The Work

Now What?

We’ve had approximately 24 hours to digest the DOJ lawsuit – an absolute AGE in Internet time. So now it’s time to turn the teacup over and spend the next few days analyzing the tea leaves.

  • Settlements – Macmillan and Penguin, despite their protestations, settle. The agency model for ebooks is essentially overturned, and we’re back to the wholesaling model. Retailers set the prices, which will fluctuate wildly depending on retail whimsy (promotions, market forces, Amazon’s deep pockets and ability to take massive hits on loss-leaders), and then stabilize at whatever price Amazon decides is fair. This price will be on the low end.
  • DOJ wins – Same conclusion as above. Then DOJ investigates Amazon for predatory pricing.
  • Macmillan and Penguin win big – Agency model prevails. Publishers keep ebooks at artificially high prices. Consumers rebel and get a bad taste in their mouths about publishing and books. Publishers feel the hit as consumers decide Angry Birds is more fun than even thinking about reading. Rovio makes out like a bandit.
  • Macmillan and Penguin win small – Agency model and wholesale model run simultaneously, depending on retailer relationships. Consumers flock to the website that offers the best deals for the books they are looking for. Most of the time this will be Amazon but sometimes – if it’s science fiction, romance, professional – it will be specialty websites in a particular vertical. Look for more experiments in windowing.

I like the last scenario best. Which probably means it won’t be the one that actually happens.


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