July 19, 2012

Schumer breaks ranks with Obama to condemn DOJ lawsuit


New York Senator Charles Schumer

There’s been a development in the case of the Department of Justice versus the book industry, and it’s a doozie: Charles Schumer, the senior senator from New York and — and this is the important part — a Democrat, has called upon his own administration to drop the case.

In an op-ed that appeared in yesterday’s Wall Street Journal, Schumer writes:

… the suit could wipe out the publishing industry as we know it, making it much harder for young authors to get published.

The suit will restore Amazon to the dominant position atop the e-books market it occupied for years before competition arrived in the form of Apple. If that happens, consumers will be forced to accept whatever prices Amazon sets.

All of us will lose the vibrant resources a diverse publishing universe provides.

In addition to being a figure of significant seniority in the ruling party, Schumer has definite standing in the case, noting “These losses will be particularly felt in New York, which is home not only to many publishers, but also to a burgeoning digital innovation industry” — not to mention Schumer’s constituency.

Perhaps this shouldn’t have been such a surprise — after all, Schumer told the WSJ in April that “I feel absolutely befuddled by the lawsuit. For the Antitrust Division to step in as the big protector of Amazon doesn’t seem to make any sense from an antitrust point of view. Rarely have I seen a suit that so ill serves the interests of the consumer.” (This particular report, by the way, was a terrific overview of what’s wrong with the case — the highlight being a quote from David Carr of the New York Times, calling the suit “the modern equivalent of leaving Standard Oil intact and ‘breaking up Ed’s Gas ‘N’ Groceries on Route 19 instead.'”)

But Schumer’s focus (and eloquent focus at that) upon Amazon-as-monopoly makes his argument something more than persuasive — it makes his rebellion from his own team particularly stinging. As Laura hazard Owen notes in a paidContent report, “Schumer’s overall argument against the agency pricing lawsuit is that the lawsuit hurts competition by making Amazon the dominant player.” And indeed, Schumer is not particularly politic on the point, especially in his condemnation of the DOJ for its lack of long-term vision — as in his comment that the Obama Justice Department ….

… misses the forest for the trees. While consumers may have a short-term interest in today’s new release e-book prices, they have a more pressing long-term interest in the survival of the publishing industry.

If publishers, authors and consumers are at the mercy of a single retailer that controls 90% of the market and can set rock-bottom prices, we will all suffer. Choice is critical in any market, but that is particularly true in cultural markets like books. The prospect that a single firm would control access to books should give any reader pause.

The Justice Department lawsuit is also unsettling from a broader perspective. As our economy transitions to digital platforms, we should be celebrating and supporting industries that find ways to adapt and grow. By developing a pricing model that made e-book sales work for them, publishers did just that.

I am concerned that the mere filing of this lawsuit has empowered monopolists and hurt innovators.

But that last comment hints at a Shakespearean rub — while the industry on the whole has mounted a powerful and unified response to the lawsuit, and now a prominent politician has broken ranks to join in, making the case seem a shambles … the fact remains that the lawsuit has been prosecuted in the first place, and there is damage already done, and once such madness is set in motion, well, logic and fairness does not always out …


Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.