Yesterday, the US Department of Justice sued Apple and six publishers, alleging that they had conspired to fix prices. It all centres around the switch from a wholesale model of selling e-books from the publishers to retailers (such as Amazon) to using the agency model of selling books that Apple and the publishers agreed to adopt in early 2010. Some of the publishers have already settled with the DOJ, but other publishers and Apple have vowed to fight the allegations.
But what is the agency model and how does it work? I’ve done my best to explain the two systems and some of the details surrounding the model that was adopted by Apple and the publishers that are in hot contention. I’ve also summarised the DOJ’s allegations as well as their timeline of events that the DOJ goes into great detail in their court filing. Finally, if you find yourself fascinated by the topic, at the end of the post is a further reading section to get more details and some opinions on the issue.
Jump the break to view the full article and video explaining the wholesale and agency models.