Cartels – what next for publishing?

The whole idea of preventing cartels is to permit the public to get the cheapest price, always. And it’s a good idea, clearly.
Except …
Sometimes a cartel may not be a cartel.
How about this? Forty years ago, say, a massive international conglomerate decides to increase its profits. It sees a few small companies making a fair living in Portugal. This international company’s profits are worth more than Portugal’s GDP, but it has investors to please. So it goes in. By slashing its prices, it puts the indigenous firms out of business. Oh, and meantime, the profits of all its suppliers are cut dramatically, too. But the conglomerate is safe and happy.
IBM was capable of doing just that, but it was shy of closing the competition and being accused of being a monopoly. However, if the firms tried to protect themselves against a corporate pirate, would they have been guilty of a crime? After all, their actions as a cartel may have protected the market from a monopoly.

This is the sort of cover I like. Excitement, murky plots hinted at, and plenty of blood. But without a publisher designing and paying for the cover, covers like this will become much more rare.

However, shift forward to the present. Consider a company that has already forced thousands of competing companies out of business. It has done so well, now it’s moving into the base for its own suppliers, and supplying itself with basic products so that it can not only screw its suppliers into the ground, but take over their businesses entirely. Its suppliers depend upon a core of creative people – well, they’ll be out of work soon, their livings destroyed.
They can, of course, join in the new model. And since that is a monopolistic model, they will have to accept whatever the monopoly offers. If there is a terrible, tightly-drawn contract that screws them to the wall, so be it.
And the public, of course, will get what they wanted. Vast quantities of cheap, easily accessible product – for now.
For the future, however, when the one company controls all product, the public will find that pricing can become an issue again. Those supplying direct will lose their incomes, just as farmers lose in negotiations to supermarkets now. Lots of small suppliers will always be screwed by one large retailer.
A cartel is a bad thing – usually.

How much longer before all publishers disappear?

But in publishing today there is a clear example of a situation where a cartel may not be a bad thing.
When a series of businesses feel a basic need to protect themselves from one of the most predatory firms, which is determined to maintain a monopolistic stranglehold on its market, it seems natural for businesses to be permitted to at least discuss strategies to protect themselves.

After all, by preventing a monopoly, they are protecting the market. And if by keeping some prices higher they allow more people to work in the market itself and make a living, that is itself a good thing.

Without publishers there won't be signing tours, chances to meet your favourite authors - only masses of titles on a website, with no indication of writing skill or ability.

For a lot more (and more rationally coinsidered) discussion on this, please look at http://www.nytimes.com/2012/04/12/business/media/amazon-to-cut-e-book-prices-shaking-rivals.html?_r=1&ref=davidstreitfeld

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Comments
12 Responses to “Cartels – what next for publishing?”
  1. I know of at least four cartels in the US that the DoJ will never touch: the NFL, NHL, MLB and NBA.

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  2. FWIW, first glance I read the new title as ‘City of Friends’. Cracking good jacket tho’.

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  3. akhenkhan says:

    Love your cover’s Michael, they always fit perfectly with the story. :)

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  4. Michael, for what it is worth you are absolutely right on this one.

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  5. Jerome Dive says:

    And now, two years later, Amazon are bringing the full weight of their quasi monopolistic power on Hachette.

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    • I really do despair. Amazon’s stranglehold as a monopoly is outrageous. They are flaunting their control. Why the hell the Americans haven’t slapped an anti-trust suit on them yet, I do not know.

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