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OFT launches investigation into agency pricing
01.02.11 | Charlotte Williams
The Office of Fair Trading has launched an investigation into agency pricing, following a "significant" number of complaints.
The OFT said the investigation is "into whether arrangements that certain publishers have put in place with some retailers for the sale of e-books may breach competition rules".
However, it added: "The investigation is at an early stage and it should not be assumed that the parties involved have breached competition law."
If the parties involved were to be found in breach of competition riles, they could face a fine or a commitment of action in lieu of a fine. However, an OFT spokesperson refused to comment on whether it would have the power to halt the agency model.
It is unclear so far who made the complaint, despite several vocal opponents to the model. Amazon.co.uk previously said the agency model "was a damaging approach for readers, authors, booksellers and publishers alike." In a letter posted on its Kindle forum in October 2010, Amazon said: "In the UK, we will continue to fight against higher prices for e-books, and have been urging publishers considering agency not to needlessly impose prices increases on consumers."
The model, which allows publishers to set their own prices for e-books rather than a retailer, was first implemented in the UK by Hachette in September, with HarperCollins and Penguin following suit in November. Simon & Schuster also made the switch at the end of the year. Macmillan and Canongate have yet to implement agency pricing in the UK, despite signing up to the model. Publishers signed up to agency in order to trade with Apple through its iBookstore.
The last major enquiry into the book trade was when Bertrams was bought by EUK, owned by Woolworths, in February 2007, effectively merging EUK and Bertrams. The merger was referred to the Competition Commission. The enquiry took eight months, with the Competition Commission finding the merger would not be "a substantial lessening of competion" in September 2007.
The OFT's team leader on this investigation will be Andrew Groves, with the project to be directed by Claudia Berg.



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The OFT might want to consider this angle too:
Are Publishers Liable For Lost eBooks If Borders Dissolves?
http://mikecanex.wordpress.com/2011/02/01/are-publishers-liable-for-lost...
And so should publisher attorneys!
We, the readers, have complained. We are the vocal opponents!
The agency model isn't the problem here- and in itself it's a good idea, which works well for independents. The elephant in the room is the greedy publishers who are blackmailing book retailers with the threat of removal of sales rights.
I would urge any authors to have a long hard think about just what their publisher is doing for them for their cut, particularly in the context of an eBook publication.
Neil.
Hi Mike,
Nice article, but I can't help noticing that the illustrations miss someone rather vital- the author!
Neil.
This was always going to happen . This is the E-NBA, and the NBA was a publishers restriction as well. This Agency Pricing Scheme is in the publisher's interest and not the consumers'. As I have said from the start the market in it's various forms will not stand for this .
Neil said: "The agency model isn't the problem here- and in itself it's a good idea, which works well for independents. The elephant in the room is the greedy publishers who are blackmailing book retailers with the threat of removal of sales rights."
Yes, but it's worse than that, Large Publishers operate with large distributors, yes there are economy of scale arguments, however, the bottom line is choice, quality, innovation and creativity are pushed out.
Booksellers are ever more reluctant to purchase directly from Publishers even when discounts are large, it's partly lazyness and extended credit lines which can back them into a corner.
We've tried hard to support Independent Booksellers, it's the large distributors that are the choke on the system.
Sadly, although we love high street bookshops we can only see the shop trade declining as Publishers like us are forced to move into other channels, in effect, cutting the distributors and booksellers out of the loop.
We can't see consumers going all the way to a bookshop to buy an ebook they can more easily preview at home.
It seems the Agency issue is not long for this world.
Can't help thinking that if the retailers bought the content from the publishers at a set price, say £3 per copy per title on a £7.99 book - ie, less than half-price, instead of insisting on taking a huge percentage of the sale price and also setting that price themselves, the retailers could charge whatever they fancied. Instead, they are claiming the moral high ground and pretending they have the customers' best interests at heart. Anyone who believes the retailers are standing up for the customers rather than themselves should have their heads examined.
Publishers need to stand up and say sorry, none of us are offering massive discounts to retailers any more, and have the OFT examine the fairness of having Amazon, Tesco etc insisting on such massive discounts. Instead, they have shot themselves in the foot by getting involved in a ridiculous emotive struggle over e-book pricing.
I am one of the many readers of ebooks who complained to the OFT. Some of the mainstream publishers of tree books seem to be attempting to stifle the ebook market because they know that their role will be considerably diminished with ebooks. The Agency Model, where they can and do charge more than twice the hardback price for some ebooks is just one example. They also riddle their ebooks with spelling mistakes and formatting errors which don't exist in the tree book and don't include photos where they exist in the tree version (or when they do, they are often too small to even read the captions),
All they are actually doing is pushing people towards the pirates, and that has the potential to kill all publishing. The English don't like being ripped off.
Anonymous, you are just advocating another set of rules to fix the market with a £3 max price . Rather Soviet in style . Let the market vote with its consumer pound it will bring the consumer cost down as it has for printed books . Publishers have been in a strategic mess on E books from the start , affording at one stage massive royalty % on digital sales. Get a grip or the punter will do it for you .
'Tree' books? Spare us the obnoxious neologisms, I beg you.
JLC objects to "tree books"? It's a lot shorter to write than "paperbacks and hardbacks" and is perfectly clear what is meant. "ebooks" is in common use, should people say "electronic books" instead?
How about 'books'? Everyone here will know what it is you're talking about, I wager.
"Books" includes electronic books. You can't compare electronic books with something that includes electronic books, that's silly.
'Books' and 'ebooks' has served everyone pretty well thus far.
We, the readers, like the terms 'tree books' and 'ebooks' to differentiate between the two. What would you publishers like to do? Make an Agency Law that forbids us using 'tree books?
We are supposedly in a 'free market' and companies know that they can't 'fix' prices and just expect that people will pay. We won't! Has any publisher tried to see how many sales are lost because where we find 'price fixed by the publisher' we don't buy.
It is not our fault that publishers shoved their heads in the sand and hoped ebooks would not take off. It has been coming for years and they are now hopping from one foot to the other trying to find a way to stifle competitive pricing.
And if there is anything that is fueling piracy it is prices of the top authors books. At this very moment there are 18 John Grisham ebooks on a cd available on Amazon for £6. Will I buy them? No. They are illegal. But someone will......
High ebook prices is a huge mistake, but do not (only) blame the Large and Evil Publishers.
Both authors and their agents are imposing in the contracts not only the maximum discounts publishers can offer off the prevailing printed edition, but also that if royalties derived from ebooks are lower than those of the printed edition, the ebook has to be removed from the catalogue.
'We, the readers'! Have you any idea how ridiculous you sound? You speak for the readers of the world, do you? Jog on.
>> the mainstream publishers of tree books seem to be attempting to stifle the ebook market
Why would they be? They're still the publishers of the books regardless of the format, a sale is a sale and money is money.
I really don't understand this constant assertion people (mostly Kindle users expecting every book to cost a max of £3) keep making.
By JLC's Left Plum. So who are you? You haven't actually said anything. Apart from attack those of us who are obviously not publishers, just the poor punters.
So come on, who are you?
"Everyone here will know what it is you're talking about, I wager." So are you in the book publishing business and believe that only others in the business should read this site? Climb down off your high horse. I'm not in the book industry but claim the right to free speech on here.
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