David Carr’s New York Times column today on Amazon, Apple, and the book publishers is excellent. He calls the Department of Justice’s antitrust suit “the modern equivalent of taking on Standard Oil but breaking up Ed’s Gas ’N’ Groceries on Route 19 instead”:
But pull back a few thousand feet and take a broader look at the interests of consumers. From the very beginning and with increasingly regularity, Amazon has used its market power to bully and dictate. It leaned on the Independent Publishers Group in recent months for better terms and when those negotiations didn’t work out, Amazon simply removed the company’s almost 5,000 e-books from its virtual shelves…
The deal struck with Apple also allowed other players into the e-book business, including independent bookstores. Previously, Amazon’s $9.99 subprofit price was a virtually impenetrable barrier to entry for anyone who couldn’t afford to lose millions in order to gain market share. Remember that it was only after agency pricing went into effect that Barnes & Noble was able to gain an impressive 27 percent of the e-book market.
Now Amazon has the Justice Department as an ally to rebuild its monopoly and wipe out other players. If the decision to charge the publishers was good for competition, why had the stock price of Barnes & Noble dropped more than 10 percent since Wednesday?
— The Institute for Local Self Reliance and the Benton Foundation issued a report last week on three cities that have quasi-socialized broadband access in their communities, with city-owned utilities making big investments and taking on private companies.
Another gubmint boondoggle? Comcast meets the DMV? Not according to ILSR:
“It may surprise people that these cities in Virginia, Tennessee, and Louisiana have faster and lower cost access to the Internet than anyone in San Francisco, Seattle, or any other major city,” says Christopher Mitchell, Director of ILSR’s Telecommunications as Commons Initiative. “These publicly owned networks have each created hundreds of jobs and saved millions of dollars.”
Here’s an example in Laffayette, Louisiana, which has gotten a leg up in landing businesses because of its super-fast and cheap Internet:
Even before the LUS Fiber network connected a single customer, studies suggested that it saved the community millions of dollars by persuading Cox and BellSouth to hold off on several rate increases during the fiber fight in order to avoid negative publicity.
Today LUS Fiber offers one of the fastest basic tiers of Internet service in the country at an affordable rate: 10/10Mbps for $28.95. It has just announced a 1Gbps tier for $1,000 per month; prior to LUS Fiber, the cost of a gig circuit in Lafayette was at least $20,000 per month.
You wouldn’t know about this from the press, though, which has ignored the study, according to Factiva.
— Bloomberg updates us on the state of too big to fail in a nice piece:
Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did in 2008 with the Fed-assisted rescue of Bear Stearns Cos. by JPMorgan and with Citigroup and Bank of America after the Lehman Brothers bankruptcy, the largest in U.S. history.
“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.
There’s no real news here, but sometimes that’s the news.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.