Kevin Drum - April 2012

DOJ Settlement With Publishers a Big Win For Amazon

| Thu Apr. 12, 2012 9:56 PM EDT

Mild-mannered physics professor Chad Orzel writes this warning to his commenters at the end of a post today:

Make sure to keep a civil tone, though. I know that tempers run high on this issue, so choose your words carefully.

Holy cats! What was that post about? Israel's treatment of Palestinians? Whether the tea party is full of racists? President Obama's socialist tendencies?

No. He was writing about the Justice Department settlement yesterday with book publishers over their price collusion with Apple on e-books. Apparently this is a touchy subject. Which reminds me: I'm late to this because I wasn't paying attention, but today I finally stirred myself to read up on the actual terms of the settlement. Apparently DOJ isn't requiring publishers to abandon the agency model, where they set the retail price and simply pay retailers a percentage, but they are insisting that retailers be allowed to discount prices if they want:

This doesn’t kill the agency model outright, but does modify it well beyond what’s widely recognized today. Suppose a publisher prices a book at $10 list price, and a retailer agrees to a 30 percent commission, or $3 on a full list sale. Under these conditions, those retailers would be permitted to sell the book below list price, presumably taking the discount out of their own $3 commission. The publisher would still net $7, but lose its ability to maintain prices.

The DOJ’s proposed terms expressly permit publishers to set a soft floor on discounts, but not a hard floor. Publishers can enter into one-year agency agreements that stipulate that the retailer can sell individual titles at a loss, but must show a profit overall for all the books it sells from that publisher’s catalogue.

That's interesting. So Amazon can take a loss on specific e-books if it wants, but it can't take a loss on its entire e-book business with a particular publisher. Here's the wording from the DOJ description of the settlement:

[Retailers] would be permitted to discount [] individual e-book titles by varying amounts (for example, some could be “buy one get one free,” some could be half off, and others could have no discount), as long as the total dollar amount spent on discounts or other promotions did not exceed in the aggregate the retailer’s full commission from the Settling Defendant over a one-year period. This provision [allows publishers] to prevent a retailer selling its entire catalogue at a sustained loss.

If I'm reading this right, this sounds like a big win for Amazon. Under the old wholesale model, Amazon was taking an actual loss on all those $9.99 e-books. Under the modified agency model here, Amazon could discount every single title by 30% and still break even.

Most likely, this means the end of the agency model in the e-book market. Nobody wants to make life easier for Amazon, after all. The question then is how long Amazon is willing to sustain losses on its e-book business. A long time probably. But if publishers go back to a standard wholesale model, and Amazon goes back to its loss-making $9.99 price point and regains the 90% market share it had previously, I wonder if, at some point, they open themselves up to a DOJ investigation for predatory pricing? That's a tough case to make, but not necessarily an impossible one.

Or, alternatively, some completely new distribution model takes over. I won't speculate about that since I'm sure anything I could dream up has already been discussed to death elsewhere. But there are plenty of fairly obvious ideas, since e-books simply don't require the kind of distribution channel that physical books do — and if Amazon does end up in a monopoly position for e-books, I imagine DOJ will eventually force them to open up the Kindle platform so that others can download e-books to Kindles.

Interesting days ahead for book publishers. I'm sure glad I'm not one.

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Quote of the Day: Newt Gingrich Whines About Fox News

| Thu Apr. 12, 2012 2:45 PM EDT

From Newt Gingrich, blaming Fox News for his dismal campaign showing this year:

I think Fox has been for Romney all the way through. In our experience, Callista and I both believe CNN is less biased than Fox this year. We are more likely to get neutral coverage out of CNN than we are of Fox, and we’re more likely to get distortion out of Fox....I assume it’s because Murdoch at some point said, "I want Romney," and so "fair and balanced" became "Romney."

So that's that. I guess Rupert Murdoch really does make all the important coverage decisions at Fox News. And "fair and balanced" is just a cynical joke. It's good to hear this kind of straight talk from a movement conservative star.

