Macmillan settles with the DoJ over the Agency Model

Macmillan settles with the DoJ over the Agency Model

Ding dong, the Agency Model is dead!

In this

press release

the United States Department of Justice (DoJ) announces that it has reached a settlement agreement with the last of five publishers against which it took a legal action over a pricing structure referred to as the Agency Model.

The four other publishers had already settled. Random House (the other publisher in the “Big Six”) will also be bound by the agreement that Penguin made, presuming that their merger is approved (and the settlement is approved).

This settlement won’t happen instantly (there is an approval process, and then it takes a bit of time to make new arrangements with the retailers, like Amazon).

Once that all happens, though, the “This price was set by the publisher” line will have disappeared from Amazon’s website.

However, the DoJ’s announcement does say that Macmillan agreed to allow price discounting immediately. I don’t see the price drops yet, and the price-setting line is still there…might happen soon, though.

While I don’t think that all New York Times bestseller hardback equivalents will drop to $9.99, I do think we’ll see specials on more books, and that the NYT list average will go down. Part of that may be driven by the return of competition between retailers on these books…and Amazon’s price-matching policy.

John Sargent, Macmillan’s CEO, had been public during the dispute with Amazon in first implementing the Agency Model (it didn’t get any messier, publicly, than it was between Macmillan and Amazon).

In this


Sargent says

“I like to believe that we would win at trial. But outcomes are hard to predict with certainty, particularly in a civil case with a low burden of proof. And so we agreed to settle with no admission of guilt. As with the other settling publishers, retailers will now be able to discount Macmillan e-books for a limited time. This change will take effect quickly.”

The statement clearly suggests that they will find other ways to fight in the future, referring to this as a “round” (as in a boxing match).

Apple still has not settled, and may actually go to court in June of this year. Unlike Macmillan, Apple can probably afford to fight for a very long time…although it’s worth noting that Apple did settle in the European Union.

As I understand it, the Agency Model is now gone in the USA for e-books through December 2014 (at least). That’s long enough to change the pricing in the market, and to make it so that the conditions that first engendered the Agency Model are not in place at that time.

I suspect Macmillan’s investors will be happy to hear this, since fighting the court battle has been expensive.

When I start noticing price drops on Macmillan books, I’ll let you know.

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

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