The Agency Pricing System For Ebooks – A Good Idea Or Not?

Rich Adin, in his always intriguing and diverse blog – An American editor – has posted an interesting article about the infamous Agency Pricing Agreement for selling ebooks.

This structure, which is currently the subject of legal inspection in the USA, Europe and the UK has caused a real stir over the last year, as it is seen as a form of price fixing, aimed chiefly at preventing Amazon from taking over the entire world of ebooks, and in passing, to give Apple a fighting chance to break into the market as a result of the launch of the iPad.

From the point of view of the consumer, it has had the effect of frequently pushing the price of ebooks up to levels higher than many paper books, which, not surprisingly has caused a lot of anger and resentment.

In this post, Rich gives a rather more nuanced view of this system, and it is because of this broader view of it all that I felt it might be of interest to you to read – assuming you have not already seen it on his blog, of course.

So, the word is with Rich now….  Read on.

eBooks: Is Agency Pricing Good or Bad?

Recently, there has been a lot of focus on the “conspiracy” between 5 major publishers and Apple regarding agency pricing and whether these 6 entities have violated antitrust law. The focus is not on whether agency pricing is good or bad, but whether the parties colluded. That question I’ll leave for the US Department of Justice.

I’m more interested in whether agency pricing has been good for me as a consumer. Various forums have been discussing this and Mark Coker, president of Smashwords, has written an excellent piece defending agency pricing (see Does Agency Pricing Lead to Higher Book Prices?) Mark Coker makes several salient points, but they are points from the author and distributor perspective, not the consumer perspective.

(Mark Coker does make, however, one interesting observation: Before agency pricing, there was the wholesale pricing model. A publisher would set a book’s list price at say $30 and wholesale to booksellers for $15. The booksellers were free to sell the book for any price they wanted, be it $5 or $10 or $25 or $30. The reality was, however, that no bookseller could sell all books at less than cost and survive, not even Amazon. At some point, a bookseller has to turn a profit or at least cover costs. Consequently, the wholesale price was, in effect, an agency price; that is, a minimum price at which a book could be sold without putting the bookseller out of business. In other words, there really isn’t much difference in effect between the wholesale scheme and the agency scheme as far as consumers are concerned. For retailers, the agency scheme ensures that the retailer makes a profit on every ebook sold.)

But what about from the consumer perspective, and even from the indie author perspective?

In the days before ebooks (i.e., my participation in the ebook marketplace), I spent, on average, $5,000 a year on pbooks, mainly hardcover. I am now into my fifth year of ebooking and each of those years has seen a steady decline in the amount of money I am spending on books overall. Combined, my pbook and ebook spending doesn’t exceed $2,000 in a year, and is often quite a bit less.

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