The Mess That's Called eBooks

As we wrote back in November, there’s a battle going on in the world of eBook publishing. The topic then was Amazon using wholesale pricing as a benchmark for author royalties as it promotes its Prime Program (and juices sales of the Kindle Fire). The upshot for content creators: You probably want to review your publisher contract and make sure you are fairly compensated (as a percentage of the retail price, not wholesale).
The battle itself, however, is being fought on multiple fronts. In August 2011, the Hagens Berman firm filed a class-action suit claiming Apple and five top U.S. publishers “illegally fixed prices of electronic books, also known as e-books.” They are demanding a jury trial, always a sign that they want the most generous settlement possible.
The basis of the Hagen Berman complaint is the claim that the five publishing houses “forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices. This would prevent retailers such as Amazon from offering lower prices on e-books.”

If Amazon defied the publishers and tried to sell e-books below the publisher-set levels, the publishers would simply deny Amazon access to the title, the complaint details. The defendant publishers control 85 percent of the most popular fiction and non-fiction titles.

The publishers, the complaint goes on, feared Amazon’s pro-consumer pricing, especially as it threatened the established brick-and-mortar model.
Now it appears that the European Union’s antitrust commission wants a piece of the action. The E.U. investigation will look into charges that “international publishers… have, possibly with the help of Apple, engaged in anti-competitive practices affecting the sale of e-books in the European Economic Area (EEA), in breach of EU antitrust rules.”
As Philip Elmer-Dewitt notes in this Fortune piece, the E.U. appears dead serious. “In preparation for the formal proceedings announced Tuesday the commission raided the offices of some or all of the five publishers named in the probe.” [Actually, the E.U. press release calls them “unannounced inspections.” Ah, so diplomatic.]
In case that isn’t interesting enough, back in August 2010, Connecticut Attorney General Richard Blumenthal also investigated potential anti-competitive e-book practices. The A.G.’s complaint?

Attorney General Richard Blumenthal is investigating agreements between the country’s largest e-book publishers and two of the largest sellers — Amazon.com, Inc. and Apple, Inc. — that may block competitors from offering cheaper e-book prices.

WTF? Who’s colluding with whom?
Takeaways
(Hey, I’m no lawyer, but I am an interested party. At least I think I am):

• If you are a content creator, an Amazon win here means get ready for wholesale to be the new retail.
• If you are a consumer, an Amazon win means e-books will fly off the shelves at giveaway prices, as Amazon juices its Kindle sales.
• If you are a publisher, an Amazon win means they are one step closer to moving into the publishing business. As Philip Elmer-Dewitt notes, Amazon is the 500-lbs gorilla in the e-book biz.

And who knows, at the moment, Amazon may need all the help it can get. There’s already speculation that as many as a half-million Kindle Fires will be returned post-holiday (via Philip Elmer-Dewitt). Usability guru Jakob Nielsen, meanwhile, is reporting that “Amazon.com’s new Kindle Fire offers a disappointingly poor user experience.” It gets worse… Over the Black Friday sales season, iPad and iPhone were dominant [Chart of the Day].
Even 500-lbs gorillas deserve some good news now and then…