Anyway, two interesting tidbits here. First, note that Gingrich blamed Murdoch, not Roger Ailes, who really runs Fox News. Apparently, even in the middle of an epic whine, Gingrich realized that it would be unwise to go after Ailes.

Second, "Callista and I both believe." I think it's interesting that Callista Gingrich got so little attention this year. (Unless I just missed it somehow.) I've long been convinced that she's been hugely influential on Newt in a whole bunch of ways, and that he most likely wouldn't have run this year if not for her. I have no evidence of this, of course. It's just my sense. But why was there never one of those definitive, everyone's-talking-about-it election-year profiles of Newt and Callista and how she's affected him?

Life Through the Lens of Twitter

| Thu Apr. 12, 2012 1:36 PM EDT

This exact thing happened to me too last night. I left my desk for a while to have dinner, and when I got back my Twitter feed had exploded into a frenzy of faux outrage that I was completely baffled about. Luckily for me, Ed Kilgore sums it up nicely. Click the link if you want to find out what happened.

Alternatively, resist the temptation and save your precious brain cells for something that actually matters.

UPDATE: More on the almost unbearable lightness of this "controversy" from Dave Weigel and Tim Murphy.

Finally, a Screed About Microsoft Word That Gets It Right

| Thu Apr. 12, 2012 12:59 PM EDT

Zack Beauchamp links today to yet another person whining about Microsoft Word, and when I clicked the link I was primed to get annoyed all over again at this never-ending meme. Yeah, yeah, Clippy. Who cares? Just disable him. Ditto for grammar check and autocorrect and a few other things. It's not that big a deal. Word has plenty of things to dislike, especially once you get down in the weeds, but if you just want to write something it basically works fine. Get a life, folks.

But it turns out that Tom Scocca is actually complaining about something else entirely:

What makes Word unbearable is the output. Like the fax machine, Word was designed to put things on paper…That's great if you're making a lot of church bulletins or lost-dog fliers. Keep on using Word.

…For most people now, though, publishing means putting things on the Web. Desktop publishing has given way to laptop or smartphone publishing. And Microsoft Word is an atrocious tool for Web writing. Its document-formatting mission means that every piece of text it creates is thickly wrapped in metadata, layer on layer of invisible, unnecessary instructions about how the words should look on paper. I just went into Word and created a file that read, to the naked eye, as follows:

[Immense amount of formatting crap follows.]

The whole sprawling thing runs to 16,224 characters. When I dumped it back into Word, it was an eight-page document. Online publishing systems gag on this stuff; gremlins breed in the hidden spaces. Some publishing platforms have a built-in button especially for pasting text from Word, to clear away the worst of it, but they don't work very well. Beyond the invisible code, there are those annoying typographical flourishes—the ordinal superscripts, the directional quotation marks, the automatic em dashes—that will create their own headaches in translation. Multiple websites exist simply to unmangle Word text and turn it into plain text or readable HTML.

Okay, this is totally true. And inexplicable. When I complain about sometimes losing blog posts, for example, a common bit of advice is to write offline in, say, Word, and then paste the text into the blog editor. If it crashes, I still have the original in Word. Plus I get Word's built-in spell-check.

Luckily I'm a good speller, so I don't really need spell-check. I say luckily, because Scocca is right: Composing in Word and then pasting the text into something like a blog editor is all but impossible. I have no idea why. However, this has generated something that I consider a pretty amusing irony. I've spent my entire life moving to more and more powerful word processing technology: typewriter to Wang to Scripsit (!) to MASS-11 on a VAX to Ami Pro to Word 3, then Word 4, then Word whatever. So what do I use today? About 98 percent of my writing is done in a primitive text editor that provides me with the ability to indent, make bullet lists, and format my words with simple bold and italic. That's about it. In other words, approximately the same level of technology as a crude text editor from 1978.

And it works fine. I still use Word when I'm drafting long-form articles, but not for much else. For the online world, it's a dinosaur.

