Amazon to blame for agency pricing: ABA

Amazon to blame for agency pricing: ABA

Summary: While the Australian Competition and Consumer Commission has said that it will look into any complaints from Australian retailers relating to the US Department of Justice's investigation into price collusion over ebooks, the Australian Booksellers Association said that it would prefer the commission to look into Amazon's "predatory" pricing practices.

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While the Australian Competition and Consumer Commission (ACCC) has said that it will look into any complaints from Australian retailers relating to the US Department of Justice's (DoJ) investigation into price collusion over ebooks, the Australian Booksellers Association (ABA) said that it would prefer the commission to look into Amazon's "predatory" pricing practices.

books

(Stack of books image by Horia Varlan, CC2.0)

The ebook pricing issue has bubbled to the surface again this week, following the US DoJ suing prominent US publishers and resellers, including Apple, for artificially propping up ebook prices.

The DoJ has accused Hachette, HarperCollins, Macmillan, Penguin and CBS-owned Simon and Schuster of using an "agency model" that sees the publishers set their own prices for ebooks, rather than using the wholesale model wherein stores purchase a book and sell it for their own price. Amazon, for example, uses wholesale pricing, purchasing an ebook for a specific price and reselling it, often at a loss, for approximately US$9.99.

The ACCC has said that it is aware of the ebook pricing matters going on in the US, and that online retail competition is one of its key areas of scrutiny. It wouldn't comment on whether it will also hold an investigation, but said that retailers with concerns should raise them with the ACCC.

The CEO of the ABA appears to have no intentions of doing so, however, saying that Amazon is where the problem lies. He said that the online giant has forced booksellers to adopt agency pricing models due to its monopoly on the cheap ebook market.

"What you have with the Amazon pricing model is that you have predatory pricing of products going on. We have concerns about predatory pricing. You want to have a competitive retail environment, and unfortunately when you have ebooks being sold below cost on an ongoing basis, that is anti-competitive," Joel Becker, CEO of the ABA, told ZDNet Australia today.

"We believe that an agency pricing model does allow a fairness with ebooks when you have predatory pricing going on," he said. He suggested that Amazon's pricing practices and their effect on other booksellers be carefully scrutinised.

Becker went on to defend agency pricing strategies in Australia.

"Agency pricing is nothing new in this country," he said, adding that as long as the agency model doesn't breach anti-price signalling and collusion laws, it is acceptable practice.

"We want businesses to operate within the law, but we don't have an issue with agency model for ebooks at this stage. Amazon has pushed us to it by selling it below cost. They are driving the need to go to agency pricing."

Apple has decided to fight the matter out with the DoJ in the US, saying that its arrival in the ebooks space served to smash Amazon's monopoly on the market. In a statement first reported by AllThingsD, Apple said:

The DoJ's accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry. Since then, customers have benefited from ebooks that are more interactive and engaging. Just as we've allowed developers to set prices on the App Store, publishers set prices on the iBookstore.

Disclosure: CBS owns ZDNet Australia and its parent company, CBS Interactive.

Topics: Apple, Amazon, Government, Government AU, Legal

Luke Hopewell

About Luke Hopewell

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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Talkback

6 comments
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  • Unfortunately for the publishers, their pricing method has lead to books of all types, not just ebooks, being high.

    Something is up when I can get a hardcover from the US or UK, and it's half the cost of what I can pick it up in a store here in Aus
    Psychaotix
  • Was in the (paper) book industry for 10 yaers. The publishers had a monopoly on "printing" their product which kept them in nice cars and very profitable business model. There was intense competition at retail level, but none at wholesale level. The last book in the Harry potter series was wholesaled at about A$24 with no discount. The supermarts sold it below cost, specilist bookshops went out of Buisness. I could have used digital information, paid a resonable royalties fee, had it printed in Hong Kong and shiped to Aus for A$12 and made a profit at A$18. With the introduction of digital materiel there is almost no on-cost of storage, printing and transport, so it should be avilible for royalties cost plus a handling fee. This would be about A$3 all up. Amozon have made it more difficult for publishers to make super profits. Even $9.90 is very high price to pay. The publishers are the ones who should be hauled over the coals, they have been systematicly keeping their prfits high at retailers expense for decades.
    Aussiemike
    • I certainly don't have issue with the Retailers, given that I know the owners of the local bookstore (I often used to spend a lot of money there) and I know that they're running on just enough profit to pay their expenses. I know that the publishers are the ones keeping the price high, but why is it nearly twice as much for me to purchase the same book from an Australian store than it is for me to get it shipped from the UK.

      For example, I did a really fast search for "Scarecrow and the Army of Thieves" from both Angus and Robertson here in Australia, and Book Depository, from the UK.

      Angus and Robertson: http://www.angusrobertson.com.au/book/scarecrow-and-the-army-of-thieves/24987244/ Priced at AU$44.99, excluding shipping

      Book Depository: http://www.bookdepository.co.uk/Scarecrow-Army-Thieves-Matthew-Reilly/9781409110965 Priced at $21.95, including free shipping.

      Sure, there's a different cover for the UK release, but a Cover doesn't make the story. I also chose the UK version rather than the US as it's very unlikely that there's any changes made to it.

      To me, it makes better sense for me to get it from the UK and wait the week or so, which is what it takes for Angus and Robertson to ship as well (From experience.)

      I agree that publishers should shape up their pricing, or they're just gonna see more money go overseas.
      Psychaotix
      • A few points on your post:
        - the A&R price includes shipping, there's no additional charge
        - the edition A&R is selling is the local AU edition, if you compare ISBNs then A&R is selling the same as BD for $32.95 (http://www.angusrobertson.com.au/book/scarecrow-and-the-army-of-thieves/5059127/) - this is the edition available in the UK
        - the AUD is today standing at 65 pence, i.e. 65 pence buys you 1 AUD. A few years ago 1 AUD cost $33 pence ("$3 to a pound", you know who sung that). Given BD price in pounds and convert, at that rate that would put their price around $44 for the UK edition they are selling (A&R's price for the UK edition would presumably be more expensive, BUT their AU edition would then be comparable)
        - as you all know, BD is owned by Amazon; this is from The Age (http://www.theage.com.au/opinion/society-and-culture/the-dark-face-of-a-cheap-and-easy-online-shopping-habit-20120405-1wfj1.html)
        JustAThought-82852
        • To counter:
          - When I last purchased online from A&R, they added shipping on top, hence my statement that the price didn't include shipping.

          - Even with the same book, BD comes out cheaper. The price I listed is in Australian dollars, not British Pounds, so it's an accurate comparison dollar to dollar.
          Psychaotix
  • For something that was scanned and turned into a file, was already marketed when it was in paper form, didn't incur storage or transportation costs or any other monies associated with paper books, publishers are pissed Amazon doesn't gouge the consumer when it comes to price. When the average self publisher can post an ebook for next to nothing, it tells a story of how big business is ripping off the public. I don't care what rubbish we are told about the quality of a self pubbed ebook. It still didn't cost an arm and a leg to construct and post online. It's time to stop blaming Amazon for the woes and whining of big publishing, and how much money they are losing. There is nothing anti-competitive about lower prices for an item that cost next to nothing, compared to a dead tree with ink, that publishers are going to remander anyway. Stop the lies.
    Japaneselonewolf