidcontent.org/2012/08/16/publishers-and-authors-guild-bash-ebook-settlement/">Authors Guild</a> sought permission to act as &#8220;friends of the court&#8221; in the proposed settlement and filed amicus briefs. We have not yet seen a filing from Judge Cote granting their requests, but both parties are listed as &#8220;amicus&#8221; on the docket report, along with Barnes &amp; Noble and the American Booksellers Association. However, the DOJ does not respond to Kohn or the Authors Guild in its response.</p>
<p>The DOJ shoots down the argument that ebooks are different from print books but doesn&#8217;t elaborate on why they are the same (and doesn&#8217;t respond to the criticism that it has failed to take interrelated markets, like those for e-readers, into account). Rather, it says, &#8220;Railroads, publishers, lawyers, construction engineers, health care providers, and oil companies are just some of the voices that have raised cries against &#8216;ruinous competition&#8217; over the decades,&#8221; and publishers should not be granted special treatment.</p>
<h2>Response to Apple</h2>
<p>Last week, <a href="http://paidcontent.org/2012/08/15/apple-bashes-amazon-and-proposed-ebook-settlement/">Apple argued that the DOJ&#8217;s proposed settlement</a>, which it has not joined, affects its interests by forcing it to tear up existing contracts. As such, Apple says it&#8217;s entitled to a trial before the settlement is approved. The DOJ says Apple &#8220;is not entitled to preclude the United States and Apple&#8217;s co-defendants from obtaining the immediate benefits of their settlements, as it is well established that the United States &#8216;need not prove its underlying allegations in a Tunney Act proceeding.&#8217;&#8221; (The Tunney Act relates to anti-trust proceedings).</p>
<p>The DOJ claims that &#8220;in reality, what troubles Apple is that the decree returns pricing discretion not just to Apple, but also to its retail competitors.&#8221;</p>
<h2>Response to Penguin</h2>
<p>Last week, <a href="http://paidcontent.org/2012/08/16/publishers-and-authors-guild-bash-ebook-settlement/">Penguin argued that the DOJ has not proven</a> that ebook prices across the board rose under agency pricing. Penguin, which along with Macmillan is holding out against the settlement, also provided evidence showing that even prior to agency, Amazon priced many of its new titles above $9.99.</p>
<p>The DOJ does not respond to this specific point, but rather presents charts (<a href="http://gigaompaidcontent.files.wordpress.com/2012/08/106-1.pdf">chart 1-PDF</a>, <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/106-2.pdf">chart 2-PDF</a>) showing that &#8220;Penguin did indeed raise its prices as soon as it gained power to do so. &#8220;In four weeks spanning the time when Penguin took retail pricing power from Amazon, the average price for a Penguin e-book sold through Amazon increased 17 percent, and the average price for a Penguin &#8216;new release&#8217; e-book sold through Amazon increased 21 percent.&#8221; Here are the DOJ&#8217;s charts (<a href="http://gigaompaidcontent.files.wordpress.com/2012/08/106-1.pdf">1</a>, <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/106-2.pdf">2</a>) and <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/106-main.pdf">accompanying methodology</a>.</p>
<p>Penguin had argued that the DOJ should turn over all of its research on ebook pricing, since that research is apparently the basis for its conclusion that ebook prices rose across the board under agency pricing. The DOJ refuses, citing case law: &#8220;There is simply no basis for Penguin&#8217;s assertion that the United States must produce internal economic analyses to support its settlement.&#8221;</p>
<h2>Response to Macmillan</h2>
<p><a href="http://paidcontent.org/2012/08/16/publishers-and-authors-guild-bash-ebook-settlement/">Macmillan echoed Penguin&#8217;s demand for the DOJ&#8217;s research</a> on ebook pricing and also asked the DOJ to show, as required by antitrust law, that the settlement would not result in Amazon gaining a monopoly. The DOJ responds by saying that there is no evidence that the settlement <em>would</em> result in Amazon gaining a monopoly because of &#8220;competition from established companies such as B&amp;N, Google, Apple, and Sony.&#8221;</p>
<p>The DOJ says &#8220;the recently announced investment by Microsoft in B&amp;N&#8217;s e-book business, and Sony&#8217;s release of a new e-reader, do not reflect any reluctance on the part of sophisticated companies to expand their sales of e-books.&#8221;</p>
<h2>Response to the ABA and Barnes &amp; Noble</h2>