Why War is Different Than It Used To Be

| Thu Apr. 12, 2012 12:11 PM EDT

In my review of Drift yesterday, I mentioned Rachel Maddow's contention that going to war used to be hard, but over the past 30 years it's become much easier. Over at TalkLeft, Armando comments:

That is not historically accurate in my view. The times getting into war was not easy was after wars that had been very costly and not particularly successful from the US point of view. Think World War I and Vietnam. Otherwise, going to war has been one of the great American pasttimes. I'm all for making going to war hard, but the history does not demonstrate that, except for isolated periods, that was ever really the case in the United States.

Jonathan Bernstein says something similar: "US-sponsored interventions of one form or another are hardly unusual, even before Maddow's apparent jumping off point in the Reagan Administration. Perhaps the idea is that there was a golden age of sorts after Vietnam, but if so it lasted less than a decade. I'm not really sure it's become easier to deploy troops for controversial missions or to begin interventions in other nations. Maybe, but I'm not sure."

I think these are good points, and if there's a weakness in Drift, it's not addressing this as completely as it should — both the longstanding fact of periodic war and the longstanding fact of congressional acquiescence. Because it's true that the United States has prosecuted lots and lots of small-scale foreign wars over the past century, and has generally done so without congressional approval. Conversely, it's also true that big wars, even recent ones, have gotten congressional approval. George H.W. Bush may have hated the idea of getting Congress's blessing for the Gulf War, but in the end he did. And like it or not, George W. Bush also got congressional approval for Afghanistan and Iraq. In fact, extremely strong congressional approval.

So what's different? I'd say this: it's one thing to periodically wage brief, smallish military actions. The Dominican Republic occupation of 1965 falls into that category. So do Grenada and Panama. Without getting into the merits of any of these actions, you can at least say that they were limited and isolated.

But the last couple of decades seem quite different. The Gulf War, followed by Somalia, followed by Haiti, followed by Kosovo, followed by Afghanistan, followed by Iraq, followed by Libya and Yemen, and all against a background of drone warfare that now seems all but perpetual, feels very different. It feels like we're simply in a constant state of military action. In the last 20 years, there have only been three or four in which the U.S. military wasn't at war. (And I'm not even sure about the three or four.)

So I think that's a real difference, and the policy drift that Maddow talks about in her book bears a big part of the blame for this.

One thing that she doesn't talk about at any length, though, is the War Powers Act. That's too bad, because its toothlessness is a key reason for our current state of affairs. The problem with the Act isn't just that presidents have historically never accepted it. It's that it fundamentally doesn't work. It allows presidents to deploy troops for 60 days, after which they're required to get congressional approval. But even in theory that's just not tenable. Without some kind of acute provocation — Vietnam is the only example in recent memory — no Congress will ever withdraw troops once they're in the field. They'll hem and haw and mug for the cameras, but they won't pull troops out of a hot battlezone. It's just never going to happen.

Is there a better way? One possibility, if it could be codified properly, is to simply make de jure the current de facto distinction between big and small wars. In reality, presidents have always had the power to unilaterally launch small wars. So maybe it would be best to go ahead and let them continue doing it. But in return, big wars don't get launched at all unless Congress approves. That way there's no question of pulling troops out of a fight. They don't even get into one unless Congress OKs it.

In practice, I don't know how you'd do this. How do you define a "big" war? By number of troops? Cost? Some other metric? And how do you define the exceptions? I'm not sure it's possible. But it would be interesting to hear some smart people toss this around to see if they could come up with something. Even if nothing gets changed, it's a topic that's at least worth talking about again. The nature of war has changed a lot since the War Powers Act was passed in 1973, after all.

