John Sargent answers questions about Macmillan agency pricing
March 12, 2010 | 11:19 am
The first question Sargent addresses is how much an e-book should cost. He takes a look at several differing points of view—it should cost the same as a hardcover, it should cost almost nothing, it should be tethered at just below the price of the cheapest paper form—and concludes:
In the end, an e book will be priced to reflect the value consumers put on it. We believe at first release an e book is worth more and people will pay more for it. Over time it will become worth less as demand tapers. However, some digital books will retain their value over time just like print books. Some will increase their value over time (many physical books are now only available as trade paperbacks, after they have been out in the cheaper mass market formats). So our digital pricing will vary to reflect the value of the book at the time. But in general, our plan is to price books below ten dollars after there initial sales demand slows (usually within a year).
Along the way, he trots out the same argument that publishers always make concerning e-book pricing: the printing cost is a tiny fraction of the price of a hardcover, and publishers need to pay fixed costs such as royalties, editing, and overhead out of what they make as well. (Of course, Baen is still able to sell its e-books much more cheaply; Toni Weisskopf explains how in this interview.)
In his second answer, Sargent makes it clear that retailers will not have the flexibility to offer e-books at a discount, as Macmillan will control the price.
It is not clear whether this will affect the types of “sale” Fictionwise and eReader offer, where book-buyers get an amount of store credit pegged to the purchase price of the e-book rather than directly discounting the e-book itself. Hopefully not, or Fictionwise might have a number of unhappy customers of its Buywise discount club.
His third answer was to my question—how can Macmillan be trusted to carry through on its pricing pledge. He notes that Macmillan has never yet made a pricing pledge, and adds:
Historically, e book pricing has been driven by a number of factors, and it may well have appeared to be inconsistent. We never promised to price books in a certain way and have actually never controlled retail prices before now. And many of our decisions on list prices were driven more by our Amazon relationship than by our relationship with consumers.
I’m pretty sure that can’t be entirely correct. Macmillan has always set its wholesale price, and nothing was stopping it from reducing the e-book price once the book was in paperback. And Amazon has only been selling e-books for the last two years, so there were eight years before that in which Amazon would not have been a factor.
In fact, I definitely remember hearing in conversations with employees of eReader and Fictionwise in years gone by that e-book pricing issues were something of a headache. They had to get the publishers to reduce their e-book wholesale price before they could reduce the e-book retail price, and publishers always lagged behind in getting that done. But I don’t have links I can include. (I have a feeling that the messages are probably buried in the voluminous archives of Jon Noring’s e-book mailing list, if anyone would care to archive-dive for them.)
Finally, Sargent says that Macmillan will be repricing to $9.99 or less e-books that cost $14 while paperback versions are available. (I could wish the question had been better worded, as it does not mention e-books that are $20 or more while paperback versions are available, but I’m going to hope that was just poor phrasing in the answer.)
On the whole, while some of the answers make me a bit skeptical, I must admit it could be worse. It is good to see Sargent making the effort to communicate clearly to consumers in a straightforward manner. Agency pricing is still going to be annoying in terms of the way it hobbles competition, but I suppose we will have to make the best of it.