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

[zombitronic]

Since .epub is an open format, is it wrong to think that there won't be a flood of torrents once the iPad and other ePub capable eReaders catch on? In a world of $100+ text books, why is no one mentioning the piracy aspect of this market??

 

[eastcoastsurfer]

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.

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.

Then the author should just hire a marketing agency. The days of publishers as the gate keepers are going away and they are trying to stop it from happening. Authors are more able than ever before to do a lot of their own marketing (through things like FB, Twitter, etc...), but I agree that when it comes to marketing you often want professionals. What I disagree with is that you have to use the typical book publishers as your professionals.

Authors now have a ton of options (the publishers hate this too!) when it comes to getting their book out there. They no longer have to fight for 'shelf' space in a store or even print their book. Unless the author is one of the mega sellers, I think many authors are going to realize after they do the math that they can just as much, if not more money by going out on their own. The mid-level authors who already have a following stand to make a killing by breaking away from the publishers.

 

[AgingGeek]

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.

Hey, where'd that Elephant come from? And why is everyone ignoring him?

 

[Manderby]

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

I don't know what happend to Amazon with "1984", probably there was a copyright-issue? Acting just as a distributor prevents apple to be accountable for almost any copyright problems or problems with regards to content (Pornography, black-list editions, and other things media publishers are struggling with to not loose their good reputation). It is (and always was) the responsibility of the publishers to provide content fitting their own rules. The new model will not change that. It might even be the case, that Apple is considering a model to even filter the contents provided by the publishers which will be under contract. But that are just my thoughts.

 

[budselectjr]

These guys better get with the times and adapt.

 

[TMay]

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.

First of all, the Publishers with the Agency model that Apple is courting aren't going to go scurrying back to Amazon. All they need do is lower prices, which with variable pricing they would be able to do. In theory they lose money on new releases, but they still control pricing over the sales life of the ebook, which is what these publishers prefer.

Secondly, what makes you think that losing money on every sale (if it is even every sale or just bestsellers) indefinitely is a business plan that will be successful for Amazon? We are currently looking at a peak of ebook marketshare for Amazon, and the Kindle is in the process of losing its status as most popular ebook platform. Amazon failed in its attempt to corner the market for ebook sales. The fact that they are looking to hire technical staff and purchased a company with touch IP indicates that they are going to try and build a platform more in line with the iPad. Amazon will fail at this.

I prefer the Agency model as it is market driven by the customer, not by the retailer, and it is the most sustainable business model for ebooks. It may take awhile for consumers to adapt to it, and publishers to get their pricing models dialed in, but it will happen.

 

[Flavioparentiq]

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.

As an artists, I find very sad you think 90% of a CREATIVE work is marketing. Where did the world go?

 

[cmwade77]

I honestly think that the days of the big publishers are soon going to be over. I think sites like LuLu that let's you self publish and set the price you want to receive for each book sold is where the future is. You can even publish in an ePub format that will be able to be read by the iPad and numerous other devices.

 

[drewc1138]

So long as I can read Kindle books on my iPad with the Kindle for iPhone app, I don't particularly care who wants to stay with Amazon.

 

[duncanapple]

Anything that can happen in this market of $150-200+ textbooks is fine with me. As a recent grad I can't wrap my head around why we even need text books. 9/10 times my professor provided much more relevant material in class, and whatever gaps I needed filled could be done online. I wouldn't even have as big an issue with books if they didn't change a couple pages each year and come out with a whole new "edition." Every year you would leave last semesters students with books they couldn't sell back (ie paper weights) and the next semesters students all buying new books.

While digital does bring a chance for piracy, that was already there to some extent with paper books. If anything I would imagine the publishers would be all over digital... you wipe out the entire used book market. Its harder to (legally) sell a digital file to someone, if you can do that at all.

I am always happy to see innovation in stagnant old markets with entrenched players. When a text book costs more than a class (which is pretty common at a regular community college) I think thats a problem. E-formats seem like a cheaper distribution method that can also cut out some of the middlemen.

Should be interesting -

 

[Friscohoya]

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.

Their perogative perhaps, but not their product. Hence, they do what the publishers say. Publishers are like venture capitalist. For every 1 or 2 winners, there are at least 10 who fail, but they must cover costs for all of them. If primary costs of a book are in editing/marketing/acquisition and marketing is best done by word of mouth/ shopping statistics (ala Amazon), then it is possible for an apple or an amazon to step in as publisher. That said, Apple has passed on becoming a record label before so I dont see them taking on publishing.

 

[Squeak825]

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.

For College Textbooks, the typical Gross Margin for the publisher is 70% (that means if they sell the book to wholesale for $100, it cost them $30 to physically make the book).

That other 70% goes towards: development costs (editorial, proofing, technology), overhead, sales costs (commissions), author royalties, and then profit for the publisher.

Typical College textbook author royalty is ~10-12% of wholesale.

 

[gfiz]

I prefer the Agency model as it is market driven by the customer, not by the retailer, and it is the most sustainable business model for ebooks. It may take awhile for consumers to adapt to it, and publishers to get their pricing models dialed in, but it will happen.

Ah, but the Amazon model IS market driven... as long as the demand for the Kindle increases, then the price of the books is subsidized. Amazon operated at a loss for a decade, and now it's possibly the most successful etailer in the world and extremely competitive price wise for consumers. I'll defer to their model for now. Publishers want control because if ebooks catch on at the pace Amazon hopes to achieve, then their importance changes significantly.

