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Mitterand warns on 'predatory' e-book pricing
16.05.12 | Barbara Casassus
Outgoing French culture minister Frédéric Mitterrand has written to European Competition commissioner Joaquin Almnunia warning that investigations now underway could foster predatory book pricing by powerful distributors such as Amazon, the French trade publication Livres Hebdo has reported.
Allowing publishers to fix prices has proved to be the best way of preventing a single player from imposing its economic model in the United States and Europe, and has permitted them to reduce e-book prices to levels that “reconcile the legitimate interests of the consumer and a fair remuneration for creation”, he said.
In assessing fair competition and editorial diversity in the e-book market, the Commission should take account of the tax advantages and strategy of selling at a loss applied by Amazon and other large American internet operators, added Mitterrand, whose successor will be named today (16th May) in the government to be formed following socialist François Hollande’s election as president on the 6th.
E-book pricing is under fire from the competition authorities in the United States and Europe.
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Minister Mitterand has a quite French high-end economic approach to eBooks just as that layer of French business stands virtually alone in its excellence in presenting the finest retailers, wines, and cheeses, among other things. But, the other piece is the French buy more McDonalds' products per capita than any other major country.
The eBooks for publishers such as us at Simply Magazine deliver stunning margins for ourselves and our authors--at very low prices. At $2.99 and higher we get $2.00 (70%) each book WIRED to us every 30 days with no physical costs, no returns (if one is made it is simply deducted from the next check; but at these low prices we hardly get 1 per month!).
The reader gets a bonanza because of the low price and high value. No need to go shopping for a book they can't find. America does dominate this market because it does in general dominate opening price/low price retail from Walmart and McDonalds and dollar stores on down.
eBooks have taken us worldwide (41% of our sales are now non-North America) and given readers much more selection. Audible/iTunes have done a similar thing for us worldwide as well.
Unlike physical books that quickly disappear from retail (even Agatha Christie rarely has more than 20 of her 80 books in a bookstore), our eBooks are up forever if not longer....
Physical book stores are disappearing as video stores have. The US, as is often the case, was the first to see them all but disappear with Borders gone and B & N all but gone, with their focus on their Nook, which keeps improving along with Kindle.
Above all, Minister Mitterand and others with his point of view should consider that France needs to consider riding these new technology waves, not try to stop them, in order to grow, increase productivity, and reduce costs--the current French economic challenge, with this only being a tiny part of it--but an excellent example of the response and trend.
CORRECTED TEXT
In the U.S. we call it the Walmart Effect. When Walmart comes to town everything changes.
It all depends on the world you want to build. There are regulations in all industries. Some reasonable and intelligent and others not. We need to find the right balance in this regard.
I believe the consumer should have options however online retailers have huge footprints and can use their size wealth in an unfair manner in the market place in order to dominate the industry and force their will upon others while at the same time causing change that may not in the long run be in the consumers interest.
You may ask why?
Once competition is gone in the market place the remaining dominant players can raise prices at will and can manage and control the retail landscape as they wish without any consideration for the consumer or the manufacturer. The strategy of big players is to knock out the competition and any cost first and the consumer will then solely depend on them for the products. This also gives the big internet players the ability to squeeze the publisher to the point of going out of business. We are now seeing push back from publishers with Amazon in connection to the retailer raising prices for their marketing of books on the site.
That is not to say internet retailers with big footprints are all bad. They do provide the consumer with a wide variety of books. But like the big banks they need to be regulated in order for industries to stay healthy and so no one player take control. Predatory pricing is a reflection of the power shift in publishing and what we all need to determine in our considerations is the ripple impact dominant players have on society as well in the age of the internet.
Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
In the U.S. we call it the Walmart Effect. When Walmart comes to town everything changes.
It all depends on the world you want to build. There are regulations in all industries. Some reasonable and intelligent and others not. We need to find the right balance in this regard.
I believe the consumer should have options however online retailers have huge footprints and can use their size wealth in an unfair manner in the market place in order to dominate the industry and force their will upon others while at the same time causing change that may not in the long run be in the consumers interest.
You may ask why?
