Not All Major Publishers Reportedly On Board With Agency Model for eBook Pricing

[MacRumors]

TBI Research reports that not all major book publishers are enamored with the "agency model" being pushed by a number of publishers inspired by Apple's forthcoming iPad tablet device and iBookstore online store to assert more control over their content.

However, one major book publisher we spoke with sees no reason to shift to that model right now or anytime in the near future.

The reason is that book publishers make less money from the agency model than they do from the traditional wholesale model (in which Amazon buys a book license at the full wholesale price, and then sells each copy for whatever it wants, often losing money on the sale). The agency model, therefore, also leaves publishers less money to pay authors and agents.

Despite the lower costs to consumers and higher revenues to publishers available under the existing pricing model, some publishers feel that the loss of control over their own content threatens the long-term viability of the publishing industry and have been striving to set their own pricing by adopting an agency model, with a 30% share of the sales price for each unit going to the distributors such as Amazon and Apple instead of selling units for a flat price and allowing distributors to set their own retail pricing. Rumored price points for new releases from publishers moving to the agency model have been in the $12.99-to-$14.99 range, while Amazon currently offers such releases at a maximum of $9.99.

The resistance on the part of at least one major publisher to the agency model could result in differing distribution arrangements with its partners, potentially allowing Amazon to undercut Apple's prices for certain titles. But at the very least, the future of eBook pricing and Amazon's dominant market position remain in flux as Apple prepares to enter the arena as a likely major player in the industry.

Article Link: Not All Major Publishers Reportedly On Board With Agency Model for eBook Pricing

 

[miles01110]

Despite the lower costs to consumers and higher revenues to publishers available under the existing pricing model, some publishers feel that the loss of control over their own content threatens the long-term viability of the publishing industry...

...because the current model is working out so well for them.

 

[tmuller]

I'd like to see a breakdown in terms of where the $175 / book goes too.

How much to the seller, distributor, author, publisher, warehouse, printer, etc.

I'm sure the author gets his $10 from that amount.

These companies don't want to lose control of their ability to ROB the author of his work is really what it boils down too.

 

[solafide]

Printing and shipping costs gone...

I've never understood, in the digital model, how they can have less money to pay authors, etc... when they don't have to print, warehouse, or ship the item.

In some cases we pay MORE for the digital copies than for the physical - doesn't make sense.

 

[supmango]

If this agency model takes off like some predict, the stragglers will join after they take hits in overall profit. Regardless of the potential for lowering profit margins.

 

[vini-vidi-vici]

What you're seeing is publishers refusing to accept the fact that they little value to add in a digital paradigm... or at least have a much smaller role to play. So, they're scrambling to say "I matter!"

the days of when you needed a publisher to print thousands of books, and do a marketing campaign are over.

In the future, their role will be to front authors money for books, act as an editor, set up author tours, maybe do a little on-line marketing, and handle the technical ins/outs of e-book sales (for authors who aren't so savvy). That's a much smaller organization.

When the system matures, there will be entities who can do all those things, and the tools available for authors to do it themselves will be much better & easier to use. The traditional "publisher" will no longer resemble what it is today.

 

[macduke]

Can anyone answer me this: What will the average textbook cost? I don't really care much about the $10/15 prices for novels. How much will a typical $100 college textbook cost on average? Will it be comparable to used versions? Is there even a way to know at this point? Thanks!

 

[Drag'nGT]

They should be making more money on the digital distribution of their books than on the physical paper book. I guess I don't have ALL the info but it just seems to make sense to me. The darn thing is written on a computer in the first place. How difficult could it be to make money on something like that?

Then again I feel that way about MP3 albums and CDs.

 

[QEII Student IT]

Hold on a mo. Just ignore the booming industry of book-publishing for a second. Like with the app store, why can't authors sent their books to Apple, who make them into .epub format and put them on the iBook store? Thus cutting out the profit-seeking middleman that leaves digital copies more expensive than paper copies.

 

[Roessnakhan]

Can anyone answer me this: What will the average textbook cost? I don't really care much about the $10/15 prices for novels. How much will a typical $100 college textbook cost on average? Will it be comparable to used versions? Is there even a way to know at this point? Thanks!

