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Ninc Newsletter

May 2012   •  Vol. 23, No. 05   •  Download pdf version

How the NY Times Bought Apple’s Spin
on the Feds’ Antitrust Suit Allowing
Amazon to Cut Prices on E-books

BY PETER SCHEER

The U.S. Justice Department announced this week that it will sue e-book publishers and Apple Computer for conspiring to raise e-book prices above the levels that Amazon, the dominant retailer for e-books, had been charging.

News reporters, responding critically to the government’s charges, were quick to point out that Amazon was willing and able to lose money on its e-books in order to boost sales of its profitable Kindle devices. The New York Times, for example, stated as fact, and without any attribution, that:

Amazon, which already controls about 60 percent of the e-book market, can take a loss on every book it sells to gain market share for its Kindle devices. When it has enough competitive advantage, it can dictate its own terms, something publishers say is beginning to happen.

But only five months ago, following the launch of Amazon’s Kindle Fire, The New York Times explained, as fact, and without attribution, why Amazon had priced the Kindle at just $200 (while also making commensurate price cuts in the company’s other Kindle e-readers) this way:

Amazon sees the Kindle line of devices as critical for its future as a virtual store, and is willing to lose money on the sale of each one for the sake of market share. Once dominance is achieved, it plans to make money on the movies, books and music that users download directly from Amazon.

Now, both of these statements can’t be true. It’s not possible for Amazon to both (1) sell e-books at a loss in order to reap big profits on Kindle devices, and (2) sell Kindles at a loss to reap big profits on e-books.

It may be doing 1 or it may be doing 2, but it can’t be doing both at the same time. (Or, if it is, readers of this

Table of Contents

President’s Voice: Scenes from a Publishing Life
Profitable Partnerships: Be There or Be Square
The Sky Is Falling? Positivity
Bookviewcafe.com: Continuing the Assault on The Problems of the Midlist Writer
Neverly Ever After
The Mad Scribbler: This, Too, Shall Pass
Writing Is Taxing: Information Reporting
Not Your Usual Writing Advice: Treasure

post will be handsomely rewarded for selling short Amazon stock IMMEDIATELY!).

I don’t mean to pick on The New York Times. The confusion in its coverage of Amazon in both periods was matched by the reporting of many other news organizations. The law of antitrust is complicated, even to lawyers and economists. Journalists, needing to simplify the e-book story for readers, sympathize with book publishers (with whom they, as book authors and wannabe book authors, identify) and with Apple, which is not only a      Continued on page 5 

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