Apple, DoJ Reach e-Book Antitrust Settlement Agreement

"In a court filing on Monday, an attorney representing the plaintiffs in a class action suit seeking damages from Apple's e-book price fixing scheme informed federal Judge Denise Cote that the company has agreed to settle."

This was going to be a separate proceeding from the ongoing anti-trust trial — with Judge Cote having declared Apple guilty of anti-trust violations, she was going to determine whether Apple should pay almost $1 billion in punitive damages. Having settled, Apple will avoid the maximum penalty in the event that its appeal of the original verdict fails. We don't know yet how much the company would pay out in that event, but you can bet it will be a lot less than $840 million.

This isn't an admission of guilt. I don't think there was any question Apple would settle the class action suit. Companies settle such cases more often than not if they think there's any chance they'll have to pay the judgment—and, seriously, did anyone think Apple had a prayer of Judge Cote not hitting them with an almost-$1 billion dollar judgement?

Beating up on Time Warner?

"The Everything Store is shrinking again. Amazon customers who want to order forthcoming Warner Home Video features, including 'The Lego Movie,' '300: Rise of an Empire,' 'Winter’s Tale' and 'Transcendence,' are finding it impossible to do so.

The retailer’s refusal to sell the movies is part of its effort to gain leverage in yet another major confrontation with a supplier to become public in recent weeks...Amazon started refusing preorders for the Time Warner movies in mid-May."

Time Warner is one of the biggest media conglomerates in the world. If Amazon prevails, proving it has the muscle to twist their arm behind their back, it'll be time for the Justice Department to take a long, hard look at Mr. Bezos.

Lawyers Are Just Wired Different

Some of you might be wondering why I've been harping on this Apple-DoJ-Amazon anti-trust trial lately. The answer is simple — 1) I'm an author; and 2) the outcome will have huge ramifications for the future of the publishing industry. In fact, if Amazon's growing power isn't checked, I'm not entirely sure the big publishers will survive and I'm dead certain that Barnes & Noble and the other booksellers won't. They're barely surviving now and Amazon is breaking arms to squeeze them for more profit. If the big publishers and booksellers go under, the future of publishing is going to look very different very quickly and I think what comes after might not be very pretty.

What really chaps my hide, though, is Judge Denise Cote.

In July 2013, Judge Cote convicted Apple of illegally colluding with the publishing industry to jack up e-book prices, thereby restoring monopoly power to Amazon (which didn't hesitate to use the judge's gift to start strong-arming Hachette this past month). Apple is appealing the decision and asked the 2nd US Circuit Court of Appeals to stay the damages trial for its conviction until its appeal is heard. The court denied the request.

The Second US Circuit Court of Appeals has rejected Apple's bid to delay a damages trial until after the company has appealed the original decision. As a result, a July court date will go forward with the same judge -- Denise Cote -- who originally found Apple guilty of conspiring to fix e-book prices alongside the publishers in a bench trial last year. Judge Cote will preside over the damages trial as well.

For those who haven't followed the trial, a brief history of Judge Cote's behavior surrounding the affair might be of interest. Hang on and enjoy this little ride.

Before the trial even began, Cote said in public that she thought Apple was guilty, a statement consisted with an alleged historic pattern of pre-trial biases. After rendering the official verdict, she appointed an anti-trust monitor. Michael Bromwich, who:

1) had no previous experience as an anti-trust monitor;

2) who is a "long-time friend"; and

3) who promptly began charging Apple $70,000 per week in fees —$1,100 per hour plus a 15% "administrative fee" plus per diem plus another several-hundred-dollars-per-hour fee to pay the anti-trust monitor advisor who's teaching Bromwich on the fly how to be an anti-trust monitor, to be precise.

Bromwich then immediately exceeded his purview by demanding interrogations of Apple executives who have nothing to do with e-books or Apple's iBookstore and publicly slammed the company when it refused to comply. Apple asked Judge Cote to reign him in and, to no one's surprise, she refused. Apple finally went over her head to the Appeals Court and tried to have Bromwich removed. The Appeals Court didn't take that step, but they did warn Bromwich in veiled terms that he was headed for trouble if he didn't tone it down. Judge Cote didn't even throw Apple that tiny sop.

