More raids in price-fixing probe. Publishers “explain” high ebook pricing
March 4, 2011 | 7:45 pm
The Guardian has a piece today on the raids, which includes quotes from some publishers trying to explain or defend the fixing of pricing so that prices are generally much higher and must be the same at all online bookstores needing Agreements with the Big 5, with no way for the online stores to offer sales or lower prices no matter what the case. Random House has decided not to join Agency pricing in Europe during this time of probing questions.
Benedicte Page and Leigh Phillips report from Brussels, where they say that officials there have “refused to say how many or which publishers were targeted although a spokesman for Hachette, famed for its dictionaries, confirmed that it was among them. The inquiry is understood to be focused on French companies.”
Excerpts of particular interest, emphases and bracketed comments, mine:
‘ The EU competition spokeswoman, Amelia Torres, said: “We have suspicions of collusion to keep prices high. But if our suspicions prove to be founded, this would have an impact across the EU because ebooks are sold across borders.” She added that the firms involved face fines if the commission finds “hard evidence”.
The development comes on the heels of an investigation in January by the UK’s Office of Fair Trading into whether arrangements between certain publishers and retailers over the sale of ebooks “may breach competition law”.
Investigation teams have asked many of the biggest London publishing houses, including HarperCollins, Hachette and Penguin, for all records and documents relating to ebook sales.
. . .
Publishers see the agency model as crucial because it allows them to trade with Apple [which created the Agency plan and insists on it], which was already using it for iTunes, and also to control the price at which their ebooks are sold.
. . .
Ronald Blunden, Hachette‘s head of communications, denied that the company engaged in price fixing. “Emphatically no,” he said. “We are dealing with distributors [such as Amazon] who have considerable clout.
“We found that in the US, electronic retailers began to apply large discounts on ebooks, driving the cost down. Steadily the spread between the price of a printed book and an ebook became so substantial that we felt it was just unacceptable.”
“It’s important for the publisher to control the retail price,” Blunden continued. “We don’t want the items sold below cost, as the perceived value of books becomes damaged. Once this happens, can we expect online retailers to absorb the cost of financing the editing and publishing of books?”
John Makinson, the Penguin group chief executive, argued that the “very important” agency model contributes to a competitive ebooks marketplace. ”To have vibrant competitive markets, it’s important that Apple and the other digital vendors have a place in that market. The agency model made it possible to have that choice,” he said.
Makinson added that he saw “a certain irony” in an OFT [Office of Fair Traiding - UK] investigation designed to ensure competition and consumer choice. ”That in our view is what the agency agreement has provided,” he said.
Their view of ‘competition’ is that the online booksellers must not be allowed to offer lower prices, which means online bookstore “Sales” are no longer possible and the customer cannot look for a lower price elsewhere as it would be fruitless. Some consider this ‘price fixing’ while others consider it necessary publisher-control of book pricing, no matter how artificial or without reason.]
Novelist Nick Harkaway, author of The Gone-Away World, agreed. “If the agency model is really a problem under EU law, the law is the problem, not the industry,” he said. “Otherwise you fall back into a situation where Amazon controls the market. This is not to demonise Amazon, but they are a massive portion of the physical market and if their wholesale model also dominates the digital book market, it becomes much harder to negotiate with them.” ‘
Yes, if an industry or individual companies (as we saw with digital music and with companies still limiting themselves to distributing physical copies of DVDs) cannot find a way to adjust to a vastly changing world, they won’t be able to sustain the infrastructure as it stands. The answer is not unceasing efforts to Stop the World from moving naturally (and insisting customers just pay up, and up) but to modify their infrastructure to reflect the real world and evolving technology, no matter how upsetting it may all be for them to have to change anything.
Read more at The Guardian story.
EARLIER BLOG ARTICLES ON THE E-BOOK PRICING WARS, WITH SOURCING
A Kindle World Blog history of articles on the e-book pricing wars