Publishers complain that agency pricing leads to lower revenue
September 29, 2010 | 8:15 am
Publishers who insisted on agency pricing are starting to be hoist by their own petards—but unfortunately, authors and agents are being hoisted right up there with them. This is the message that a Wall Street Journal article Paul mentioned a few days ago (from another publication) brings us, and it’s one worthy of revisiting.
As most of the comments on Paul’s post point out, this article has a number of problems—most notably that literary fiction as a genre has already been in trouble for some time now, and the lower per-unit income from e-books may just be another nail in the coffin rather than a silver bullet. And there’s also the “cheap digital-music downloads have meant that fewer bands can earn a living from record-company deals” groaner.
Still, in a way it is deeply satisfying to see publishers beginning to express this “woe is us!” attitude in response to a situation that they have created themselves. Perhaps if they had been willing to keep letting Amazon give money away to them they might not be in this position. Though I will grant that the eventual outcome of that path might also end up being suboptimal from the publishers’ point of view.
I find it interesting that another piece Paul mentioned a few days ago claimed that “genres such as science fiction and romance are ‘overperforming’ thanks to the tastes of early adopters of e-books.” How do they know that those genres are overperforming? Perhaps people’s tastes are simply changing. Perhaps literary fiction is simply underperforming. (Though in fairness, I must also admit to feeling a sort of savage glee that genre fiction is trouncing the “mainstream” fiction beloved of those snooty types who look down their nose at genres and declare them to be trash.)
But not all publishers are quite so bearish on the future of the book. FutureEBook has a report on a recent publishing industry roundtable on the future of the book, featuring execs from Amazon’s Kindle division, Macmillan, and Google, and a Writer’s House agent.
The agent, Simon Lipskar, noted that Kindle book buyers should “feel guilty” (from the point of view of giving money to the author) for buying an e-book rather than a pricier hardcover (but not rather than a paperback). (Feel guilty? Really, Simon? It wasn’t consumers’ decision to chop the amount of royalties authors get from an e-book.) But he also said that selling at an affordable price was the key to fighting piracy.
Macmillan’s John Sargent noted the problem that “the value proposition goes ever downward when on screen”—in other words, people don’t think e-books should cost as much as paper books because there’s no physical artifact there. He also said that determining what customers want (and not building what they don’t want) is going to be a challenge publishers will have to face.
I believe that beyond just trying to figure out what customers want, publishers really need to start working on becoming more efficient, being able to survive on less revenue, if they want to be able to price books at the levels consumers are demanding and stay in business. Their competition isn’t just Amazon underpricing their books, it’s Amazon (and potentially other outfits) offering writers a 70% royalty rate to publish exclusively through them and bypass the publishers altogether.