Random House Adopts Agency Model for e-Books, Coming Soon to iBookstore?

Random House, Inc. is adopting the agency model for e‐book sales in the United States effective March 1, 2011. Going forward, Random House will set consumer prices for the e‐ books we publish, and we will provide retailers with a commission for each sale. There are no changes to our terms of sale for physical books.

Random House, the world's largest publisher, as been the highest-profile holdout from the agency model, with most major publishers having reached agreements with Apple, Amazon, and others nearly a year ago as the iBookstore launched in the United States.

The agency model allows publishers to set retail prices, with retailers earning commissions for each sale. The traditional system had allowed retailers to set their own prices, with some such as Amazon even selling select content at a loss in order to draw in customers. Many publishers viewed the practice as devaluing their content and threatening the long-term viability of the industry, but Random House has been reluctant to shift away from it. Even with today's announcement, Random House will continue to use the traditional model for its physical books.

Random House's announcement does not include specific mention of the iBookstore, but given that its refusal to move to an agency model appeared to be by the most significant stumbling block to the two companies reaching an agreement, it seems likely that Random House's books will make their way to the iBookstore in the relatively near future.