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Old 08-18-2010, 07:58 AM   #1
Ben Thornton
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Agency model, Apple and Amazon in the UK

This article is interesting. It says a number of things:
1. It calls the agency model "Apple's" rather than the publishers'
2. It includes a claim by Hachette that the Agency model is legal in the EU
3. It confirms Amazon's stance that it is not using this model in the UK and is seeking to be the cheapest

Presumably, Amazon's strategy is to use this to put pressure on the pricing within the agency model (and perhaps the model itself)?
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Old 08-18-2010, 08:08 AM   #2
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A post dealing with Agency pricing (but in Canada) was addressed on the Kobo Facebook page by a Kobo employee:

"Just like with print books, Canadian customers are often faced with higher list prices. Unfortunately the eBook world is further complicated by agency pricing in the US. If the title you were looking at was published by one of the "big 5" agency publishers (Penguin, Simon & Schuster, Hachette, HarperCollins and Macmillan) you're most likely looking at a US agency price which is only applicable in the US. US publishers don't sell eBooks directly to "international customers" and because most Canadian branches of US publishers have not yet gone agency, publishers are still sending retailers much higher Canadian retail prices. On the flip side, retailers are allowed to discount in Canada where they can't in the US. "
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Old 08-18-2010, 10:12 AM   #3
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Originally Posted by Ben Thornton View Post
This article is interesting. It says a number of things:
1. It calls the agency model "Apple's" rather than the publishers'
There are plenty of published reports that it was Apple that "suggested" the Agency model to the Price-Fix Five. It's the model they use on iTunes so by getting publishers to adopt it they could use their existing processes and not have to keep two separate processes for apps/music/video and ebooks.
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Old 08-18-2010, 10:14 AM   #4
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Even if it wasn't Apple who suggested the agency model, it was Apple that made it possible by having an agreement that allowed the agency model and that Apple does not get undersold. So really, we do have to blame Apple for this agency model that the Agency 5 are now using. So when the anti-trust hits the Agency 5, Apple should be right there with them in the noose blowing in the wind.
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Old 08-18-2010, 10:46 AM   #5
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Quote:
Originally Posted by fjtorres View Post
There are plenty of published reports that it was Apple that "suggested" the Agency model to the Price-Fix Five. It's the model they use on iTunes so by getting publishers to adopt it they could use their existing processes and not have to keep two separate processes for apps/music/video and ebooks.
Yes, but not every reference says this, and I've seen people arguing on other threads that it's the publishers rather than Apple who instigated this. So it was in my list of things that were interesting about what the article said.

I'm not convinced that it was done to retain one iTunes model. My impression was that Apple mainly wanted to ensure that nobody else sold books cheaper than them (especially Amazon!)
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Old 08-18-2010, 11:09 AM   #6
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Quote:
Originally Posted by fjtorres View Post
There are plenty of published reports that it was Apple that "suggested" the Agency model to the Price-Fix Five. It's the model they use on iTunes so by getting publishers to adopt it they could use their existing processes and not have to keep two separate processes for apps/music/video and ebooks.
Apple's apps/music and videos aren't the same process.
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Old 08-18-2010, 11:11 AM   #7
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Originally Posted by Ben Thornton View Post
Yes, but not every reference says this, and I've seen people arguing on other threads that it's the publishers rather than Apple who instigated this. So it was in my list of things that were interesting about what the article said.

I'm not convinced that it was done to retain one iTunes model. My impression was that Apple mainly wanted to ensure that nobody else sold books cheaper than them (especially Amazon!)
You are correct. Every reference doesn't say this, because there is no proof it is true. We don't know if the publishers were moving towards this anyways-and what role Apple played. But, as JSWolf noted, people need to blame someone.
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Old 08-18-2010, 11:22 AM   #8
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And ultimately the decision to adopt it lies with the Price-Fix Five.
I'm not blaming Apple (I'm not looking to get kneecapped) merely pointing out where/why the article likely got the idea.

The ultimate responsability, of course, lies with the idiots who think anything good is going to come out of this scheme. Whoever cooked it up, *they* were the ones that signed up for it and they're the ones who'll have to deal with the consequences.

I just hope the whole thing keeps on mushrooming and they keep on losing share for at least a few more years. We could do with a few less publishing oligarchs and more small- and mid-sized publishers.
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Old 08-18-2010, 11:30 AM   #9
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Let's be honest, if nobody accepted the Agency 5's new deal, then the Agency 5 could not have gotten it rammed down our throats. Apple has a clause in the contract saying they cannot be undersold. That's what has caused most of the mess. So yes, we know who to blame and that blame is on Apple for allowing the Agency 5 to make a deal that is not beneficial to the customers at all.
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Old 08-18-2010, 11:32 AM   #10
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Originally Posted by JSWolf View Post
Let's be honest, if nobody accepted the Agency 5's new deal, then the Agency 5 could not have gotten it rammed down our throats. Apple has a clause in the contract saying they cannot be undersold. That's what has caused most of the mess. So yes, we know who to blame and that blame is on Apple for allowing the Agency 5 to make a deal that is not beneficial to the customers at all.
You mean Amazon didn't push for the same clause, before the iPad was released?
http://seekingalpha.com/article/1911...-ereader-sales
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Old 08-18-2010, 11:33 AM   #11
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It will be interesting to see how Amazon in the UK affects all of this. If they maintain their current policy, and keep increasing the available content, the UK could overtake the US in ebook share (I mean a bigger %age of UK business than %age of US business). If that happened, perhaps publishers would wake up to the opportunity and start making it easier to access content and give them (a reasonable amount of) money for it. Here's hoping!
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Old 08-18-2010, 11:36 AM   #12
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The UK doesn't have the Agency 5. So they can have all those nice eBook at lower prices. Well done Agency 5. Way to screw up things for your consumers.
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Old 08-18-2010, 11:37 AM   #13
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Quote:
Originally Posted by Ben Thornton View Post
This article is interesting. It says a number of things:
1. It calls the agency model "Apple's" rather than the publishers'
2. It includes a claim by Hachette that the Agency model is legal in the EU
3. It confirms Amazon's stance that it is not using this model in the UK and is seeking to be the cheapest

Presumably, Amazon's strategy is to use this to put pressure on the pricing within the agency model (and perhaps the model itself)?
I don't know about the rest of the EU, but the "agency model" has been in effect in France, by law, since the 1980's. Maybe he says it's legal in the EU because the French law hasn't been challenged by the European authorities. But the laws would be different in every country anyway.
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Old 08-18-2010, 11:37 AM   #14
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Originally Posted by Ben Thornton View Post
It will be interesting to see how Amazon in the UK affects all of this. If they maintain their current policy, and keep increasing the available content, the UK could overtake the US in ebook share (I mean a bigger %age of UK business than %age of US business). If that happened, perhaps publishers would wake up to the opportunity and start making it easier to access content and give them (a reasonable amount of) money for it. Here's hoping!
It is a great set of circumstances right now-Amazon can show which pricing model is most effective to both increase profits/move more ebooks. It will be interesting to see if the publishers learn from it.
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Old 08-18-2010, 11:41 AM   #15
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Let's be honest, if nobody accepted the Agency 5's new deal, then the Agency 5 could not have gotten it rammed down our throats. Apple has a clause in the contract saying they cannot be undersold. That's what has caused most of the mess. So yes, we know who to blame and that blame is on Apple for allowing the Agency 5 to make a deal that is not beneficial to the customers at all.
The facts do not back up your assertion.

Amazon's UK bookstore sells books a lot cheaper than the Apple UK iBookstore.
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