
Faced with a Five-Page Limit, Lawyer Files Cartoon Amicus Brief - bootload
http://www.abajournal.com/news/article/faced_with_a_five-page_limit_lawyer_files_cartoon_amicus_brief_with_proper_/
======
fpgeek
For completeness, here's a non-cartoon summary of the other side of the story:
[http://www.courtneymilan.com/ramblings/2012/07/24/your-
unspe...](http://www.courtneymilan.com/ramblings/2012/07/24/your-unspecial-
antitrust-snowflake/)

~~~
aaplsux
Inexpensive books? This must be stopped! The last thing the country needs is
educated citizens. Think of the job creators! They are special snowflakes.

~~~
TimGebhardt
Did you actually read the story? It's not that the books were low priced. It's
that they were priced predatorily. Preditory pricing is bad for consumers in
the long run, and in every industry outside of software is seen as a bad
thing. In the software business that seems to be the standard VC-backed-
company model.

~~~
dmbaggett
I've actually wondered about this for a long time: why is it legal for
software companies to offer products and services at below marginal cost?
Clearly zero is below whatever the actual marginal cost is, and Eric Schmidt
summed up the industry's view of charging zero: "Consumers like the price of
free."

I would love to learn from a knowledgeable lawyer why the practice of giving
software away for free -- even when it potentially harms new entrants by
eliminating entirely their potential for revenue generation -- is legal.

~~~
btilly
I am not a lawyer, but it seems to me that you're suggesting that you think
that it should be illegal to contribute to open source software that is
naturally available for free. As someone who has contributed to open source
software, I had plenty of legitimate reasons for doing so other than anti-
competitive behavior. One of them is advertising - if I'm in an interview and
am asked for a code sample I can just point to CPAN.

Similar considerations happen in a proprietary context. For instance this
website is funded and built by programmers whose time is _incredibly_
valuable, yet it is available for free. My belief is that pg sees this
discussion forum as an advertising cost for ycombinator. Why shouldn't it be
legal for pg to spend his advertising budget giving away a discussion forum
when there are competitors that are trying to do similar things as a paid
product?

~~~
dmbaggett
Sorry, I wasn't clear. Obviously the only reason it would be illegal would be
if it were done to restrain competition or trade, and done by an entity with a
monopoly.

Giving things away for below marginal cost can also run afoul of WTO anti-
dumping laws. I am also curious why there are never any dumping complaints
made against software companies whereas they are quite common in adjacent
markets like RAM chips.

~~~
btilly
Well, what is the marginal cost of software distribution?

Just bandwidth cost. Literally a fraction of a cent.

There are a lot of costs to software distribution, but the vast majority are
sunk costs, not marginal. By contrast manufacturing has significant marginal
costs.

This economic fact may be relevant to any decent analysis.

------
kghose
It looks novel (and obviously succeeded in getting attention) but I don't
think he used the comic medium potential - it was all mostly bullet points,
but instead of bullets, he put a comic frame around each point.

The question and answer format was OK, but really, it did not clarify any
points for me or make them less dense.

But then, this was still meant for other lawyers, and not as a layman's
explanation.

------
lukev
So he's weighing two bad things against eachother:

\- collusive price-fixing

\- predatory pricing

These are both definitely bad things, and using one to justify the other is
itself problematic.

But there's another dimension - are these allegations _true_? As I understand
it, predatory pricing is when a large player throws its weight around,
offering goods at below cost to edge out competitors.

But there's _nothing stopping_ other retailers from offering similarly low
prices. Ebooks have almost no marginal price. Just because someone else
_wants_ to sell ebooks for a higher price doesn't make prices lower than that
predatory.

~~~
pedrocr
>Ebooks have almost no marginal price. Just because someone else wants to sell
ebooks for a higher price doesn't make prices lower than that predatory.

To Amazon ebooks have a marginal price as they're paying the publisher a fixed
value for every copy. They were charging customers less than that value so
that's where the accusations came from.

~~~
eridius
Very true. And it's highly unlikely that another distribution channel could
come along and convince the same publisher to sell the ebooks to them at a
lower price, so they could compete with Amazon without selling below cost.

It seems a lot of people are fixated on the idea that digital goods have no
cost, which is simply untrue. Even discounting the fact that the seller has to
purchase the item from the publisher (under the traditional model), there's
still a base cost associated with the good because of licensing issues. People
need to get paid, and certainly some people do get paid on a royalty basis. As
a trivial example, someone needs to pay the author, which is typically done
through royalties. But the publisher also needs to get paid, as does anyone
the publisher employs.

