Amazon and the New World of Publishing

Abstract

In 2012 the Department of Justice sued Apple and the major book publishers for their role in a conspiracy to raise the prices of eBooks. The publishers settled while the Apple case proceeded to trial in which the company was found liable for violating the Sherman Act. Chris Sagers’s upcoming book, Apple, Antitrust, and Irony (Harvard University Press) explores the conspiracy and the events that led Apple to orchestrate it. Through the Apple conspiracy, Sagers examines developments in antitrust law and competition policy in recent decades.

This essay offers several observations concerning Sagers’s comprehensive account, the Apple conspiracy, and mainly its aftermath. Analyzing that aftermath means focusing on the entity that was left in control of the market once the dust settled: Amazon.

The essay argues that Amazon’s dominance in the book and eBook markets is troubling and that shielding it from legal scrutiny is problematic. Nevertheless, it explains that while Amazon’s actions gradually push the major publishers out of the market, their potential demise is not necessarily bad. Technological changes reduced the value of many of the major publishers’ services to the point in which the publishers and Amazon are two types of intermediaries in a market that might need only one. As such, the conflict between Amazon and the major publishers is partly unavoidable as it is just another example of the tension between vested short-term interests and socially desirable long-term disruptive reforms.

The essay then focuses on books’ authors by making a rather radical claim: as Amazon gains market power it puts itself in a position of determining the overall reward for the authors’ creativity. As such, Amazon’s policies might be replacing parts of copyright law itself as the source of creativity’s incentives structure.

Keywords: Copyright, Intellectual Property, Antitrust, eBooks, Apple, Amazon

JEL Classification: K2, O34