How Apple revived publisher-set pricing and got sued for it

Comment In the beginning there was the Net Book Agreement. The NBA, a gentleman's accord 'twixt publishers and retailers, ensured that prices set by the makers of books were respected by the sellers of the same.

Then it was realised that this was a form of 'price maintenance' and that this was anti-competitive. Quite right, said many in the book industry. The NBA means big companies can't use their financial clout to undercut smaller firms, ensuring business for all and that none need tremble at the door of the bankruptcy court.

And barely read authors of a literary bent could continue to find publishers for their work. The NBA ensured penny dreadfuls were not the only fruit.

But not all in the book game were keen, and they did whisper into the ears of civil servants and ministers. And the government of the day did abolish the NBA.

And so it came to pass that big chains buying in books in bulk were able to gain volume discounts and undercut smaller, weaker booksellers, a fair few of whom went to the wall.

And then the supermarkets did enter the fray and undercut the big chains, some of whom also went to the wall. Even some from across the great ocean.

But the public were able to buy books more cheaply than before. More books, of all kinds, were published than ever before. More books were purchased than ever before. And no one was forced to read Dan Brown because John Banville couldn't get a publishing deal, because he could and did.

And there was much rejoicing.

Not that the closed bookshops went unmourned, but many did realise that rather a lot of them would have collapsed anyway. The emerging virtual marketplace of the internet had quickly proved more convenient to buyers tired of being forced to buy dusty, dogeared, yellowing and sometimes already well-thumbed books from high street shops as if they were new.

And then the books themselves did become virtual, covers and pages being transmuted into bits and bytes. And this was good, because it is a book's ideas - and the words that convey them - that matter, not from what kind of cloth the binding is cut.

And the greatest among the sellers of the electronic tomes was Amazon, already the greatest seller of books formed from paper. And it saw that the e-book was the future and, despite e-books commanding a sales tax and paper books being free of this surcharge, did its utmost to bring the prices of the two into harmony.

And the abolition of the NDA made this possible.

But one firm, whose symbol was the very fruit used by the serpent to tempt Eve, did seek to do battle with Amazon. And, to encourage publishers to sell their offerings through its new store in return for the mere token of a 30 per cent cut of the purchase price, it allowed publishers to themselves set the price of their books.

In the Land of the Free, this was named the Agency Model, but to learnéd minds it was the NBA by another name. And the publishers were keen. And many did agree to Apple's sales terms. And they did force (allegedly) Amazon and others to do the same.

And so retailers were no longer able to compete by charging less than their rivals, or by offerings services of the value-added kind. And in America, the forces of law and order did question this change, and did accuse Apple and others of colluding to fix the price of e-books for the benefit of themselves and not their customers.

Yet some pundits did claim that the Agency Model was good. That it prevented a big chain - Amazon - from sweeping aside smaller rivals. And that argument might carry weight were not one of those 'smaller rivals' a $600bn maker of iWare and one of the world's biggest sellers of digital content.

And Apple and many publishers did reject the allegations of collusion.

And the higher counsels of the law did withdraw to consider their verdict.

What will their judgement be? Who can say, but to be sure they will not come to the consumer's aid to block the evil magic of DRM, which prevents consumers from buying a book from the store of their choice and reading in the application and on the device of their choice, no matter how much the book costs. And which prevents a true and open market for digital books more than any pricing model may. ®