How market dominance is different from anticompetitive behavior
You know, I'm just grateful that the antitrust thing didn't happen before I sent the Trust layout to the copy editor.
Anyway, the whole brouhaha has been kind of interesting, because it's brought out a lot of people who don't know much about self-publishing. So there's concerns that the end of agency pricing will force down book prices (not necessarily), that lower book prices mean less money for authors (only if you don't self-publish), and that it will result in a precipitous decline in quality (not necessarily, because writers can hire help). (And gosh, isn't this the sort of helpful reassurance and advice for writers that you might expect to hear from the president of the Author's Guild? Maybe he's too busying looking for Abba LPs and Toto 8-tracks.)
One thing I thought needed more clarification than can be provided by a simple link is the difference between market dominance and anticompetitive behavior. Obviously, it's easier to engage in anticompetitive behavior if you dominate a market, but the two things aren't the same.
Let's take an example from Scott Turow's amusing little diatribe: Amazon controlled 90% of the e-book market by the end of 2009. Now its share is 60% of the e-book market.
Unlike Turow, I try to not automatically regurgitate information that has been spoon-fed to me by large publishers. Therefore, I will note that nobody knows how big the e-book market is, which means that it is impossible to determine with any accuracy who controls how much of it. (I'm crossing my fingers that the discovery process will result in some good data.)
But for the sake of argument, let's say that those numbers have some basis in reality (perhaps by "the e-book market" he means "the market of e-books produced by large publishers who provide me with talking points"). Well, Amazon dominated that market for about five minutes. And then it lost a huge chunk of market share!
Turow looks at this and says, Yay! Price-fixing did the trick! David Gaughran looks at this and says, Um, hello? At the end of 2009 the Kindle was basically the only e-reader on the market. Now there's the Nook and the iPad.
Honestly, I think Gaughran's much closer to the truth, but even if you buy Turow's argument, the fact is that competitors came into a market that was almost completely dominated by Amazon, and they quickly reduced Amazon's market share by one-third. If you are wondering why, oh why, the Department of Justice doesn't investigate big bad Amazon for anticompetitive practices? It's because Amazon didn't try to exclude competitors. Instead, Amazon allowed competitors to enter the e-book market and take away market share. That is not anticompetitive behavior.
Now, you might argue (and I'm sure the large publishers will) that thanks to all those self-publishers out there, large publishers no longer dominate the supply of e-books. Maybe so, maybe not--the absence of data on e-book sales makes it impossible to know.
But one of the reasons the publishers decided to get together with Apple and fix prices is that they were afraid that Amazon would "pit authors against publishers" and make self-publishing attractive. So the fact that Amazon went ahead and did that and now there are all these self-published e-books out there happened in spite of traditional publishing's efforts to prevent it.
In other words, the fact that traditional publishers may no longer have a dominant e-book market share doesn't mean that they didn't engage in anticompetitive behavior. If an illegal scheme backfires--I try to rip off your granny, but she's too smart for me--that doesn't somehow make it legal. Likewise the fact that the price-fixing scheme they hit upon guaranteed lower margins for publishers and a 30% profit margin for Amazon doesn't mean that they didn't engage in anticompetitive behavior. It just means that, in addition to being unethical, they weren't very smart.