Publishers Work on E-Book Agreements Under DOJ Settlement

With last week’s federal court order entering as final judgment [1]the Department of Justice’s e-book pricing settlement with Hachette, HarperCollins, and Simon & Schuster, the three publishers are banned from using the agency model for two years and are required to terminate their agency agreements within 30 days.

On Monday, HarperCollins became the first publisher to announce that it had struck new agreements, which allow its e-books to be discounted. Erin Crum, a spokeswoman for HarperCollins, told the New York Times [2]in an e-mail that the publisher had reached agreements with “e-tailers that are consistent with the final judgment” and that “dynamic pricing and experimentation will continue to be a priority” for HarperCollins moving forward. The agreements stipulate that HarperCollins will set the list price of e-books but retailers are allowed to discount the titles.

Also, in a statement this week, Hachette Book Group said that it was “engaged in productive discussions with e-book distribution agents to conform our agreements to the terms of the settlement, and [does] not anticipate disruption of sales of our e-books.”

The three publishers are not reverting to a traditional reseller model for e-books, but rather to a DOJ-approved pricing model that is being referred to as “Agency Lite.”

Under this model the publisher is still the seller of record, and the reseller (for example, the bookstore) is still acting as its agent. The publisher is still responsible for collecting and remitting the sales tax, while the retailer is allowed to discount titles, though not below their cost for the publisher’s entire catalog over a one-year period.

In an e-mail explaining the ramifications for IndieCommerce stores, ABA Director of Member Technology Neil Strandberg said, “The good news is that, while the Google eBooks Reseller Program is sunsetting, IndieCommerce sites selling Google eBooks will not lose Harper, Hachette, or Simon titles from their catalogs.” However, Google has informed ABA that it will not be able to support the settlement’s complex model for partial discounting of titles. While IndieCommerce stores will be able to continue to sell titles from settling publishers through Google eBooks, they will not be able to discount them.

Under the new e-book partnership between ABA and Kobo [3] announced just two weeks ago, Kobo will set the price of e-books, so contractual and technical issues will not be a factor for IndieCommerce stores. “ABA and Kobo are moving forward as quickly as possible to enable integration of Kobo’s catalog into the IndieCommerce platform,” said Strandberg.

While acknowledging that this is a challenging time in the e-book marketplace, Strandberg said, “ABA believes that with the Kobo program bookstores will have a powerful tool to retain customers while being able to focus on what they do bestselling books to your customers. Having a strong, industry-leading partner like Kobo will help navigate what is becoming an increasingly turbulent market.”

See this week’s related story on a sign-up and resources to participate in the ABA/Kobo partnership.