Thread: Amazon says 'will have to capitulate and accept Macmillan's terms'
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Old 02-01-2010, 11:43 AM   #104
Pardoz
Which side are you on?
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Join Date: Dec 2009
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Quote:
Originally Posted by HarryT View Post
Could you explain what "agency pricing" is, and why it's bad?
Short answer: it's the Net Book Agreement risen from the dead and coming to eat your braaaaaaains. Or at least your waaaaaaaallet.

Longer answer: Under the current model, (most) e-bookstores are retail outlets. They buy books from a wholesale source (could be the publisher, could be an intermediate distributor), generally paying around half the publisher's suggested retail price. Having bought the book, they then turn around and offer to sell it to the public for whatever price they like. One retailer may decide to sell the book at a low mark-up, counting on volume of sales to make a profit; another may opt to sell fewer books at a higher mark-up; a third may even decide to sell the books below cost, in order to attract custom to their store, hoping people who come for the $2 Steven King novel will add a bunch of other, higher-profit, items to their shopping cart.

Under an agency model the bookstore is no longer a retail outlet - they're an 'agent', paid to distribute the publisher's product. The publisher decides what the retail price is going to be, instructs its agents to sell the book for that price, then pays them a percentage of that price (in the agreement at hand 30%) for each book sold.

Basically it's a pissing match about who gets to control prices - Amazon or Macmillan. Whether or not it's a bad thing depends on how you feel about paying $20 for an electronic copy of a book that's been available for sale as a $7 paperback for ten years.
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