Friday, November 5, 2010
The Agency Model in Australia - wtf??
This distressing piece was in the WBN yesterday:
Hachette Australia CEO Malcolm Edwards has confirmed the publisher has signed with both the iBookstore and Kobo under ‘an agency agreement', but declined to comment on the publisher's pricing strategy.
Under the agency model agreements between Apple and publishers currently in use in the US and UK, publishers set the price of their ebooks and discounting by retailers is not allowed.
The Weekly Book Newsletter understands that Hachette Australia is the first publisher to come to an agency agreement with Kobo, however other publishers may also come to an agency agreement with the Canadian-based ebook distributor in future.
However Malcolm Neil, communications manager for REDgroup Retail which offers ebooks through the Kobo platform, said that ‘observing the situation in the UK, if publishers do move to an agency model in Australia in future, it will take a while for [associated price changes] to wash through the market'.
I know I keep banging on about this, but let me repeat: in Australia the agency pricing model is clearly and unambiguously AGAINST THE LAW!
No doubt Hachette has legal advice to the contrary. Well bugger me - legal advice that corroborates with what you want to do anyway! Who would have thought? (Although I'd love to see the hedging in that advice!)
Here is what the ACCC says about our Resale Price Maintenance provisions in our Trade Practices Act. It's pretty clear:
Any arrangement between a supplier and a reseller that means the reseller will not advertise, display or sell the goods the supplier supplies below a specified price is illegal.
It is also illegal for a supplier to cut off, or threaten to cut off, supply to a reseller (wholesale or retail) because they have been discounting goods or advertising discounts below prices set by the supplier.
A supplier may recommend an appropriate price for particular goods but may not stop retailers charging or advertising below that price. In most cases, a supplier may specify a maximum price for resale.
This is a succinct summary of what the actual provisions say.
One source of publisher confusion could be that Apple has thousands of Apps that have been legally supplied under the agency model in Australia since day one, so an Apple ebook is simply one more App. But 99.9% of those Apps are Apple exclusive and specific. The problem comes when other competing resellers get into the act and producers/suppliers attempt to force the model onto them. This is the danger with ebooks, which are far from being Apple specific. They need to be available on multiple devices. And foisting price control on them is restrictive of competition.
In Hachette's case they've gone to Kobo and presumably muscled them into meekly submitting. How bad is that?
This is dangerous legal ground. You really don't have to be Einstein (was he a lawyer?) to know that.