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Originally Posted by Ninjalawyer
The issue isn't whether there's added value or not, it's that the publishers have colluded to raise the price.
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No, the article specifically discusses the author's belief that higher prices on ebooks will negatively affect the ebook market.
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Originally Posted by Ninjalawyer
if the price goes up because all of the competitors have gotten together to set a price floor, that warps the marketplace and screws over consumers.
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True, but so far there is pretty much zero indication that has happened.
The difference between agency and retail pricing is that with agency, the publisher chooses what price to set, rather than letting the retailer purchase the item wholesale and charge whatever they want. To date there is no indication that publishers are coordinating prices.
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Originally Posted by Ninjalawyer
There's a reason agreements between competitors to set pricing is illegal in most countries. In Canada, this behaviour is a criminal offence, punishable by jail time for corporate directors and officers and/or multi-million dollar fines.
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In several European nations, it is a legal requirement for paper book prices to be set by the publishers, and for retailers not to compete against one another on price. These are known as Fixed Book Price Laws or "Lang Laws."
Agency pricing works the same way. In fact, it makes much more sense than the wholesale model, because retailers are not paying in advance for 10,000 physical objects -- i.e. they are taking on far less risk, therefore it makes sense for them to have less control over pricing.
I might add, there wasn't apparently anything illegal about Apple insisting that downloadable music tracks be set at 99¢; with self-publishers specifying prices at services like Smashwords or Amazon; or with "app stores" like Apple and Android Market letting software publishers set their own prices.
The only way it's illegal (in the US at least) is if the publishers are collaborating as an industry in order to set a specific price, with the intent of harming their competitors. I.e. if they got together and said "let's lowball our prices so the small publishers can't afford to compete," that would be a major anti-trust issue. So far, there is no evidence to suggest that kind of anti-competitive behavior.