Agency Model Set To Fall! Kindle Book Prices Will Follow Suit

Not much is known at this time about what options are being discussed by the publishers under attack by the Justice Department.  We do have good information that there are settlement options on the table and that the Agency Model pricing model currently to blame for high Kindle Edition eBook prices will be on the chopping block regardless.

Reports from unnamed informants close to the matter have indicated that there is reason to expect a settlement within the next several weeks.  Neither Apple nor the publishers have responded to any requests for comment at this time.  The Justice Dept declined to say anything.

Whether this is a sign of consensus among the defendants or merely that one or two are feeling the pressure and wanting to end what they see as a losing battle should not matter much in terms of the outcome.  In the event of one publisher involved in the price fixing scheme reaching a settlement, the terms would undoubtedly involve release of evidence necessary for ensuring a successful prosecution of the rest.

Basically, assuming the news is true, this means that the end of the Agency Model is at hand and that the Kindle has made it through possibly the most harmful barrier to eReader adoption without so far becoming irrelevant.  A return to the wholesale model, even temporarily, will mean more affordable reading material for Kindle owners.  This in turn should spur sales of the eReading line.  Amazon’s willingness to take a loss on bestsellers to promote their product line is what game them over 90% of the eReading market before the Agency Model was imposed and there is no reason to see this practice changing overly much if the Agency Model is destroyed.

The big question will be what comes next.  Settlement or unfavorable ruling aside, publishers are not going to give up on their position that readers have no right to expect inexpensive books.  It is incredibly unlikely that they will all pull out of Amazon in reaction to this, but they’re going to have to find some new way to prevent Kindle customers from being too happy with digital books.

The case at hand is all about how the defendants collaborated to impose the Agency Model on Amazon.  The means to achieve this goal is in question, not the model itself.  Depending on the terms of the settlement, publishers could be permitted to go back to it in time.  They could also turn to something even more unpleasant for potential customers.  It is hard to tell at the moment.

In the short term, the clear winners will be customers.  Prices on eBooks should drop abruptly, especially in the Kindle Store, following official announcement of the deal being made.  In reality, expectations may need to change with regard to how profitable a new bestseller should be per unit sold.  Big 6 publishers will be forced to come to terms with this.  Beyond the immediate benefits to Kindle customers there is little that can be asserted reliably about the effects of this situation.  It will be interesting to see how the situation evolves.  Any thoughts or predictions?

4 thoughts on “Agency Model Set To Fall! Kindle Book Prices Will Follow Suit”

  1. I’ve been purchasing physical books for the last 6-9 months as the ebooks have simply been too expensive. It’s not only bestsellers that have been impacted. Just about every book I’ve wanted to read has been north of $12. I can find the paper back for less and used copies for even less (including shipping). I’ve had very good experiences purchasing used books on Amazon, may not even return to the ebook fold. That should make the publishers happy.

  2. @Adam – you will not make the publishers happy buying used books. That’s likely worse than you buying an e-book since you are not new revenue for them.

    This whole situation reeks of the music and film industries desperately holding on to an “old” technology (printed books) when challenged with a new technology (e-books). You will find that the successful publishers will be the ones that innovate using the new platform to their advantage. The older & larger publishers are likely going to be the ones most resistant since they can’t be as nimble.

  3. In my case, I’ve simply stopped buying books until I find one I’m interested in, in e-book format, at a reasonable price. I don’t buy paper excepting as a last resort – I simply don’t have the storage space for it any more.

  4. I would love to see some benefit for public libraries as part of the agreement to improve their access and purchase pricing.

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