More on TechnologyTell: Gadget News | Apple News
Boy do I disagree with this! Mike Shatzkin gets it 100% wrong about the agency model!
June 3, 2010 | 10:58 am
|
By Paul Biba
Mike Shatzkin publishes a blog that is always worth reading – The Shatzkin Files. One of his latest articles is Agency seems (to me) to be working; I hope its legal.
In that article Mike talks about the beginning of the use of the agency model and how publishers love it so far. In that article he talks about how the Texas AG is investigating the model (we think) and says:
It would make many publishers very unhappy if the Agency model were deemed illegal. One major house CEO I spoke with two weeks ago was positively rhapsodic about the control the new paradigm gives the publisher. That CEO told me about one major bestseller at their publishing house which suffered no loss of unit sales when the price went up from the Amazon-set $9.99 to the Agency price of $12.99. Struck by that, the CEO further raised the price of that title to $14.99 and saw immediate sales erosion. So, two weeks later, the CEO took the price back down to $12.99 for that title, where it sits.
As this person said, “I can’t ever see going back. I have never had this ability to maximize revenue before or to experiment with pricing.”
He then goes on to say the following. When I read it my jaw dropped open:
I’m personally persuaded that universal set prices for ebooks are good for the industry and, ultimately, for consumers. They will definitely foster competition among retailers. My belief for a long time has been that the day will come when almost all web sites will offer their own curated selection of ebooks. (Why shouldn’t ESPN.com be selling the new Willie Mays or Steinbrenner biography?) That will work great in a price-set world. It would make the retailing opportunity about “location, location, location”, rather than “price.” It would boost sales for publishers and authors by putting ebooks a click away from interested consumers across the Web. But it isn’t going to happen if web sites figure that their curation efforts will just be triggers to send people to a deep-pocketed etailer that is pricing for market share.
It would appear that the Agency model is good for just about everybody except the etailers that would use price to drive others out of the market. But will it ultimately be ruled legal? I don’t think we know yet.
Foster “competition among retailers”? The point of the agency model is just the opposite. Fixe prices and avoid competition – both for ebooks and pbooks. With agency a free and open marketplace can’t exist.
Mike simply doesn’t understand the consumer. Agency is not “good for just about everybody”, agency sucks, big time, for the consumer. All you have to do is read TeleRead, and some other blogs, and you will see that the consumer feels that agency is simply a ploy to raise prices and take more money out of the consumers’ pockets. Screw the consumer, kill price competition – we publishers will do everything we can to see that the consumer has to pay what we want, no matter how outrageous.
As a matter of fact, the Supreme Court had long held that his was exactly what price maintenance was doing, and it is only recently that they overturned the long standing rule that price maintenance was a per se violation of the antitrust laws. The big publishers have never sold to the consumers, only to the book buyers from the book chains, so they have no idea what a consumer is, or what a consumer thinks. The cry is going out all over the web that the consumer is being screwed and the publishers have no clue. Mike doesn’t understand that the consumer is mainly interested in price, not “location, location, location”, as he says above. He’s got it completely reversed.
The publishers are setting up a world without any competition – which only a healthy retail market can provide – and I think it’s very sad that our legal system currently allows this. However, since all the publishers agreed to the same model, at the same time, I think, as a lawyer, that a case could be made to prosecute them for a conspiracy to restrain trade or fix prices. Now THAT would be good for the consumer. I could go on and on, but enough said for now.
Mike and I will be on the same panel at the CEA Line Show on June 23 – that could get interesting!
|
Related Posts:
Previous
SUBSCRIBE TO RSS
Comments:
Joanna I do see where you are coming from and now I am out of the publishing/author/book loop and am just an ordinary punter I sympathise with readers’ desire to keep prices as low as possible. But I know that 1% of authors generate 90% of the income for the trade as a whole. If you take that 1% – the bestsellers if you like – out of the equation – the possible profit is very small. A good writer, whether literary, practical or of general non-fiction often only sells 1500 in hardcover- say $20 ea. ($3000 at 10% royalty) – and 6-7000 in paperback, say at $8, ($2800 at 5% roy which is generous these days as usually any high discount sales are accounted on publishers receipts, i.e. after the discount to the bookseller is knocked off), the earnings for the author would be something in the region of $6000. One hears about the huge advances authors are getting but there are an awful lot of authors who only get an advance of $5000 or even less.
