Guardian: EU anger over ebook deal suggests hard times ahead for publishers

[seagull]

http://www.guardian.co.uk/books/book...u-raids-ebooks

It was an interesting read, I don't agree that agency pricing is always a "reasonable price" though.

[rhadin]

I think the article nailed it, however, when it mentioned the how the standard was the agency price, which publishers abandoned in the 1990s. Once they opened the Pandora's box to lower-priced books, they untrained the consumer. Now they want to close the lid but find steep resistance.

[SlowRain]

It's rather one-sided, just with a pitiful attempt at being objective. I'm guessing it was written by someone who has friends in the publishing industry. Not that it's totally wrong, either.

[TallMomof2]

I'm one of those untrained consumers. I *expect* to be able to shop around for the lowest price and I can't with Agency books. Since I can't I don't purchase Agency books unless the price is less than that for the paper version. Paper versions are almost always available for less than the Agency priced ebook. This is especially true when I use coupons or wait for sales.

[leebase]

If the EU succeeds in stopping the agency model of ebook selling -- the result will be that Amazon will not get new release ebooks.

I'm sure that stores that DESIRE to work with the agency model will still be allowed too. So Apple will still get the new release ebooks at the new release price. Amazon will be putting the "was really hot last year" ebooks on sale.

Yeah, of course that's not going to happen. So even if the EU keeps the publishers from mandating the agency selling model, Amazon will CHOOSE it, as it already has.

No one can force the publishers to offer the ebook version for sale at all, let alone during the hard back book pricing window.

Lee

[tubemonkey]

For me, agency pricing is a non-issue. I don't buy their books, so I really don't care what they charge.

My book world is safe.

[Horemheb]

Originally Posted by leebase

No one can force the publishers to offer the ebook version for sale at all

That's true with an emphasis on for sale. Publishers however have no influence on the existence of ebook versions of their books. If they don't publish a book in ebook format someone will in a matter of days (see Harry Potter). Again, the only choice publishers can make is whether they want to collect the money for ebooks or not. People will read their books in ebook format either way.

[fjtorres]

They do parrot the publishers' party line about how the price-fix is meant to hurt Amazon.
Right.
As if guaranteeing Amazon a 30% margin hurts them any.

The first level of competition in ebooks is the consumer's choice of DRM ecosystem between Kindle, ADEPT, B&N, and Apple. And few mainstream buyers think of weighing the pro's and con's of that decision before getting their reader. At that point price-fixing merely mitigates buyer's remorse with the consolation that the other DRM camps are being equally ripped off.

Restricting price competition at the bookstore level is not just anti-consumer but downright stupid (as an anti-Amazon strategy) as it blunts the multi-vendor value of ADEPT in favor of the walled-guarden vendors who can subsidize/minimize the retail price of their readers in the assurance that they can make it up in ebook profits. At this point in time, and for the next couple of years at least, the real market power in ebooks will be determined by the installed base, not the rate of sale of readers. With ebook price competition off the table, the ebookstores can only compete on breadth of catalog (witness the rise of store-exclusives) and network effects (keep an eye on the lending pool websites) and both of those are install-base driven.

At present, Kindle install base runs about 11 million, Sony 4 (being generous), B&N 3, and Kobo, Pocketbook, Hanvon, and the Hanlin clones running a milion each, maximum. If 2011 resembles 2010, Kindle should be around 20 million by early next year with Nook easily in second place at something like 7-8 million. With everybody else fading in the rear view mirror.

Ecosystem-wise this means that the BPHs will still be tied to Amazon for at least half their sales for the forseeable future even if Apple does evict competitors off iOS since the rise of Android still favors Amazon over the epub crowd. Any market share losses Amazon might theoretically be losing to the rise of Apple will be more than compensated by the 30% margin and the defanging of the ADEPT "standard". And let's not forget that Agency pricing is increasing the rate of disintermediation of the BPHs by driving self publishers to Amazon and their 70% royalty.

If the BPHs were truly expecting the price fix to "rein-in" Amazon (which I doubt) they had better go back to the drawing board, because so far they've only strengthened their hand.

