The DOJ’s threat to sue the publishers over agency pricing has evoked a number of responses and reactions.

Mike Shatzkin has written a thoughtful survey of what a putative “end” of agency pricing might mean for all the players in the e-book industry, and for the major and minor publishers. Basically, all the other e-book vendors will be put in the position of having to burn cash to keep up with Amazon’s discounts or see their sales drop off, it may mean that Google’s bookstore e-book initiative can’t compete, and the publishers will be back in the same position they were before, of having to figure out how to keep control over pricing while still making money.

John Scalzi points out that it could be hard to prove “collusion” because it necessarily takes into account the state of mind and intentions of the publishers and whether they actually did cooperate with the goal of raising prices. After all, he point out, there’s not a lot of difference in the end result between publishers getting together to decide upon the price changes, and publishers reacting individually to Apple’s proposed agency pricing scheme.

If a store offers favorable pricing terms, is it really “colluding” if each publisher makes up its own mind to take advantage of them without consulting anybody else? The fact that one of the Big Six waited a whole year before implementing agency might lend support to the idea that it was several independent decisions.

It’s also worth noting that predatory pricing, which is “the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors,” is also a potential anti-trust violation. But it could be just as hard to prove that Amazon’s $9.99 e-book prices count as it would be to prove publisher collusion, because again it goes back to frame of mind: did Amazon price cheap to drive other people out of the market, or simply to give people incentive to buy its own e-readers? And how do you prove its intention? Unless you’ve got a smoking gun, like the sorts of internal e-mails Megaupload was dumb enough to keep around, you really can’t do it.

As for whether agency pricing is in consumers’ best long-term interest, PaidContent has an article in which two of its own writers, Matthew Ingram and Laura Hazard Owen, debate whether agency pricing harms or benefits consumers. Ingram takes the position that the publishing industry is shooting itself in the foot with the higher e-book prices due to agency pricing, while Owen points out that allowing Amazon to sets its own prices harms its competitors. Then they discuss matters of profit margin, royalty, and who makes it easier for new authors to find a readership.

Of course, it’s probably premature to predict “the end” of agency pricing. A number of possibilities for settlement are on the table, including keeping the 30% and price control but giving retailers some ability to set discounts. And whatever happens will probably take months to play out.


  1. This is a tough one. In abstract terms, I’m all in favor of each distributor setting their own prices. On the other hand, some distributors, including Amazon drop royalty rates if prices are below a certain range… so when Fictionwise, for example, puts things on sale, Amazon first matches and then drops royalty rate. The only option is something like agency pricing, which is why Smashwords went that route. Again, my preference is to set a list price, base royalties on that list price, and let the distributors do what they want (if they want to offer my book free and send me 70% of the list price, no problem with me). Unfortunately, that option might be on the table for the big six but it sure isn’t for me.

    Is predatory pricing an issue? One thing for sure… competition in distributors is good for publishers, for authors, and for readers. If we ever get to a space where there is just one distributor (say Amazon, just for example), that’s not going to be a happy place for anyone except Amazon shareholders.

    Rob Preece, Publisher

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