Why should the big chains and Amazon etc get the massive discounts of as much as 70%? It is because publishers, once the set price of books went, have been daft enough to allow it to happen. But it means the chains are now geared up to this sort of profit per book – huge premises, high salaried executives, etc – and it is hard to change. But looking at it from the author’s p.o.v. any erosion of their share of cover price when an ebook replaces a paperprint one, could be very damaging. And $6000 for a year’s work is not exactly a princely wage.
Pantasillia, have you considered that ebooks can enable the other 99% to make a living wage by shifting money from the high-visibility 1% to their output? The technology disruption of ebooks levels the playing field a lot and the new emerging publishing channels will likely be moving sales from tthe BPHs to smaller publishers/packagers and the authors.
Frankly, I see authors fears of ebooks as slaves looking at an open cage door and cowering in a back corner out of fear of freedom.
Yes, ebooks = change.
But as you pointed out, for most authors the status quo is so bad, it can hardly get worse, so what is there to fear?
They should jump in; the water is fine.
Felix, don’t get me wrong; I rejoice in any change which might allow an author to earn more from their creative effort and allows more people access to their work. I don’t think authors are frightened by ebooks; they are concerned that digitisation leaves them with a less easy to control copyright and of course this is ultimately all they have to sell. And the vast majority are not able to spend many hours a day on blogs, twittering or otherwise generating interest in their work. Many have to do another job to pay their way and a large proportion are not computer savvy. I know many who still use a manual typewriter rather than a computer and this is because it improves their writing – time to think and the discipline of NOT being able to cut and paste. But I digress. The current chaos is because the Big Boys did not embrace ebooks and work out how to change the business model when they first became available. They saw them as a fad like the CD-RoM on which they had lost fortunes and the early e-readers, only five years ago, were expensive and clunky objects. Only the most techno-loving authors knew anything about them and most agents and book sellers also ignored them.
But now it is different and some model has to be invented where an author can control their copyright and fairly benefit from it. Google blithely digitised out of print books whether they were in copyright or not. They then intimated they were doing authors a favour in selling them. In some cases this might be so but some writers do not want certain books reproduced or they might want to make changes. THEY should be in control. But unless they happened to hear the news on the grapevine they might know nothing about this piracy.
Pantasillia, I agree with most of what you say.
Especially on Google and their vile land grab.(Funny how they talk of “orphan works, as if the creators are dead, huh?)
My main point is that the people with the most to *gain* from the mainstreaming of ebooks, the mid-list and new authors, for the most part are not standing up for themselves; instead they are letting the entrenched oligarchic powers (and the million-dollar advance types) set the terms of debate and poison the well. If they don’t recognize that in the current market their relationship with their readers is part of the job they are in for sad times. Good bad or indifferent this is simply the reality of the 21st century. Doesn’t mean they have to spend eight hours a day online promoting their work, but an hour or two a month posting a blurb or two on a personal web page would maintain a line of communication open. (Not insulting the intelligence of the buyers by parroting corporate spin would also help.) Given that the BPHs will *not* promote any book not expected to be a monster seller (your basic self-fullfilling prophesy) *somebody* has to pick up the marketting slack for mid-list books. In recent years it has been retailers. Well, thanks to the Agency Price Fix, that option is likely going away. With both Amazon and B&N doing House Brand publishing and ebooks taking up an ever growing share of sales the power of the BPHs is headed the same way as their reputations; down.
