Dispatches from the Digital Revolution

Amazon’s off the hook in the agency model lawsuit. Now what?

The agency model lawsuit continues its molasses-slow death march, sounding a terrifying (but also kind of boring) wholesale-model war cry.

But as slowly as the lawsuit develops, its implications continue to worry me—more so now that Amazon is off the hook in the complaint.

For those of us instant-gratification addicts whose Google-addled minds can’t remember what the lawsuit is about in the first place, Publishers Weekly was kind enough to sum it up in an article published January 21:

In an amended complaint filed January 20, Hagens Berman, the law firm chosen in December to consolidate the class action lawsuits charging that Apple and major publishers conspired to fix e-book prices, argued that the adoption of the agency model has driven up the cost of e-books by as much as 50%, costing consumers millions of dollars. The new complaint does not include Amazon and Random House. Although some of the original suits had included those companies, Hagens Berman’s consolidated complaint limits the suit to Apple, HarperCollins, Penguin, Hachette, Simon & Schuster, and Macmillan, and dubs those publishers the “Agency 5.” (Emphasis mine)

After all, Amazon had the agency model forced on it to try to level the playing field in the ebook market. The juggernaut has enough money to take a loss on the sale of every ebook just to gain market share. So I guess, to Hagens Berman, a purported price-fixing conspiracy is more worrisome than Amazon gaining a monopoly.

Now, one could argue that Amazon doesn’t have a monopoly. Nothing’s stopping Barnes & Noble from selling Nooks and Nook Books, or Apple from selling iPads and iBooks. Kobo’s still truckin’ along. Google eBookstore is still being weird and Google-y and letting you give your book money to the indies rather than a big corporation. So, no market monopoly, no foul, right?


When I first wrote about this lawsuit, I was concerned that Amazon may have done irreparable damage to the ebook market—and to the book market overall—by setting the low, low ebook price of $9.99. This blog post from the Authors Guild nicely sums up Amazon’s war on the book business, and that price was part of it. As the Guild quotes Barry Lynn’s recent Harper’s article:

Amazon wanted to price every Macmillan e-book, and indeed every e-book of every publisher, at $9.99 or less. This scorched-earth tactic, which guaranteed that Amazon lost money on many of the e-books it sold, was designed to cement the online retailer’s dominance in the nascent market. It also had the effect of persuading customers that this deeply discounted price, which publishers considered ruinously low, was the “natural” one for an e-book.

Despite publishers’ (and Apple’s) best efforts to the contrary, it would appear that Amazon is winning that battle. At the Digital Book World conference in late January, Verso Advertising presented a slideshow that compiled the results of a book-buying survey. Half of Verso’s respondents wouldn’t pay more than $12.99 for an ebook, with 30% saying that $10 is their cap.

The problem is that an Amazon ebook monopoly is great for consumers, at least in the short term. It’s just not so great for, you know, other booksellers, or the publishers who have to make those books. Which is what led to the agency model in the first place. Now that Amazon is no longer included in the complaint, will its toxic practices be allowed to continue without scrutiny?

3 comments on “Amazon’s off the hook in the agency model lawsuit. Now what?

  1. Bob Gray
    February 8, 2012

    You ignore trees, sawmills, ink, tree farmers, printing presses, trucks, warehouses, labor, fuel costs, inventory maintenance, shipping, stacking, and on and on. Not that any one cost for an ebook is “right”, but it IS less than the same book on paper.

  2. Claire Schulz
    February 8, 2012

    Hi Bob, thanks for the feedback. If I appeared to ignore those p-book costs in this post, it wasn’t intentional and failed to do justice to the whole issue! You’re absolutely right that all those things drive up the cost of dead-tree books, and ebooks should cost a bit less. However, my main point was that the $9.99 price point Amazon set for ebooks (taking a loss on every sale) isn’t sustainable for publishers or other booksellers. Thanks for the clarification, and thanks for reading!

  3. Pingback: Is publishing broken? « appazoogle

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This entry was posted on February 6, 2012 by in Business and tagged , , .

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