As occasionally happens, the quote approach is getting impossible to read. So I'll address a few salient points.
It Doesn't Matter Who Sets the Price….
All that matters to people is that the price matches what enough people are willing to pay.
To wit: Saturn treated its dealers exactly the same way publishers treat Amazon. Saturn Corp set the prices; dealers were not allowed to haggle; dealers were restricted from being too close to one another. And people
loved it. They were happy to pay
full price, as long as the cars were good.
Similarly, Apple strictly controls the prices for hardware, and obviously controls the pricing in their major sales outlets -- the Apple website and stores. I believe they also exert very strict controls over the handful of retailers they cope with (and they definitely treat those retailers like crap on occasion). They also fixed the price for song downloads at $1 per -- a price that few complain about.
Oh, and if you buy a book from Baen or Harlequin off their website, then… who's setting the price?
The publisher. It's not like Baen Retail is a wholly independent entity. And a primary reason why people don't complain is that they are satisfied with the prices.
Examples abound of a manufacturer controlling the retail process. American Apparel, H&M, Ikea... Lots of companies have full control over the pricing of their goods. Are these also violations of the concept of a free market? Is it a violation of capitalism that the only way you can buy an Ikea PLUGGIS is at their store, at the price they dictate?
And hey, what about everyone's favorite, Walmart? They invert the process, by basically strangling manufacturers who don't meet their price points. This can dominate pricing for a product in huge swaths of the US. Is this an unalloyed good thing? Is this the free market in action?
Furthermore, not everyone is tearing their hair out over $13 ebooks. About half of Amazon's Top 20 are over $10. I don't have exact sales figures (and neither does anyone else around here), but publishers do. They know exactly how much they are making off of numerous books at various price points. As such, if
they figure that they can make up for the lower margins with higher volume, they will have a strong incentive to drop the prices. If they don't, perhaps that's because -- shock horror gasp -- people aren't quite as livid as some of y'all over a $13 ebook.
You may not like it, but really, let's be honest. If Hachette said "$10 ebooks for everybody," you wouldn't care who set the price. You are ticked off because you have a perception that the publishers are "socking it to you."
So, if you ask why I'm not grabbing a pitchfork and a torch like the rest of you, a nice big chunk of it is that the publishers simply haven't wound up charging me more than I'm willing to pay; and if they want too much for a book, I read something else until the price drops.
Agency Pricing Is Almost Certainly Legal
I slightly disagree with LakeLoon in that I'm fairly sure
Leegin is relevant. It allows manufacturers to set price controls at retail, as long as it meets certain criteria.
For example, agency pricing does not prevent retailers from offering books from other publishers; the publishers aren't collaborating with each other on their prices. I.e. it's far from a slam dunk that this practice is illegal.
And manufacturers clearly have tons of leeway in terms of dealing with retail channels. A specific retailer does not have the right to force a manufacturer to work with them, unless there is some sort of illegal discrimination at work; the manufacturer can legally stipulate things like product placement or bundling. However, their rights definitely do not necessarily extend to absolute freedom to decide the price of a product.
It is entirely possible that the courts may find that agency pricing does not match the tests suggested in
Leegin. Or, legislators may generate a specific law stating what qualifies as anticompetitive pricing (though I seriously doubt that one). However, the law does not state that retailers
must have absolute freedom to price their goods as they see fit.
Paper Prices Are Irrelevant
Well, to me at any rate. I am aware that I am
currently largely unique in this regard, but that won't be the case for long.
If a digital version is available, and the book is text rather than mostly images, then I have no interest in a paper version. Why, exactly, should I care if the paper version is ¢50 cheaper? All that matters to me is "are they charging a price that I am wiling to pay?"
And y'know, I really see absolutely no valid reason to peg that price to a format that I don't want. If an MP3 download costs more than a vinyl or 8-Track version, I see no reason why I should care.
Volume Is Not Necessarily King
Some of us had the displeasure of living through the Dot Com excesses. One lesson of that era is that you can't always make up for razor-thin margins merely by increasing your volume. (*cough* pets.com *cough* kozmo.com *ahem*
)
I've already tried to make it clear that a reduction in price requires a significant increase in volume in order just to break even; deny it as much as you like, it's just a fact of economics. And even though we're dealing with a digital good, you need to do more than just slash prices to accomplish that, especially once the lower price becomes the norm.
It should also be clear that price isn't always a deterrent to success. E.g. people have squealed for years that Apple hardware is too expensive, that they need to cut their prices to increase sales volume and thus their market share; i.e. they needed to join Dell, HP and others in a "race to the bottom." Meanwhile, they've been living off of fat margins and sticking yet more capital under their mattresses -- and they are raking it in even in the midst of a major recession.