So, many of you have heard that the DOJ is rattling its sabers at the original Agency 5 and Apple, claiming that they colluded in creating the Agency Model of pricing, a pricing scheme for ebooks that allowed publishers to set prices among vendors without the possibility of discounting.
There have been a number of responses from various sources, but most of the apologists for agency pricing say the same thing. Scott Turow of the Author’s Guild response is pretty standard, as he explains why agency pricing was necessary:
Two years after it introduced the Kindle, Amazon continued to take losses on a deep list of e-book titles, undercutting hardcover sales of the most popular frontlist titles at its brick and mortar competitors.Â Those losses paid huge dividends.Â By the end of 2009, Amazon held an estimated 90% of the rapidly growing e-book market. Traditional bookstores were shutting down or scaling back. Borders was on its knees. Barnes & Noble had gamely just begun selling its Nook, but it lacked the capital to absorb e-book losses for long.
So, the argument goes, agency pricing was necessary because Amazon was being anticompetitive in the first place. Amazon was engaged in predatory pricing (which is a claim of monopolization, or perhaps in Amazon’s case, attempted monopolization). Predatory pricing is anticompetitive, of course: it raises the barriers to entry to a market, and reduces the number of competitors out there. (It is also hard to distinguish between a highly competitive market in which firms slash prices in order to compete with one another. This doesn’t mean predatory pricing is okay, or that Amazon wasn’t engaged in predatory pricing–but it does mean that it’s not an easy call to make.)
But assuming that Amazon’s pricing was predatory (and you could make good arguments on either side), what Turow says is still not an answer.
Self-defense is a justification for murder and assault. “I had to hit him; he was going to shoot me” works. If you are in imminent danger of death or bodily injury, saying that you must wait for the authorities to come rings rather hollow. But try these on for size: “I had to steal his car; he was going to take my wallet.” Or: “I had to engage in insider trading; she was embezzling funds and the stock price was about to go down.” Uh, no.
Those are not justifications that get you off the hook for your wrongful act. If someone is doing something wrong, and the harm you suffer is purely economic, you can recover for that harm. If it is so patently clear that Amazon was engaged in the attempted monopolization act of predatory pricing, sue them and recover treble damages under the Sherman Act. (If it is not so clear that you’d win, well…that just means that your justification sounds a little thin.)
More importantly, like someone who engages in insider trading, the victim of the harm is not the person who supposedly done you wrong, but the consumer. In this case, agency pricing actually made Amazon a ton of money–and cost readers in terms of access to books and higher prices. Casting agency pricing as an act of defiant vigilantism is all well and good in terms of rhetoric, but most of the things that vigilantes do are illegal.