Quote:
Originally Posted by SteveEisenberg
Agency wasn't a get rich quick scheme. My impression is that the publishers expected it would lower revenue, as it did.
The purpose was to keep Amazon from getting such a big market share that it would gain control over its book suppliers. By stopping the loss leader pricing for a while, they may have done that.
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The problem is, you can't really say for sure whether agency pricing was entirely or even largely responsible for Amazon's market share decreasing. Barnes & Noble had already entered the e-book market. Say, as a thought experiment, that Apple entered the market and matched Amazon's loss-leader pricing, even though they didn't want to (which is why they conspired to force the new pricing scheme into play in the first place). Sure, they'd be losing money on those new titles, but if the loss leader strategy worked for Amazon it should work for them, too—they'd make money hand over fist from the older titles that buying the newer titles led consumers into buying.
Don't you think Amazon's market share would still have gone down? After all, e-books would have still cost the same everywhere, it's just they'd have been cheaper. I can't see anyone having a reason to buy from Apple or B&N when everyone charged $12 or $15 who wouldn't have had the same reason to buy if everyone was still just charging $10. The prices would have been the same from vendor to vendor either way, it's just that they'd have been the same low instead of the same high.