<p><a href="http://paidcontent.org/2012/07/31/american-booksellers-association-barnes-noble-seek-more-influence-in-apple-ebooks-case/">In their amicus brief, the booksellers argued</a> that the number of public comments against the proposed settlement vastly outweighed the number of comments in favor of the settlement. The DOJ responds that &#8220;it is not unprecedented for parties to oppose a settlement because they have a stake in an anticompetitive status quo,&#8221; and claims &#8220;the majority of the comments received opposing the decree did not come from those seeking to represent the public interest, but rather from those that benefited from the conspiracy and that have a vested interest in maintaining the status quo.&#8221;</p>
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		<title>As time ticks down, publishers and Authors Guild slam ebook settlement</title>
		<link>http://paidcontent.org/2012/08/16/publishers-and-authors-guild-bash-ebook-settlement/</link>
		<comments>http://paidcontent.org/2012/08/16/publishers-and-authors-guild-bash-ebook-settlement/#comments</comments>
		<pubDate>Thu, 16 Aug 2012 13:20:47 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[agency pricing]]></category>
		<category><![CDATA[amazon]]></category>
		<category><![CDATA[antitrust]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[authors guild]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[department of justice]]></category>
		<category><![CDATA[ebook pricing]]></category>
		<category><![CDATA[hachette]]></category>
		<category><![CDATA[harpercollins]]></category>
		<category><![CDATA[legal]]></category>
		<category><![CDATA[macmillan]]></category>
		<category><![CDATA[penguin]]></category>
		<category><![CDATA[simon & schuster]]></category>

		<guid isPermaLink="false">http://paidcontent.org/?p=216517</guid>
		<description><![CDATA[Along with Apple, publishers Penguin and Macmillan and the Authors Guild submitted filings criticizing the DOJ's proposed ebook settlement on Wednesday. They argue that the DOJ has not provided analysis of Amazon's ebook pricing and say the settlement goes too far.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=216517&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>On Wednesday, the Authors Guild, publishers Penguin and Macmillan, and Apple filed their opposition to the Department of Justice&#8217;s proposed ebook pricing settlement with Hachette, HarperCollins and Simon &amp; Schuster. <a href="http://paidcontent.org/2012/08/15/apple-bashes-amazon-and-proposed-ebook-settlement/">I covered Apple&#8217;s response yesterday</a>. Here&#8217;s a summary of the filings from Penguin, Macmillan and the Authors Guild.</p>
<p>Like Apple, Penguin and Macmillan are fighting the DOJ in court (<a href="http://paidcontent.org/2012/06/23/doj-e-book-price-fixing-trial-set-for-june-3-2013/">the trial is set for June 2013</a>) and are not part of the proposed settlement. They had asked and received permission from Judge Denise Cote to file their opposition to the settlement. The Authors Guild is seeking to act as an <em>amicus curiae</em>, or &#8220;friend of the court,&#8221; in the proposed settlement and filed an amicus brief.</p>
<h3>Penguin</h3>
<p>&#8220;The Emperor has no clothes,&#8221; <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/penguin-statement.pdf">Penguin writes in its filing (PDF)</a>. Elaborating on the metaphor, Penguin explains that the Department of Justice claims that agency pricing caused an increase in ebook prices but &#8220;has offered no empirical evidence to clothe this claim.&#8221; If the DOJ has &#8220;systematically [examined] actual pricing,&#8221; Penguin says, it must share those findings with the Court and the public, but it has not done so. Meanwhile, Penguin notes &#8220;numerous industry participants&#8221; stated in their public comments that ebook prices have actually decreased under agency.</p>
<p>Penguin undertook an analysis of its own &#8220;pre-agency, month-by-month pricing&#8221; of new ebook releases as priced and sold by Amazon in the year before agency pricing was enacted. &#8220;What we found is that over 62% of the ebook titels for books with hardcover list prices over $20 (the typical range for bestsellers and other popular trade fiction) were priced by Amazon <em>above</em> $9.99, with many priced in the $14 to $15 dollar range.&#8221; (There are accompanying exhibits and data, but Penguin requested they be sealed and they are not available publicly.) Penguin acknowledges that the pricing of ebooks is &#8220;complex,&#8221; but says it is &#8220;absolutely clear&#8230;that the price of new release Penguin ebooks did not unvaryingly move from $9.99 to $12.99 post-agency.&#8221; Furthermore, it says that since its agency agreements with Apple and Amazon also include price ceilings, &#8220;many of these ebook prices would have been <em>less</em> under the agency model.&#8221;</p>
