Price Fixing
This is just bizarre:
On Tuesday 1 March, several publishing offices in Europe were raided by inspectors from the European Commission.
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The background to these raids is the agency model many big publishers have adopted to sell ebooks. Under this model, instead of selling the ebooks wholesale and allowing the retailer to set the price they charge the customers, the publisher itself sets the price of the ebooks and the retailer takes a commission. The potential problem with this arrangement is that it could, according to the EU commission statement explaining the raids, "violate EU anti-trust rules that prohibit cartels and other restrictive business practices".
If publishers are forming a cartel around price that's one thing, but what does that have to do with the Agency Model? It's how every app on the app store is sold, and I don't see them kicking down anyone's doors over that.
I disagree with Sam Jordinson that this is a return the net book agreement. In order for a cartel to work, it has to be able to restrict supply. That is precisely what publishers are now unable to do in the age of the eBook. Before eBooks you could still self-publish, but you really needed a known publisher in order to have any chance of being stocked in bookstores. The same thing went for music, and the industry used that leverage to fix CD prices.
With Kindle and iBooks, people have been publishing books themselves, in the exact same forum that Random House and Hodder use. Jordison accidentally makes this point himself, by pointing out that people are selling eBooks for £0.99 on Kindle.
What makes this even more strange is that price fixing was already going on:
Until the agency model was imposed, Amazon had been setting a $9.99 (£6) standard price for new bestsellers in the US and discounting the Kindle editions of some of last autumn's UK bestsellers by as much as 72%. Amazon, the ebook pioneer that makes the Kindle reading platform, unsurprisingly dislikes the agency model. The OFT said it had received "significant" complaints but did not name the sources.
I honestly do not understand how Amazon imposing a single, uniform price on all bestsellers isn't price-fixing, but publishers deciding what to charge for their books is. The extra skullduggery is the OFT complaints, which people expect was Amazon dropping a dime on some troublesome publishers. It's no surprise they don't like the Agency Model: it would prevent them from doing things like deeply discounting bestsellers. Amazon was basically forcing publishers to lower prices on its bestselling books in order to gain market share for the Kindle.
I don't know who's going to come out ahead in court, but it's safe to say no one will emerge covered in glory.
