Let's know more about the Government – Publisher – Retailer saga

Following an 18-month investigation into the Canadian eBook industry, the competition bureau signed a consent agreement with the major publishing companies in Canada viz: Hachette Book Group, HarperCollins Canada Ltd., Macmillan Inc., and Simon & Schuster, which produce many of the country’s bestselling eBooks. The consent agreement forces them to stop their practice which prevented retailers from offering discounts on eBooks.

Apparently, this initiative taken by the Canadian government will make it possible to induce competition amongst retailers thus resulting in eBook readers reaping the benefits of lower priced eBooks. So now retailers can compete with each other based on their eBook pricing.

Prior to this move by the government, retailers were not permitted to sell eBooks below the permissible cost set by the publishing giants. While this could be a critical factor making eBooks costlier, there could be another line of thought to this practice of the publishers. While it certainly does not favor competition in the industry, it could also be seen as a move to minimize monopoly amongst retailers. To explain this, consider a scenario where the ‘rich’ retailers, now with this new initiative can drive customers to purchase only from them due to reduced costs which they can afford. But then what happens to those retailers who can’t afford to reduce their costs? There could arise a situation where, after a certain point, the ‘rich’ retailers will control the costs, either forcing other retailers to reduce costs according to them or shut shop, hence leading to minimal or no competition whatsoever.

So as governments take measures to make eBooks affordable and in the process try to reduce publisher control and profitability, let’s see how these steps affect the retailers, both big and small, over a period of time.