It is in no author’s interest to tie their *personal” brand to a reader-hostile conglomerate. Not when consumers and authors have a common interest; getting the ideas out to as broad an audience as possible and getting as much money as possible to the authors so they can crank out more stories. You won’t see much debate on that.
The problem is that such an agenda poses a threat to the entrenched powers who see *their* slice of the revenue pie is what comes under pressure by the elimination of their paper-driven controls so they have chosen to try and retake control through price fixing to protect their interests. But it has to be understood, especially by the authors, that it is the Big Publishing Houses’ interests that the Agency model serves. Not their and not consumers’.
Not the customers interests, as they are being deprived of the ability to play one retailer against the other and are now expected to pay more than under the wholesale model for the exact same content(which renders most of the apologists laughable), and certainly not the authors, who are going to find their share reduced because it will be calculated against the new street prices, not the old list prices, and because their higher-priced Agency books will be in competition with content from publishers more interested in maximizng *total* revenue instead of maximizing *Unit* revenue. (As an agent, I’m sure you understand the difference, right? Volume matters. 100% of nothing is still nothing.)
It is well documented that Agency pricing was instituted to shield Apple from competition, on the theory that giving the other retailers a larger share of *per unit* revenue would bribe them into stopping price competition at the retail level. (riiighhht!)
Unfortunately for the 5 BPHs suckered into the scheme, number 6 didn’t bite. (Let’s hear it for Random House! Lets hope that 40% boost holds up.)
Neither have most of the mid- and small-size publishers that still make up over half of the Amazon and B&N catalog.
Price fixing only works when everybody plays so the poor authors being fronted by the Price Fix Five are in for a hard time until the scheme collapses.
The origins and intent of Agency pricing are too well documented for any informed person to fall for the BPHs party line at this late date. Defending the scheme only aligns you with the people who have publicly declared war on readers.
And that is not the side any rational, informed person wants to be in, in a buyers’ market.
Peace!
“What I would pay for is a library model where I just check out the e-book for $.99 for a week or two and then is disappears.”
My public library has been lending ebooks (and audio) for a few years now FREE of course. It’s great for non-keepers or trying new authors. I don’t rent paperbacks from them, and therefore I shouldn’t have to pay for an ebook loaner. That’s not a good thing unless it’s a new release, then I might bite.
“have you considered that ebooks can enable the other 99% to make a living wage by shifting money from the high-visibility 1% to their output?”
Whoa. That is a big if. You are implying that the ONLY reason the 1% make so much money is some publisher-initiated conspiracy that will be broken when ebooks gain more traction.
I absolutely disagree. that 1% make more money often because a) they wrote or wrote better what folks wanted to read and b) they did have some publisher and bookseller umph behind them. The idea that publishing houses are
Simply saying ebooks will spread the wealth around is nonsensical. As Pantsilla said, there are already many more authors in the print world that do not make nearly as much money as the top 1%, and how one thinks ebooks will magically transfer wealth from Stephen King to Noname McJohnson is beyond me.
I do notice, Mr. Felix, that you are avoiding my arguments. It seems easier to proclaim the revolution than to make it happen.
er.. to finish the abandoned thought:
The idea that publishing houses are somehow “reader-hostile conglomerates” is well, in need of substantiation. And the continued ignoring or excusing of Amazon for price fixing ebooks while accusing Apple of the same also weakens your perspective.