Once competition is gone in the market place the remaining dominant players can raise prices at will and can manage and control the retail landscape as they wish without any consideration for the consumer or the manufacturer. The strategy of big players is to knock out the competition and any cost first and the consumer will then solely depend on them for the products. This also gives the big internet players the ability to squeeze the publisher to the point of going out of business. We are now seeing push back from publishers with Amazon in connection to the retailer raising prices for their marketing of books on the site.
That is not to say internet retailers with big footprints are all bad. They do provide the consumer with a wide variety of books. But like the big banks they need to be regulated in order for industries to stay healthy and so no one player take control. Predatory pricing is a reflection of the power shift in publishing and what we all need to determine in our considerations is the ripple impact dominant players have on society as well in the age of the internet.
Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
In the physical world the consumers are safeguarded because there are thousand of publishers (in any developed countries) and thousands of retailers shops (point of sales).
No single player can exploit a dominant position by predatory pricing. A selfish retailer (if retail price is not fixed by law) would hardly become the monopolist if it dumped prices to 0 (or very close to it) alone. It would almost certainly go bust before getting a remarkable market share.
In the eCommerce of Physical books, there aren't that many online retailers, it means their bargaining power both towards publishers and consumers is much higher. If you have very deep pocket and there is no law to preempt you to, you might thing to dump price until the other competitors are out of business. However even if it was left alone, such eCommerce monopolist could not rise prices at wish, because consumers would still have the option to buy from the physical retail, which still is in most developed countries the largest distribution channel. So the risk of a eCommerce retailer that become the monopolist of book selling (both online and offline) by predatory pricing appears quite limited. So the offline retail channel acts as limit to predatory pricing in online retail channel (and viceversa). This is for books.
Let's move on eBooks.
In the sales/distribution of eBooks, on the contrary a monopolist retailer would be very dangerous because consumers, publishers and writers would hardly have any other option than to rely on the Monopolist. There is not any alternative channel for the sale of ebook. So they would either accept prices or not buy the books. This might or might not apply to consumers, but certainly it will apply to publishers and authors who would have to accept deep discounts by the monopolist retailer. To a point where some/many quality ebooks are not worthwhile being written and published.
Mr. Gottlieb is very right, predatory pricing by online retailers is a risk that capitalism alone might perhaps fail to self-contain.
It is one of the cases where legal regulations might help the market to develop and thrive at large scale.
As often regulatory laws alone might not be enough or the might come too late.
It's up to the incumbent stakeholders (writers, agents, publishers, retailers) to find a solution (including lobbying with the institutions) to limit such market risks.
Best
Marcello Vena
follow me on Twitter @marcellovena
Minister Mitterand has a quite French high-end economic approach to eBooks just as that layer of French business stands virtually alone in its excellence in presenting the finest retailers, wines, and cheeses, among other things. But, the other piece is the French buy more McDonalds' products per capita than any other major country.
The eBooks for publishers such as us at Simply Magazine deliver stunning margins for ourselves and our authors--at very low prices. At $2.99 and higher we get $2.00 (70%) each book WIRED to us every 30 days with no physical costs, no returns (if one is made it is simply deducted from the next check; but at these low prices we hardly get 1 per month!).
The reader gets a bonanza because of the low price and high value. No need to go shopping for a book they can't find. America does dominate this market because it does in general dominate opening price/low price retail from Walmart and McDonalds and dollar stores on down.
eBooks have taken us worldwide (41% of our sales are now non-North America) and given readers much more selection. Audible/iTunes have done a similar thing for us worldwide as well.
Unlike physical books that quickly disappear from retail (even Agatha Christie rarely has more than 20 of her 80 books in a bookstore), our eBooks are up forever if not longer....
Physical book stores are disappearing as video stores have. The US, as is often the case, was the first to see them all but disappear with Borders gone and B & N all but gone, with their focus on their Nook, which keeps improving along with Kindle.
Above all, Minister Mitterand and others with his point of view should consider that France needs to consider riding these new technology waves, not try to stop them, in order to grow, increase productivity, and reduce costs--the current French economic challenge, with this only being a tiny part of it--but an excellent example of the response and trend.
In the U.S. we call it the Walmart Effect. When Walmart comes to town everything changes.
