The Possible Death of Agency Pricing

Scales of Justice

Agency Pricing seems to be dying.

Agency as we knew it is on its death bed. Penguin titles are now being discounted by retailers and the rest of Penguin Random House titles will soon follow. – Agency Dead? Penguin Ebooks Discounted

Scales of JusticeSome say this is a good thing.

“The consumer is the huge winner,” said David Balto, a Washington antitrust lawyer and former policy director for the Federal Trade Commission. “Apple’s policies clearly increased prices, and if permitted Apple would have used this formula to raise prices in numerous markets. This is a landmark decision that demonstrates the value of strong antitrust enforcement.” – Apple case cracks open e-books, digital goods pricing

Some argue against.

Even if true, the Justice Department’s argument is weak, because it relies on the Relevant Market Fallacy — the idea that e-book sellers are just competing with each other. They aren’t. They are competing with everything else that is clamoring for people’s leisure time. This includes printed books, magazines, newspapers, blogs, and websites such as this one. E-books are also competing with movies and television, video games, and other tablet and smart phone applications. The relevant market is bigger than just e-books or other reading material. This market discipline puts an upper bound on what consumers will pay for an e-book before turning to other entertainment options. Consumers cannot be said to have been harmed if they are willing to pay higher e-book prices. Given the e-book market’s continued rapid growth since the price increases, people are clearly still willing to pay. They are willingly buying something that gives them more value than what they give up to buy it. – Apple’s ebook ruling and the absurdity of antitrust law

Just to recap: I find the first argument more compelling.

Photo Credit: DonkeyHoley

 

Ruling in Apple E-book Case: Orchestrated Conspiracy

Apple iBooks

Apple iBooks

A federal judge on Wednesday found that Apple violated antitrust law in helping raise the retail price of e-books, saying the company “played a central role in facilitating and executing” a conspiracy with five big publishers. “Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,” the judge, Denise L. Cote of United States District Court in Manhattan, said in her ruling. She said a trial for damages would follow. – Judge Rules Against Apple in E-Books Trial

 

Personally, I think this is the correct ruling. What the publishers were doing was very wrong and Apple was definitely at the heart of it.