Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
Four big publishers and Apple Inc. agree to allow discounting, in a win for Amazon.
Efforts by book publishers and Apple Inc. to stop online retailers, notably Amazon.com Inc., from discounting electronic books are falling by the wayside, most recently in Europe.
The European Union’s governing body announced this week it had shelved its investigation into possible price-fixing among publishers and Apple for the sale of e-books in Europe as part of a deal that opens the door for Amazon and others to price e-books as they like. The EU has come to terms with Apple and publishers Simon & Schuster, Harper Collins, Hachette Livre and Verlagsgruppe Georg von Holtzbrink, the owner of Macmillan, to settle the matter.
The investigation looked into the so-called agency model for pricing of e-books. That model allows publishers to set the retail prices of e-books and pay retailers a commission for each sale, rather than selling e-books to retailers wholesale and letting them set their own store prices. An investigation into agency pricing in the United States concluded in August with publishers agreeing to pay a total of $69 million to settle the antitrust suit.
The agency pricing model, which emerged in late 2009, effectively put publishers in control of retail prices. That was in response to aggressive pricing by Amazon, which, in order to promote sales of its market-leading Kindle e-book reader regularly priced bestsellers at $9.99, often below the wholesale price it paid publishers. The publishers feared that such a low price would put pressure on them to reduce prices on their printed volumes. Amazon.com is No. 1 in Internet Retailer’s Top 500 Guide and No. 1 in Internet Retailer’s Top 400 Europe.
The four publishers and Apple have agreed to terminate their agency agreements in the European Union. The publishers have also agreed to end any agency pricing agreements they have with other sellers. The terms also say publishers cannot restrict resellers’ abilities to price e-books however they want for the next two years. Unlike the U.S. agreement, there is no monetary compensation. The EU says the agreement is legally binding and that publishers could face sanctions if they don’t abide by the agreement. It did not say what sanctions might entail.
Another publisher cited in the investigation, Penguin Group Inc., did not agree to commit to the terms. The EU says it will continue discussing them with Penguin. Penguin also declined to settle in the U.S. case and continues to litigate the matter.