Smashwords Moves to Agency Model

[DMcCunney]

Originally Posted by abookreader

I'd appreciate it if somebody could tell me why this would be a thing for authors to cheer over?

I've always been under the impression that Authors were ecstatic when they'd wake up one morning and find out that Amazon had discounted their book.

Since it's the authors who can set their desired prices, tell me why they shouldn't cheer over it?

You aren't exactly being forced to buy. If the price is higher than you want to pay, you can pass on the work. Authors will find out what price points work for them as sales rise or fall.

But meanwhile, you get what you're willing to pay for, and if you want good work, it tends to carry a higher price.
______
Dennis

[TallMomof2]

I don't support any company that requires their products to be sold at a fixed price with no discounting by the retailers allowed. Period.

[Kali Yuga]

What the Dickens are you people upset about?

Smashwords' best-selling book of this week has a sales rank of lower than 250,000 on Amazon. One of their most downloaded books is "A Letter To Justin Bieber's Hair." This is not an 800 pound gorilla pushing a bunch of retailers around.

[Fbone]

I read Mr Coker's blog post and came away confused.

First he applauds the retailers in having the expertise in book selling and pricing to best serve their customers. He even gave an example of a retailer promotion of 89c (originally 99c) and sales skyrocketed when other retailers matched esp Amazon. When the promotion ended sales dropped off a cliff. Sounds like the retailer and author did well.

Then he says that with author/publisher setting prices they will earn higher royalties. No more discounting. They will be able to value their work accordingly. And that this will be better for the author/publisher, retailer and customer.

So how will higher prices and fewer purchases help anyone?

[J. Strnad]

I priced Risen at $2.99, the lowest price I could set at Amazon and still get the 70% royalty rate. I set the same price at Smashwords.

Unfortunately, Kobobooks discounted the price 20%, to $2.39. That caused Amazon to lower the price to $2.39 and my royalty dropped to 35%.

So I decided to raise my Smashwords price to $3.75 so that when Kobo discounted it 20%, to $3, and Amazon matched the price, I'd still be in the 70% royalty area with Amazon (which makes up about 80% of my sales).

This news is fine with me. I don't think it's price gouging to charge $2.99 instead of sixty cents less, DRM-free, with no geographical restrictions. But at that price point, I do need the 70% royalty. Really, at less than $3/book, pricing and discounts are hardly a factor. Your time reading the book is more important than $3 vs. $2 + change.

The new structure FOR ME just means that I can set one price and forget it. It all comes out the same for the reader.

[JSWolf]

I don't see a problem for authors to set the price. I do see a problem for publishers to set the price.

[hgwlackey]

Originally Posted by lilac_jive

They can still give out coupon codes for use on Smashwords, and I get a book DRM free in the format of my choice.

If coupons codes can still be used on the books, not just on Smashwords but Kobo, too, where I do most of the emptying of my wallet, I'm good with this. That's the biggest complaint I have about the agency five, the restriction against coupons.

[J. Strnad]

If the Big Five priced their ebooks 20% less than the street price of the cheapest print edition, I would have no problem with the agency pricing model at all.

When a book goes out of print, the ebook could enter the under-$5 range and compete with used books. That's a market opportunity I don't see the big publishers taking advantage of.

[jhempel24]

Originally Posted by J. Strnad

I priced Risen at $2.99, the lowest price I could set at Amazon and still get the 70% royalty rate. I set the same price at Smashwords.

Unfortunately, Kobobooks discounted the price 20%, to $2.39. That caused Amazon to lower the price to $2.39 and my royalty dropped to 35%.

So I decided to raise my Smashwords price to $3.75 so that when Kobo discounted it 20%, to $3, and Amazon matched the price, I'd still be in the 70% royalty area with Amazon (which makes up about 80% of my sales).

This news is fine with me. I don't think it's price gouging to charge $2.99 instead of sixty cents less, DRM-free, with no geographical restrictions. But at that price point, I do need the 70% royalty. Really, at less than $3/book, pricing and discounts are hardly a factor. Your time reading the book is more important than $3 vs. $2 + change.

