When the ebook
agency pricing model came under fire by the US Justice Department and the European Union, companies began to settle out of court.
Not exact matches
In April of 2010, the so - called «
agency model» of ebook
pricing came into effect and caused a furor in the publishing industry.
He said the Department of Justice had ruled that the
agency model was «legal», and the DOJ mandated deals (
agency - lite) that allowed for retailer discounting of
agency -
priced titles would
come to end this year.
Those same five Big Six publishers — Simon & Schuster, Hachette, HarperCollins, Penguin, and Macmillan — ultimately
came to agreements with Amazon in the US over the wholesale - versus -
agency pricing model.
What they are concerned about is the recent
Agency Model the big publishers are
coming up with to regulate global eBook
prices.
Amazon quickly
came to fully appreciate that not just Macmillan but all five Publisher Defendants had irrevocably committed themselves to the
agency model across all retailers, including taking control of retail
pricing and thereby stripping away any opportunity for e-book retailers to compete on
price.
The
agency pricing model does not work when it
comes to ebooks and the fall of sales should be clue to the publishers.
Some of the events of 2011 were of the «you coulda seen it
coming» variety — Borders closing or Random House going to the
agency pricing model.
Some pro-electronic publishing forums have suggested that, like cigarettes, ebooks produced by the publishers adopting the
agency model should
come with a warning along the lines of: Warning: buying this book will support a publisher who wants to increase book
prices for all.
The
Agency Model, if you've
come a little late to this party, is a baldly anti-consumer
price - fixing conspiracy (I wish I didn't have to use that word, but sometimes a conspiracy is just that, a conspiracy) that was hatched at the beginning of 2010 by some combination of Steve Jobs and executives of five of the Big Six publishers, with Random House abstaining.
The end of the love affair between Amazon and the major legacy publishers
came with the
agency pricing model.
But the
agency model resulted in higher
prices for consumers, particularly when it
comes to books available in both e-book and mass - market paperback formats.
For a look back at the history of Apple negotiating with book publishers and a little more on how the
agency model came about, I recommend this WSJ article from 2010 and Michael Cader at Publishers Marketplace's look at how the introduction of the iPad gave publishers «the opportunity to change the basic selling terms of ebooks with at least one major trading partner in a way that lets [them] take back control of
pricing and reassert their vision of the value of an electronic version of a book.»
Second, as the article I linked pointed out, the
agency model (along with higher
prices and consumer backlash)
came into effect in April, and that could explain the large dip in April.
And a Wall Street Journal piece looking at the industry noted that when it
comes to newer titles, e-book
prices are still in many cases actually higher than the printed version, which isn't subject to the
agency model (although that could be because retailers like Amazon are willing to take a loss on print).
Since the company was playing catch - up to some extent with Amazon's Kindle — at least in the e-reader department — it
came up with a way of getting the major publishing houses on its side: instead of the wholesale -
pricing approach that existed prior to Apple's entry into the market, which gave retailers (including Amazon) the ability to set book
prices wherever they wanted, the
agency model would allow publishers to set the
price.