The NRA's Never-Ending Campaign to Lose My Support

| Thu Apr. 12, 2012 10:35 AM EDT

The New York Times writes today about the NRA's efforts to pass laws, like Florida's Stand Your Ground legislation, that give gun owners ever-expanding rights:

The laws, which expand beyond the home the places where a person does not have a duty to retreat when threatened and increases protection from criminal prosecution and civil liability, vary in their specifics and in their scope. But all contain elements of the 2005 Florida statute that made it difficult to immediately arrest Mr. Zimmerman, who has claimed he shot Mr. Martin, who was unarmed, in self-defense.

Critics see the laws as part of a national campaign by the National Rifle Association, which began gathering on Thursday for its annual meeting in St. Louis, to push back against limits on gun ownership and use....The success of the campaign is reflected in the rapid spread of expanded self-defense laws as well as laws that legalize the carrying of concealed weapons — only one state, Illinois, and the District of Columbia now ban that practice, compared with 19 states in 1981. Bills pending in several states that would allow concealed weapons to be carried on college campuses, in churches, in bars or other at sites would further weaken restrictions, as would either of two federal bills, now in the Senate, that would require that a concealed carry permit granted by any state be honored in all other states.

Guns are not one of my hot buttons. I'm neither especially pro-gun nor anti-gun. On the one hand, I believe that (like it or not) the Second Amendment does provide a personal right to gun ownership. I've also long thought it would be interesting to learn how to handle and shoot a handgun. Maybe someday I will. On the other hand, I'm 53 and I haven't done it yet, which suggests a pretty low level of interest.

That said, the NRA sure seems bound and determined to make me more anti-gun with every passing day. After the Supreme Court decisions in Heller and McDonald, which upheld a personal, constitutional right to bear arms, I thought maybe the gun wars would settle down a bit. They wouldn't go away, since plenty of people still opposed Heller and lots of local municipalities were still determined to regulate handgun use tightly. But I figured this is where the fight would turn: to court cases between city councils and the NRA over how to implement Heller at a local level. The old hysteria about the government coming to take away your guns would go away because the Supreme Court had very firmly said that they couldn't.

Needless to say, that's not what happened. Over the past decade, and accelerating after the Heller decision was handed down, the NRA has gotten almost insanely aggressive. The government is still coming to take away your guns. (Aided by the UN, natch.) And gun owners, not satisfied that the Supreme Court has upheld their basic Second Amendment rights, have gone on a tear, fighting even modest registration and safety requirements and insisting on the expansion of shall-issue laws, concealed carry laws, unconcealed carry laws, stand your ground laws, and a bevy of laws that would all but remove the right of private property owners to ban guns on their own premises. I mean, guns in bars! WTF? Can you even imagine a worse place for guns than a bar?

So....I feel like I'm slowly but surely becoming more anti-gun over time. I still don't want to take away anybody's guns. I hope you handle them safely, but that's about the extent of my concern.

But do I really want squadlets of NRA zealots with chips on their shoulder pretending that we live in the Old West and parading around the mall with guns in shoulder holsters just to prove that they can? Not really. And I'm pretty sure I'm not alone. We don't live in the Old West. Keep your guns at home or at the range. Shoot only as a last resort, and don't feel like the law should protect you if you gun someone down just because he took a swing at you on your front lawn. Enough's enough, folks. It's time to declare victory and go home.

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Iran Having a Hard Time Finding Buyers for its Oil

| Thu Apr. 12, 2012 1:21 AM EDT

The Financial Times reports that Iran is pricing its oil to move:

Iran is trying to skirt US and European sanctions by luring nations to buy its oil on highly advantageous credit terms, say officials in the industry.

Tehran has been offering a handful of potential customers in Asia, including India, 180 days of free credit, according to the officials....Iran’s offer of longer payment periods amounts to a discount of about 7.5 per cent per $118 barrel. Saudi Arabia and other leading Middle East oil producers extend 30 days of credit, and Tehran in the past has allowed importers such as China to pay in 60 to 90 days.

So Iran is now reduced to about the same level as a used car dealer. Drive it off the lot, no payments for six months! Apparently the Apologizer-in-Chief's sanctions are starting to bite.

