Agency pricing sees publishers set the final retail price and pay the retailer a commission.
Many publishers adopted it in order to sell through Apple’s iBooks app and subsequently extended the model to other retailers including Amazon’s Kindle store.
The DOJ has accused Apple and big publishing houses Hachette, HarperCollins, Macmillan, Simon and Schuster and Penguin of colluding over the prices of e-books.
If the five defendant companies, Simon & Schuster, Hachette and HarperCollins have agreed to settle with the DoJ. That leaves Apple, Macmillan and Penguin to defend their actions in court.
Macmillan CEO John Sargent has issued a defiant defence of the company’s decision to adopt agency pricing and its refusal to agree to the settlement offered by the DOJ.
In an open letter to authors, illustrators and agents, Sargent writes: “..the terms the DOJ demanded were too onerous. After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model. We also felt the settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.
“When Macmillan changed to the agency model we did so knowing we would make less money on our e book business. We made the change to support an open and competitive market for the future, and it worked. We still believe in that future and we still believe the agency model is the only way to get there.”
Noting that some of Macmillan’s rivals have agreed to settle out of court, Sargent adds: “That is their decision to make. We have decided to fight this in court.”
Sargent closes his letter by saying: “Since we are now in litigation, I may not be able to comment much going forward. We remain dedicated to finding the best long term outcome for the book business, for Macmillan and for the work you have entrusted to our care.”
