Is the new 'agency' system going to change your buying habits?

[Kali Yuga]

Originally Posted by vaughnmr

Kali, why are you ignoring the issues of Apple pricing benefits from their negotion? Is that ok with you, that Amazon (or anyone else, for that matter)should not be able to price ebook bestsellers at $9.99, but Apple can?

I'm not ignoring it, I'm just not seeing any evidence of Apple getting such special treatment.

The most explicit statements we've had so far on pricing is from Sargent, the CEO of Macmillan. He has said that new ebooks will typically cost $13-15; books on the NY Times bestseller list will drop to $13 or less; older ebooks will drop in price. He has also indicated that in "the long run," it does not make sense to peg ebook prices to physical book prices.

I.e. Apple does not get unlimited rights to discount ebooks, while other retailers do not. Nor have I seen any such indication.

DRM is a completely separate issue, and one unaffected by the agency model change.

[Kali Yuga]

Originally Posted by Robotech_Master

Actually that's not entirely true.

You may want to check out Sargent's blog posts: http://blog.macmillanspeaks.com/

Although not an exact recitation, I assure you the scheme I posted is very close to what Sargent indicated. A new ebook could hit $10, but that will be the exception, rather than the rule (as it has been to date for Amazon).

[Robotech_Master]

Originally Posted by Kali Yuga

I'm not ignoring it, I'm just not seeing any evidence of Apple getting such special treatment.

Perhaps you missed the link I posted?

Going directly to the New York Times article source, we get:

But according to at least three people with knowledge of the discussions, who spoke anonymously because of the confidentiality of the talks, Apple inserted provisions requiring publishers to discount e-book prices on best sellers — so that $12.99-to-$14.99 range was merely a ceiling; prices for some titles could be lower, even as low as Amazon’s $9.99. Essentially, Apple wants the flexibility to offer lower prices for the hottest books, those on one of the New York Times best-seller lists, which are heavily discounted in bookstores and on rival retail sites. So, for example, a book that started at $14.99 would drop to $12.99 or less once it hit the best-seller lists.

Moreover, for books where publishers offer comparable hardcover editions at a price below the typical $26, Apple wanted e-book prices to reflect the cheaper hardcover prices. These books might be priced much lower than $12.99, even if they did not hit the best-seller list.

Tom Neumayr, an Apple spokesman, declined comment.

Yes, fine, they're anonymous sources. But I find it hard to believe the NY Times would just talk through its hat.

[Kali Yuga]

Originally Posted by Robotech_Master

Perhaps you missed the link I posted?

Wow, that was fast. And I read all about that weeks ago.

Sargent's comments are more general and more recent. In his initial blog post, he states they will discount NY Times best-sellers, essentially confirming the rumor mill.

I seriously doubt Apple will have some sort of major discount option that will be denied to other retailers. If that is not the case, we'll see soon enough.

[Kali Yuga]

Originally Posted by Logseman

Game Theory will tell you that, indeed, customers aspire for the lowest price, and sellers for the highest. Obviously, it is the point in which they both agree which will set up the price. However, there is no such thing as "reasonable" price for both parties....

I would concur that there is no "objective" or "perfect" or "ideal" price.

However, there are definitely circumstances where prices could be classified as "unfair." For example, some may find that charging a premium for a scarce resource during an emergency qualifies as "price gouging." Some may argue the higher prices are justifiable -- e.g. I run a hotel, I charge 10x the normal rate after a hurricaine, on the basis that I need to run a private generator and this increases my costs. Others may say it is not justified, e.g. running the generator did not increase my costs enough to equate a 10x rate increase; my price increase is taking advantage of the dire straits of others, and so forth.

Ergo, one could claim that charging $100 for an official ebook copy of "Lord of the Rings" could be "unfair," as the publisher has an official monopoly over the title and might be regarded as price gouging.

Also, many people presume there is some sort of exclusive connection between cost and price -- and that demand does not figure at all into the price. The public has a perception that it is "unfair" for a publisher to make a substantial profit off of a book, for example, or to charge the same or more for the ebook than paper, or to charge more for what used to be $10 until now (even though that price was largely subsidized by retailers who were attempting to control the market). Many people also mistakenly believe that the majority of the cost of a book is the paper portion, when the reality is that the paper part (including distribution and returns) is closer to 15%, thus it is "unfair" to charge the same or more for the ebook as paper. Similarly, many people protest that it is "unfair" to charge $15 now for an ebook and $10 later because it is the same exact item, even though this is downright routine market behavior.

And let's face it, most people are just not rational, and are reacting more based on emotion than reason. All they hear is that prices on a new ebook will go up to $15, and the knives come out. I'm confident that if Apple said "our ebooks will be $10," objections to the agency pricing would be minimal. And when people notice that older ebooks are $10 or less, maybe they will calm down. (Maybe. )

So is there a "reasonable" price? That may not be the proper term, as the price will be "whatever the market will bear," and "reasonable" is a highly subjective judgment.

But to me, it is perfectly rational that since supply is flat, the price of an ebook should change in accordance with demand. You want it immediately after it comes out, you pay a premium. If you're willing to wait, you pay less.

[GA Russell]

The discussions on the numerous threads about this subject seem to be based in large part upon the belief (maybe correct, maybe not) that Macmillan and other publishers will not act rationally, in the economic sense.

That is to say, rather than maximizing their profit by lowering the price and selling more eBooks, they will choose to keep the eBook price high (for whatever reason, including incompetence).

