Mark Coker from Smashwords offers a long explanation of why he thinks Agency pricing actually lowers the cost of e-books for consumers. He offered this explanation in an hour-long call with the Department of Justice this week (Does Agency Pricing Lead to Higher Book Prices?):
Yesterday I had an hour-long conference call with the DoJ. My goal was to express why I think it’s critically important that the DoJ not take any actions to weaken or dismantle agency pricing for ebooks.
Even before the DoJ investigation, I understood that detractors of the agency model believed that agency would lead to higher prices for consumers.
Ever since we adopted the agency model, however, I had faith that in a free market ecosystem where the supply of product (ebooks) exceeds the demand, that suppliers (authors and publishers) would use price as a competitive tool, and this would naturally lead to lower prices.
I preparation for the DoJ call, I decided to dig up the data to prove whether my pie-in-the-sky supply-and-demand hunch was correct or incorrect. I asked Henry on our engineering team to sift through our log files to reconstruct as much pricing data as possible regarding our books at the Apple iBookstore.
In plain English, we’ve seen the average price of books in our catalog drop from $4.16 in October 2010 to $2.97 today.
Read more at the Smashwords blog.