It all depends on the world you want to build. There are regulations in all industries. Some reasonable and intelligent and others not. We need to find the right balance in this regard.
I believe the consumer should have options however online retailers have huge footprints and can use their size wealth in an unfair manner in the market place in order to dominate the industry and force their will upon others while at the same time causing change that may not in the long run be in the consumers interest.
You may ask why?
Once competition is gone in the market place the remaining dominant players can raise prices at will and can manage and control the retail landscape as they wish without any consideration for the consumer or the manufacturer. The strategy of big players is to knock out the competition and any cost first and the consumer will then solely depend on them for the products. This also gives the big internet players the ability to squeeze the publisher to the point of going out of business. We are now seeing push back from publishers with Amazon in connection to the retailer raising prices for their marketing of books on the site.
That is not to say internet retailers with big footprints are all bad. They do provide the consumer with a wide variety of books. But like the big banks they need to be regulated in order for industries to stay healthy and so no one player take control. Predatory pricing is a reflection of the power shift in publishing and what we all need to determine in our considerations is the ripple impact dominant players have on society as well in the age of the internet.
Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
CORRECTED TEXT
In the U.S. we call it the Walmart Effect. When Walmart comes to town everything changes.
It all depends on the world you want to build. There are regulations in all industries. Some reasonable and intelligent and others not. We need to find the right balance in this regard.
I believe the consumer should have options however online retailers have huge footprints and can use their size wealth in an unfair manner in the market place in order to dominate the industry and force their will upon others while at the same time causing change that may not in the long run be in the consumers interest.
You may ask why?
Once competition is gone in the market place the remaining dominant players can raise prices at will and can manage and control the retail landscape as they wish without any consideration for the consumer or the manufacturer. The strategy of big players is to knock out the competition and any cost first and the consumer will then solely depend on them for the products. This also gives the big internet players the ability to squeeze the publisher to the point of going out of business. We are now seeing push back from publishers with Amazon in connection to the retailer raising prices for their marketing of books on the site.
That is not to say internet retailers with big footprints are all bad. They do provide the consumer with a wide variety of books. But like the big banks they need to be regulated in order for industries to stay healthy and so no one player take control. Predatory pricing is a reflection of the power shift in publishing and what we all need to determine in our considerations is the ripple impact dominant players have on society as well in the age of the internet.
Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
In the physical world the consumers are safeguarded because there are thousand of publishers (in any developed countries) and thousands of retailers shops (point of sales).
No single player can exploit a dominant position by predatory pricing. A selfish retailer (if retail price is not fixed by law) would hardly become the monopolist if it dumped prices to 0 (or very close to it) alone. It would almost certainly go bust before getting a remarkable market share.
In the eCommerce of Physical books, there aren't that many online retailers, it means their bargaining power both towards publishers and consumers is much higher. If you have very deep pocket and there is no law to preempt you to, you might thing to dump price until the other competitors are out of business. However even if it was left alone, such eCommerce monopolist could not rise prices at wish, because consumers would still have the option to buy from the physical retail, which still is in most developed countries the largest distribution channel. So the risk of a eCommerce retailer that become the monopolist of book selling (both online and offline) by predatory pricing appears quite limited. So the offline retail channel acts as limit to predatory pricing in online retail channel (and viceversa). This is for books.
Let's move on eBooks.
In the sales/distribution of eBooks, on the contrary a monopolist retailer would be very dangerous because consumers, publishers and writers would hardly have any other option than to rely on the Monopolist. There is not any alternative channel for the sale of ebook. So they would either accept prices or not buy the books. This might or might not apply to consumers, but certainly it will apply to publishers and authors who would have to accept deep discounts by the monopolist retailer. To a point where some/many quality ebooks are not worthwhile being written and published.
Mr. Gottlieb is very right, predatory pricing by online retailers is a risk that capitalism alone might perhaps fail to self-contain.
It is one of the cases where legal regulations might help the market to develop and thrive at large scale.
As often regulatory laws alone might not be enough or the might come too late.
It's up to the incumbent stakeholders (writers, agents, publishers, retailers) to find a solution (including lobbying with the institutions) to limit such market risks.
Best
Marcello Vena
follow me on Twitter @marcellovena