Sunday, December 16, 2007

The Joys of Price Fixed Markets

Amazon has been ordered to end free delivery on books in France.

It has taken three years but the French Booksellers' Union (Syndicat de la librairie française), has finally got their way and Amazon now has to start charging for the delivery of books and pay compensation to retailers. The reason is that the courts in France ruled that it unfair trading practice..

Retail prices, particularly of books, are tightly regulated in France where selling products below cost to attract customers, is illegal. Books retailers must also not offer discounts greater than 5 percent on the publisher's recommended price. The free delivery offered by Amazon exceeded the legal limit in the case of cheaper books.

This victory follows that earlier this year against, an online bookseller with operations in France, Spain and the U.K.

As always, we wonder how this is going to work out in the global digital world? It is understandable when one looks at the discounting mess the UK finds itself in today to pine for the return to fixed prices. We are were we are and there are only two winners; those who set the prices and those who buy at discount. The loosers are the creators who get poor reward for selling more units and the retailers who live in a reactive environment they can't control.