Lies, Damn Lies, and Mitt Romney's Charts

| Wed Apr. 11, 2012 6:20 PM EDT

"Apparently," sighs Matt Yglesias, "the ridiculous political attack line we're supposed to talk about today is Mitt Romney's claim that 92.3 percent of jobs lost since Barack Obama took office belonged to women." You betcha! Mainly, though, this is interesting as an object lesson in how to mislead with statistics. As a political attack, it's too lame to last more than a day or two.

So do you want to know how Team Romney came up with this number? The chart below, which shows job losses among men and women, tells the tale. If you look at jobs lost since the beginning of the recession, here's what you get:

  • Men: 3,321
  • Women 1,840
  • Total: 5,161
  • Percent women: 36%

But that's too boring! As you can see, there was a steep job loss among men right at the beginning of the recession and a slower job loss among women. So what happens if you just lop off that bit of the recession and count only the strength of the recovery since January 1, 2009? Well, men have recovered steeply and women have recovered more slowly. So now we have:

  • Men: 57
  • Women: 683
  • Total: 740
  • Percent women: 92%

Pretty snazzy, eh? Men have made up ground faster than women since January 2009, so technically that means that women have sustained the bulk of the job losses since then. Very clever indeed. Politifact has more here.

ALSO WORTH NOTING: It's important for Romney to start on January 1, even though Obama wasn't inaugurated until January 20. Why? Because if you started on February 1, you'd end up with women accounting for something like 300% of all job losses, and that's ridiculous enough that it would give the whole game away. Even the rubes wouldn't buy that.

The Maddow Doctrine: We Need to Make War Hard Again

| Wed Apr. 11, 2012 2:14 PM EDT

I finished reading Rachel Maddow's Drift a couple of days ago, and right off the bat I want to say that I'm glad she wrote it. Too many books from TV talking heads are just tired rehashes of whatever the issue of the moment happens to be, barely worth cracking open unless you've spent the past year vacationing on Mars. But Drift is different: It's about a topic that isn't especially sexy right now, and definitely doesn't get enough attention. With Iraq winding down, the economy still sluggish, and domestic politics dominating the headline, Maddow decided to write a book about America and the way we use our military. Specifically: Why is it so damn easy to go to war these days?

It's a good question, and it's unfortunate that it's regularly trivialized by mountains of snark. This is Maddow's stock in trade, of course, and I guess you have to expect a certain amount of it. But this is a more thoughtful book than it sometimes lets on, and the snark too often obscures that. It also, I suspect, makes the book off-putting for anyone who's not already a fan.

If you can get past that, though, there's a deadly serious argument here that deserves way more attention than it gets. The book is, basically, a series of potted histories that explain how we drifted away from our post-Vietnam promise to make sure we never again went to war without the full backing and buy-in of the American public. Maddow's premise is that, just as the founders intended, our aim was to make war hard. Presidents would need Congress on their side. The Abrams Doctrine ensured that reserves would have to be called up. Wars would no longer unfold almost accidentally, as Vietnam did.

And for a while that was the case. Sure, there was Grenada, but that was a small thing. And the contras in Central America and the mujahideen in Afghanistan. But the real breakdown, Maddow says, started almost accidentally at the end of the Reagan administration, when Attorney General Ed Meese, desperate to defend Reagan's conduct in the Iran-Contra scandal, insisted that the president had the right to ignore congressional restrictions on his war-making capability. His commander-in-chief powers gave him all the authority he needed to do anything he wanted.

George H.W. Bush bought into this heart and soul, resisting until the last minute the suggestion that he needed Congress' approval for the Gulf War. That was 500,000 troops! But even so, Bush was apoplectic over the idea that he needed anyone's permission to deploy them. The Meese Doctrine was gaining ground. But there was more. The next decade brought the rise of contracting, and once that ball got rolling, it meant that wars no longer always needed a call-up of the reserves. Logistics could be farmed out instead:

By the time Bill Clinton left office in 2001, an Operation Other Than War, as Pentagon forces called them, could go on indefinitely, sort of on autopilot—without real political costs or consequences, or much civilian notice. We'd gotten used to it.

