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As we understand it, the investigation is not questioning the legality of the agency model, but, rather, whether it was arrived at in an illegal manner. The critical point we made to DOJ was that any attempts on the government’s part to remedy any alleged wrongdoing must not end the agency model, which has created a more competitive marketplace.

Since the introduction of the agency model, the market has become not less competitive, but, rather, far more competitive. There is much more competition in the retail sector, as Apple, Barnes & Noble, Google, Kobo, and indie booksellers have all entered the market, offering consumers many more choices. There is also far more competition among publishers, which are now regularly offering special promotional offers, with lower-priced titles. In our channel, we have seen that the average prices to booksellers and to consumers have dropped since the introduction of the agency model.

Before the introduction of the agency model, a single online retailer was selling e-books significantly below cost, dominating this nascent market, and rapidly growing readership in their proprietary format. It may be that their intent was to capture this market not only for book purchases, but, perhaps more importantly, to sell these consumers products from the full range of other online product offerings — everything from lawn furniture to flat-screen TVs. As many analysts have noted, the losses that online retailers have been willing to accept on book sales by selling below cost can be seen from another perspective as nothing more than shrewd ongoing customer acquisition costs.

In our meeting with DOJ, we argued strongly that if the agency model goes away, there is every reason to conclude that major online retailers will again use considerable resources to dominate — and ultimately monopolize — the market, and that, in a relatively short amount of time, consumers will have a radical reduction in choice when it comes to purchasing books in both digital and print formats. The market will be far less competitive on all levels, and this stark reality will adversely affect the health of the entire publishing ecosystem. In the end, we believe, it will mean a far less diverse range of titles being published and a much diminished range of publishers.