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In the days following the announcement of the U.S. Department ofJustice lawsuit against publishers accused of colluding with Apple ( AAPL ) to raise e-book prices, much of the U.S. publishing industrydecamped to the U.K. for the annual London Book Fair. Notsurprisingly, the suit was a major topic of conversation atcocktail parties and in booths across the Earls Court ExhibitionCentre in particular speculation about whether the DOJ suit mightfinally push big publishers to consider easing their requirementsfor digital rights management (DRM), the controls that keep e-bookreaders from being able to pass a copy of a title on to a friend. Publishing-industry futurists individuals typically far removedfrom the real-world calculations being crunched in publishers accounting departments have long argued that DRM inhibits e-bookinnovation and prevents small e-book retailers from entering themarket and competing with the giant distributors (read: Amazon). InLondon this year, says Lorraine Shanley of publishing consultancyMarket Partners International, more mainstream publishingexecutives are talking seriously about ending DRM restrictions. It would allow individual publishers much more flexibility withtheir own content and in making it available directly toconsumers, says Shanley. And it would allow consumers to accesscontent without getting locked into one device e.g., the Kindle. Some analysts say that s wishful thinking. In recent years themusic industry has removed nearly all its DRM restrictions, yetthat has done little to diversify the digital music market. Appledominates, and Apple sets prices. For consumers, Amazon regainingmore market power could result in less choice among retailers downthe road, says Michael Wolf, vice president of tech news websiteGigaOm. Whether Amazon is benevolent or not in the long run,that s yet to be seen. Most of the London trade-show visitors and indeed many others inthe business say the lawsuit plays into the hands of Amazon andits boss, Jeff Bezos. Since the debut of the Kindle, Amazon.com ( AMZN ) has played a long game, losing money on both the razor (Kindledevices) and the razor blades (e-books) in an effort to establishthe kind of dominant market position in e-books that Apple enjoysin digital music. The company sells Kindle hardware at virtually noprofit, and it also lost money during the Kindle s first few yearsby pricing new releases and major bestsellers at $9.99, when it waspaying publishers $15 or more for many titles. For e-books published by Hachette, HarperCollins, and Simon &Schuster the three houses that settled with the DOJ Amazon willsoon be able to start slicing retail prices again. That could boost Amazon s market share from more than 60 percentof the overall e-book market and put additional pressure on Barnes & Noble ( BKS ) , which controls 30 percent. But it also could undermine Amazon salready thin operating margin just as the company is investing inlong-term projects such as tablets, the Amazon Prime free shippingclub, and its cloud computing initiative, Amazon Web Services.Analysts believe Amazon will start cutting nonetheless. This is avery calculated move on Amazon s part, says Colin Sebastian, ananalyst at RW Baird. Their view is that Apple probably doesn thave the stomach to lose a whole lot of money on e-books and Barnes& Noble can t afford to. They will do whatever they can atthis stage of e-books and Kindle to drive as much market share aspossible. Amazon will have to be cautious about cutting prices sodramatically that it forces book publishers to leverage whatremaining clout they have left. Publishers could, for example, window e-books delaying their publication for a few weeksafter the release of the more expensive hardcovers. Simon &Schuster and Hachette tried this in the early days of wholesalee-book pricing, on memoirs by Sarah Palin and Edward Kennedy. (Thisstrategy, though, could alienate customers and lead to increasede-book piracy.) Publishers could also experiment with packaging thee-book and the hardcover together, or they might pull DRMtechnology on e-books for the Nook, which could make Barnes &Noble s store more appealing to customers. Still, it s hard tosee how publishers find a way around Amazon in the market, unlessAmazon blows it somehow, says Bill Rosenblatt of consulting firmGiantSteps Media Technology Strategies. Whatever Bezos s overall strategy, Amazon won t be able to cutthe price of e-books published by Penguin and Macmillan until theDOJ case is resolved and that could take a while. Geoffrey Manne,an antitrust expert at the Lewis & Clark Law School, says thecase could take years to resolve, in part because Apple has such adeep reserve of cash it could spend on the litigation. Meantime,the e-book market is likely to keep evolving rapidly. In fact,one of the big problems with this suit, as with others in the techrealm, Manne says, is that by the time it s concluded, themarket is likely to have changed so much that it will have becomeirrelevant. We are high quality suppliers, our products such as Sinamay Bags , Sinamay Base Manufacturer for oversee buyer. To know more, please visits Sinamay Hat.
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