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Old 07-10-2014, 12:11 AM   #42
darryl
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Bear in mind the competition legislation. The traditional publishers appear to want to return to agency pricing as their belief is that they can't compete with Amazon otherwise and are therefore doomed without it. They must control the retail price to preserve most of the rest of their outdated business model. But considering they have operated on a wholesale model for so long this is very hard to justify. I am no expert on competition law in the United States, but would imagine that if one publisher manages to negotiate an agency pricing contract alone, without the provable involvement of the rest of the pack, this would eliminate many of the risks involved in having a second try. My impression is that they are simply trying it on with Amazon and do not realistically expect to succeed. But this time around it is vital for the Publishers to avoid collusion or even the appearance of it. Because one thing agency pricing does do is take an essentially free market with a range of prices and substitute if for a market with much higher pricing and little discounting. Agency pricing can only be competitive if there are a number of aggressively competitive participants. This did not happen last time.

It will be very difficult for other large publishers to support Hachette openly or, if agreements are delayed, for a number or all of them come to the table with Amazon with similar agency pricing positions.

And of course, who benefits from agency pricing other than the large publishers? The only arguments I have seen that others benefit are based on the Amazon is an evil monopoly theory, which I regard as not only ironic given its source, but also untrue. Amazon may in the future become an evil monopoly, or they may not. So far their influence has been, whilst not perfect, a breath of fresh air. An extension of ths first argument is that all benefit from the strong market that will exist when the large publishers are again in control. And then there is that last bastion of the self-interested. We make more money we can continue running our public benevolent institution, using it for promoting new talent, marketing, innovation etc. I think these three arguments all lack validity.

I expect a bitter battle. The traditional publishers want to retain control of the market and run it in the comfortable fashion in which it operated for them pre-Amazon. Because like most surprised by technology, they want their old business model and control to continue. For them, it is indeed a danger to their companies which are either unable or unwilling to adapt to this brave new world.

Last edited by darryl; 07-10-2014 at 12:14 AM.
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