Penguin's Makinson: "We Have Done Nothing Wrong"

PublishersLunch Special

Penguin Group ceo John Makinson issued a statement about the lawsuit his company faces from the Department of Justice and a group of attorneys general on Wednesday afternoon. He writes: "A responsible company does not choose a path of litigation with US Government agencies without carefully weighing the implications of that course of action." But, Makinson says, "we have done nothing wrong. The decisions that we took, many them of them costly and difficult, were taken by Penguin alone." As for Justice's complaint filed today, "the document contains a number of material misstatements and omissions, which we look forward to having the opportunity to correct in court."

Additionally, Makinson reiterates that "the agency model is the one that offers consumers the prospect of an open and competitive market for e-books. We understood that the shift to agency would be very costly to Penguin and its shareholders in the short-term, but we reasoned that the prevention of a monopoly in the supply of e-books had to be in the best interests, not just of Penguin, but of consumers, authors and booksellers as well.... The decision we took in January 2010 to move Penguin’s e-book business to agency pricing has been vindicated by the very rapid subsequent growth in the volume of e-books sold by agency publishers, and by the benefit to consumers of the steep decline in the price of e-book readers that that has resulted from this open competition."

Makinson also says that "alone among the publishers party to the investigations that resulted in today’s announcements, we have held no settlement discussions with the DOJ or the states."

In other statements, ABA ceo Oren Teicher said: "Today's DOJ filing is baffling. Following the implementation of the agency model at the end of 2010, the ebook market has become more competitive. There is more -- not less -- competition among retailers, and more -- not fewer -- examples of marketing and promotional efforts among publishers that have reduced prices. For the Department of Justice to challenge a business model that played an essential role in fostering a more competitive, diverse retail environment seems to turn logic on its head and is not in the best interest of consumers."