Penguin settles with DoJ over Agency Model

Penguin settles with DoJ over Agency Model

Thanks to my reader Norma for the heads up on this!

According to this

US Department of Justice press release

Penguin has agreed to settle with the DoJ over its participation in the Agency Model. That’s a change in the way that e-books were sold, which turned former retailers (like Amazon) into “sales agents”, and thereby prevented them from discounting the books. Amazon fought it publicly, but it went into effect in April of 2010. For more information on that, see this category of posts.

It appears that this came about partially because Penguin’s proposed merger with Random House is currently under scrutiny.

Interestingly, the conditions proposed (which are similar to those already accepted by HarperCollins, Hachette, and Simon & Schuster) would also automatically apply to Random House if the merger goes through…and Random House was not named by the DoJ in their legal action.

Why didn’t they name Random House? Well, RH adopted the Agency Model almost a year after the others of the “Big Six” trade publishers in the USA, so it would probably be a lot harder to prove collusion. That’s part of the DoJ’s basis for the action…not just the Agency Model per se, but the concerted effort to set prices.

This will take a while to go into effect. A court has to approve it (but I don’t see a barrier to that). Then, they’ll have some grace period to negotiate new contracts. I would guess it would happen in the next few months.

That leaves Macmillan and Apple still fighting the DoJ.

The fight between Macmillan and Amazon over instituting the Agency Model in the first place was quite messy, and quite public:

Macmillan CEO John Sargent on the agency model

Amazon actually pulled the “buy buttons” from all Macmillan books during the process, but did eventually agree (under pressure of having e-books “windowed”, or delayed in release).

Apple has so much money, they can fight as long as they want. 🙂 They did just settle with the EU (European Union), though.

All in all, I think this is very good news for readers, and should result in lower prices on very popular e-books before too long.

Thanks again to Norma!

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

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