How Agency Agreements Transformed the eBook Marketplace

By Jason Boog Comment

Arguments have closed in U.S. v. Apple, Inc., et al, the Department of Justice’s lawsuit alleging that Apple colluded with publishers to fix eBook prices. No matter what the outcome of the trial, agency agreements altered the publishing landscape dramatically.

The DOJ chart embedded above shows “eBook Retailers’ Shares of eBook Revenue, March 2009-March 2012.” The red, purple and light blue lines illustrate where the agency model for eBook pricing began at different publishers–transforming the eBook marketplace (click to enlarge).

Berkeley Competition Policy Center chair and emeritus Berkeley economics professor Richard J. Gilbert created that chart for the DOJ. You can download a PDF copy of Gilbert’s 108 pages of testimony.

Here’s more from his testimony:

After signing the Apple Agency Agreements, the five defendant publishers all signed similar agency agreements with each of the e-book retailers with which they continued to do business, including Amazon, Barnes & Noble, Kobo, and Sony. All five of the defendant publishers wholly abandoned selling e-books on a wholesale model.  Figure 1 displays the shares of e-book revenue held by the six largest e-book retailers throughout the period between March 2009 and March 2012. It appears that the entry of Barnes & Noble’s Nook, in late 2009, and Apple’s iPad, in early 2010, negatively impacted the market shares of Amazon and Sony.