I'm thinking their goal really was to increase prices and reduce royalties. Short term, they've suceeded. Long term? It's early...

[Kali Yuga]

A few thoughts on this....

First, I find it a bit odd that there is a perception that agency pricing is illegal, despite the fact that paper prices are essentially set the same way in most of the EU. E.g. France's "Lang Law," where the publisher sets the price and retailers cannot discount it more than 5%. In half of Europe, publisher setting the prices for paper books is not only legal, it's mandated by law. (The UK does not have a Lang Law btw)

While I believe that protest sites like "Lost Book Sales" may be one of the more effective methods of registering discontent, there is a question of whether or not the publishers ought to pay attention to the point where they either surrender agency pricing or just lower the prices on new books.

If the contributors to Lost Book Sales are in fact the early adopters and frequent book buyers, then that's an important segment. If they are cheapskates who won't be satisfied unless brand-new ebooks are €4, then they may not be important at all. (An open secret of retail is that sometimes, yes, the customer is not only wrong, but that not every single customer is worth having.) If the site is not drawing any notice, as indicated by operating for a few months and has 1300 lost sales listed, then why bother?

It may not help their cause that ebook sales in the US went through the roof in the US in 2010, despite 5 out of the 6 big publishers using agency pricing for most of the year.


On a side note, it's worth mentioning that the EU investigation may not be going against agency pricing per se, rather targeting alleged collusion to fix specific prices -- a claim for which there is currently no evidence, as the EU agency itself admitted.

[HarryT]

Originally Posted by Kali Yuga

First, I find it a bit odd that there is a perception that agency pricing is illegal, despite the fact that paper prices are essentially set the same way in most of the EU. E.g. France's "Lang Law," where the publisher sets the price and retailers cannot discount it more than 5%. In half of Europe, publisher setting the prices for paper books is not only legal, it's mandated by law. (The UK does not have a Lang Law btw)

We used to have such a law in the UK: the "Net Book Agreement". In 1997 it was declared, following an investigation by the Office of Fair Trading, to be against the public interest, and therefore illegal.

The collapse of the Net Book Agreement has certainly lowered book prices, but it has also beeen directly responsible for the almost complete disappearance of small independent bookshops from the British highstreet.

[tompe]

Originally Posted by SlowRain

It's rather one-sided, just with a pitiful attempt at being objective. I'm guessing it was written by someone who has friends in the publishing industry. Not that it's totally wrong, either.

One-sided? I think your reading is one-sided and not objective.

[leebase]

Originally Posted by Horemheb

That's true with an emphasis on for sale. Publishers however have no influence on the existence of ebook versions of their books. If they don't publish a book in ebook format someone will in a matter of days (see Harry Potter). Again, the only choice publishers can make is whether they want to collect the money for ebooks or not. People will read their books in ebook format either way.

I doubt the amount of folks who pirate verses those who will pay $9.99 instead of $12.99 is insignificant compared to folks who will buy a hard back rather than waiting for the paper back to come out. Those are the customers and revenues that publishers are trying to keep.

And since Apple will be there to sell the ebooks at the manufacturer's suggested price -- you KNOW Amazon will as well.

Lee

[elcreative]

Exactly...

Originally Posted by HarryT

We used to have such a law in the UK: the "Net Book Agreement". In 1997 it was declared, following an investigation by the Office of Fair Trading, to be against the public interest, and therefore illegal.

The collapse of the Net Book Agreement has certainly lowered book prices, but it has also beeen directly responsible for the almost complete disappearance of small independent bookshops from the British highstreet.

[Kali Yuga]

Originally Posted by HarryT

The collapse of the Net Book Agreement has certainly lowered book prices, but it has also beeen directly responsible for the almost complete disappearance of small independent bookshops from the British highstreet.

H'm.... Were the indies holding out better until that law was repealed?

[tompe]

Originally Posted by Kali Yuga

H'm.... Were the indies holding out better until that law was repealed?

Yes, they were. It is pretty obvious that they lost on the change since they lost the customers coming into the shop to buy a best selling books since they could not sell them as cheaply as the big chains since the big chains get a better discount.