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Wednesday, March 14, 2012

Moneybox: Leave Penguin Alone

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Moneybox
Leave Penguin Alone
Who cares if book publishers are colluding with Apple to raise e-book prices?
By Matthew Yglesias
Posted Wednesday, Mar 14, 2012, at 06:16 PM ET

A bit buried in last week's iPad 3 excitement was the news that Apple, along with five major American book publishers, was given notice by the Justice Department that it's about to be sued for colluding to raise prices. A tech giant can afford to shrug off something as petty as an anti-trust lawsuit over books, but for HarperCollins, Penguin, MacMillan, Hachette, and Simon & Schuster (full disclosure: my publisher) the implications are potentially quite dire. Scott Turow, president of the Authors Guild, went further and argued that "everyone who cherishes a rich literary culture" should be alarmed by the DOJ's actions. He's wrong. If there's a case against the government's actions it's that the forces of disruption buffeting traditional publishing are much too large to be blocked by any cartel. The good news is that literary culture should survive either way.

The basic question here is, how much should a digital book cost? A traditional book is, among other things, a rather heavy manufactured product. Like many manufactured goods, it's much more efficient to make a whole bunch of books at once rather than crafting them one at a time on demand. Consequently, to bring a book to market a traditional publisher needs to make a substantial up-front investment in inventory, and that inventory then needs to be lugged around the country. If consumer demand turns out to be low (the sad fate of my first book), then unsold copies end up ...

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