Was agency pricing hugely beneficial to self-publishers? In a response to a DoJ public comment by David Gaughran (claiming that professional publishers did it to try to kill off Amazon’s self-publishing), self-publishing blogger Aaron Shepard makes a pretty convincing argument that it amounted to a great big sloppy kiss from publishers, who were unwittingly handicapping themselves in competing against self-publishers’ lower prices—and that Amazon isn’t necessarily as big a friend to self-publishers as they might believe.

Here are only a couple of his numerous points:

• The agency model helped self publishers by creating a bigger price differential among ebooks, thereby making less expensive ones more attractive. David, do you really want new books from top authors coming online at $9.99? And exactly where did you obtain that death wish?

• The agency model also helped self publishers by directly inspiring Amazon’s 70% royalty plan. This royalty was set up in retaliation for the agency model, as a way to draw authors away from big publishers. Without Apple and the big publishers, David, your publishing income would be half what it is today. That’s the benefit to you of ebook competition, which was not significant before establishment of the agency model.

He also contends that Amazon has offered largely second-rate support and tools to self-publishers, and that it sells all of its books, whether print or electronic, as loss leaders if it can to try to draw people in for bigger high-margin purchases while other book retailers are stuck having to make their only profit from books.

Shepard calls the DoJ’s case “far-fetched,” noting it relies on “a fairly creative interpretation of anti-trust law” that he’s not so sure the courts will agree with. We’ll find that out for ourselves in about ten more months. Meanwhile, if Amazon is able to lower prices again on half of the Big Six publishers’ books, and the other three publishers follow suit to keep from losing too much money, it’s possible that self-publishers could be in for some harder times ahead.

(Found via The E-book Community mailing list.)


  1. As far as I can tell, while I’m making a nice profit from my e-books, Amazon is also making a nice profit. The actual cost of storing the bits and sending the bits is quite low–the warehouse is the cloud, and the distribution channel is the point-to-point connection between the server and the client computer.

    This is disruptive technology, and the genie is out of the bottle. The way to thrive is to adapt.

    Paper books will be around for a lot longer–paper is more adaptable to more environments and isn’t dependent upon a battery–but e-books and e-readers offer much greater flexibility and a much larger pool of resources.

    If you want to go head-to-head against Amazon, then offer better distribution, better royalties, and better penetration in the market.

    I’m glad that the e-book market is taking off, and I say that as an author and reader who loves printed books.

  2. Agency price-rigging and the imposition of geographic limitations have certainly driven me to self-pubbed titles. Prior to geolims, I never even looked at who published a title (apart from a few niche imprints like the Collins Crime Club): I just bought lots of books. Geolims were suddenly imposed without explanation: they largely barred me from buying titles from big publishers, and left me scouring the Web to find out WTF was going on. Agency then drove many popular titles out of my price-range. After investigation powered by my puzzlement and resentment of these illogical interventions, I know which publishers are ripping me off, and I also know the pittance they pay their authors. So wherever possible, I buy self-pubbed or directly from authors. I’ve discovered a great many new authors, and really don’t regret the popular but overpriced or geoblocked authors I’ve had to abandon.

    I’ve seen many other keen readers say the same. This amounts to a major marketing failure by the big publishers.

  3. I find myself constantly confused by this assertion, made by you and others: “Meanwhile, if Amazon is able to lower prices again on half of the Big Six publishers’ books, and the other three publishers follow suit to keep from losing too much money, it’s possible that self-publishers could be in for some harder times ahead.”

    Why would nonsettling publishers have to “follow suit”? If we assume, as so many ebookers claim, that, for example, Stephen King novels are NOT freely interchangeable with Tom Clancy novels, and that readers who want to read the new King or Clancy novel will buy the new King or Clancy novel, then it matters not whether a publisher is agency or nonagency in terms of pricing. I wouldn’t buy a King novel at any price, not even free, because he doesn’t appeal to me; I would buy a Clancy novel at a reasonable price because his writing does appeal to me. Whether a price is reasonable has little to do with whether it is agency or nonagency; nonagency can be as unreasonable as agency.

    If, however, the King and Clancy novels are interchangeable, then perhaps it still doesn’t matter whether the pricing is agency or nonagency because it would also make the $2.99 thriller from Smashwords interchangeable.

    Agency pricing levels the pricing to a narrow band of variation. Under nonagency pricing, there was no narrow band of pricing; pricing was all over the map and yet books sold.

  4. I disagree that his point is all that convincing. His argument seems to center around the legality of the agency model. The agency model is not illegal and the defendants in this case are not being sued for its use. Their being sued because, according to the DoJ, as a group they got together and decided to employ a mechanism that raised prices. Yes, that mechanism was the agency model, but note that Random House also uses the agency model and is not being sued.

  5. Someone needs to start ripping up the grossly misleading way the “Agency Pricing” term is applied.

    Self published authors are not ‘Agents’ in any stretch of the imagination, and the ability for individual authors to set their own selling price is a million miles away from the commercial and market significance of publisher’s ability to do so.

    Especially when those publishers end up being massive multi national publishers who manipulate pricing in a massive way because they control the pricing of hundreds of thousands of titles in comparison with the self published author.

    The ability of individual self published authors to set the pricing of their titles has no impact whatsoever on the market – the ability of multi national publishers to do so, even without any collusion whatsoever, has a global impact on the market.

    The conflation of the two creates a deeply misleading view of, and image of, what Agency Pricing means for Publishing and the Reader.

  6. …Agency pricing was boon to self-publishing, blogger contends…


    I’ve covered this way better on my ereader blog and lay it down to everyone the same way.

    Consumers are not interested in paying for the college of publishers great grandchildren.

    Authors and consumers benefit from self-publishing due to the removal of the middleman (aka the publisher).

    The only complaint I have with self published works even from well known authors is that virtually all of the works could do with a final edit for misspelling and grammar errors. Most of the time I really don’t care as I have trained myself to read by understanding and not worry about technical correctness..( comes from living deep in the south where evidently grammar and spelling past the forth grade are option classes in the minds of students.

    In any case……the benefits of self-publishing are way larger than anything a traditional publisher can bring to the table. I see publishers shrinking to the concept of pay for service providers similar to the traditional agent and editor combined and having to give up the royalty model that has allowed them to graduate to the elite status they have enjoyed in society for generations.

    In other words…..time to give up the jets and Mcmansions and learn what the working person lives like. I know i’ll certainly be glad to live in a gated community when prices come down.

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