DOJ: Apple and B&N can continue to use agency pricing

[Top100EbooksRank]

Originally Posted by stonetools

Lets be blunt. The purpose of the agency model is to ensure that the publisher, not the retailer, sets the final price. By taking that way, the DOJ is in fact pushing the publishers back to the wholesale model, at least for the next two years. They are disingenuous in suggesting that they are not dictating a business model. In effect, they are, regardless of the formal wording.

Publishers can set the price at $14.99 or $12.99 and take their 70% cut under agency pricing.


Why should the publishers care what the "agents" do with their 30% commission?

(if B&N and Apple want to pass some of this "commission" as discount to consumers, shouldn't publishers be glad? since lower prices = more sales?)

[stonetools]

Originally Posted by Graham

I think we've all understood what's really happening, in spite of the attempts by Apple and the opposing publishers to pretend this is about agency pricing.

The DoJ is not 'dictating a business model', they are dismantling a legal business model which was brought about by illegal collusion.

Graham

Whether there was collusion is a matter for the courts to decide. The Defiant Ones may or may not prevail. What happened with the Settling 3 was that the DOJ insisted that they go back to the (in effect) wholesale model for the next 2 years because they believe that they had established the agency model through collusion. After that time, the DOJ will allow the Settling 3 to back to the agency model on a staggered schedule.
Now the DOJ has made it as difficult as possible to go back to the agency model, but long term I think that the BPHs will go back to the agency model. The wholesale model is just too dangerous for the publishers as long as there is a dominant retailer who can say, Sell me your product at MY price on MY terms or you won't sell squat."

[stonetools]

Originally Posted by Top100EbooksRank

Publishers can set the price at $14.99 or $12.99 and take their 70% cut under agency pricing.


Why should the publishers care what the "agents" do with their 30% commission?

(if B&N and Apple want to pass some of this "commission" as discount to consumers, shouldn't publishers be glad? since lower prices = more sales?)

Because if there is a dominant retailer ( Amazon), the retailer can say, "Screw your $14.99 offer. Sell me your books at $9.99 or below, or lose 80% of your sales" .

What's the publisher's recourse? "We'll go with Sony" who has 2 per cent of sales? The publisher is going to bend over and spread 'em. The publisher has got their authors and staff to think about.

[Graham]

Originally Posted by stonetools

Whether there was collusion is a matter for the courts to decide. Whether there was collusion is a matter for the courts to decide. The Defiant Ones may or may not prevail.

Obviously, but that's taken as read within the context of this thread. We don't have to preface every sentence with it.

Originally Posted by stonetools

What happened with the Settling 3 was that the DOJ insisted that they go back to the (in effect) wholesale model for the next 2 years because they believe that they had established the agency model through collusion. After that time, the DOJ will allow the Settling 3 to back to the agency model on a staggered schedule.

Correct. Thus making it clear that the agency model itself is not the issue.

What's the alternative (assuming that the wrongdoing is upheld)? Allow them to carry on with their ill-gotten model?

You might say that imposing even more massive fines may be enough, but the collusion is presumed to have damaged a competitor, Amazon, and this is one aspect of the redress that the DoJ feels is necessary.

Originally Posted by stonetools

Now the DOJ has made it as difficult as possible to go back to the agency model,

Well, it's no harder than it was before the (OK) 'alleged' collusion. They'd just like it done legally.

Originally Posted by stonetools

but long term I think that the BPHs will go back to the agency model. The wholesale model is just too dangerous for the publishers as long as there is a dominant retailer who can say, Sell me your product at MY price on MY terms or you won't sell squat."

Maybe, but this business is moving very fast. Perhaps they'll figure out a business model that will allow them to threaten to pull their books, such as an aggregate shop front for the big houses. Perhaps Google Play's book store will take off and provide a lever that they can use against Amazon. Samsung have got clout and are building an ecosystem of their own, who's to say that they won't move into ebooks as well, and you can never count Apple out of the fight. Again, these might provide alternate markets that can give them leverage and keep their deals with Amazon profitable.

Graham

[Top100EbooksRank]

Originally Posted by stonetools

Because if there is a dominant retailer ( Amazon), the retailer can say, "Screw your $14.99 offer. Sell me your books at $9.99 or below, or lose 80% of your sales" .

What's the publisher's recourse? "We'll go with Sony" who has 2 per cent of sales? The publisher is going to bend over and spread 'em. The publisher has got is authors and staff to think about.

Going from $14.99 to $9.99 is a harsh example no?

Publishers can pull the books from Amazon. And direct readers to other sites. Apple and Google and Microsoft will market the fact they have the books while Amazon does not.

Amazon would be hurt by it too.


I can see pressure to drop the wholesale from $14.99 to $13.99 but a drop of $5 overnight?

p.s. Amazon is nowhere near 80% of the publishers total sales (print + digital).

[stonetools]

Maybe, but this business is moving very fast. Perhaps they'll figure out a business model that will allow them to threaten to pull their books, such as an aggregate shop front for the big houses

I think this is exactly where they are going. They are already trying something like this in the UK (Google Anobii) , and they seem to have something in mind like this in the US.
Macmillan seems to be going its own way with its SFF line (Tor), which is starting its own store this summer. Of course, if they direct sell from their own stores, that's the agency pricing model turned up to 11.

