Random House adopts agency pricing March 1st

[Kali Yuga]

Originally Posted by kjk

Interesting! Hyperion is owned by Disney, but distributed by Harper Collins. So Apple's iBooks store doesn't require all books to be under agency pricing, it seems.

My understanding is that Apple's contracts only require that they can't be undersold by a competitor.

It is likely that the publisher still sets the price on the Apple platform, but it looks to me like Amazon is setting the prices for Riordan's books. Presumably (and assuming someone's paying attention), if Amazon cuts the price then Apple will match them.

[CleverClothe]

Originally Posted by Kali Yuga

AFAIK the big publishers pretty much gave up that attitude about a year ago.

What they want to do is protect their margins. Hardcovers are high-margin sales, and paperbacks are low margins. An ebook at $14 is much more profitable than one at $10 (and no, a boost in sales numbers do not necessarily offset the lost profits).

Given the price hikes by RH today, you are proved wrong. The publishers themselves acknowledged that the Agency pricing will often mean a smaller cut for the publisher.

[rogue_librarian]

Originally Posted by Kali Yuga

However I cannot imagine that a retailer is paying for a block of 10,000 copies of a title, selling those copies off, ordering more if too many are sold, and returning unsold copies.

So he "orders" them one by one, and? It's till not much of a difference: producer (publisher) -> en gros merchant (distributor) -> en detail merchant (reseller) -> customer (reader). The only time the producer should get a say about the price is when he delivers to the wholesaler. With tangible good it works that way, too.

OK, but my point is: If it isn't the publisher's business, then who should set the price for self-published books?

Self-published? Why, if you're buying from the author he can ask for any price he likes. And talking about Smashwords: if they suddenly decided to want to sell your book for less than your asking price (while covering the difference out of their own pocket), they should certainly be allowed to do that.

Conversely, why is it OK for Apple to set a flat cost of $1 per song?

Not the same thing. That's their business model, and they are getting publishers to agree to that. Agency pricing for music would mean "nobody can sell that .mp3 for less than amount X", or, more drastically, "this CD must not be sold for less than amount Y". No merchant in his right mind would accept that.

Ultimately the problem isn't really "manufacturers setting prices."

Yes it is. And if the various anti-trust authorities would get their heads out of their collective asses they'd do something about it. It doesn't affect us as much in Europe, but then only because we've always had government-mandated price-fixing for books anyway.

agency pricing = higher prices.

Perception? That's a reality. Have you kept an eye on Random House titles? Prices for all of them, without exception, rose significantly on the 1st of March. Care to speculate why that might be?

If agency pricing resulted in lower prices for new books, I'm convinced that no one would care in the slightest.

That's akin to saying "if shit tasted like chocolate nobody would mind eating it". Possibly true, but completely missing the point.

[rogue_librarian]

Originally Posted by Giggleton

One of the neat things about ebooks, and digital/digitally printed physical goods is that there does not need to be any more retailers.

Technically, no, but I don't see publishers cutting out the middle man completely any time soon.

It feels like you're talking about first sale rights? Or something similar?

I am talking about publishers setting the price: obviously they can ask what they want (or can get) from the bookseller, but they really mustn't be allowed to set "minimum retail prices", which is what this whole agency collusion amounts to.

Are companies like Amazon still ordering ebooks from publishers at set prices?

Yes, of course. I don't expect them to order fixed quantities, but publisher X says "this title costs you, I dunno, $3.95 if you sell at least 10,000 copies". Traditionally they were free to choose their own retail price (factoring in the various overheads, profit and what not.) Now it's become "... you must charge $12.99 and can keep 50%." I'm making these numbers up, but the principle remains.

Rather than just acting as a marketing facade?

Amazon sells book from practically all publishers. Whose facade would they be but their own?

[murraypaul]

Originally Posted by Kali Yuga

It usually takes about a year for the price changes to kick in, and it's often cued to paperback release timing.

Prices changed the moment RH switched to agency pricing, and they went up. That is the reality.

