Some publishers more willing to settle with DOJ than others over e-book pricing

The Wall Street Journal has some further news on the putative e-book pricing settlement in the US Justice Department and European Commission joint anti-trust investigation of the “Agency Five” publishers plus Apple. Anonymous sources have told the Journal that three publishers are inclined to settle and two others (plus Apple) are holding out. HarperCollins, Hachette, and Simon & Schuster reportedly favor settling, while Penguin and Macmillan (plus Apple) do not. (Random House, who waited a year to implement agency pricing, was not part of the investigation.)

"The companies involved know very well under which conditions we are ready to settle," [Europe’s competition commissioner Joaquin] Almunia said in an interview. "If our conditions cannot be met in a satisfactory way, we will continue our investigation."

Per these anonymous sources, the settlement conditions would include a “cooling-off period” during which agency pricing would be suspended. The Justice Department feels that agency pricing was only possible due to all the publishers and Apple getting together, and such a cooling-off period would allow publishers and booksellers to resume their independent one-to-one relationships. The length of such a period is the subject of one of the settlement talks.

It’s not clear what such a settlement would mean for odd man out Random House, who imposed agency pricing but did so after a long enough wait that it wasn’t seen as part of the original conspiracy. Presumably the company could make its own decision to drop prices to match those of its competitors’ books during the cooling-off period.

5 thoughts on “Some publishers more willing to settle with DOJ than others over e-book pricing”

  1. No surprise Apple doesn’t want to settle. They have set up their system such that all vendors of anything are required to give Apple a 30% cut of everything sold via their platform. Thus, if Agency pricing goes away, Apple either must do away with that policy or accept that their prices are going to be higher than everyone else’s.

  2. Apple don’t want to settle because they feel they are in a strong position. A lot of opinion now believes Agency itself will not be ruled illegal but collusion between the Publishers will attract punishment. Apple is not one of the publishers and as such could avoid punishment. By the way I would like to hear of any business that doesn’t take something like a 30% cut on goods they sell in their shop ?

  3. Howard’s right. A 30% markup is about what supermarkets make over wholesale and they have to do huge volumes to make a profit. And if a typical bookstore is selling at full retail, it’s making about 45%, out of which it has to pay the shipping, the rent, and staff wages.

    Let’s hope agency pricing hangs in there. It’s great for independent publishers and authors, since it allows them to test sales with lower prices. Without agency prices, Amazon and its kin might regard lower prices as too much bother to implement.

    It would be great, however, if any settlement gets rid of the real irritating feature of these licensing agreements–a requirement not to sell at a lower price elsewhere, including on the author’s own website. Besides having a retailer trying to tell an author the price he can set for his own books, it makes no sense. Ebooks from different sources aren’t the same product. Amazon, B&N, and Apple (with IBA) have different formats, requiring separate labor to create ebooks for each. Authors and publishers should be able to recoup that formatting cost.

  4. It would be a great relief to all of our budgets if retailers were able to discount ebooks again. I wonder how many authors and publishers would notice the increased sales, leading in most cases to higher returns?

    After all, it comes down to how much the retailer is willing to earn (or lose, on loss-leaders) and how much the author gets in the end. There are plenty of examples of ebooks at lower prices earning more than Agency 6 ebooks.

  5. Clytie – I disagree, though I used to hold that view.

    However the profile of the eBook market, imho, makes it almost impossible for an online eRetailer to set prices in a way that helps either the reader or writer or publisher – or even themselves.

    Consider the size of the market and number of titles. It is enormous. Each title being unique. It is impossible for any eRetailer to know which titles are from good writers or fledgling writers or writers with great or poor reputation. They could never implement the kind of flexible pricing strategies for new writers that they can do themselves – such as offering a title free or at a discount with higher prices for other titles, or varying the price according to success or waxes and wains in the market.

    Prices would be implemented in blunt swathes across multiple genres and writers and titles, and this would not actually help readers or writers imho.

    The Agency system, implemented properly, offers flexibility and healthy competition between writers and publishers. The mess that we have faced as a result of the Agency 6, on Amazon and Apple, is one of collusion between publishers to maintain high prices, and not really the result of Agency pricing in and of itself.

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