History lesson over. Back to the present, which is this — instead of withholding punishment while Apple tries to prove it shouldn't be punished because Judge Cote pre-determined the case, the Appeals Court is going to let the very same judge whose conduct is suspect proceed with a damages trial to decide whether Apple has to pay the maximum ~$800 million fine. 

Any bets on what her ruling will be?

Destroying the US Market for Books

The NY Times gets this one absolutely right.

"This week, as part of a contract dispute with the publisher Hachette, we’re seeing Amazon behaving at its worst. The company’s willingness to nakedly flex its anticompetitive muscle gives new cause for concern to anyone who cares about books — authors, publishers, but mainly customers ...

But the more basic problem here is that Amazon is violating its own code. To win a corporate battle, Amazon is ruining its customer experience. Mr. Bezos has long pointed to customer satisfaction as his North Star; making sure customers are treated well is the guiding principle for how he runs Amazon.

Now Amazon is raising prices, removing ordering buttons, lengthening shipping times and monkeying with recommendation algorithms. Do these sound like the moves of a man who cares about customers above all else?"

This in the wake of the DoJ's successful prosecution of Apple and the Big Five publishers who it accused of engaging in illegal collusion to fix e-book prices. From Amazon's post-trial behavior, it's apparent that the DoJ and Judge Denise Cote picked the wrong side, stomped on abused entities that were trying to renew competition in the market, and restored a monopoly to power -- exactly what the government is not supposed to do.

On Authors and Phony Reviews

Cold Shot came out this past Tuesday and, as most authors do, I decided a few days later to look around and see how sales and reader reviews were going. The pre-release reviews from Kirkus, Booklist, Publisher's Weekly et al had been uniformly positive, so I had hopes that readers were enjoying the book as well.

What followed was somewhat unpleasant. After the dust settled, I decided that this was a good opportunity to give readers a little insight into how authors view reviews of their books.

Note: all comments are posted here unredacted. I've stripped out such bits as "Verified Purchase (What's this?)" and "This review is from: Cold Shot: A Novel" to leave just the comments. Also, I've anonymized the name of my antagonist.

So I check the Amazon.com Cold Shot page and it says there have been three reviews, all 5-star. I note that one review from user-name "lance" already has some discussion comments. Okay, I check the comments and find this:

Anonymous says:

So you only "review" books by this one particular author? 

Are you a friend, a family member, or the author himself?

Hmm.  I've never met Anonymous, but he/she (I'll use "she") has just attacked my integrity--"This might be the author trying to juice his sales by posting a fake review of his own book!"--based on the fact that "lance" has only posted two reviews--both five-star marks for Cold Shot and for my previous novel Red Cell.

Well, such a thing would certainly be unsavory if it were true, not to mention against Amazon's Customer Reviews Submission Guidelines...but it's not true. So...

Mark E. Henshaw says:

I can say with authority that "lance" isn't the author, any member of his family, or any friend of which he's aware. I don't play those games, nor do I ask family or friends to do so.

...which draws this response. 

Anonymous says:

Well, maybe you didn't ask "lance" to "review" your book, and perhaps they think they are doing you a big favor under an assumed name. But they're not helping you at all. Here's a thought -- ask around and find out who it is, and ask them to delete it. 

It sure looks like a duck and quacks like a duck. I'm thinking it's a duck.

Okay, let's assume for a moment that Anonymous is actually right--that "lance" is someone I know. Anonymous is telling me to interrogate all of my friends and immediate and extended family, suss out "lance," and demand that he/she delete their review of my book.

Seriously? 

