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The history lesson that I was given in school is that businesses originally had sales people in house, on salary, with benefits and on partial commission. This was viewed as expensive during slow sales cycles and didn't keep the sales people fully motivated. The companies allowed the sales people to become their own employees (agents) where they got paid 100% on how much they sold but they took the risk of slow periods and had to pay their own benefits. To make sure that the agents didn't undercut each other into becoming unprofitable the company included price maintenance conditions in the agent contract and voila the agency model. I don't have any problem with that and it seems to have worked well in some industries.
The problem with what the publishers are doing is that they want higher prices and they are using the agency model as a loop hole to pretend that a retailer is their agent. Grocery stores aren not agents for each of the company's products they sell, department stores are not agents and book stores are not agents for each publishing company. The law makers don't seem inclined to close the loophole though.
In a competitive industry you want to get your product to market as cheaply as possible. You don't have a goal of making your products more expensive unless you are trying to set yourself up as a premium brand or if have some sort of arrangement with your competitors to also maintain high prices. The evidence is pretty clear that the big publishers are doing this for the later reason. In the end I believe that small publishers, indie authors and file sharing will make them fail. They just have some hard lessons to learn.
What I find amusing is that the big publishers seem to think that they're playing the long game but they are going to spend the next two years trying to refight the 2010 battle. If they do eventually win back their precious agency model they'll find out the game has changed and all they've done is give Amazon more profits to use against them. Amazon has them way out classed in long term strategic thinking. Until one of the major publishing companies does a major executive overhaul and introduces some radical changes, Amazon will continue to get more powerful in the book publishing industry. I personally think that's a bad thing, they need a few strong competitors.
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