<h3>Macmillan</h3>
<p>Macmillan echoes Penguin in its statement that the DOJ has not offered &#8220;a single economic study or analysis showing why its mandated pricing scheme is necessary.&#8221; <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/macmillan-statement.pdf">(Filing as PDF)</a> Macmillan says &#8220;the size of Amazon&#8217;s market share is at the center of this proceeding regardless of whose narrative the Court accepts,&#8221; and while the &#8220;government&#8217;s narrative&#8221; is that Amazon achieved its &#8220;monopoly&#8221; through &#8220;superior competition,&#8221; the narrative shared by Macmillan and others is that Amazon engaged in predatory pricing. Macmillan says &#8220;the Tunney Act requires the government to show, and the Court to find if it is to approve the proposed settlement, that the settlement will not result in an Amazon market share that is contrary to the public interest,&#8221; but that the DOJ has not done so. &#8220;The issue is whether, lawfully or otherwise, Amazon will be able to use the judicially compelled discounting to grow its market share to a level that is not in the public interest.&#8221;</p>
<h3>The Authors Guild</h3>
<p style="text-align: left;">Like attorney Bob Kohn, who filed his motion earlier this week, the <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/authors-guild-amicus.pdf">Authors Guild argues (filing as PDF)</a> that the DOJ defines the ebook market too &#8220;narrowly&#8221; and disregards interrelated markets like e-reading devices &#8212; but &#8220;the realistic effects of the Proposed Judgment&#8217;s flawed remedy&#8230;reach far beyond the narrow new-release ebook market that the DOJ alleges.&#8221; Among the &#8220;critical players&#8221; that would be harmed are &#8220;traditional bookstores,&#8221; which remain &#8220;critical showrooms.&#8221; The Authors Guild believes that &#8220;of all possible remedies to the alleged collusion, requiring three large publishers to allow Amazon to sell ebooks at a loss is among the most destructive of competition that one could imagine.&#8221; The Guild requests a hearing and concludes that &#8220;the DOJ&#8217;s goal of undoing alleged collusion can be achieved with far less risk to competition.&#8221;</p>
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		<title>Apple bashes Amazon and proposed ebook settlement</title>
		<link>http://paidcontent.org/2012/08/15/apple-bashes-amazon-and-proposed-ebook-settlement/</link>
		<comments>http://paidcontent.org/2012/08/15/apple-bashes-amazon-and-proposed-ebook-settlement/#comments</comments>
		<pubDate>Wed, 15 Aug 2012 21:29:50 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[amazon]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[department of justice]]></category>
		<category><![CDATA[ebook lawsuit]]></category>
		<category><![CDATA[ebook settlement]]></category>

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		<description><![CDATA[Apple says the DOJ's proposed settlement with three publishers is unlawful because it requires Apple -- which is not settling -- to terminate its contracts with those publishers. A trial is needed, Apple says, as well as more scrutiny of Amazon's role in the lawsuit.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=216490&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>In a <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/apple-statement.pdf">memo filed with the Southern District of New York</a> this afternoon (PDF; embedded below), Apple argues that the Department of Justice&#8217;s proposed settlement with three book publishers forces Apple to tear up existing contracts. That is &#8220;fundamentally unfair, unlawful, and unprecedented,&#8221; Apple says: It&#8217;s not settling, so it&#8217;s entitled to a trial.</p>
<p>&#8220;Apple is taking a bold stance by ignoring the Judge’s admonition to the parties not to oppose the settlement, other than submitting comments,&#8221; attorney and RoyaltyShare CEO Bob Kohn, who <a href="http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/">is seeking permission to file an amicus brief in the case</a>, tells me. &#8220;Apple makes a good point that the proposed settlement terminates Apple’s agency contracts without a trial and that would be an unprecedented violation of Apple’s right to due process.&#8221;</p>
