Class action lawsuits are growing against five major publishers plus Apple RE the infamous “agency model” (where the publisher sets the book/e-book price versus the traditional wholesale/retail model where the price is set by the sellers/retailers (?) … at least I think I have that right)
Per publishing consultant, Mike Shatzkin, who writes the great IdeaLog Blog, the “agency” model is based on the idea that the publisher is selling to the consumer and, therefore, setting the price, and any “agent”, which would usually be a retailer but wouldn’t have to be, that creates that sale would get a “commission” from the publisher for doing so.
Or, put another way by the ABA (The American Booksellers Assoc): Under the agency model, a publisher sets a retail price for a specific book, which establishes a level playing field for all resellers.
I have posted on the agency model several times back when it was first named … and damned if I don’t seem more confused about it now!
At any rate, the lawsuits … mostly claiming that e-book prices are being artificially inflated … and their associated costs are spiraling upward!
More Lawsuits Over Agency Model
A class action lawsuit over e-book pricing filed against five major publishers and Apple has begun to sprawl, with four new “copycat” lawsuits filed last week. Two suits, filed in Manhattan, add Random House as a defendant, while a third suit, also in Manhattan, adds Amazon and Barnes & Noble. Another suit was filed in Oakland, Calif. The claims and assertions of fact in each suit are nearly identical to the original suit, filed August 9 by the firm Hagens Berman: that the simultaneous introduction of the agency model by the major publishers reflects an illegal conspiracy to “artificially inflate” e-book prices.
The filing of copycat suits is very common in consumer class actions. “It is more the rule than the exception,” one class action attorney told PW. If a case is perceived to be a good one, there will be multiple filings by different firms in different courts, and the firms will then compete to see who will become lead counsel. In the coming months, the cases—and there could be more coming—will be organized, and the defendants will seek to have them moved to one court.
According to the filings, the price-fixing conspiracy occurred as Apple negotiated terms with publishers in anticipation of the 2010 iPad release. On January 27, 2010, when asked by reporters how Apple’s e-bookstore would compete with Amazon’s $9.99 price, Apple’s Steve Jobs responded that the prices “would be the same.” That public pronouncement, one suit alleges, “was a signal to Publisher Defendants that each of them had agreed to join the conspiracy.” The following day, January 28, Macmillan CEO John Sargent told Amazon of its switch to the agency model. “This would have been irrational if Macmillan had not expected its primary competitors to follow suit,” the lawsuit notes. “Acting alone, no individual publisher would be able to sustain the supra-competitive prices.” The agency model, the suit notes, effectively ended “retailer discretion” for e-book pricing.