MobileRead Forums - View Single Post - Could Google Editions break the agency model?

Bookbee · 06-07-2010, 12:45 AM

Hey there,

Anyone want to hazard a guess as to how Google Editions will work? With publishers selling their books (as Google Editions) on their sites, in competition with Google selling the same books through Google sites??

In Australia, Google has started hiring ahead of Google Editions, but if the big G goes with the agency model, I can't see how it will work. Here's my best guess (from Bookbee.com.au): =>

It was widely reported that Google’s manager for strategic partner development Chris Palma announced that Google Editions – the search giant’s foray into browser-based ebooks – will be launching in “late June or July” this year. Estimates as to how many titles they will launch with have been between 500,000 and 2 million (paid) mark, with another 2 million free titles on top of that.

The service is touted by Google as being a more “open ecosystem” than that of Apple’s iBooks, and will allow publishers to sell their own books on their websites using Google’s software platform. It will also enable third parties – i.e. independent bookshops – to use the Google platform to sell books.

It’s a serious foray into a seriously growing market – and they’re hiring in Australia (see below), presumably to get bodies on the ground to do deals with all the local publishers, as REDgroup has/is doing.

Sadly, even with all their web clout, it’s likely Google will adopt the broken “agency” pricing model, in my view an anti-competitive pricing structure that allows publishers to fix book prices across all web retailers.

Interestingly, the Google Editions platform may be where the “agency model” is most easily shown to be flawed and anti-competitive.

Google says the pricing structure will work in this way:

1. When a book is sold by Google, publishers get 63%, Google keeps 37%.

2. When a book is sold by a third-party site, publishers gets 45%, the third party gets 55%, minus a small fee (5%?) to Google.

3. No details are available on what the breakdown is if a publisher sells their own Google Edition on their site. Presumably, they would get upwards of 80%. That’s just my guess, but with Google doing little of the heavy lifting in this scenario, the cut would be somewhere between the 63% of example 1 and the 95% of example 2 (if you assume the publisher and third party are one and the same).

So how would this work in the real world? Here’s an example (all prices in fictitious US bucks).

Barnes & Schuster (a very underrated pretend publisher) fixes the price of Bestseller2010 at $10.

You buy it from Google – publisher gets $6.30.

You buy it from Bookbee.com.au (or other third party) – publisher gets $4.50.

You buy it from Barnes&Schuster.com – publisher gets, say, $8-9 (see example 3).

In effect, publishers are going to want to sell through their own sites to keep a bigger slice of the sale, but they’re virtually competing with Google for sales. And with Google’s clout (and search-based sales channel via Google Book Search), I back Google to win that one.

So what can the publishers do to attract more sales? They can’t lower prices, can they? If they could, they could offer Bestseller2010 for, say $9 and still keep between $7.20-$8.10 (an 80-90% cut, from example 3). So they get lots more sales (the book is cheaper) and they still keep more than they’d get if Google sold the book.

But they can’t lower the book’s price, can they? Remember the agency model? And if they do, doesn’t the agency model break down?

We’re entering strange waters here, folks…

What do you think about this brave, crazy pricing system? Has anyone considered the consumer at any point?

[quoted]
Via Bookseller+Publisher

Mark Tanner has been appointed to the newly created position of strategic partner development manager for Google Books in Australia and New Zealand.

Tanner is currently the Australian manager of publishing services company ReadHowYouWant.

The specifics of his new role aren’t yet clear, but Tanner was able to tell the Weekly Book Newsletter that he would be acting as ‘Google Books’ man on the ground for the region’, backed up by ‘a big team from Google internationally’ and that he will be speaking both with local publishers about making their content available on Google Books and to retailers and resellers about selling Google’s offering to consumers.

Tanner will be leaving ReadHowYouWant on Thursday 17 June and starting with Google on Monday 21 June. ReadHowYouWant will announce his replacement shortly.

06-07-2010, 12:45 AM	#1
Bookbee Member Posts: 11 Karma: 10 Join Date: Oct 2009 Device: jasondavis	Could Google Editions break the agency model? Hey there, Anyone want to hazard a guess as to how Google Editions will work? With publishers selling their books (as Google Editions) on their sites, in competition with Google selling the same books through Google sites?? In Australia, Google has started hiring ahead of Google Editions, but if the big G goes with the agency model, I can't see how it will work. Here's my best guess (from Bookbee.com.au): => It was widely reported that Google’s manager for strategic partner development Chris Palma announced that Google Editions – the search giant’s foray into browser-based ebooks – will be launching in “late June or July” this year. Estimates as to how many titles they will launch with have been between 500,000 and 2 million (paid) mark, with another 2 million free titles on top of that. The service is touted by Google as being a more “open ecosystem” than that of Apple’s iBooks, and will allow publishers to sell their own books on their websites using Google’s software platform. It will also enable third parties – i.e. independent bookshops – to use the Google platform to sell books. It’s a serious foray into a seriously growing market – and they’re hiring in Australia (see below), presumably to get bodies on the ground to do deals with all the local publishers, as REDgroup has/is doing. Sadly, even with all their web clout, it’s likely Google will adopt the broken “agency” pricing model, in my view an anti-competitive pricing structure that allows publishers to fix book prices across all web retailers. Interestingly, the Google Editions platform may be where the “agency model” is most easily shown to be flawed and anti-competitive. Google says the pricing structure will work in this way: 1. When a book is sold by Google, publishers get 63%, Google keeps 37%. 2. When a book is sold by a third-party site, publishers gets 45%, the third party gets 55%, minus a small fee (5%?) to Google. 3. No details are available on what the breakdown is if a publisher sells their own Google Edition on their site. Presumably, they would get upwards of 80%. That’s just my guess, but with Google doing little of the heavy lifting in this scenario, the cut would be somewhere between the 63% of example 1 and the 95% of example 2 (if you assume the publisher and third party are one and the same). So how would this work in the real world? Here’s an example (all prices in fictitious US bucks). Barnes & Schuster (a very underrated pretend publisher) fixes the price of Bestseller2010 at $10. You buy it from Google – publisher gets $6.30. You buy it from Bookbee.com.au (or other third party) – publisher gets $4.50. You buy it from Barnes&Schuster.com – publisher gets, say, $8-9 (see example 3). In effect, publishers are going to want to sell through their own sites to keep a bigger slice of the sale, but they’re virtually competing with Google for sales. And with Google’s clout (and search-based sales channel via Google Book Search), I back Google to win that one. So what can the publishers do to attract more sales? They can’t lower prices, can they? If they could, they could offer Bestseller2010 for, say $9 and still keep between $7.20-$8.10 (an 80-90% cut, from example 3). So they get lots more sales (the book is cheaper) and they still keep more than they’d get if Google sold the book. But they can’t lower the book’s price, can they? Remember the agency model? And if they do, doesn’t the agency model break down? We’re entering strange waters here, folks… What do you think about this brave, crazy pricing system? Has anyone considered the consumer at any point? [quoted] Via Bookseller+Publisher Mark Tanner has been appointed to the newly created position of strategic partner development manager for Google Books in Australia and New Zealand. Tanner is currently the Australian manager of publishing services company ReadHowYouWant. The specifics of his new role aren’t yet clear, but Tanner was able to tell the Weekly Book Newsletter that he would be acting as ‘Google Books’ man on the ground for the region’, backed up by ‘a big team from Google internationally’ and that he will be speaking both with local publishers about making their content available on Google Books and to retailers and resellers about selling Google’s offering to consumers. Tanner will be leaving ReadHowYouWant on Thursday 17 June and starting with Google on Monday 21 June. ReadHowYouWant will announce his replacement shortly.