Apple is now the lone hold-out.

As you may recall, three publishers—Hachette, HarperCollins and Simon & Schuster—immediately settled, leaving Penguin, MacMillan and Apple to fight it out in court. Penguin settled in December, probably to protect their pending merger with Random House. And now Macmillan joins its fellows.

Macmillan CEO John Sargent cited financial reasons for the settlement, according to this story on Publishers Lunch:

“Our company is not large enough to risk a worst case judgment. In this action the government accused five publishers and Apple of conspiring to raise prices. As each publisher settled, the remaining defendants became responsible not only for their own treble damages, but also possibly for the treble damages of the settling publishers (minus what they settled for). A few weeks ago I got an estimate of the maximum possible damage figure. I cannot share the breathtaking amount with you, but it was much more than the entire equity of our company.”

I can only imagine what that number might have been.

I’m kind of disappointed. I would have liked to see what emerged in the trial later this year. The whole thing always smelled bad to me, but I do think the publishers have made good decisions, on finances alone, if not for all the other reasons.

I wonder what Apple, which is currently scheduled to continue to trial in June, will do now? Thoughts?


  1. Marilynn, I’m not sure they will. There’s no longer any profit to them in winning. They benefited from Agency Pricing keeping prices stable across all platforms. Now that everyone has settled, their reason for being in the game has gone away. I think they’ll take their toys and move to a new sandbox.

  2. Sargent’s complete statement on the matter can be found on

    I think the most important thing to take out of this is that, even if it didn’t go to trial, in the end the system worked as it was supposed to. Only a couple of years after it was implemented, agency pricing from the Big Six publishers is effectively dead. Yay, we win!

    That we don’t get the schadenfreude of courtroom drama might be a little sad…but you know what? Given the choice, I’d rather have the cheap e-books. 🙂

  3. Agency may be gone (for three years) but it leaves behind the legacy of the 70-30 benchmark split. And it will be followed by other schemes like Macmillan’s recent “raise prices another 10% and let retailers only discount 10%. Nothing in the settlement prohibits pricing ebooks at $30 and wholesaling them at $15.

    “Them’s folks ain’t done scheming.” 😉

  4. But Chris, if we’d had the courtroom drama, we could have all broken out the popcorn and followed along with your ironic coverage of the event. Righthaven has been out of the news for more than a year now. Someone else needs to misbehave. 😉

  5. Yeah, maybe they’re not done scheming. But if they do re-implement agency pricing, they’ll have to do it on their ownsome, without consultation with the other publishers. It was that consultation that was the nastiest part, because without being able to be sure the other publishers would follow suit, none of them would have done it. I mean, just look at Sargent’s statement—he outright said that since every other big-six publisher was settling, remaining Agency themselves would have been a competitive disadvantage for Macmillan.

    If they’re not able to coordinate with each other, I think the publishers may just think twice about putting themselves back into agency that way. Prisoners’ dilemma, ho!

  6. If you can’t collude, merge.
    Same result, but its legal.
    Get the BPH segment to two players and then do as the airlines do; float a price hike and if the other player(s) follow suit, you’re golden. If not, you drop it.
    Wink-wink, nod-nod is just as effective as secret meetings and leaves no email trail.
    So far the BPH execs have been crude and crass in their money grubbing which is why they’ve been getting egg on their face. In time, they’ll get subtler or by replaced by somebody from Corporate HQ who is.
    As is, let’s not forget that the settlement and “restitution” they have grudgingly accepted amounts to pennies on the dollar of what the price hike brought in. They are still making out like the bandits they are.

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