[Kali Yuga]

Originally Posted by rogue_librarian

So he "orders" them one by one, and? It's till not much of a difference: producer (publisher) -> en gros merchant (distributor) -> en detail merchant (reseller) -> customer (reader)....

It's a huge difference.

With paper, the retailer pays up front for the books, stores them, transports them. Each copy in inventory is, in a sense, a liability that needs to get out the door as quickly as possible, and carries financial risks for the retailer.

With digital, the retailer has not purchased an item that is gathering dust in a warehouse; the retailer is taking substantially less risk. They are basically only acting as a front door for the reader to have one convenient place to find and purchase their digital books.

It's a valuable process, and retailers ought to be compensated for it. But there is nothing inherent in that process which requires that the retailer, and only the retailer, has the right to set the price. Given how the status quo has also produced lots of inequities and anti-competitive behavior, that agency pricing levels the playing field for retailers, and is a better reflection of digital commerce, I really do not see the basis for proclaiming this is somehow "fundamentally wrong" for any reason other than that a) it's different and b) some, but not all, prices are higher.

Originally Posted by rogue_librarian

Self-published? Why, if you're buying from the author he can ask for any price he likes.

Why is that OK for an author, but wrong for a publisher?

After all, ultimately you're just adding one intermediary, to which the author has granted a lot of latitude in exchange for advances, royalties and resources (editing, marketing etc). It is still, essentially, the rights holder setting the price.

Originally Posted by rogue_librarian

And talking about Smashwords: if they suddenly decided to want to sell your book for less than your asking price (while covering the difference out of their own pocket), they should certainly be allowed to do that.

Why not? Letting the author/small pub set the price has been the modus operandi for those companies for years now.

If it's unacceptable for a large publisher to set the price, it ought to be unacceptable for a small publisher or individual. Clearly that is not the case, since no one howled about the "unfairness" of self- and small publishers setting prices, and lauded the control that these services offer the content creators and rights holder.

And again: Lots of digital goods get the exact same treatment. How can it be acceptable for a developer to set the price (regardless of their size), but it isn't for books?

Originally Posted by rogue_librarian

Perception? That's a reality. Have you kept an eye on Random House titles? Prices for all of them, without exception, rose significantly on the 1st of March. Care to speculate why that might be?

Because they believed that Amazon was eviscerating the value of their works.

The reason why I said partly based on reality is that if you look at agency priced books that are a year old, quite a few have gone down from an initially higher price of $14 to $10.

Originally Posted by rogue_librarian

That's akin to saying "if shit tasted like chocolate nobody would mind eating it". Possibly true, but completely missing the point.

No, it's an assertion that people are masking and/or rationalizing their price sensitivities behind a criticism of the process. Post hoc moralizing is a routine process.

Most people have no clue and do not care how the prices are set. They see a number, decide whether or not it's acceptable, and go from there.

[Kali Yuga]

Originally Posted by murraypaul

Prices changed the moment RH switched to agency pricing, and they went up. That is the reality.

Yes. And lots of prices go down about a year after the ebook release. That is also the reality.

[rogue_librarian]

Originally Posted by Kali Yuga

With paper, the retailer pays up front for the books, stores them, transports them.

Actually, no. Transport and storage, yes, but there's usually no upfront payment involved. Unsold books are routinely stripped of their covers and destroyed (only the covers are shipped back to the publisher as proof of destruction). Only then are accounts finally settled.

Either way I don't see how that's an argument in favor of allowing publishers to set binding retail prices for third parties.

It's a valuable process, and retailers ought to be compensated for it.

What kind of spurious argument is that? Nobody said they shouldn't.

... some, but not all, prices are higher.

Please give an example of agency pricing leading to lower cost for the consumer.

The reason why I said partly based on reality is that if you look at agency priced books that are a year old, quite a few have gone down from an initially higher price of $14 to $10.

And that's because of agency pricing, you say?

Most people have no clue and do not care how the prices are set.

Well, I do; both know and care, that is.

[MikeB1972]

Now, I thought that the reason the publishers gave for chosing agency pricing was because amazon etc were deep discounting the new release ebooks (making a loss on all new releases according to some reports). So the publishers - not wanting the general public to think that $9.99 was the going rate for new books - decided to change the rules a bit.