 

[jbellanca]

Since .epub is an open format, is it wrong to think that there won't be a flood of torrents once the iPad and other ePub capable eReaders catch on? In a world of $100+ text books, why is no one mentioning the piracy aspect of this market??

ePub's an open format, but still has the option to add DRM if the seller (Apple) wants to. So their book smay be in an open format, but still locked down with DRM. We won't know for sure until the iBook store's open for business, though.

 

[gfiz]

If primary costs of a book are in editing/marketing/acquisition and marketing is best done by word of mouth/ shopping statistics (ala Amazon), then it is possible for an apple or an amazon to step in as publisher.

They already have...

http://www.amazon.com/gp/feature.ht..._m=ATVPDKIKX0DER&pf_rd_r=1PEWMHQBVBMV2Z3RKGEZ

 

[jbellanca]

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.

Isn't this the same issue/argument/comment that we saw with music and the RIAA back when digital music was first becoming popular? That everyone thought the RIAA (the middlemen) would become irrelevant and musicians would sell their music direct to people through iTunes/Amazon/whoever? Unfortunately, that day hasn't come to pass (yet)...

 

[paul4339]

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 can see parallels with the recording industry. Although many/most publishers do add value, I think it's more about control and how much value they add. Also I would imagine it's different with say $175 textbook vs a $15 novel.

 

[mrgreen4242]

I'm still holding out to see what ebook prices look like beyond new releases. I can name probably 3 non-paperback, non-textbook books that I've ever bought. But I do (well, used to when I had time to read) buy a lot of paperbacks. I'd like to think that eBook which are available as mass market paperbacks (usually $7-9 these days) will somehow manage to get down to $5-6. I can see myself buying more books if that's the case.

Otherwise, I predict that a DIY book scanner and a library card will be my main source of eBooks.

 

[awmazz]

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.

Hey, where'd that Elephant come from? And why is everyone ignoring him?

This was actually how I envisaged the iBookstore working until I read the actual details:

App Store -> Developers.
iBook Store -> Authors.

But then it's more like:

iTunes Store -> Studios.
iBook Store -> Publishers.

So to start off with, it's iBook Store -> Publishers 'cos they've got all the publishing rights to all the best-selling books ever written under copyright. Up to now. All the To Kill A Mockingbirds and Catch 22s and Kings and Crichtons and Ludlums locked up in contracts like studios have the best selling musicians locked up with music publishing contracts. Need the big names to launch the new store, just like iTunes, so that's the way it's gotta be, need the publishers/studios.

What does it take to release your own album without the backing of a studio on iTunes? If you can do it on iTunes, then you'll be able to do it on the iBook Store too. Eventually, if not at the beginning.

 

[HobeSoundDarryl]

Isn't this the same issue/argument/comment that we saw with music and the RIAA back when digital music was first becoming popular? That everyone thought the RIAA (the middlemen) would become irrelevant and musicians would sell their music direct to people through iTunes/Amazon/whoever? Unfortunately, that day hasn't come to pass (yet)...

Exactly. There's been a iTunes MUSIC store for 7 years now. In it you can find artists with both the MONEY and the TIME to go it on their own. Yet none have. Since the "greedy middle-man" math makes it look like the artists could make a lot more money that way, there must be something more to why they choose not to take the (apparently) more lucrative path.

Hate the middlemen if you wish, but there is obviously value there to even thoroughly established artists. And against the argument of "what purpose do Publishers serve, when guys like King and Clancy have their cult followings?" one only needs to think about the next-generation Kings and Clancys who lack the money, time, or even one follower (yet).

 

[QEII Student IT]

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

I'm a school student, and I already enjoy reading books. I agree with you though, the techie side of me really wants to pull out an e-textbook on an iPad and smirk at all the 'normal kids' who merely have ones made of paper.

 

[TMay]

Ah, but the Amazon model IS market driven... as long as the demand for the Kindle increases, then the price of the books is subsidized. Amazon operated at a loss for a decade, and now it's possibly the most successful etailer in the world and extremely competitive price wise for consumers. I'll defer to their model for now. Publishers want control because if ebooks catch on at the pace Amazon hopes to achieve, then their importance changes significantly.

Well, do you really think that the Kindle is going to see huge growth? Because all I see is Nooks, and Sony eReaders, iPads and iPad wanna be's exploding into the same market space, but supporting ePub format.

"Publishers want control because if ebooks catch on at the pace Amazon hopes to achieve, then their importance changes significantly."

I agree with that, and this also supports my position that the consumer is ultimately going to define ebook pricing, not Amazon and at some point, not even the publishers. Either way, Amazon is going to see its market share drop significantly, and that isn't a bad thing.

 

[QEII Student IT]

Hey, where'd that Elephant come from? And why is everyone ignoring him?

Could you explain what you mean?

 

[awmazz]

And if the iBook Store won't take independents, what's to stop a Johnny Nobody like me from setting up Johnny Nobody Publishing International Inc and sign up with Apple. Then all the Jane and Jack Nobody authors can send their manuscripts to me (no Word docs please, ugh) to me and after spell-checking (I don't believe in editing) I'll release them on the iBook Store under the name of my publishing company. I can even specialise, only publish sci-fi for instance.

 

[TMay]

ePub's an open format, but still has the option to add DRM if the seller (Apple) wants to. So their book smay be in an open format, but still locked down with DRM. We won't know for sure until the iBook store's open for business, though.

Apple will defer to the publisher on DRM. Apple probably prefers no DRM at this point in time.