Time will tell.

[riemann42]

Originally Posted by GA Russell

The discussions on the numerous threads about this subject seem to be based in large part upon the belief (maybe correct, maybe not) that Macmillan and other publishers will not act rationally, in the economic sense.

That is to say, rather than maximizing their profit by lowering the price and selling more eBooks, they will choose to keep the eBook price high (for whatever reason, including incompetence).

Time will tell.

That's it exactly. I hope that this whole shift is because Publishers want to make more money in the ebook market, and thus will sell more ebooks at more attractive prices.

Of course, there is the possibility that they will jack the prices up to ridiculous levels to destroy the ebook market and go back to killing trees. This would be such a stupid move that shareholders would revolt, CEOs would be fired, boards replaced, executives would jump out windows, authors would return their advances and release their work to the public domain, Amazon, Adobe and Apple would distribute DRM breaking tools and mobileread posters would nod sagely and say, "see, I told you that the big publishers are evil."

[bgalbrecht]

Originally Posted by riemann42

I think most people are looking at the headline "$9.99 ebook on best sellers will be stopped by Agency model" and miss the big picture.

3) eBooks will only rarely be more expensive than physical books, at least based on MSRP.

John Sargent never promised this. He only promised that the price would drop to $10 or less, potentially down to $5.99 if there was a drop in demand. Presumably there would be a huge drop in demand for the ebook if it were priced higher than the cheapest paperback edition, but Sargent's been pretty coy about tying the ebook price directly to paper editions.

[fugazied]

If prices go up from where they are now, I will simply buy less books. I will NOT pay more for an e-book than I would for a print book, in fact I demand the e-book be cheaper for the simple fact it has tiny printing/transport costs.

Basically if they screw things up here, I will simply go to one of those well known pirate sites. To ease my conscience I'll try to donate to the author, but sorry, screw the publishers if they want to push DRM and lift prices with new payment models.

[riemann42]

Originally Posted by fugazied

If prices go up from where they are now, I will simply buy less books. I will NOT pay more for an e-book than I would for a print book, in fact I demand the e-book be cheaper for the simple fact it has tiny printing/transport costs.

I agree for the most part. If I can go to B&N (there's one a mile from my house) and get the book for $5, whereas it is $7 as an eBook, I'll walk to B&N and get it. However, if it is $4 at Amazon, or online, I'll likely just pay the $5 to get it now.

Your behavior, fugazied, and mine, are both rational. For this reason, I believe ebooks will usually be priced to sell for less or same as the average physical copy, if for no other reason than the publisher will almost certainly make more money if you buy an eBook than if you get it from the store.

Originally Posted by bgalbrecht

John Sargent never promised this. He only promised that the price would drop to $10 or less, potentially down to $5.99 if there was a drop in demand. Presumably there would be a huge drop in demand for the ebook if it were priced higher than the cheapest paperback edition, but Sargent's been pretty coy about tying the ebook price directly to paper editions.

Good point. I hope that Mr. Sargent is not an idiot and prices eBooks above average retail of the physical book.

[Lemurion]

I will make no demands.

I will let the market work as it will.

When I want to buy an ebook I will look to see what's available and base my purchases on the combination of my available budget, the price of the book, and how badly I want it now.

If I think a book costs too much, I won't buy it. I have both lots to read and patience. I'm certainly not going to worry about whether the sale followed an agency model or a retail model.

[kennyc]

Yeah, I'm not going to buy from MacMillan any more.

[cbarnett]

My biggest fear is that this is simply a move by the publishers to keep ebook sales down and drive sales of their paper products. It may be cynical, but if it's true then it won't matter whether we purchase books under the new model or not. It won't discourage the publishers at all, or encourage realistic pricing and availability of ebooks.

I hope I'm wrong.

[Logseman]

Originally Posted by Seli

ETA: I think you're also assuming a completely rational consumer, which would not fit at all for books.

Ebooks make decision-making by a consumer potentially much closer to "complete rationality" (I put in quotation marks as I, like you, don't endorse the existence of such) than Pbooks. More concretely, Ebooks are much more homogenous than Pbooks as they're all nothing but files to download (the file size issue is non-existent today), and allow a buyer a much wider array of choices, i.e. something closer to "perfect information". In the time we take two p's in our hands and read the back covers, we can see 2 or 3 webpages with 50 titles each.

[Seli]

Originally Posted by Logseman

Ebooks make decision-making by a consumer potentially much closer to "complete rationality" (I put in quotation marks as I, like you, don't endorse the existence of such) than Pbooks. More concretely, Ebooks are much more homogenous than Pbooks as they're all nothing but files to download (the file size issue is non-existent today), and allow a buyer a much wider array of choices, i.e. something closer to "perfect information". In the time we take two p's in our hands and read the back covers, we can see 2 or 3 webpages with 50 titles each.

I see your point, but I could do the same already in online stores for paper books. And while I do at times decide in the store to buy something usually I have a selection beforehand based on other sources. And books for me can not be randomly interchanged, total ebook access wouldn't increase the amount of books I would love to read that much.
I have preferences, authors I want to read as soon as possible, authors I would like to try, authors I would have to be paid to try... Independent on format. I have bought hardcovers despite the format, not despite the price, because I wanted access to a book.

On a tangent I still have not found an online bookstore (paper or e) that makes is as easy to browse for books as a physical bookstore (new or second hand). The amount of info I can get from a wall of (reasonably organized) books still seems to be superior for me to any webpage.