Friends and family have just as much right post reviews of my books as anybody else; in fact, where does Anonymous think that the positive blurbs on the backs of most books come from? Often as not, they come from people the author already knows--a far more egregious example of public favoritism than a friend or family member (still not established, btw) posting a favorable review on Amazon. Is Anonymous going to demand that authors stop using blurbs too? And how many people are going to read "lance's" Cold Shot review and do the research to see how many other books "lance" has reviewed, realize that "lance" has only reviewed my books, then conclude "lance" must be a dishonest shill and so refuse to buy my book? A pretty small number, I'd bet.

Even assuming I didn't mind offending a loved one, this is clearly not worth my time. So I tell Anonymous that I'm not about to put my friends and family under the bright lights and launch an investigation to track down the malefactor who dared to say something nice about my book in public -- 

Mark E. Henshaw says:

There's no pressing need to find out who "lance" is. The book only came out last Tuesday and there will be plenty of genuine reader reviews before the dust settles. No need to get bent out of shape over such things.

I admit that I'm surprised to find that there's some kind of "reviewer" police on Amazon.

Apparently, my lack of zeal for the cause is unacceptable.

Anonymous says:

You're surprised that Amazon shoppers don't like phony reviews? How interesting.

The fact that you don't think bogus reviews are a problem speaks volumes about your character. I would think you'd want them gone, and would be tracking down "lance" and also asking your publisher to stop sending ARCs to Harriet Klausner (she's notorious for her phony reviews). But instead, you just shrug your shoulders.

Perhaps honesty and integrity are too old-fashioned for you, especially when you stand to make a buck. I was willing to give you the benefit of the doubt, but not any more. You'll never get a dime from me.

Another attack on my character, used as a deflection away from my question about where Anonymous gets her authority to police book reviews; and after looking at the other reviews, I see that Anonymous is bent out of shape about one posted by a Harriet Klausner (probably what brought her to Cold Shot's Amazon page in the first place), is conflating the two reviews now, and has intermixed this discussion with a similar one she's launched in the comments section on that review for the express purpose of launching another attack on me, stating "the author doesn't care if the reviews of his books are real or phony."

I reiterate that I do, in fact, care, but I have better things to do with my time.

Mark E. Henshaw says:

*sigh*

You mistake "not able to really do anything about it" with "doesn't care." This has nothing to do with attitude and everything to do with pragmatism. I'm not sure what you think authors can realistically do about "phony" reviews. If authors and publishers can't stop digital piracy of their books--and it's rampant--I'm not sure how you think authors and publishers could shut down review mills that aren't doing anything illegal. Sure, we could protest, but do you really think review mills would listen and voluntarily shut down? Not likely, I think.

So, in the absence of being able to stop Harriet Klausner or any other such outfit, I prefer not to get frustrated tilting at windmills. Life's too short for that. I am curious, though--why exactly do you have it out for Klausner? You seem to be on a crusade.

Again, my lack of commitment to the cause is offensive.

Anonymous says:

Mr. Henshaw,

You said, "There's no pressing need to find out who "lance" is. The book only came out last Tuesday and there will be plenty of genuine reader reviews before the dust settles. No need to get bent out of shape over such things."

Sounds like you don't care at all.

What can you do?

For starters, you can track down "lance" and ask that person to delete the review.

Next, you can contact your publisher and ask them not to send ARCs to Harriet Klausner.

And finally, you can condemn phony reviews, rather than lazily sitting back and accepting them as inevitable.

Okay, time to open the coat a bit on an author's view on life.

First, nobody likes phony reviews--nobody. I don't. Amazon doesn't. Customers don't. I'm not disputing that point. They're one of the ugly blights on the capitalist system and we'd all be better off if they didn't exist. But here's the rub--"lance" hasn't done anything illegal. Arguably, "lance" hasn't even done anything morally wrong. Assuming "lance" is someone I know, he/she has tried to do me a favor, and someone I don't know has decided that both "lance" and I are morally bankrupt because of it.

Second, Anonymous has apparently been tilting at this windmill for quite a while and nothing's changed. Her approach isn't working--Klausner keeps chugging along--but I'm supposed to jump on board and adopt the same tactics? Einstein had a word for people who keep doing the same things repeatedly while expecting different results. But a righteous cause, as Anonymous believes hers to be, requires righteous tactics and merits effective ones. An attack on an author's integrity based on a few sentences of disagreement is neither.  

