An American Editor

April 7, 2010

Agency in eBooks: Just the Start?

With all of the hullabaloo lately about the shift to the agency model of pricing brought about by Apple and 5 of the big 6 publishers, the question of what this means for the future of all publishing has been sidestepped. (For those unfamiliar with the model, essentially it means this: publishers set the retail price for an ebook and every ebookseller sells the ebook at that price. The ebooksellers aren’t really sellers in this scheme; they are simply conduits — a funnel for money to go from buyer to publisher and for delivery of an ebook to the consumer. For their efforts, the ebooksellers receive a commission.)

Let’s assume that the publishers (and Apple’s) motive for the agency model in ebook pricing is pure as the driven snow before the dog is let outside. Let’s also assume that the move was necessary to preserve “quality” publishing by ensuring that publishers and authors receive a fair return for their work effort. And let’s further assume that publishers play and will continue to play an important role in getting “quality” manuscripts from the oven to the table.

Yes, I know that for some of you these are mighty big assumptions and that it goes against the grain, like a fingernail scraping across a chalkboard, to give any credence whatsoever to these assumptions, but their credibility really doesn’t matter in the real world. What does matter is what the agency model for ebooks portends for publishing as a whole, and here is where publishing may well meet its Waterloo (further discussion of publishing meeting its Waterloo is found in Will Apple’s iBookstore be Publishing’s Waterloo?).

If the agency model works for ebooks, why won’t it work for pbooks? What separates the ebook and the pbook in terms of preserving the value of the work? Why should one be treated differently?

Logically, there is no difference between an ebook and a pbook. Yes, there is a form difference and yes, there is a slight production cost difference, but there is no difference in the content — and isn’t content what is really being sold? If the sale is really the format and not the content, then why pay authors? Why not just sell gibberish? Every reader, every author, and every publisher knows that content is king — it matters greatly whether that novel was written by me or by Stephen King and it matters greatly how the same words are strung together (presumably Stephen King strings them better than me).

If the agency model is designed to preserve the value of the content of an ebook, shouldn’t it be used to preserve the value of the identical (except for format) pbook? (Further discussion of value is found in Valuing a Book: How Do Publishers Decide on Value?) Isn’t this where we are heading now that the floodgates have been opened?

The ramifications of the agency model haven’t really been thought out by any of the players. If it works for ebooks, it will work for pbooks. If it is imposed in pbookland, publishers will, in one fell swoop, eliminate their largest headache — returns (for a discussion of returns, see It’s Raining, It’s Pouring: Returns in an eBook Age). It will also stabilize pricing — no more battles based on price between Wal-Mart, Amazon, Target, and Barnes & Noble, for example.

If agency pricing works with consumers (still unknown), publishers will be able to raise pricing on paperback books — after all, if an ebook that the buyer leases sells well at $14.99, why sell a paperback that the buyer owns at $7.99?

And if agency pricing works, why not further consolidate and eliminate booksellers altogether? Oh, that can’t be easily done tomorrow because consumers like the one-stop shopping that bookstores and ebooksellers provide, but it is only a matter of putting some thought to the problem to figure out a solution, a way for the publisher to reap 100% of the money — no need to split with an agent who provides minimal service.

Apple is one culprit here. Blinded by its dislike for Amazon (among other companies that Jobs seems to have a fetish about), Apple offered publishers what seems to be the ideal solution to Amazon’s power grab. Amazon is the other culprit in this story. Blinded by its desire to dominate the nascent ebook market like Apple dominates the emusic market, Bezos made several strategic blunders, each inflaming the publishing industry and fanning a belief (a well-founded belief, I think) that the enemy is Amazon and it must be brought to its knees. Unfortunately, the ebook consumer became the first casualty in this war and, ultimately, all readers are likely to become book war casualties.

The ultimate question for publishers, however, is will the agency model actually work to the industry’s benefit? What benchmarks have the big 5 set to evaluate the effect of the agency model on ebooks? How dedicated to book buying is the reading public? Have ebookers become so enamored with pricing wars that they will forsake agencied ebooks? There are lots more questions that need asking and answering, but I suspect that the big 5 are unprepared to either ask or answer them — at least not objectively. In the end, I think the near-term winners will be Random House and those indie publishers who forsake the agency model.

Which leads to the final question to be answered: What will publishers who have agreed to the agency model do if the iBookstore turns out to be a small molehill at the foot of a mountain rather than the expected mountain? Someone who buys a Kindle or a Sony Reader buys one because they are a reader; who knows why an iPad was bought. It’s the difference between buying a dedicated device and a multifunction device. Hard to tell which of the multifunctions was the impetus for buying the device and which functions are secondary or tertiary considerations, if considerations at all.

2 Comments »

  1. [...] How do publishers decide the value of a book? And how is the new “agency model” going to affect publishing and bookselling? [...]

    Pingback by Stumbling Over Chaos :: In which Mayhem taunts all of you and I include a few links — April 14, 2010 @ 9:31 pm | Reply

  2. [...] This is the result of the Agency 5 pricing scheme for the ebooks (for some background, see Agency in eBooks: Just the Start? and The Decline & Fall of the Agency 5) that allows the publisher to set the ebook price and [...]

    Pingback by Ripping Off is Soooo Easy to Do: The Charade of Pricing « An American Editor — October 7, 2010 @ 5:27 am | Reply


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