By 2001, the ability of a president to start and wage military operations without (or even in spite of) Congress was established precedent.

…By 2001, the spirit of the Abrams Doctrine—that the disruption of civilian life is the price of admission for war—was pretty much kaput.

By 2001, we'd freed ourselves of all those hassles, all those restraints tying us down.

And it only got worse after that. The CIA and JSOC have become largely unaccountable branches of the military. Drone warfare has lowered the cost of war even further. And the reserves are no longer really reserves. They're practically full-time soldiers.

And the worst part is that all of this is virtually invisible to most of us. The vast bulk of the civilian population, especially among the college-educated elites who run the country, doesn't serve in the military and never has. In a lot of cases, we barely even know people who have. When we go to war, there's no WWII-style rationing to worry about, there's no draft, and there aren't even any taxes to pay. It's all free! Is it any wonder that we fight so many wars?

Maddow's argument is that we need to start rolling back these changes of the past two decades. When we go to war, we should raise taxes to pay for it. We should get rid of the secret military. The reserves should go back to being reserves. We should cut way back on the contractors and let troops peel their own potatoes. And above all, Congress should start throwing its weight around again. It's fine to criticize presidents for accreting ever more power to themselves, but what do you expect when Congress just sits back and allows it to happen? Our real problem is congressional cowardice: They don't want the responsibility of declaring war, but they also don't want the responsibility of stopping it. So they punt, and war becomes ever more a purely executive function.

It's a powerful argument, and one that deserves a whole lot more attention than it gets. Snark and all, Drift is recommended reading.

Book Publishers Caught Conspiring in "Upscale Manhattan Restaurants"

| Wed Apr. 11, 2012 12:15 PM EDT

I've been following the whole e-book pricing controversy for a while, but without a huge amount of interest. Nickel version: in the market for actual, physical books, publishers have long sold their titles at a wholesale price to booksellers, who then resold them for whatever price they wanted. Until recently, things worked the same way in the e-book market, with Amazon taking a loss on many titles because they were promoting a uniform $9.99 price in order to encourage adoption of their Kindle e-reader. Publishers didn't like this much and recently switched to an "agency" model, in which they set the price and simply pay the bookseller a cut.

The question is whether the publishers colluded in this action, and today's lawsuit from the Justice Department sure suggests that they did:

The lawsuit said that for at least one year beginning “no later than September 2008,” the chief executives of the publishing companies met once every several months, “in private dining rooms of upscale Manhattan restaurants” to “discuss confidential business and competitive matters, including Amazon’s e-book retailing practices.”

....“These private meetings,” the suit alleges, “provided the publisher defendants’ C.E.O.’s the opportunity to discuss how they collectively could solve ‘the $9.99 problem.’ ”....In early 2010, Steve Jobs, then Apple’s chief executive, suggested to book publishers that they sell e-books using agency pricing; Apple would serve as the online agent and take a 30 percent commission.

The five publishers made agreements with Apple for selling e-books, and Apple, which was about to introduce its iPad to the market, insisted on what is known as a “most favored nation’’ clause, which prohibited publishers from allowing other retailers to sell e-books for less than Apple’s price.

I wonder who ratted them out? One of their own? In any case, I'll be curious to see how this turns out. The collusion may have been illegal, but it's not clear to me that there's really anything anticompetitive per se about the agency model. Likewise, the "most favored nation" clause is standard practice for large customers in virtually every industry, so that doesn't seem especially problematic. The New York Times piece above makes the same point, suggesting that "investigators were zeroing in on the way agency pricing was adopted, not on the pricing model itself." Presumably this means that although any settlement might be bad news for the publishers, who may have to pay fines and agree to some kind of future conduct arrangement, it probably won't affect the price we all pay for books.