<p>The proposed settlement would require the three settling publishers &#8212; HarperCollins, Hachette and Simon &amp; Schuster &#8212; to terminate their existing agency pricing contracts with Apple. Apple says that isn&#8217;t fair: &#8220;The Government is seeking to impose a remedy on Apple before there has been <em>any finding</em> of an antitrust violation.&#8221; This case, the company states, revolves around &#8220;an alleged conspiracy to force Amazon to adopt agency.&#8221; So a settlement &#8220;enjoining collusion or precluding publishers from forcing agency on Amazon would be appropriate,&#8221; but Apple is entitled to defend its contracts in court.</p>
<p>Apple also says the most favored nation clauses in its contracts have not &#8220;forced any publisher to adopt agency with other retailers,&#8221; and notes that &#8220;many independent publishers&#8221; &#8212; not mentioned by name here, but they include Sourcebooks and Scholastic &#8212; have agency pricing agreements with Apple and wholesale agreements with Amazon.</p>
<p>Kohn objects to this. If the settling publishers were to terminate their agency agreements with Amazon, he says, &#8220;that would (a) allow Amazon to resume predatory pricing (i.e., selling below its marginal cost) and (b) allow Apple, under its agency agreement with the publishers, exercise its MFN clause to match Amazon’s discounts. Since the publishers get 70 percent of what Apple charges, this could really hurt the settling publishers. I don’t think the Apple lawyers intended this, but it does seem an unfair result to the settling publishers.&#8221;</p>
<p>Apple&#8217;s filing appears intended to increase scrutiny of the proposed settlement but also, at a deeper strategic level, to protect the commission-style pricing system that underlies its entire content business.</p>
<h2>Amazon&#8217;s story &#8220;has yet to be scrutinized&#8221;</h2>
<p>In a footnote, Apple says that many of the public comments on the proposed settlement</p>
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<blockquote><p>expressed concerns about the possibility that the Government has unwittingly placed a thumb on the scales in favor of Amazon, the industry monopolist. Amazon was the driving force behind the Government’s investigation, and it told a story to the Government that has yet to be scrutinized. Amazon talked with the Government repeatedly throughout the investigation, even hosting a two-day meeting at its Seattle headquarters. In all, the Government met with at least fourteen Amazon employees—yet not once under oath. The Government required that Amazon turn over a mere 4,500 documents, a fraction of what was required of others.</p></blockquote>
<p>Therefore, Apple says, the settlement should be rejected &#8212; or the Court should defer ruling on it until after the trial, which is set for June 2013.</p>
<p>Full document below.</p>
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		<title>Attorney asks DOJ to release findings on Amazon&#8217;s &#8220;predatory&#8221; ebook pricing</title>
		<link>http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/</link>
		<comments>http://paidcontent.org/2012/08/13/attorney-asks-doj-to-release-its-findings-on-amazons-predatory-pricing-of-ebooks/#comments</comments>
		<pubDate>Mon, 13 Aug 2012 17:06:54 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[amazon]]></category>
		<category><![CDATA[apple]]></category>
		<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[department of justice]]></category>
		<category><![CDATA[ebooks]]></category>
		<category><![CDATA[kindle]]></category>
		<category><![CDATA[predatory pricing]]></category>

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		<description><![CDATA[In an amicus brief responding to the DOJ's proposed ebook pricing settlement against Apple and publishers, attorney Bob Kohn says the DOJ unwittingly showed that Amazon used predatory pricing on ebooks, and asks that the DOJ's investigation of Amazon be turned over to the court.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=216307&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>Attorney and Royalty Share CEO Bob Kohn is <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/memorandum-in-support-of-motion-of-bob-kohn-for-leave-to-partic-as-amicus-curiae.pdf">seeking permission</a> (PDF) from U.S. District Judge Denise Cote to file an amicus brief in the Department of Justice&#8217;s <a href="http://paidcontent.org/2012/04/16/what-does-the-doj-e-book-pricing-lawsuit-mean-for-readers-now/">proposed ebook pricing settlement</a> with book publishers. In the <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/brief-of-bob-kohn-as-amicus-curiae.pdf">brief that Kohn filed with the court this morning</a> (PDF, and embedded below), he says the DOJ&#8217;s own investigation into Amazon&#8217;s ebook pricing practices shows that the company engaged in predatory pricing. He asks the Court to demand that the DOJ turn over all documents relating to its investigation of Amazon&#8217;s ebook pricing practices.</p>
