There is no doubt that the Settling Publishers gain an advantage vis-a-vis RH-while the settlement lasts. However, the long term effects of giving Amazon a monopsonistic hold on the market are right where they have always been . Steve Jobs was right: eventually, Amazon is going to say: Give us your books at 70% of $9.90 =$6.93 or we'll take our business elsewhere." And $6.93 is a lot less than $9.93.
Now consumer advocates tend to ignore the possibility of this happening because they don't understand (or want to understand) the problem this poses for publishers, but publishers would be incompetent not to want to guard against such a scenario. They guard against such a scenario by :
1. Encouraging as broad and diverse a group of retailers as possible ( that's the intent of agency pricing).
2. Establishing their own sales channels . In the UK, RH is investing in Anobii
LINK Anobii isn't off the ground yet,but its CEO is on record as promoting direct marketing to consumers from the publisher.Anobii sets out their vision
HERE:
Quote:
In a similar way, Pottermore transformed Amazon from a fierce ebook retailer into a tame ebook shop window. Pottermore uses Amazon (and all other ebook retailers online) as an affiliate which attracts customers to their ebook store in exchange for a finder’s fee. Thus, Pottermore gains direct access to the end user details (alongside Amazon as both companies know that the user has purchased the ebook).
This ‘charm’ is really transformative as it really shifts the power from the retailer to the publisher. The publisher gains are significant:
•they gain direct access to the user/reader for marketing purposes
•they have total and final control on the price of their ebooks as they are the only place where the ebooks can be purchased (they own the ‘check-out gateway’)
•this approach does not affect the retailers as they could still earn healthy ‘introduction fees’ and also retain data on the user (they know who they are sending to the publisher and if the transaction has taken place)
•the publisher controls how much they pay the retailer who has procured the customer in a sort of ‘extreme agency’ model without the legal implications of the current agency structure (this is an affiliate scheme!)
•they build a customer base which is going to be extremely valuable when trying to attract new authors (this also helps answering the difficult question of what’s the role of a publisher in the future)
•they gather invaluable user data for statistics and future planning
These are all pretty valuable points but the most important one is that by gaining control of the relationship with the people who read their ebooks, publishers are going to be in a much stronger position in the future. The two biggest risks for publishers in the future are the lack of control on how much their ebooks will cost and the inability to attract authors.
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So what will RH do? They MAY go back to wholesale-short term. BUt in my mind, there is no question they'll go back to agency pricing and direct sales-long term. They'd be short-sighted idiots not to.