If you're self-publishing and selling on your own storefront, then no there's
probably no marginal cost as you don't have any sort of license or royalty
agreements with yourself. But as soon as multiple parties are involved, things
change.

~~~
jeffdavis
"As a trivial example, someone needs to pay the author, which is typically
done through royalties. But the publisher also needs to get paid, as does
anyone the publisher employs."

Those aren't marginal costs.

~~~
eridius
Any time someone is paid based on the number of units sold (e.g. royalties),
sure it is. If I sell one more ebook, I need to pay out more royalties, and
therefore my total cost has gone up.

I realize I'm handwaving a bit, but my basic point is that selling more ebooks
is not free for the publisher. There's definitely a cost here. And it's
somewhat tangential anyway, because the marginal cost that's important here is
Amazon's. In the traditional model they buy ebooks from the publisher at a
fixed price, just like with physical books, and then mark them up and resell
them. So the marginal cost here is the amount they pay the publisher per copy.

------
junto
It is a pity that his argument is a load of bollocks.

As I understand it, he argues that an e-books price fixing cartel is in the
interests of all, including the consumer, because otherwise, companies such as
Amazon will lower the price to a point (whilst continuing making a loss), such
that all others e-book sellers are unable to compete long term.

Or, have I misunderstood his five pages of cartoon genius?

~~~
quadhome
Maybe.

But you haven't explained why it's a load of bollocks.

~~~
sageikosa
Because it is a non-sequitor. It uses hypothetical future bad behavior (which
itself isn't proven) to justify an actual "bad" behavior to compensate before
it occurs.

But, I am anti-anti-trust, so I don't have a problem with collusion of this
sort; any inefficient collusion will eventually bloat and be disrupted (unless
protected by the government as a sanctioned monopoly).

------
tankenmate
The argument of the cartoon is great except for one thing, the marginal cost;
for e-books the marginal cost is so close to zero it might as well be
considered zero. This was also stated by another commenter on the OP
discussion section.

~~~
aaplsux
Exactly. But this bonehead wants to argue that it's "presumed illegal" to sell
them for what they cost: almost nothing.

~~~
biot
If you're paying a $3 royalty to the rightsholders per copy sold, then the
marginal cost is at least that plus minor distribution and transactional
costs. If you sell the e-book for $2.99, that's below marginal cost.

~~~
belorn
But that is not what the comics argue since they are attributing it to DOJ
guidelines for the Licensing of Intellectual Property.

There is not a single reference to marginal cost or copyright infringement in
that document. The guidelines focus around market power, and competitive
prices.

Contrary to the comic, the guidelines do to define what an competitive price
is, or public goods, or systems goods, or the effect of supply & demand on IP.
The closest we get is a statement that market power exist if the consumer can
not get the product beyond from a single source.

If someone edited the Wikipedia article about IP and used the same wording as
the comic, it would get reverted with the comment ("Does not exist in
source").

~~~
biot

      > There is not a single reference to marginal cost or
      > copyright infringement in that document.
    

Did we read the same document? These references are from
<http://www.abajournal.com/files/AppleAmicusBrief.pdf>

Page 2 panel 2:

Woman: "Oh, because of illegal downloading." (aka copyright infringement)

Page 3, panel 2:

Woman: "Who said Amazon was a predator?"

Man: "The DOJ did in their own complaint & CIS. Amazon sold e-books below
marginal cost."

Page 4 panels 1 & 2:

Woman: "So, how does all this help solve the case?"

Man: "You see, when Amazon lowered e-book prices below its marginal cost..."

Man: "... any conduct that raised them back to marginal cost could not have
harmed consumers."

~~~
ryanmolden
I believe he was referring to the "DOJ guidelines for the Licensing of
Intellectual Property" not the comic. I'll assume he means this:
<http://www.justice.gov/atr/public/guidelines/0558.htm>

~~~
biot
You're most likely right and I misunderstood. Thanks for the link.

------
dlss
Somehow I was expecting an ending where the author is awesome. Maybe he lifts
a car, maybe the girl gives him a series of unreasonable compliments... just
_something_

------
calinet6
"The illustrator attends school with Kohn's daughter, Katie, who is pursuing a
Ph.D. in film studies at Harvard."

