Big Win For Amazon, B&N In Europe: Apple, Four Big Publishers Terminate Their Agency Deal

Some development in the e-book price war being played out in Europe — and an indirect victory for Amazon and any other retailer not called Apple in the process: the European Commission has announced that Apple and the four big publishers Hachette, Macmillan, HarperCollins and Simon & Schuster have offered to drop their agency pricing agreement for e-books sold in Europe — although the five still “do not agree” with the European Commission’s preliminary assessment that those deals were anticompetitive in the first place.

The agreements had been the subject of an EU investigation, in which Apple and the publishers had forged agency agreements and, it seems, prevented others from inking wholesale agreements in the process. The agency model lets the publishers set the price for books and offer resellers a fixed cut of that price (30% is a typical cut). The wholesale model sees publishers selling their books to distributors, who then sell them at whatever price they want. (A route Amazon has used to great effect to grow its business, sacrificing margin on cheaper books for scale.)

Today’s development will mean that Apple will not get preferential discount pricing on books sold in Europe — and that other resellers like Amazon will be allowed to continue to sell books at discounts. As Reuters points out, the move follows a similar settlement in the U.S. earlier this year. One publisher left out of the notice in name today is Penguin, although there is indirect reference made to it in the document (embedded below).

This is a crucial development as the tablet and e-reader markets continue to heat up in Europe. Amazon is now launching its Kindle Fire tablet in the region, as well as several new Kindle e-readers. At the same time, Barnes & Noble is forging ahead with its Nook plans in Europe, and Tesco has recently purchased an e-book reseller to ramp up its presence in the market. Apple’s iPad continues to lead in tablets but there are many nipping at its feet.

The full document explaining Apple and the publishers’ offer is embedded below but the basic details are as follows:

We are reaching out to Penguin for further comment — specifically why it’s not mentioned in the announcement — and will update as we learn more.

View this document on Scribd

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