Originally Posted by DuckieTigger
Oh, believe me, I have paid attention. In a nutshell: if agency is going to be the new model, then the only thing left to talk about is retail price and cost to retailer. What else is there to talk about?
And there I thought you were in the pro-agency model group to protect whatever (HC prices, funding for specialist books, ...). From what you just said it sounds like you want the wholesale model back? Under agency model there is absolutely no way that Amazon can sell books cheaper than the price charged by the publisher. Think about it: Hachette charges $20 to Amazon for a book, but sets the price Amazon is allowed to sell it for $14.99 - not going to happen. And it is also not going to happen under agency that the retailer is forced to sell at cost.
I would not be so sure that Amazon's only reason for setting the prices low is for establishing market dominance. It is good for competition. Amazon is not making a secret out of how they discount - any competitor will know that, and they will find ways to compete by offering different kind of discounts. They used to do that, you know, before Apple entered ebooks.
No what I am saying is that under the wholesale model, Amazon is able to charge whatever they want. Once Amazon established the $9.99 price point in the customers' mind, it's a natural progression that Amazon would then push the publishers to reduce their wholesale price to below $9.99.
So just to throw out made up prices to make the example clearer, if the suggested retail price for an ebook is $20, and the wholesale price is $12, then when Amazon sells that ebook for $10, they eat a $2 loss. What Amazon is now doing is saying, "we can't make any money at $12 wholesale, so publishers need to reduce the wholesale price to $7 so we can make some profit". It was both predictable and predicted.
My point is that while Amazon's pricing practices may maximize profit for Amazon, it doesn't necessarily maximize profit for the publishers or for the established authors that I like to read.
The current publishers business model is to sale books at hardback prices for those customers who are willing to pay hardback prices and then a year later, release the book at paperback prices for those who want the book but aren't willing to pay hardback prices. Skipping that step leaves a lot of money on the table that the publishers and authors never get.
I'm perfectly willing to pay hardback prices to support authors that I like to read. I do not view books as generic product and that one author/book is as good as another.
The reason that publishers want agency rather than wholesale is because Amazon's ploy is so transparent and predictable. Ebooks currently don't have a established price point in the consumer's mind as evidenced by the back and forth debate here.
The publishers want to set the price point in the consumer's mind at whatever the current deadtree version is. They do not think that Amazon's $9.99 price point makes their business viable long term. I favor long term viability for authors and publishers over Amazon's quest for market share.