"Attends school with." Mmmhmmm.

------
lucian1900
So it boils down to "let collusion go unpunished this one time, because we did
your job for you!". Right.

Not only would it create a precedent in letting collusion slide, but it would
also misrepresent the problem: it's DRM that supports Amazon's monopsony, and
only because publishers asked for it.

------
Swizec
After reading the comic, I have no idea what the point is. Is he for or
against whatever is going on? What's even going on?

I just feel so confused.

~~~
grabeh
Initially, Amazon set prices at whatever level they wanted because they had a
distribution model with publishers. This means the publisher would charge a
set price to Amazon and Amazon could then charge whatever it liked to end-
consumers. Amazon engaged in low pricing to build market share.

Apple and publishers didn't like this because lower book prices meant lower
revenues and sales for them.

Discussions were had and publishers then collectively went to Amazon to demand
a switch to the agency model. In the agency model, the publisher sets the end
retail price and the intermediary (Amazon) takes an agreed cut.

The lawyer argues that the above one-time step by the publishers against
Amazon was necessary to correct the anti-competitive action of Amazon in
engaging in pricing at a level which would reduce competition over time.

Effectively, the rise in prices resulting from the agency model was justified
because without the reversion to the agency model, Amazon's continued low
pricing would eventually lead to monopsony effects in terms of Amazon being
able to control publishers.

The lawyer goes on to say that what is important is not the price level, but
its effectiveness in terms of encouraging competition. In the short term,
consumers benefit from a low price, but if one actor becomes the only
provider, it is likely to have a detrimental effect on the ability of upstream
providers to compete.

~~~
mtgx
Which model ended up benefiting the consumer the most, though? I thought
that's what antitrust is all about.

Sure, we could make theories all day long about how 10 years from now Amazon
will increase their prices, but that's highly improbable, as I think Amazon
would like to make book prices even lower if they could. That's why they are
allowing self-published authors to sell books even for $2.99, and singles for
$0.99. They are working in the same time to disrupt the traditional publishing
model. And that's a _good thing_.

I was hoping Google would be the more innovative company with Google Books,
and try to disrupt Amazon with new models of selling books (or free/ad-based,
promote self-publishing more, etc), but they've disappointed me in doing that,
and honestly I have no idea why they even bothered entering the book market,
if they weren't going to be serious and do something radical and disruptive to
gain market share from Amazon.

I'm not even a fan of Amazon, and I'll _never_ forgive them for what they
_voluntarily_ did to Wikileaks, but so far Amazon has proven time and time
again to be the most innovative company in the book industry.

~~~
grabeh
It is of course very difficult to forecast into the future and that is the
problem with intervention into free market matters.

I do think it is interesting to note the German approach in terms of
protecting publishers, and how there appear to be many more book stores in
Germany catering for niche areas of publishing owing to the fixed pricing
arrangement for the sale of books.

[http://www.thenation.com/article/168124/how-germany-keeps-
am...](http://www.thenation.com/article/168124/how-germany-keeps-amazon-bay-
and-literary-culture-alive)

For me, it suggests that price is not the only factor to consider in terms of
satisfying consumers.

------
colinshark
So Amazon is being bad because they might seize the market and raise prices.
But the publishers want to raise prices right now.

Got it.

------
jethroalias97
I don't know if Poe would be considered a novelist, but he can really blow you
away in less than 5 pages.

1) <http://www.online-literature.com/poe/335/>

~~~
chrischen
I don't think the comic format was legitimately for fitting more info in to 5
pages. Probably more of a publicity gimmick.

~~~
thedudemabry
I agree. This isn't a space-saving brief. It's an attempt to inflame. But...

I think it's pretty cool that a new medium for legal discourse has been
actually used. Several years after absorbing Scott McCloud's phenomenal book
Understanding Comics (<http://en.wikipedia.org/wiki/Understanding_Comics>), I
set out to argue for a very technical (programming) project at work through a
goofy comic. It was surprisingly effective, and got more eyes on it than the
more traditional internal wiki plea. I assume that the novelty and
incongruence of the medium brings the audience out of whatever comfort zone
they routinely occupy.

~~~
hrayr
Reminds me of "Why's Poignant Guid to Ruby" [1]. I can't say how efficient
this medium is for transferring information/knowledge, but it's certainly
captivating -- sometimes what's needed to get a point across is not
efficiency, but captivation.

