Quote:
Originally Posted by DMcCunney
Two kinds of buyers buy hardcovers. Some want a durable long-term copy that they plan to keep. Others want the book now, and will pay a premium to get it. The latter group were the ones who provoked the "Agency model" imposed on Amazon by Simon and Schuster, Hachette, Macmillan et al. They were buying Kindle editions instead of current hardcover bestsellers, because they just wanted to read the book now, didn't care about format, and chose the cheaper alternative.
The publishers behind the Agency model were seeing lost revenue as people chose the cheaper alternative, and essentially forced Amazon to charge a higher price and remit more of the sale if it wanted to offer electronic editions at the same time as the hardcover, to compensate for the lost revenue in not selling the hardcover edition.
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Publishers weren't seeing lost revenue from people buying ebooks instead of hardbacks, as they were setting the ebook RRP the same as the hardback — they were getting the same in gross revenue for an ebook as a hardback, with the benefit of much lower marginal cost on ebooks.
Publishers were worried by Amazon's loss-leader selling of the ebooks at less than cost, expecting this to set public expectation for the price of ebooks, leading to Amazon being able to force them to set a lower RRP.
And then publishers cut their own throats by agreeing with Amazon to accept less money for ebooks, and agreeing to require the public to pay more. I can't think what they were doing - less money and fewer sales, all to turn new release ebooks from loss-leaders for Amazon into a revenue stream for Amazon.
[UPDATE: carld reminds me that the publishers (and/or Apple) were the driving force behind agency pricing, and that Amazon didn't want agency pricing. Apologies to Amazon.]
IMO publishers should have been looking for a way to make money from the ones who buy hardbacks to get the book NOW. The obvious way is to have released the ebook at a high price /before/ the hardback, dropping it when the hardback gets released.
Dare I say Baen again? Their eARCs cost $15. Two and a half times the cost of the ebook when released. Translating to 'big publisher' pricing:
One month before the hardback gets released, release the 'Advance eBook' for $24.99. When the hardback come in at $24.99, release the 'Finished eBook' for $9.99.