The Shakedown Behind The DOJ Apple/Publisher eBook Antitrust Lawsuit

Money Versus ParagraphsThe Department of Justice filed an antitrust lawsuit against Apple and the major publishers for conspiring to force Amazon to sell ebooks at higher price points than $9.99 USD. This is ironic—and moronic—for several reasons.

Until Apple introduced the agency model for letting publishers set their own ebook prices and keeping 70% of each sale, Amazon had a 90% market share as it sold the bestsellers as lost leaders to sell more Kindle devices and the publishers kept 35% of each sale. After those changes went into effect, Amazon’s market share dropped to 60% as Apple, Barnes & Noble, Sony and other ebook retailers expanded their market share.

The DOJ may have a better antitrust case against the publishers for maintaining higher ebook prices than it does against Apple. The publishers are still stuck in the traditional brick-and-mortar world of printed books. If the ebook price of a new printed book is substantially less, the consumers will favor the cheaper alternative. Higher ebook prices are necessary to maintain an unsustainable business model.

Why does the ebook version of a 50-year-old science fiction novel, “Starship Troopers” by Robert A. Heinlein, have to be priced at $9.99 USD like a premium paperback?

But the antitrust lawsuit isn’t really about ebook prices. It’s about Apple sitting on $100-billion-dollar in cash reserve and not sharing the wealth with the Washington lobbyists, who in turn wine and dine the political establishment.

The DOJ Shakedown

When Microsoft had a multi-billion-dollar cash reserves, it spent nothing on lobbyists. After the DOJ filed the antitrust lawsuit in 1998, Microsoft spent millions of dollars each year on lobbyists thereafter. The antitrust lawsuit failed to quash Microsoft’s twin monopoly in operating systems and office suites, but it was a significant boon for Washington lobbyists.

As Silicon Valley companies acquire huge market share and cash reserves, they have to spend more money on Washington lobbyists as the DOJ and other regulatory agencies threaten various legal actions, and entertain presidential candidates when they stomp through Silicon Valley for campaign fundraisers. As Willie Sutton once said about banks, it’s where the money is.

If that wasn’t ironic enough, lobbyists are complaining about a new rule that would prevent them from wining and dining the two million federal workers who are not politicians but often wield indirect influence on the government.

Investigate Amazon

Being a writer who publishes ebook, the antitrust lawsuit is a concern but doesn’t impact me as my short story and essay ebooks are priced from $0.99 USD to $2.99 USD. I doubt I will ever put out an ebook priced at $9.99 USD or higher .

Like many things in life, I have the opposite problem. When I released my writing blog compilation ebook, I priced it at $0.99 USD on Amazon and, because it was listed for FREE on Smashwords, there was a “technical glitch” regarding the pricing info that made it unavailable. I subsequently had to unpublished the ebook from Amazon.

If the DOJ wants to get serious about ebook prices, they should investigate Amazon for stifling FREE ebooks.

UPDATED 04/16/2012 — Looked like it was a technical glitch. My writing blog compilation ebook is available at Amazon—for $0.99 USD. I’m pestering them to make it free. Probably won’t happen until the ebook appears on the Smashwords third-party distribution network (i.e., Apple, Barnes & Noble, Diesel, Kobo, Sony, etc.).

Being A Working Stiff Again

After two years of being unemployed, five months of on-and-off-but-mostly-off contract work, and a Chapter 7 bankruptcy still in progress, I’m a working stiff again with two PC technician jobs. The first job is at a local Fortune 500 company that I had previously worked at in the past, and the other job is for a moving company in San Mateo county that does business with other Fortune 500 companies on the weekends. Both of these jobs are $7/hr less than what I was making in my last full time job before Wall Street cratered the economy in the Great Recession. With bankruptcy eliminating my credit card debt, I’m making enough money from both jobs to cover my living expenses and rebuild my savings. I’m hoping to work six to seven days a week from now through the summer.

I’m not kidding about being a working stiff. These are not comfortable jobs where I’m sitting down to stare at a computer all day. These are jobs where I’m running around, crawling underneath desks and hauling new/old computer systems. I haven’t worked this hard since I did construction work with my father for two years after my 18th birthday. I’ve been soaking in epsom salt baths—sometimes before and after work—to relieve my stiff muscles.

Not surprisingly, writing blog posts and short stories have taken a hit from my new work schedule. During two years of unemployment and five months of underemployment, I had 25+ short stories published in eight anthologies and published 14 ebooks with 32 short stories (new and reprints), poems and essays. That pace will slow down as turn my attention from creating new short stories to revising my first novel during the summer. My goal is to write/edit/revise for 90 minutes per day and do admin tasks in whatever free time that I can find. I’m already missing being an unemployed writer and looking forward to the day where I can write full time without having to crawl under someone else’s desk.

If You’re Going To Lose Big, It Helps To Be A Billionaire

During the California gubernatorial campaign last year, Republican Meg Whitman spent a record $144-million of her own money to lose big to Democrat Jerry Brown. A new report came out that her wealth was relatively unchanged over the last three years despite dropping a pretty nickel on her first attempt at public office. Whitman, however, did drop in rank from 773rd to 938th on the Forbes list of the world’s richest people. When you’re a billionaire several times over, $144-million really is pocket change.

A recruiter called me last year to talk about being a PC technician at the Whitman campaign office in Palo Alto. I flat-out refused to consider taking the position. This astonished the recruiter. I had previously worked 13 months at eBay as a desktop support specialist. A perfect background to work with the former CEO of eBay. After all, everyone at eBay loves Whitman. Sure, if you’re working at eBay. Like most tech companies in Silicon Valley, drinking the Kool-Aid is a requirement if you want to keep your job. Like most corporate CEOs who pull down a stratospheric salary, Whitman developed a sinister dark side when it came to dealing with the employees who serve her: a PR person was shoved in a verbal confrontation in 2007, and an illegally employed nanny of nine years was let go before the campaign got started in 2009.

Did I want to work for such a person? No way, Jose.

I also had more personal reasons not to work for the Whitman campaign. As a moderate conservative, I was supporting moderate conservative Tom Campbell in his run for governor. Didn’t make sense to work for Whitman when I wanted her to lose the primary election. Unfortunately, with the Tea Party gaining ungodly influence in the primary elections, a moderate conservative didn’t have a prayer even if he had a better chance at winning independent voters in the general election. Campbell dropped out of the governor’s race to run for U.S. senator but he still couldn’t beat the more conservative Carly Fionrina. I ended up voting for Jerry Brown for governor and Barbara Boxer for senator. Not a single Republican candidate won state office in the 2010 election.

For a moment I did seriously consider taking the job to write a kiss-and-tell essay after the campaign was over. I saw a documentary about Hunter S. Thompson who covered the presidential campaigns of President Richard Nixon and George McGovern for Rolling Stone magazine about a week before the recruiter called. I always did love the idea of independent journalism that spits in the eye of the establishment news media. I’m now reading “Smoking Typewriters: The Sixties Underground Press and the Rise of Alternative Media in America” by John McMillian.

And maybe I did make a mistake by not taking the job to do just that.

I write and publish mostly fiction, and never seriously bothered with writing non-fiction beyond the occasional blog post. After the election was over I started creating ebooks to reprint my previously published short stories, and learned from other writers that original non-fiction tend to sell better as ebooks. (The reprint of my Christmas shopping essay is still my best-selling ebook to date.) If I’m still doing contract work next year, I’ll work for one of the presidential campaigns and write a kiss-and-tell ebook.