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A FutureBook survey shows some interesting responses, the Bookseller reports. 76% of those who answered thought that e-books should be priced at the same level as the least expensive discounted print version of the paper book. 60% thought that the publisher was in the best position to set that price. 43% supported agency pricing, though 75% did not think it would last for more than five years.
The article goes on to quote a few comments that poll-takers left, some of them quite amusing.
When asked how long agency agreements would remain in place, one third of respondents said up to five years, with only 24% indicating it would last beyond five years. One said it would last "until law enforcement remembers that price fixing is illegal".
It should be noted that the survey has only received “more than 500 responses” thus far, which is hardly even a drop in the bucket considering how many people own e-readers now. It is also a potentially biased, self-selecting sample, given that it’s an adjunct to the FutureBook Digital Conference 2010 and anyone can take it by going to this link.
I wonder whether the people who think the publishers are in the best position to set e-book prices to parity with print book prices are being too optimistic to believe that they will set them there. Publishers have a history of trying to protect their printed book sales (and publishing consultant Mike Shatzkin has said he thinks they are right to do so), and one method of doing that is to price e-books much higher than the currently-available print versions.
(That’s also how the big publishers priced most of their e-books before Amazon came along with its $9.99 deals. Let’s not forget that publishers had plenty of control over e-book retail prices—by setting the wholesale prices—in the decade before they met up with big e-tailers willing to sell at a loss!)
There have also been a number of examples of e-books being agency priced higher than available print versions in the US, though I’ll admit I’m not sure whether they’re common or isolated incidents. Either way, I still don’t think agency pricing is good for the consumer, nor will it ever be.
Hopefully those who think it won’t last more than five years are right. But the Net Book Agreement (a British price-fixing agreement for printed books) lasted for almost a century!
I’m far from sure that “what’s good for consumers” is a driving factor in publishers’ pricing decisions, but neither do I expect that grocery stores, coffee shops, etc. price their products based upon what’s good for consumers. In general, businesses want to maximize their revenue, which means selling products at the maximal point on the price/demand curve. (That is, they want to price products as high as they can without unduly affecting demand). For products where competition exists, the prices of other retailers may play into that mix, but the welfare of their customers generally does not.
I think the failure of the agency model will not come from appeals to consumer welfare. Rather, the failure of the agency model will come when consumers discover enough indie authors (for whom they don’t have to spend ridiculous amounts of money) to impact the demand side of the pricing equation. As long as people want to read Dan Brown in sufficient numbers to be willing to pay the agency model price, that’s what publishers will charge. When enough people say “I don’t want to pay 150% of the paperback price to get the e-book”, publishers will lover their prices.
This is not, by the way, to say that I disagree with the idea that agency pricing results in some ridiculously over-priced e-books. Rather, I’m simply pointing out that the publishers are making pricing decisions based upon THEIR perceived welfare, not the welfare (real or perceived) of the consumer.
It seems that every time I read someone complaining about agency pricing, what they really mean to be complaining about is high-priced eBooks. That is one way to do agency pricing, but really: Agency pricing means the publisher is in control of the book’s price, instead of the retailer. It’s just a shift in who decides how to set the price, it isn’t (necessarily) an upward shift in pricing.
The arguments you’re making against the agency model aren’t actually addressing the question of the agency model at all, they’re merely addressing the question of how the model is now or may later be implemented. The agency model doesn’t need to go away for eBook prices to come down. This is evidenced by all the small press and independent publishers who use the same agency model to set their eBook prices low. The agency model isn’t (strictly) about making eBooks expensive, it’s about putting control of the price of their product back in the hands of the publishers.
While it’s true that agency pricing doesn’t necessarily mean higher prices, it’s not exactly a surprise people would consider them synonymous given that the whole reason agency pricing came about in the first place was that the publishers felt Amazon’s prices weren’t high enough.
It’s not as if they tried to wrest control away from Amazon so they could make e-books cheaper.
I agree that the agency model isn’t only about higher prices, it’s about control. Any other kind of retailer purchases their goods wholesale, then tacks on their percentage for a total retail price. Why should ebooks be any different?
A free market transaction is between buyer and seller. The seller sets a price that he thinks the buyer will pay. If it’s too high, he won’t have any sales and will adjust the price accordingly. If the price is too low, he’ll run out of product, and/or go out of business because he can’t cover his expenses. Having the manufacturer set the price for the seller bastardizes the market model.
I agree that the agency model will fail because readers will go elsewhere. Very few authors are a “must have”. In fact, I’ve already done that myself. I’ve discovered many indie authors that I enjoy just as much or more than the authors I used to read but have their ebooks priced ridiculously high. It also pushes more people towards the used book market. If there’s an author I really want to read, I just wait a few months for a low used price. I also frequent our library district’s semi-annual sales – $5/bag of books.
Would the publishers and authors rather have 70% of $2.99 or nothing? Because that’s what they get from me.
> Agency pricing means the publisher is in control of the book’s price, instead of the retailer.
That should be retailers (plural), not retailer. When you have multiple retailers, you have in effect competition. Competition eventually leads to an optimal price point that works for both the supplier and the consumer, supply and demand. When there’s only one party setting the price – the publisher – you have price fixing instead. There’s also only one publisher of a given book for a given region, so they already have a de-facto monopoly. Add to that several publishers doing this and setting the same prices, and you have a cartel.
That’s what the problem is, not just high prices.