[stonetools]

p.s. Amazon is nowhere near 80% of the publishers total sales (print + digital).
__________________

Amazon could easily get back to 80 per cent of digital sales. Indeed, most analysts predict that precisely this will happen post settlement . As most people here say, digital is the future. Amazon also dominates Internet print sales , which is gaining rapidly at the expense of B&M stores.
As Amazon becomes dominant, it could certainly squeeze prices down over time -maybe not in 1 year, but certainly over 5.
To avoid this, the publishers tried to maintain diversity in the retail market through agency pricing. In future, they'll do it through agency pricing from their own stores, I think.

[crossi]

Well if Kindle owners are 80% of the market all they need to do in get some big ads out letting people know that they can buy non-DRM mobi books for their kindles at Barnes & Noble or Smashwords or their own sites. Then just spam some emails with links to those sites. Just because they don't sell through Amazon doesn't mean they can't sell books to kindle owners. At that point Amazon might reconsider the percentage they offer publishers.

[stonetools]

Originally Posted by crossi

Well if Kindle owners are 80% of the market all they need to do in get some big ads out letting people know that they can buy non-DRM mobi books for their kindles at Barnes & Noble or Smashwords or their own sites. Then just spam some emails with links to those sites. Just because they don't sell through Amazon doesn't mean they can't sell books to kindle owners. At that point Amazon might reconsider the percentage they offer publishers.

Sounds nice , but realistically, it ain't gonna happen. Amazon controls the only highway to a majority (soon to be an increasing majority ) of ebook customers. You're saying that the publishers should get their product to customers by going through back roads and over goat tracks.
Let's use another analogy. If Walmart pulls a product from shelves because of a dispute with suppliers, its not helpful for the supplier to post flyers saying that the product is now available at the corner store across town. The Walmart customer is just going to shrug their shoulders and move on to buy a similar product on the same shelf.
We've actually seen this movie. Amazon had a dispute with an independent publisher (IPG) earlier this year. IPG refused to change their terms of their sales contract to their detriment, and Amazon pulled their BUY buttons. IPG protested loudly, and even carried out sort of a PR campaign against Amazon . Four months later, it was back at the table. It most likely agreed to the new terms. It just couldn't hold out against losing most of its sales.

That's why the independent publisher's association wrote in opposition to the settlement. They know what happened to IPG will happen to them eventually.

[JoHunt]

Originally Posted by stonetools

Amazon could easily get back to 80 per cent of digital sales. Indeed, most analysts predict that precisely this will happen post settlement . As most people here say, digital is the future. Amazon also dominates Internet print sales , which is gaining rapidly at the expense of B&M stores.
As Amazon becomes dominant, it could certainly squeeze prices down over time -maybe not in 1 year, but certainly over 5.
To avoid this, the publishers tried to maintain diversity in the retail market through agency pricing. In future, they'll do it through agency pricing from their own stores, I think.

Amazon remained dominant even with agency pricing. B&N does not sell internationally (so naturally Amazon will also dominate internet print sales) and their CS is lousy to say the least.

Amazon is not the villain in this sorry tale.

[khalleron]

Originally Posted by stonetools

Because if there is a dominant retailer ( Amazon), the retailer can say, "Screw your $14.99 offer. Sell me your books at $9.99 or below, or lose 80% of your sales" .

That isn't what was happening. Amazon was buying wholesale from the publishers and then selling their hardcover priced ebooks at trade paperback prices. Amazon was actually taking a loss on the most popular books. The publishers were getting the same price no matter what price Amazon sold them for.

Then Apple got involved, and Apple did not want to sell popular ebooks for $9.99, so they colluded with the BPH to force Amazon to sell books at a higher price or have no bestsellers.

Which was illegal, period.

[MovieBird]

Originally Posted by stonetools

Because if there is a dominant retailer ( Amazon), the retailer can say, "Screw your $14.99 offer. Sell me your books at $9.99 or below, or lose 80% of your sales" .

Too bad. Amazon isn't a charity. They're not here to prop up anybody's business model but their own. They're also not here to be my friend, but they just happen to be an awesome experience with rock bottom prices for the customer. Too bad I'm too curmudgeonly to lease ebooks from them.

Originally Posted by stonetools

The publisher has got their authors and staff to think about.

I don't think I've ever read anything funnier on this forum. The publishers are public businesses. They are beholden to their shareholders to turn a profit, as large a profit as they can. They only 'think' about their authors and staff at the bare minimum required to make a profit. Like every other public corporation out there.

[Greg Anos]

Originally Posted by stonetools

Because if there is a dominant retailer ( Amazon), the retailer can say, "Screw your $14.99 offer. Sell me your books at $9.99 or below, or lose 80% of your sales" .

What's the publisher's recourse? "We'll go with Sony" who has 2 per cent of sales? The publisher is going to bend over and spread 'em. The publisher has got their authors and staff to think about.

So - is it better the tell the public to bend over and spread 'em? That's what the agency model did....

[stonetools]

Originally Posted by joehunt

Amazon remained dominant even with agency pricing. B&N does not sell internationally (so naturally Amazon will also dominate internet print sales) and their CS is lousy to say the least.

Amazon is not the villain in this sorry tale.

There are no villains here. Amazon is acting in their interest and the publishers are too.

[khalleron]

Originally Posted by stonetools

There are no villains here. Amazon is acting in their interest and the publishers are too.

Not. Price-fixing is illegal. You can act in your own interest as long as you also act in Society's interest.

Hell, you can use that 'acting in my own interest' to justify ANYTHING. Sorry - self-interest is not the be-all and end-all of rational arguments, Ms. Rand.