Macmillan CEO John Sargent Responds To DOJ Lawsuit

IT Management

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A short while ago we brought you news that Apple and five publishers had been sued by the U.S. Department of Justice. The suit alleges that Apple colluded with Macmillan, Penguin, Hachette, HarperCollins, and Simon & Schuster to raise e-book prices by instituting the agency model for e-book sales.

While Hachette, HarperCollins, and Simon & Schuster have reportedly agreed to settle out of court, Apple, MacMillan, and Penguin apparently mean to contest the suit. A little while ago, Macmillan CEO John Sargent made a post to Macmillan's news page explaining his company's refusal to settle the lawsuit.

He begins with the assertion that Macmillan is innocent of any wrongdoing in its adoption of the agency model: "Macmillan did not act illegally. Macmillan did not collude." In fact, he said, the decision to adopt the agency model was not made in concert with other publishing CEOs, but rather Sargent himself came to the decision "on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement." He also called it "the loneliest decision I have ever made."

Sargent also argues that the choice to adopt the agency model was not motivated by a desire for increased profits, but by a desire to preserve competition. The agency model, he says, means that Macmillan makes less money on e-book sales, but that the change was made "to support an open and competitive market for the future."

He also called the settlement terms the DOJ was demanding "too onerous." Though Macmillan would have preferred to settle out of court and avoid the costs "in time, distraction, and expense." These terms, though, "could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model."

Sargent noted that Hachette, HarperCollins, and Simon & Schuster had decided to settle, and said that it was "their decision to make." Macmillan, however, would continue to fight in court because "[i]t is hard to settle a lawsuit when you know you have done no wrong."

Sargent's statement closes with a quote from Author's Guild president Scott Turow, who had the following to say:

The irony of this bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition. This would be tragic for all of us who value books and the culture they support.

What do you think? Is the agency model actually better for competition, or should it be abandoned, at the risk of Amazon gaining a monopoly? Let us know in the comments.