DNAML_PResDid you know there’s another agency pricing Apple lawsuit? This one hasn’t gotten as much press, though Nate has covered it at The Digital Reader and we touched upon it once in regard to a ruling by Judge Cote on the legality of removing DRM.

It was filed by three booksellers: Australian e-book store DNAML (who we’d covered a few times), Lavoho (“successor to” defunct store Diesel eBooks), and Abbey House Media (formerly BooksOnBoard). They alleged that Apple and the agency-pricing publishers had effectively torpedoed their businesses, because they relied so heavily on discounts and bundles..

In June, 2014, Cote permitted the suit to proceed, though warned the plaintiffs that it could be extremely difficult to prove actual financial damages against the publishers and Apple. In August, 2014, she ordered the plaintiffs and defendants into mediation, but it apparently didn’t go anywhere. So, at last, Andrew Albanese reports at Publishers Weekly, the trial is moving forward into the Summary Judgment phase. Under the new schedule, all motions and replies are expected to be briefed by the end of October.

It’s unclear what, if anything, the former e-book stores could hope to gain from this. As Judge Cote noted, it would be very difficult to put a price tag on money they didn’t make. Indeed, proving damages or lack thereof from agency pricing was one of the more contentious issues of the overall Apple trial. What’s more, even if the bookstores win, it seems unlikely they’ll be able to re-open. Agency pricing is effectively a fait accompli now; since the trial, the publishers have accomplished by negotiation what they couldn’t with litigation, so they wouldn’t be able to resume their discounting and bundling ways.

But if nothing else, it might be a source of some ancillary schadenfreude while we wait to hear what the Supreme Court thinks of Apple’s appeal.

In a way, it’s kind of sad. There should have been other companies represented as plaintiffs—eReader, Fictionwise, Mobipocket. They were the best-known names in e-books in the late ‘90s and early 2000s, and their businesses were torpedoed just as effectively by agency pricing. (I was a member of Fictionwise’s “Buywise” discount club and rebate program, which could no longer exist by the rules of agency.)

But by then Barnes & Noble and Amazon had already bought them out and they no longer existed as separate companies (and first Mobipocket and then Fictionwise and eReader no longer existed at all)—and even if their new owners could join the suit on their behalf, it seems unlikely either of those big bookstore companies would want to court further enmity with the publishers and Apple by doing so.


  1. Oh, I doubt agency pricing has anything to do with any ebook business failure. Incompetence is a far more likely reason. Look at all the ebook sales and subscription businesses that have failed or are failing. It’s almost the norm.

    Take note also that agency pricing is the standard way to sell apps, music and movies. No one brands those as evil conspiracies and the business models of all four are virtually identical: Pay and download a file.

    My impression is that the world is divided into two groups.

    1. Those who take court decisions seriously as establishing standards of right and wrong.

    2. Those who know better.

    In the earlier Cotes’ case, the court madness lay in treating the agency pricing of ebooks as some great evil while ignoring all the other markets where agency pricing is the norm. That’s simply stupid. Yes, judged are often stupid.

    So is the idea that Apple, with a 0% share of the ebook market at the time of its alleged crimes, either wanted or could fix prices while Amazon, which at that time controlled 90% of the ebook market was as innocent as a new-born lamb.

    Also, note that by paying only 35% on ebooks priced below $2.99, Amazon is almost forcing publishers to raise their ebook pricing to $2.99 or higher. That’s price-fixing by a retailer and often means consumers must pay 300% more for an ebook. What’s the DOJ doing about that? Nothing, absolutely nothing.

  2. It wasn’t “agency pricing” per se that caused the small ebookstores problems. It was that with agency pricing there was no provision for distributors to get a cut, and all but the big guys (Amazon, Sony, Kobo, B&N, and later Apple) got their Big-6 ebooks through one or both of the two big US distributors: OverDrive Content Reserve and Ingram CoreSource.

    The distributors’ contracts with the “agency” publishers were canceled, and no new contracts were forthcoming. There wasn’t nearly enough time for the small guys to work contracts with the publishers (who were busy enough dealing with the big guys. So, on April 1, 2010, almost all of the major ebook titles disappeared from every ebook store except for the five I named above, and of those only B&N and Kobo had titles from *all* of the publishers, with Sony joining the ranks of the “full range ebook sellers” at the end of the month. Random House was the only major publishing house whose titles were still available from the small stores.

    BooksOnBoard never did get an ebook supply line reestablished for the “agency” publishers other than HarperCollins, and gave up.

    Diesel fought hard, and on May 10 they got Penguin back (which Amazon didn’t yet have!), and three days later they had HarperCollins. They got Hachette in September, Simon & Schuster in October, and Macmillan in November. So it took Diesel more than seven months of negotiating to “become whole” again. Then the following March, Random House suddenly went agency and Diesel lost *them* for two months.

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