Apple vs. Amazon? Not really. More like the publishing industry vs. readers and writers. But perhaps Harry Potter has the answer.

The US Department of Justice (DoJ) is prosecuting Apple, Macmillan, HarperCollins, Simon & Schuster, Hachette, and Penguin for “conspiring to end e-book retailers’ freedom to compete on price.” The DoJ claims that “To effectuate their conspiracy, the publisher defendants teamed up with defendant Apple, which shared the same goal of restraining retail price competition in the sale of e-books,”

What that means in plain English is that Apple and the others adopted an agency model approach to eBook pricing that effectively guaranteed Apple a 30% margin and positioned the publishers to challenge Amazon’s push to grow the eBook market by keeping prices below $10, a pricing model which worked for Amazon’s margin but meant that the traditional publishing houses couldn’t make the profit they wanted on titles sold as eBooks.

Here’s the BBC’s report on the case together with links to a copy of the DoJ complaint

The DoJ are positioning themselves as champions of the consumer, holding Apple and its band of five “conspirators” to account for hatching an evil plan to take money from consumers by forcing prices artificially high.

Apple are trying to position themselves as the good guy, protecting consumers from living under an Amazon eBook monopoly. Kevin Dede, an analyst from Auriga described this as “defending interests of all the members of [Apple’s] ‘book’ value chain, including authors, publisher, and customers, as it does with all its constituents that offer value to the end customer,”

Amazon does in fact have a near monopoly in the eBook market: an 85% market share in 2010 of a medium that is predicted to become 40% of total publishing sales by the end of 2012. Amazon uses DRM (Digital Rights Management) to defend that position, using the excuse of defending against piracy to effectively giving readers less rights over eBooks than they have over hardcopies and locking users into what what Charles Stross calls “the walled garden of the Kindle store”. He argues that unless DRM is removed from eBooks “all of us who like to read (or write) fiction get to live in the Amazon company town.”

DRM has already died in the music market. Its death came about not because piracy went away but because the music industry finally came up with a variable pricing model that gave profit without the need for DRM.

I look forward to the death of DRM in the eBook market too.

I would like to see the technology used as a bridge between writers and readers where the readers own what they buy, the writers get paid for what they sell and the people who provide the bridge make a reasonable profit.

But if Apple just wants its 30% and Amazon wants a DRM death-grip to secure its estimated 10 million Kindle sales in 2011 and its $5 billion eBook revenue in 2011 and the New York publishers want to turn the clock back to making money from Hardbacks, then Trade Paperbacks and then Mass Market Paperbacks, then who is on the side of the reader and the writer?

Perhaps the only bright spot on the horizon is Pottermore which is watermarked but DRM free. This is J.K. Rowling’s way of taking control of eBook publishing of the Harry Potter books. She has the clout to change the way business is done and she’s used it to come up with a much fairer deal.

Perhaps it will be Harry Potter who finally provides a means of ridding the epublishing world of the “You Know Whos” who currently prey on reader and writer alike.


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