Third, I don't even know who Simon & Schuster sends Advance Reader Copies (ARCs) to (readers would be surprised how little control authors have over the marketing of their own books). Sure, I can ask S&S not to ever send an ARC to Klausner (assuming they did so this time) but I have no way of verifying whether they'll comply and no way of stopping them if they choose to continue. Also, an author's leverage with a publisher is proportional to the number of books they sell. Red Cell is turning a profit and we have high hopes for Cold Shot, but I haven't cracked the NY Times Bestseller List (yet, I hope), so S&S isn't exactly going to be cowed if I threaten to commit seppuku over it--they might just tell me to clean up after myself when I'm done. In short, I've worked ten hard years to build a writing career and I'm not ready to go all suicide bomber over Krausner. Is that abandoning my integrity to make a buck? I don't think so. I just have a thing against committing career self-immolation on behalf of somebody else's cause--even if righteous--when there's zero evidence it would help anyone while hurting me.

Fourth, in a later note, Anonymous outright accuses Klausner of breaking federal law. Well, if that's true, give the Department of Justice or the FBI a call, point them at Klausner, and try to convince them to prosecute. Just don't ask me to be surprised when they respond that they have more pressing matters to attend to, because...

Fifth, as a professional military analyst, I always say "look at the math" and here it is -- for any author selling any respectable number of books, "phony" book reviews constitute such a vanishingly small percentage of the total reviews that the number effectively rounds down to zero. As of this writing, there are over 300 reviews of my first book, Red Cell, between Amazon and Goodreads alone. If we hit the same numbers for Cold Shot, "lance's" and Klausner's reviews will constitute ⅔ of 1% of the total reviews for the book. Authors like John Grisham or James Patterson move millions of books (JK Rowling has moved hundreds of millions) and end up with thousands upon thousands of reader reviews. Reviews from people like Klausner and "lance" aren't even blips on the radar; they get averaged out by the wisdom of the crowd (even lost in the noise) but authors and publishers are supposed to get bent out of shape by onesies and twosies? A simple cost-benefit analysis says that it isn't worth the stress.

Here's my conclusion to the story -- it's fine to want to educate people about phony reviews. Letting people know that Klausner publishes reviews at a faster rate than she could possibly read the books is a useful service. Transparency and informed decisions are valuable to capitalism. But ascribing to one's self the moral authority to denounce strangers who don't show outrage and zeal over the issue crosses a line, and so hurts your cause. A lot of our current political problems stem from the fact that many people in this country have decided that anyone who disagrees with their POV isn't just wrong, but morally wrong and the right response isn't civilized debate but personal attack.

None of us has the moral authority to decide that people who disagree with us (and especially complete strangers) deserves public scorn. "Judge not that ye be not judged." The way to make a positive change in the world is by educating people and convincing them that yours is the better path; it isn't by attacking those who disagree and making insulting claims about their character. Persuade me, don't impugn me. I'm less inclined to pay attention to people attacking Klausner than before because my experience now suggests that they're disagreeable zealots who'll insult me if I don't toe their line.

I doubt that's the outcome they were hoping for.

Update: After a day's thought, I decided--somewhat against my better judgement--to re-engage Anonymous one more time and offer some friendly advice just in case she and her supporters were really serious about trying to recruit authors to their battle against phony reviews and not just trolling. I posted this short guide to dealing with authors in a constructive way. I was gratified to see that the responses were very respectful and the subsequent discussion was actually quite pleasant. Civility and politeness are powerful tools.

Also, it turns out that Anonymous was correct on one point--Amazon prohibits family members from posting five-star reviews of a relative's product for the purpose of juicing sales; no ban on friends, though (and Goodreads and other book review sites have no such prohibitions at all). In the age of social media, I think it would be too hard legally to define who a friend was anyway.