UK Consumer Protection Watchdog Investigates Ebook Pricing

Responding to an increasing amount of complaints, the Office of Fair Trading (OTF) launched an investigation into ebook prices. The agency says they are seeing whether certain publishers and retailers have made anticompetitive pricing deals.

The investigation is still in its early stages, so there’s not a lot of details. But it is being reported that the new agency pricing model is under the spotlight:

The OFT will not specify exactly what the investigation entails, but a report in the Wall Street Journal claims that it relates to the “agency pricing model” which sees publishers set the price of e-books, as opposed to retailers. This model is used by Amazon’s Kindle store and Apple’s iBooks store in partnership with publishers including HarperCollins and Penguin.

A similar investigation has been launched in the US by the Connecticut Attorney General last August.

The agency pricing model lets publishers set ebook prices and giving retailers a 30% commission on sales. The model has been controversial to say the least. Publishers maintain that if retailers are allowed to set ebook prices too low, then consumers will expect lower prices, devaluing the product.

Amazon fought the agency model, saying higher prices will only hurt sales. The online retailer had a dispute with Macmillan a year ago over the agency model. Amazon removed Macmillan books from their Kindle store. A week later Amazon agreed to the new pricing model.

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Read More: eBooks, Publishing News