[1] <http://mislav.uniqpath.com/poignant-guide/>

------
mhd
Maybe it's just the looks of the main character, but this reminded me a bit of
Scott McCloud - although I would like how he would do things like this in a
"Understanding Comics" style.

------
seanmcdirmid
Related to Bret Victors work: <http://news.ycombinator.com/item?id=4421235>

I really want to try this in my next paper!

------
tomrod
_ahem_

Marginal costs on ebooks are essentially zero after factoring payment to
authors/publishers. Fixed costs, even long-term variable costs, cannot be
considered marginal costs here. The costs are hosting and delivery of content.

So unless Amazon is selling books at a price lower than what it paid to
authors/publishers who distribute through them, I don't follow the inherent
marginal cost pricing argument.

Perhaps the author means average costs?

------
anigbrowl
A bit gimmicky (since the argument could easily have been stated in a couple
of pages), but he developed the argument cleverly.

~~~
grabeh
Although the argument relayed in the comic could be stated in a couple of
pages, I believe the point of the comic is to mock the judge for imposing a
5-page limit as this is an insufficient amount of space in which to relay the
full argument that the lawyer wanted to make.

The last section states 'it's impossible to tell a complex story in only five
pages'.

------
saurik
I can't imagine that this was more efficient, or potentially even more
enjoyable, than something that used the space more efficiently: between the
handwritten and crowded text, the repetitive panels, and the irritating
premise of a conversation that would never have happened, I found reading that
document very difficult.

------
Tichy
Not that we can see it in black and white, the case is settled. Pictures can't
lie.

------
weekends
If all legal briefs were like this I suspect more people would be able to
understand the law

------
gunshor
Who knew -- lawyers can be creative. Count me impressed.

------
bifrost
this is excellent!

------
aaplsux
This guy is your typical lawyer who has no life outside of his job. Just a tad
bit overeager. "Look at me I'm an annoying laywer! I will argue the moon is
made of cheese if you pay me." I can only imagine how long his brief would
have been without the limit. The judge was wise; she obviously values her free
time more than he does.

"Efficient" prices. Yeah right. In other words, Apple prices. We all know how
they work.

Go Amazon!

~~~
dctoedt
> _This guy is your typical lawyer who has no life outside of his job._

Far from it. If the comic author is who I think it is [1] (and I'm pretty sure
it is), he's not at all your typical lawyer. Way back in the day, he was the
general counsel of Borland International [2], which published Turbo Pascal,
Turbo C, Sidekick, etc. Bob's Christmas-card newsletters were always a blast
to read, although I haven't been on his mailing list for a number of years
now.

[1] <http://en.wikipedia.org/wiki/Bob_Kohn>

[2] <http://en.wikipedia.org/wiki/Borland>

~~~
aaplsux
You're right. I'm wrong. Apologies to Mr. Kohn.

He's not a bonehead either. But that is a boneheaded cartoon and he is making
boneheaded arguments.

When you look at what he's doing now and who is clients are it makes perfect
sense why he wants to submit an amicus brief.

As a consumer, Kohn is not looking out for my interests.

The internet makes publishing less expensive. We are getting things for free
that we used to pay for. This aggravates lots of people. But technology has no
moral sense. It is a means to an end. (The information in legal research
databases, not to mention the dubious "copyright" status of court decisions
that some "Legal Publishers" assert, are fine examples you should be familiar
with. The internet does not benefit every business. Poor Lexis-Nexis. Poor
Westlaw. Poor Martindale. They have to adapt and compete. What a tragedy.)

But the internet clearly benefits consumers. We get lower prices and better
access to information. How is this a bad thing?

Amazon may be no angel but they have embraced the internet, openness and
interoperability to a far greater degree than those who now oppose them,
seeking the help of the courts to slow Amazon's progress.

Royalty rates are a matter of negotiation not actual production and
distribution costs. It's interesting to see how some commenters seems to view
what the publisher deems a reasonable rate as a "fixed cost".

The top post in this thread is spot on. There's nothing to stop anyone from
offering low prices like Amazon. It's pretty obvious why they do not want to
and why they would go so far as to suggest Amazon is breaking the law.

I don't want to see people's book collections turn into some ridiculous
propreitary iTunes-like lock-in, denying people ownership or any reasonable
amount of interoperability.

