The DOJ E-Book Lawsuit: Is It 1934 All Over Again?

During the Great Depression, publishers faced off against another seemingly invincible retail juggernaut: Macy's Department Stores.

Throughout the Great Depression, department stores like Macy's sold books at a steep discount. The best-selling Gone with the Wind became an early casualty of the 1930s price wars. Department stores priced the new novel at 89 cents (equivalent to $14 in 2011), hoping to lure customers into stores — a loss leader strategy that feels almost like a precursor to Amazon's play. In mid-1934, publishers and booksellers lobbied for federal protection from this kind of predatory pricing. During the early days of President Franklin Roosevelt's administration, the federal government enforced a set of retail codes to prevent predatory pricing and other Depression-era trade practices.

The Supreme Court later declared the codes unconstitutional, but publishers fought in courts around the country to keep fair price legislation alive throughout the Great Depression. Thanks to the legislation, Macmillan dramatically raised the price of Gone with the Wind to $3 (equivalent to $47 in 2011). Macy's promptly returned 36,000 copies of the novel to the publisher, hoping to prove that this solution would scuttle sales for the new book. The publisher told the New York Times "we believe ... with the price of Gone with the Wind stabilized, its sale will go right on." Both the publishing industry and Gone with the Wind kept sailing, thanks in part to jury-rigged fixes nobody ever imagined would endure. No matter what the outcome of this mountain of federal and state litigation, the agency model, in its present form, is dead. Within the next month, Amazon, Barnes & Noble, Apple and other e-book retailers will undoubtedly mount a fierce price war for control of this new market. Publishers will bemoan the loss of the tool for preventing predatory pricing, brick-and-mortar booksellers will struggle to compete in the digital marketplace, and cash-strapped book buyers will cheer the competitive prices.