So, who here thinks that after amazon had as close to a monopoly as possible on ebooks (kindle = amazon only) thay would continue to make a loss on ebooks, they would either raise the price or force the publishers to lower their selling price.

So of course new release agency prices should be higher, it was the entire point of the exercise.

BTW : Baen, not just fixed agency price but an actual monopoly as you can't buy their ebooks anywhere other than webscriptions. Of course no one complains about this as we all like the price they set

In the UK (at least outside of amazon) the agency pricing has made pretty much sod all difference, yes there is no discount but the undiscounted price is about the smae amount lower than the RRP of non agency books as the discount from RRP - Well if you do a straight compare of Harper Collins to Random House anyway - I'm ignoring self published and small (and niche) publishers (So Agency Priced Jim Butcher books (Harper Collins) cost the same as non Agency Priced Terry Pratchet (Random House).
Bearing in mind that Random House are non agency in the UK at the moment.

[Giggleton]

Oh, I see the problem.

You guys think that publishers will be able to conduct business as usual in the coming years. This is of course not the case. GET OVER IT.

[rhadin]

I expect that this is the first step on the road to instituting agency pricing for pbooks, too. If we accept the rationale for agency pricing of ebooks (i.e., to prevent the devaluing of the content by selling at too low a price), then it stands to reason that pbooks are next. After all, what is being sold in pbooks is the content, not the covering, and supposedly there is no content difference between p- and ebook versions. Consequently, selling of the pbook for less than the ebook price devalues the pbook content.

Agency selling of pbooks could also solve some other problems that publishers face, particularly returns and overlarge print runs that result in remainders and a large secondary market.

[stonetools]

I agree with Kali Yuga. I frankly hate the big price rises,thaimmediately come with the agency priocing, but let's face it, none of us diligently track those prices and none of us really know what the "right price" should be -we just believe that the price we see looks too high right now. After agency pricing "the second Stig Laarson novel ("Hornet Nest?" ) jumped from 5.00 to 7.99. I would not have bought the book at either price. I'll wait till book drifts down to what I would consider a fair price-about 3.99. That may be about 2-3 years from now. If it doesn't get down there, I'll probably just get it at the library eventually-or maybe just see the movie.

[Kali Yuga]

Originally Posted by rogue_librarian

And that's because of agency pricing, you say?

Correct.

To start with, there never was a universal "all ebooks are $10" -- e.g. Sony and B&N routinely charged more than $10 before 2010. Amazon was the only big retailer that regularly hit that price point, and in at least some cases this was done as a loss leader with the specific intent of capturing a controlling market share.

By the way, before agency pricing plenty of people were mercilessly roasting Amazon for all sorts of slights and arrows. This included occasionally setting an ebook price higher than $10 (which provoked all sorts of demonization and vilification, not unlike the attitudes many express towards agency pricing publishers); and numerous attempts to dominate the ebook market and alleged / perceived anti-competitive behavior.

Long story short, yes there are lots of agency priced books that are about 1 year old that are $10. Since it's the publisher setting that price, then yes they're responsible for those price drops, in the same way they're responsible for setting the prices higher.

Do you really need me to explain how and why it's structured this way?

[Kali Yuga]

Originally Posted by rhadin

I expect that this is the first step on the road to instituting agency pricing for pbooks....

It is possible, but I expect paper sales will need to drop significantly before the retailers stomach that change. Perhaps if print on demand can replace most of a retailer's inventory, that might happen.

I'd also expect that one day in the not so distant future, publishers will stop returning books for 100% of the wholesale price. This policy is great for the retailers, but terrible for publishers, highly inefficient for everyone, and results in millions of unsold and subsequently destroyed books.

Perhaps we should take bets on which policy will go first.

[rogue_librarian]

Originally Posted by Kali Yuga

The reason why I said partly based on reality is that if you look at agency priced books that are a year old, quite a few have gone down from an initially higher price of $14 to $10.

Sorry, this is just too ridiculous to comment; so I won't. Thanks for playing.