“Agency Model” pricing on the way out in Europe?

According to a report filed by Reuters, it looks like Apple and several associated e-book publishers will be agreeing to a settlement that would allow Amazon to discount e-books in Europe, ending the alleged price-fixing that prevented Amazon from undercutting Apple’s prices.

Apple and the publishers offered in September to let retailers set their own prices or discounts for a period of two years, and also to suspend “most-favored nation” contracts for five years.

Such clauses bar Simon & Schuster, News Corp. unit HarperCollins, Lagardere SCA’s Hachette Livre and Verlagsgruppe Georg von Holtzbrinck, the owner of German company Macmillan, from making deals with rival retailers to sell e-books more cheaply than Apple.

The agreements, which critics say prevent Amazon and other retailers from undercutting Apple’s charges, sparked an investigation by the European Commission in December last year.

Pearson Plc’s Penguin group, which is also under investigation, did not take part in the offer.

This seems to indicate a trend moving us away from the so-called “agency model” whereby the publisher would set the price and the retailer (e.g. Amazon) had no ability to discount the final retail price.

Pratchett Fans Save Money vs. Rowling Fans

As an interesting result of Harper -Collins discontinuing the use of the “agency model” for e-book pricing on Amazon, the newly released Dodger, by Terry Pratchett, is being sold for $9.99 despite having a $17.99 list price, whereas J.K. Rowling’s new (non-Potter) release The Casual Vacancy currently has a pre-order price (release date is 2012/09/27) of $17.99, with the dreaded “This price was set by the publisher” message; indicating that Hachette Book Group is still using the agency model and therefore not allowing Amazon to discount the retail price.

I’m therefore happy that as a big fan of Sir Terry I’m able to get a new release at a “reasonable” price (admittedly a very subjective opinion), but disappointed that my many friends who are Harry Potter fanatics either have to shell out almost twice as much for Ms. Rowling’s latest, or wait until the price drops (presumably either whenever the paperback is release, or if/when Hachette decides — or is forced — to abandon the agency model pricing). A potential down-side I see for Rowling and Hachette is that since this latest novel is a foray into a new, non-Potter and apparently non-YA subject, many fans may be waiting for reviews before considering shelling out $17.99; and if the reviews turn out to be not so hot, well….

2012-09-28: From this article, it may be that you J.K. Rowling fans will not have to wait for the paperback release in order to get a better price on the e-book version. If the author is correct, Hachette may be switching back to a “normal” retail model within the next month or so, allowing Amazon and other retailers to sell it at whatever price point they choose.

Looks Like ‘Agency Model’ Pricing Is On the Way Out — I Hope

As noted by an observant member in a KindleBoards.com post, it appears that Harper/Collins is no longer using the dreaded ‘agency model’ for selling books through Amazon. In case that means nothing to you, five of the “big 6” publishers had adopted this model whereby Amazon was purely a distribution agent of their e-books, and as such Amazon had no discretion as to what price could be charged. You can tell when this is the case when the details about a Kindle book on the Amazon site include text to the effect that “this price is set by the publisher.” Poking around Amazon.com now, it seems that verbiage is no longer there for Harper/Collins titles, and I see books where the sale price is less than the list price, implying Amazon now has the freedom to decide how much they want to make (or even lose) on each title.

Presumably this is all largely a result of the collusion talks/settlement/judgment/whatever that the US DoJ had with Apple and those 5 publishers; and ideally in the long run it will mean lower prices in general for us readers.

DOJ Warns Apple, Publishers about Potential Price-Fixing Lawsuit

I just saw a news headline that the US Department of Justice has warned Apple and five of the “Big Six” publishers concerning price-fixing of e-book prices. The details can be found on the Wall Street Journal’s web site.

Sources told the WSJ that the DoJ has threatened Apple with antitrust lawsuits if it indulges in raising prices of e-books by colluding five of the biggest book publishers.

Some of them are reportedly in settlement talks with the Justice Department to avoid a court battle. A settlement or a successful lawsuit will see customers gaining access to cheaper e-books.

The publishers include Hachette Livre (Lagardère Publishing of France), Harper Collins (News Corp. of USA), Simon & Schuster (CBS Corp. of USA), Penguin (Pearson Group of U.K.) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan of Germany).

The so-called “agency model” which this alleged collusion forced upon Amazon.com has meant that Amazon is not able to apply any discounts to e-book prices from those publishers (and their many subsidiaries). My hope is that either through out-of-court settlements or actual litigation, we e-book consumers will eventually benefit from lower prices. Of course, the way things go with the court system, I would not recommend getting your hopes up for $9.99 best-sellers again any time real soon.