Friday, March 9, 2012

Uncle Sam Says 'No!' to Agency Pricing

According to the Wall Street Journal, the U.S. Justice Department is planning to file suit against Apple, Inc., and five of the biggest publishing companies in the U.S. for price collusion. In the meantime, the European Union is still conducting its own investigation into the matter.

Go read the article. I'll wait . . .

As a consumer, I like getting as much for my money as I can. But when I go shopping for a birthday present for  DH and I'm paying less for a hardcover from his favorite author than I would for an e-book, something's definitely wrong with the system and I'm pissed..

As an indie publisher, I LOVE the agency model for two reasons:

1) I can undercut the big publishers because I have much lower overhead.

2) I want to be able to set my own prices.

The problem here is that Apple and the five accused publishers pretty much admitted in the Wall Street Journal prior to Steve Jobs's death that they agreed to their agency model arrangement to stop the Godzilla known as Amazon. (Please note: The article I originally linked to last March has been removed. This link is to a cached page of the article, and I cannot guarantee this link will be active after today.)

Right now, everyone's bemoaning Bob Mayer's prediction that e-book royalty/splits will go up. This isn't my biggest worry.

My biggest worry is that this lawsuit (or settlement if the execs at the accused companies have a clue) will eliminate agency pricing, and all of the e-book retailers will start a price war that puts us indies out of business.


  1. IMO the best thing that could happen -- whether or not it will is another discussion -- would be for agency pricing to be trashed (as it should be) and for all books, paper and electronic, to go back to the system the paper books had before this agency crap came along, where the publisher suggests a retail price, sets a wholesale price, and sells units to the retailer, who then sells them for whatever he wants. Amazon was taking a loss on all those $9.99 bestseller hardcovers the publishers were in such a tizzy about. The publishers were making more money per unit under the old system than they are under agency pricing.

    I'd love to be able to cut a deal with Amazon or B&N or anyone else saying, "I want $3 [say] per unit sold; you can price them however you like." If Amazon wants to put my book on sale for ninety-nine cents, or give it away for free for a while, that's fine, 'cause I still get my three bucks per. If they sell it for $9.99 and neither of us makes much money, maybe I'll cancel that deal all together, or renegotiate if they'll do that.

    But right now, Amazon can set the price of your books to whatever it wants. It usually won't, except for periodic sales, but from what I've heard, the agreement indie authors sign says that it can. I'd much rather have an old fashioned agreement that spells out how much I make per unit and let the retailer worry about the retail price, like every other retail system in the world.

    It'll be interesting to see how this shakes out. And what the e-book retail market looks like in five years, and in ten years. Agency pricing isn't the answer, though.


  2. *sigh* You're right, Angie. None of us know what will happen--even by the end of this year.

    Bob Mayer set off a panick over his prediction that Amazon will raise the rate split. They may; they may not. Only Jeff Bezos knows what he's planning down the road. But everyone else in the industry is FOLLOWING, which to me means Amazon's already won the battle.

    Honestly, I want to get to the point where I can sell my stories from my own website, but that's going to be a ways down the road.