<p>In addition, <a href="http://gigaompaidcontent.files.wordpress.com/2012/08/us-v-apple-12-cv-2826-request-for-hearing.pdf">Kohn asks Judge Cote</a> (PDF) to hold a hearing on the settlement &#8212; something that the Department of Justice is opposed to &#8212; and asks permission &#8220;to participate in oral argument at any such hearing to address issues that have been raised by the Justice Department’s response to the public comments.&#8221;</p>
<p><strong>A bit of background before we get into Kohn&#8217;s argument:</strong> The Department of Justice&#8217;s proposed final settlement with HarperCollins, Hachette and Simon &amp; Schuster <a href="http://paidcontent.org/2012/04/16/what-does-the-doj-e-book-pricing-lawsuit-mean-for-readers-now/">would require the settling publishers to terminate existing agreements with Apple and would end agency pricing for those publishers for two years</a>. (Apple, Macmillan and Penguin are fighting the case in court, but <a href="http://paidcontent.org/2012/06/23/doj-e-book-price-fixing-trial-set-for-june-3-2013/">the trial will not begin until June 2013</a>.) The DOJ <a href="http://paidcontent.org/2012/07/23/justice-department-slams-apple-refuses-to-modify-e-book-settlement/">received 868 public comments on the settlement</a>, nearly all of which opposed it. For more, see our guides &#8220;<a href="http://paidcontent.org/2012/04/16/what-does-the-doj-e-book-pricing-lawsuit-mean-for-readers-now/">What does the DOJ ebook pricing lawsuit mean for readers now?</a>&#8221; and &#8220;<a href="http://paidcontent.org/2012/04/11/everything-you-need-to-know-about-e-book-doj-lawsuit-in-one-post/">Everything you need to know about the ebook lawsuit in one post.</a>&#8220;</p>
<p>Judge Cote previously approved Barnes &amp; Noble and the American Booksellers Association&#8217;s request to file an amicus brief, but <a href="http://paidcontent.org/2012/08/08/as-verdict-on-ebook-pricing-settlement-nears-apple-gets-5-pages-to-respond-to-doj/">she limited them</a> to the arguments they&#8217;d already submitted in support of the brief, rather than a new one. She granted Apple five pages to respond to the proposed settlement, rather than the ten pages the company had requested. Kohn&#8217;s brief is 25 pages long and he notes that since the settling publishers will not be objecting to the proposed settlement themselves, &#8220;the Court should welcome <em>amicus curiae</em> participation to keep the United States accountable for its statements of law.&#8221; However, there is no guarantee that Judge Cote will approve Kohn&#8217;s brief.</p>
<h3>The DOJ mistakes ebooks for printed books</h3>
<p>Kohn argues that the DOJ mischaracterizes ebooks as a private good like &#8220;apples or printed books.&#8221; Rather, he says, ebooks are public goods: &#8220;an ebook can be consumed without leaving any less for others to consume&#8221; and can even be consumed free due to piracy. In addition ebooks are &#8221;systems goods&#8221; that &#8220;need to interoperate with other products [like e-readers]to have value.&#8221; By contrast, &#8220;consumers can read printed books right off the shelf, standing alone.&#8221;</p>
<p>The fact that ebooks are public goods and systems goods matters because supply and demand don&#8217;t operate on them normally, Kohn writes. He says &#8220;antitrust analysis must take these differences into account in evaluating specific market circumstances in which transactions occur.&#8221; The DOJ failed to do this, he argues. By treating ebooks the same as &#8220;apples or printed books,&#8221; it ignored the fact that &#8220;the ebook market is best characterized as a stack of interdependent markets.&#8221;</p>
<h3>The DOJ itself provides evidence that Amazon acted as a predator</h3>
<p>Kohn argues that &#8220;sufficient &#8216;evidence&#8217; of Amazon&#8217;s exclusionary threat is alleged in the government&#8217;s own Complaint and the CIS [Competitive Impact Statement].&#8221; He notes that the DOJ&#8217;s original complaint</p>
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<blockquote><p>alleges that Amazon &#8216;lowered substantially the price of newly released and bestselling ebooks,&#8217; and according to the CIS, Amazon bought ebooks from publishers for “a discount (usually around 50%) off the price printed on the physical edition of the book (the ‘List Price’).&#8221; Thus, for example, an ebook with a List Price of $26.00 would be sold to Amazon for $13.00 and Amazon would sell that copy to a consumer for $9.9947 &#8212; a marginal loss of over $3.00 per unit. In the economics terms, this practice is known as &#8216;penetration pricing,&#8217; the practice of reducing the price of a component of the system (e.g., ebooks) to initial adopters of the system (e.g., an ebook platform, such as Kindle), thereby enhancing the network effects operating in the market to spur the consumer adoption of the system. In legal terms, Amazon engaged in a clear case of &#8216;predatory pricing,&#8217; an exclusionary practice that is illegal under federal and state antitrust laws.</p></blockquote>
