Good news for cheapskates, bad news for traditional publishing: “Agency pricing,” which many in the book business had hoped would prove a defense against Amazon’s discounting every new book to $9.99, is pretty much finito as of today.
A bit of background: At issue is the agency model, which first came into play when Apple debuted the iPad and began talking to publishers about ebooks. Apple liked the sound of an agency model, where publishers would set the price and and Apple would merely act as agent, taking a cut of the transaction. This looked like a way of finally breaking Amazon’s iron-fisted insistence on charging $9.99 for a standard new release, which would otherwise go for $25.00 in print.
Back in April, the Department of Justice, however, took exception to this, filing an anti-trust suit against Apple and five of the big six book publishers, namely Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. (Only Random House escaped unscathed.) The lot of ‘em were accused of colluding to fix prices. Three of the accused–Hachette, Simon & Schuster, and HarperCollins–immediately agreed to settle, terminating the offending deals with Apple and pinky swearing not to control retailers’ prices for at least two years.
Macmillan and Penguin are fighting on, as is Apple.
However, it wasn’t as simply as signing some papers and cutting a check. Apple wanted them to wait until a trial determined the final outcome. It didn’t work out, though: The Wall Street Journal reports that a judge has signed off on the agreement, meaning Amazon can begin sharpening the discounting knives… well, depending on whether Apple decides to appeal.
One industry analyst told the New York Times:
“I think that everybody competing with Amazon in the e-book market had better fasten their seat belts,” Mike Shatzkin, the founder and chief executive of the Idea Logical Company, a consultant to publishers, said in an interview. “I would expect Amazon to be leading the charge to cut prices on the most high-profile e-books as soon as the decision allows them to do so.”
That means anyone who wants to compete is going to have to start the price chopping, too.
Meanwhile, in the wider tech world, Amazon just took a flying leap, claws extended and teeth bared, at Apple’s face. The press release issued for the Kindle Fire HD? “Amazon Takes on the High End.”
And to think, this whole thing started as a way for Apple to get the content offerings to compete with Amazon.