Well, some of my management books currently go for $150 in the store, but a digital version is available for $60. So probably along those lines.

 

[gwangung]

the days of when you needed a publisher to print thousands of books, and do a marketing campaign are over.

From my days as an independent consultant and as a current creative artist, doing the marketing yourself means you spend WAAAAYYYYY more time marketing than you do writing.

Sure, you can do it yourself, but it's not going to be nearly as good as someone who specializes in it, who has a budget for placement of ads and does it as a full time job. Like publishers have....

Most of a book's cost comes from marketing, book acquisition and editing. None of that's going to change with e-books.

 

[Mister Snitch]

This

...the stragglers will join after they take hits in overall profit.

Yes, and after some more visionary, hungry and innovative smaller publishers eat the big publishers' lunches. (Not to mention some self-published authors who suddenly discover they don't need publishers AT ALL anymore.)

 

[Mister Snitch]

another valid point

From my days as an independent consultant and as a current creative artist, doing the marketing yourself means you spend WAAAAYYYYY more time marketing than you do writing.

Yes, marketing a 'creative' product (song, book, movie, etc.) is at least half the work. No doubt about that.

Thing is, there was a time when doing both - making the product AND marketing it - was almost inconceivable. These days, the only obstacles to a determined and talented creator are time and money. With enough of both, there's nothing stopping such a person from achieving his/her vision.

 

[gfiz]

haha nice, all we need is a few publishers to not break to Jobs' model and watch those publishers who thought it was best for the industry to start charging 50% more for ebooks to come scurrying back to Amazon in a few quarters when their profits fall even further. Customer Pricing should be dictated by the retailer, not the distributor. If Amazon wants to make an investment in their own hardware and sell ebooks as a loss leader, then that is their prerogative.

 

[Mister Snitch]

and still another valid point

Customer Pricing should be dictated by the retailer, not the distributor.

Absolutely. What Amazon's trying to do is appalling, and will backfire on them (if it hasn't already).

 

[Usful Ijit]

Most of a book's cost comes from marketing, book acquisition and editing. None of that's going to change with e-books.

Exactly. Right now ebooks comprise only a very small percent (1-3) of total book sales. The publishers want to control the public's perception of the monetary value of a book before ebook sales really take off. They fear that if people become accustomed to books selling for $9.99 or less, they will never be willing to pay more in the future, when ebooks comprise the majority of sales. Will this strategy work? Probably, at least for the short term.

 

[gfiz]

From my days as an independent consultant and as a current creative artist, doing the marketing yourself means you spend WAAAAYYYYY more time marketing than you do writing.

Sure, you can do it yourself, but it's not going to be nearly as good as someone who specializes in it, who has a budget for placement of ads and does it as a full time job. Like publishers have....

Most of a book's cost comes from marketing, book acquisition and editing. None of that's going to change with e-books.

Am I missing all this advertising? I can't remember the last time I saw an ad for a book where the author's last name wasn't King, Grisham, Clancy or Patterson, let alone an ad that compelled me to buy one. And those authors don't really need the advertising, they've got a cult of followers who know when the next book is due out before the author does...

 

[Manderby]

... why can't authors sent their books to Apple, who make them into .epub format and put them on the iBook store?

Because Apple refuses to take any responsibility. If everybody would be allowed to submit content, they have to be careful. See AppStore approval process.

 

[gwangung]

Yes, marketing a 'creative' product (song, book, movie, etc.) is at least half the work. No doubt about that.

Thing is, there was a time when doing both - making the product AND marketing it - was almost inconceivable. These days, the only obstacles to a determined and talented creator are time and money. With enough of both, there's nothing stopping such a person from achieving his/her vision.

Actually, it's 90% of the work. And marketing is expensive. I think non-pros vastly underestimate both the time and money needed to do it well. And if you do it half-assed, you may as well not do it at all.

You can leverage better use of time and money when you're a big name already, but trying to do it from the bottom up is a lot more hassle than it should. And, honestly, given two artists of equal talent and appeal, the one that uses a publisher is going to have more success. (and that's not getting into the fact that many creators just may not be any good at marketing)

You're still going to have something like publishers out there--the advantages of specialization is just too great to overcome.

