Macmillan CEO Sargent: Why we won’t settle against DOJ

Macmillan is ready to fight the Department of Justice lawsuit against Apple and five big publishers, CEO John Sargent writes in an open letter to the publishing community today.

“Let me start by saying that Macmillan did not act illegally. Macmillan did not collude,” Sargent writes. He acknowledges that the costs of fighting the DOJ’s suit — “in time, distraction, and expense” — are “truly daunting,” but “we have decided to fight this in court.”

Meanwhile, HarperCollins, Hachette and Simon & Schuster are settling with the DOJ. Penguin, the fifth publisher named in the suit, has not yet announced its plans but is presumed to be fighting the case in court.

“The government’s charge is that Macmillan’s CEO colluded with other CEO’s in changing to the agency model. I am Macmillan’s CEO and I made the decision to move Macmillan to the agency model,” Sargent writes. “After days of thought and worry, I made the decision on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, and I see no reason to go back on it now.”

And, Sargent says, “When Macmillan changed to the agency model we did so knowing we would make less money on our e-book business. We made the change to support an open and competitive market for the future, and it worked. We still believe in that future and we still believe the agency model is the only way to get there.”

Macmillan, under Sargent’s leadership, has been at the front lines of fighting against Amazon — starting back in 2010, when Macmillan switched to the agency model and Amazon temporarily turned off the “buy” button on its books before capitulating. In today’s letter, Sargent notes that the DOJ’s proposed settlement terms “could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model. We also felt the settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.”