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<p>Kohn also takes issue with the DOJ&#8217;s standard for predatory pricing. In its <a href="http://paidcontent.org/2012/07/23/justice-department-slams-apple-refuses-to-modify-e-book-settlement/">response to the public comments</a>, the DOJ said &#8220;Amazon&#8217;s ebook distribution business has been consistently profitable, even when substantially discounting some newly released and bestselling titles.&#8221; Kohn notes that according to case law, profitability is not a standard for predatory pricing and the Second Circuit previously ruled that &#8220;prices below reasonably anticipated marginal cost will be presumed illegal.&#8221;</p>
<p>Before agency pricing was enacted, Kohn says &#8220;Amazon sold every newly-released and bestselling ebook made available by the Defendant Publishers and by most, if not all, independent book publishers, at below its marginal cost, consistently.&#8221; The only exempt ebooks, he says, were those self-published through Kindle Direct Publishing.</p>
<p>This is relevant to the question of whether the settlement is in the public interest, Kohn argues, because:</p>
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<blockquote><p>Amazon’s $9.99 price was not the result of price competition on the merits, but of Amazon’s illegal predatory pricing activity. As the Second Circuit has acknowledged, selling below marginal cost is antithetical to consumer welfare and is presumptively illegal. Accordingly, the Defendants conduct could not, as a matter of law, have been aimed to illegally raise prices, as the Complaint alleges &#8212; unless the objective were to raise prices above Amazon’s marginal cost.</p>
<p>Accordingly, any alleged conduct that resulted in raising illegally-low prices up to the level of Amazon’s marginal cost cannot be a violation of the Sherman Act, because the government cannot prove any consumer harm.</p></blockquote>
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<p>Kohn demands that the DOJ turn its investigation &#8220;into the facts of Amazon&#8217;s pricing practices&#8221; over to the court. &#8220;If the DOJ does not provide transparency into the results of its &#8216;investigation,&#8217; then the reasonableness of its conclusions cannot be sustained,&#8221; he writes.</p>
<h3>Efficient prices &#8212; not low prices &#8212; are in the public interest</h3>
<p>Kohn says he is &#8220;gob-smacked&#8221; to read the DOJ declare that low prices are &#8220;one of the principal goals of the antitrust laws.&#8221; &#8220;Low prices are not the core ambition of either the law or the markets,&#8221; he writes. &#8220;Efficient prices are&#8230;Upon this fundamentally flawed legal foundation, one should be hard pressed to find the reasonableness in the government’s conclusion that the settlement is in the public interest.&#8221;</p>
<p>The proposed final settlement &#8220;would constitute a tragic miscarriage of justice,&#8221; Kohn concludes, and recommends that the Court &#8220;send the DOJ back to the drawing board&#8221; to come up with &#8220;a consent decree that enjoins any potentially collusive communications among the Defendants in the future, with some monitoring of information exchanges for a limited period.&#8221;</p>
<p>The filing is below.</p>
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		<title>DOJ says it received over 800 comments on ebook pricing case, needs more time to publish them</title>
		<link>http://paidcontent.org/2012/07/11/doj-says-it-received-over-800-comments-on-ebook-pricing-case-needs-more-time-to-post-them-publicly/</link>
		<comments>http://paidcontent.org/2012/07/11/doj-says-it-received-over-800-comments-on-ebook-pricing-case-needs-more-time-to-post-them-publicly/#comments</comments>
		<pubDate>Thu, 12 Jul 2012 02:22:40 +0000</pubDate>
		<dc:creator>Laura Hazard Owen</dc:creator>
				<category><![CDATA[Bob Kohn]]></category>
		<category><![CDATA[Denise Cote]]></category>
		<category><![CDATA[department of justice]]></category>
		<category><![CDATA[ebook pricing]]></category>
		<category><![CDATA[ebook pricing lawsuit]]></category>

