Doesn't make sense, because the big six publishers _wanted_ the agency model. They used Apple to force Amazon to use it too. What happened I think (correct me if I am wrong), is that till two years ago Amazon used its market power to pass on their low wholesale prices to the publishers: "We only will sell your eBook if we can get it for this price" In the agency model the publisher can set its own price.
Also notice, that Apple only uses the agency model for Apps and eBooks. Music songs are sold in the iTunes store for a constant price (99 cents).
Re:Dear DoJ: You Need To Sue Apple Again
by MatthewPhillips on Wednesday April 11, 2012 @03:45PM
(#3829303)
That's not correct. In the agency model the publishers set the price that Amazon (and others) sells it to the end user.
Apple doesn't use the agency model for music because they are dominant in that market. The agency model was meant to prevent Apple from having to compete with Amazon on price. They couldn't sell at the same price as Amazon without taking a loss.
No what Apple did was force all sales of virtual goods to use their API, with a 30% cut for them, while also forcing all book sales to only give a 30% cut to the retailer, ergo no one but Apple can sell ebooks via iPhone apps. I can think of at least one YC company that might have been forced out of the market by this.
The agency model lets Apple get a fixed 30% no matter what the price the publisher chooses to sell. The retail price is in effect fixed to the wholesale price, and there are no sales and no competition at the retail level.
The wholesale model is the publisher sets the price and the retail sells it for whatever they wish. So one store can offer New York Times bestsellers at 30% off, while another store sells them fixed price, and another store has a "buyers club" that gets you 10% off everything in the store.
The variable pricing model, wholesale, is better for consumers. The fixed pricing model, agency, is better for the retailers. It's the same for publishers since they get their wholesale price either way.
Apple is smart - they think this "sell it as cheap as you can make a profit" model is not for them. It's always been their model actually.