 

[gwangung]

Am I missing all this advertising? I can't remember the last time I saw an ad for a book where the author's last name wasn't King, Grisham, Clancy or Patterson, let alone an ad that compelled me to buy one. And those authors don't really need the advertising, they've got a cult of followers who know when the next book is due out before the author does...

Pretty much. Marketing isn't directly to YOU; they're directed to buyers at book stores for floor space, stands, etc.

 

[ChazUK]

Because Apple refuses to take any responsibility. If everybody would be allowed to submit content, they have to be careful. See AppStore approval process.

Does that prevent Apple getting into the same situation as Amazon when they had to delete Orwell's 1984 remotely from Kindle owners?

 

[gfiz]

Pretty much. Marketing isn't directly to YOU; they're directed to buyers at book stores for floor space, stands, etc.

ahh...so you mean marketing that would be obsolete if they just went direct to epub format to Amazon? gotcha.

 

[gfiz]

Absolutely. What Amazon's trying to do is appalling, and will backfire on them (if it hasn't already).

lol somehow you agreed and disagreed with me in the same sentence....I was referring to Amazon as the retailer, just as an FYI, since they're the one that sells to me.

 

[frjonah]

What you're seeing is publishers refusing to accept the fact that they little value to add in a digital paradigm... or at least have a much smaller role to play. So, they're scrambling to say "I matter!"

the days of when you needed a publisher to print thousands of books, and do a marketing campaign are over.

In the future, their role will be to front authors money for books, act as an editor, set up author tours, maybe do a little on-line marketing, and handle the technical ins/outs of e-book sales (for authors who aren't so savvy). That's a much smaller organization.

When the system matures, there will be entities who can do all those things, and the tools available for authors to do it themselves will be much better & easier to use. The traditional "publisher" will no longer resemble what it is today.

I think you're really on to something there...

The question is how long will it be before any average Joe will be able to write his masterpiece and get it onto a reader like the Kindle or the iPad in the future? With the iPad and future devices that will follow, it probably won't be that long... As you point out, the situation today is that the Publishers are still the "gatekeepers" who get to decide what is worthy to be consumed by the masses. In the world where eBooks are king, the Publisher, at least in his current form, is not going to be very important.

We may be rapidly approaching a world where authors are being discovered based on short-stories that ended up on some "YouTube" equivalent for writers, leading to floods and floods of submissions. The up side is that everyone gets motivated to give it a go, the down side is that, like on YouTube, there will be so many really bad submissions that it will be relatively hard to find the good ones (come to think of it, the App Store is kinda like that too )

One element that is beginning to emerge as a new "gate" of control, however, is the distributors themselves (i.e. Amazon, Apple, etc.) and it will be interesting to see how they use their new position... Will they refuse to sell certain books or content? Will they take on the role of editor, etc.?

I wonder how long it will take before any content can be loaded on these Ebook Readers, effectively undoing the need for official distribution channels like "iBooks". With an app-oriented OS and rumors of a workable file-system coming with the iPad, there may be a market opening up for a host of new "distributors", both legal and not, to get eBook content onto digital readers.

This would, of course, be very bad for Apple's new eBook based revenue stream... especially since, by definition, it's going to be a lot harder to prevent copyright infringement on text (at least compared to video/audio).

Could we be approaching an era where people actually start reading again? Even young people?

 

[ddTaylor]

From my days as an independent consultant and as a current creative artist, doing the marketing yourself means you spend WAAAAYYYYY more time marketing than you do writing.

Sure, you can do it yourself, but it's not going to be nearly as good as someone who specializes in it, who has a budget for placement of ads and does it as a full time job. Like publishers have....

Most of a book's cost comes from marketing, book acquisition and editing. None of that's going to change with e-books.

Thank you! Finally, someone who is in the 'know' setting the record somewhat straight! You are completely correct and that is something many on this forum do not know or are aware of! There is FAR MORE that goes into publishing a book (or other work) than just writing it and getting it out to the masses! Thank you for your insight and thoughtful post. Anyplace I can checkout your work?

D