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		<description><![CDATA[In response to an attorney's letter criticizing the delayed publication of comments on the proposed ebook pricing settlement, the Department of Justice says it received over 800 comments and is "working expeditiously" to make them available to the public by July 20.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=paidcontent.org&#038;blog=33319749&#038;post=213720&#038;subd=gigaompaidcontent&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p><a href="http://gigaompaidcontent.files.wordpress.com/2012/07/stack-of-letters.jpeg"><img  title="stack of letters" src="http://gigaompaidcontent.files.wordpress.com/2012/07/stack-of-letters.jpeg?w=300&#038;h=200" alt="" width="300" height="200" class="alignright size-medium wp-image-213728" /></a>In response to <a href="http://paidcontent.org/2012/07/11/hey-doj-where-are-the-public-comments-on-the-ebook-pricing-case/">a letter from attorney Bob Kohn regarding the delayed publication</a> of all the comments received on the proposed ebook pricing settlement, the Department of Justice says it received over 800 comments on the proposed settlement and is &#8220;working expeditiously&#8221; to make them available to the public by roughly July 20, 2012.</p>
<p>(Side note: That is a LOT of letters. As of mid-June, the DOJ had only received about 150 of them.)</p>
<p>The Department of Justice was supposed to publish <a href="http://paidcontent.org/2012/05/31/letters-to-the-doj-ebook-pricing/">all of the letters it has received</a> about the ebook pricing settlement on its <a href="http://www.justice.gov/atr/cases/applebooks.html">website</a> by June 25. That did not hapen. Earlier this week Kohn, an attorney and CEO of Royalty Share who previously wrote a legal brief in support of Apple and the publishers (but does not work for any of the parties involved), sent Denise Cote, the judge presiding over the case, a letter stating that the DOJ’s failure to make the letters available to the public &#8212; and to provide its response to those comments &#8212; on time violates federal antitrust rules.</p>
<p>Today Mark Ryan, an attorney for the Department of Justice, <a href="http://gigaompaidcontent.files.wordpress.com/2012/07/20120711-letter-to-judge-cote.pdf">sent a letter to Judge Cote</a> in response to Kohn&#8217;s letter. Ryan says it received &#8220;more than 800 comments&#8230;relating to the proposed consent judgment,&#8221; and &#8220;as many as half&#8221; of those &#8220;arrived within a few days or after the comment deadline&#8221; of June 25. Ryan argues it would not have been possible for the DOJ to respond to all the comments immediately or to publish them all online immediately because it has to ensure that all of the materials are converted into electronic format and made accessible to the disabled. In addition, Ryan claims that on April 18, the DOJ requested and was granted &#8220;additional time to prepare and file our submission.</p>
<p>Ryan says the DOJ will publish the comments and, simultaneously, its response to them roughly two weeks before August 3, the date of the proposed final judgment on the settlement. That would mean the public can expect to see the letters on the DOJ&#8217;s website around Friday, July 20. This timetable, Ryan argues, &#8220;results in no conceivable harm to Mr. Kohn or any other member of the public, or to any actual party to the proceedings.&#8221;</p>
<p><a href="http://gigaompaidcontent.files.wordpress.com/2012/07/kohn-ltr-to-judge-cote-july-11-2012.pdf">In a response</a>, Kohn says he can find no record of the DOJ&#8217;s request to extend the comment period on April 18 and that in fact the DOJ reversed its position in a June letter to the court, when it said the comment period would end on June 25. &#8220;The government had an opportunity to seek more time, but it didn&#8217;t,&#8221; he writes. &#8220;It can&#8217;t have it both ways: that is, ask the court to cut off the public&#8217;s right to submit comments on June 25, and then file and publish the comments at its own convenience on its own schedule.&#8221; And if the DOJ finds the posting of the letters to a website onerous, Kohn writes, its complaints should be addressed not to the court or to the public &#8220;but to Congress who passed the law.&#8221;</p>
<p>In response to the notion that the DOJ&#8217;s timetable does not harm the public, Kohn writes, &#8220;the government should not be the last to speak about whether the public has been prejudiced by the government&#8217;s delay.&#8221;</p>
<p><a href="http://gigaompaidcontent.files.wordpress.com/2012/07/20120711-letter-to-judge-cote.pdf">DOJ&#8217;s letter to Judge Cote</a></p>
<p><a href="http://gigaompaidcontent.files.wordpress.com/2012/07/kohn-ltr-to-judge-cote-july-11-2012.pdf">Bob Kohn&#8217;s response</a></p>
<p><em>Photo <a href="http://www.shutterstock.com/pic.mhtml?id=105496925">courtesy of Shutterstock</a></em></p>
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