Well, I think it is also a faulty assumption to assume that the ebook buyer would have bought the hardback in absence of an ebook option. I am a lifelong reader, read in the range of 100 books a year, and have never bought a hardback in my life. In my case, it was second-hand stores, until ebooks came along, and the author gets zero profit on those. When pricing the book, you have to consider not just what IT costs, but what the cost is of whatever alternatives the reader also has available. Would you rather price the hardback $2 higher and lose a bunch of readers to the second-hand paper market? Or would you rather price it reasonably and have them buy it new, from you? I don’t think this is about customers being so cheap that they want to deprive the author of their due. I think it’s about a) customers not wanting to feel like they are being thought of as stupid and are being taken advantage of (e.g. the $25 ebook of the $6 mass market paperback) and b) customers not feeling like that’s what the higher price is going for anyway
Felix I think you are unrealistic about the feasibility of authors standing up for themselves. There are organisations such as the Society of Authors, the Authors’ Agents Association in the UK and similar organisations in the States, who are doing what they can to fight the author’s corner. But if you think of each author as a separate business working in isolation you can see how hard it would be to get a majority of them to gang up and turn down offers from publishers. Most of them are thrilled to get any sort of offer and are not going to risk losing a deal because of some small print which might well be remote for them. If the agents and organisations gang up they are at risk of infringing the anti=trust laws. There are a very few altruistic best selling authors who will take a stand on behalf of other writers but it is rare, and not to be relied on. I know a lot of best selling authors who are not at all happy about the present situation. For instance why should Amazon insist on exclusivity if you do a deal with them – what about all the people who have Apple machines? Are they not to be able to get an ebook? It is pretty nerdish to have multiple platforms and most normal people buy one and pray it wont become obsolete for a few years. I think many people are trying to work this through and to suggest authors are siding with the BPH against their readers is a mistake. Authors have been at the bottom of the heap for thirty years or more. Publisher’s have been complaining about massive advances but these only go to a very few. Author’s and their agents have been asking for them if they possibly can because unless a publisher has paid up a large amount they do sweet FA after the first few months to promote or sell the book.
I am not an advocate for the Agency Model. Nor am I against it. Personally I do not think ebook rights should automatically be part of the initial grant to a publisher. I probably live in cloud cuckoo land but I think publishers should offer for what they can do – i.e. publish paper print books – and the author can then find the best ebook outlet. It might well be a branch of the publishing house but not necessarily. Once the market for ebooks reaches critical mass most of the BPHs will have an ebook section and there will also be smaller specialist ebook producers. One of the best ebook publishers I know started life as an agent and over ten years ago saw the opportunities in digital publication. I sold him several major authors and we agreed terms platform by platform.
Whatever emerges after the brouhaha has settled I hope it will be fair for the three producers, author, publisher and seller, and also fair for the reader.
And Lynn you are right; there is always the library and so long as the author gets his Public Lending Right payment in the same way as he does on pbooks – no problem.
And Occam; publishers are certainly not “reader hostile” but I do think that perhaps some of their Boards of Directors and senior executives are in danger of being more interested in their shareholders and protecting their own lifestyles than in supplying their readers with affordable and wide-ranging literary works of all genres.
Joanna I agree; ebooks are something different. I agree with Atilla in that one might well want both ebook for reading in certain situations and hard or paperback to mark up, curl up with in the evening or pass on to children. I buy books at charity shops, jumble sales, second hand shops, railway stations, and even in book shops and occasionally – if reluctantly – from chains. They all have their place.
PS I now have a massive physical book problem = far too many of them and not enough shelf space. Time for me to restock the charity shops, jumble sales etc etc. How do I get all my books digitised?
Yes, Pantasillia, I too have too many books. Tis is why I prefer ebook for fiction, then I can buy as much as I want and not have to store it
I still do prefer paper for cookbooks and some other things.
Thanks for the info in the comments!
Now I know where to get library ebooks – the library! Duh! And I hear that the vanity press is what I thought it was — not very good quality. And some insight into Amazon pricing for authors. I wrote a book on energy that was never published and lapsed and an finishing a fiction book and now will have to find alternatives to Lulu I guess.
On the tech side: I just loaded Safari 5.0, sorry I live in Sillycon Valley it’s in the water here, and tried the ereader feature on this article. It makes a nice page for the blog post, but does not allow one to read the comments the same way. Technology keep going and going.
The agency pricing model is basically price fixing. If there were any type of regulatory control in this country it wouldn’t be allowed to have gone on this long.