The new structure FOR ME just means that I can set one price and forget it. It all comes out the same for the reader.

I think it's a great thing with independent publishers and authors such as yourself, what you have said makes perfect since to me!

[DMcCunney]

Originally Posted by J. Strnad

If the Big Five priced their ebooks 20% less than the street price of the cheapest print edition, I would have no problem with the agency pricing model at all.

What about the case where the ebook is released simultaneously with the hardcover?

When a book goes out of print, the ebook could enter the under-$5 range and compete with used books. That's a market opportunity I don't see the big publishers taking advantage of.

How could they? When the book goes out of print, the author (or author's agent) can formally request that the rights revert. They can then attempt to sell it to another publisher, or the author may choose to self-publish in POD and ebook format.

Ebooks and Print On Demand have caused a rethinking of just what "out of print" means. Before those, when a publisher decided to stop selling a book, it was declared out of print, and unsold copies either wound up on remainder tables (hardcovers) or were pulped.

With ebooks and Print On Demand, current contracts specify a level of sales for both, and if the sales drop below that level, it's considered evidence the publisher is no longer actively trying to sell the book and the book is considered out of print. If it weren't for that, the publisher could theoretically hold onto the rights forever, because ebook and POD editions would be available. I don't think that's something any author would be happy about.

An author may choose not to ask that the rights revert, and let the publisher do something like that. I'd be reluctant to go for it, as an author or a publisher. Given that most buyers routinely wait for the PB instead of buying the hardcover to get a lower price, what's to prevent them from waiting even longer for the price to drop to the point you specify?

Hard for the author to make any money, or for the publisher to remain in business under those circumstances...
______
Dennis

[bgalbrecht]

Originally Posted by DMcCunney

An author may choose not to ask that the rights revert, and let the publisher do something like that. I'd be reluctant to go for it, as an author or a publisher. Given that most buyers routinely wait for the PB instead of buying the hardcover to get a lower price, what's to prevent them from waiting even longer for the price to drop to the point you specify?

Hard for the author to make any money, or for the publisher to remain in business under those circumstances...

The buyers have been doing this in the DTB market since the first used bookstore opened. The cost of DTBs is only partially based on cost of production, the people buying new hardcovers do it because they can't/won't wait (or for gifts), those who want new at a cheaper price wait for the paperback, and those who want it even cheaper, wait for the used paperback (or hardcover) to drop to half paperback cover price in the used bookstores, or next to nothing at yard sales.

What was suggested was that when the number of sales drops to the level where in the DTB world it would be considered out of print, the price should drop to a level corresponding to used paperbacks. The author and the publisher would get the proceeds instead of the used bookstore. Everyone's happy except the used bookstore owner. In particular, the author and publisher keep getting some revenue, where they would have received nothing once the book dropped out of print.

The main concern for the author and publisher is that if older works never go out of print, they're always in competition with new books. One could argue that this is a good thing for earlier books in a series, because if they never go out of print as an ebook, then readers will not be as reluctant to buy the latest book of a series because they can buy the predecessors and catch up.

[abookreader]

Originally Posted by DMcCunney

Since it's the authors who can set their desired prices, tell me why they shouldn't cheer over it?

You aren't exactly being forced to buy. If the price is higher than you want to pay, you can pass on the work. Authors will find out what price points work for them as sales rise or fall.

But meanwhile, you get what you're willing to pay for, and if you want good work, it tends to carry a higher price.
______
Dennis

I didn't say they shouldn't. The few authors I'm aware of that have had Amazon discount their books seemed to be thrilled when it happened. I asked if somebody could explain the opposing POV to me, since I'm not an author, am not fully aware of the changing commission levels and all the other details.

I was asking for information, not expressing an opinion.

[kacir]

Originally Posted by abookreader

I'd appreciate it if somebody could tell me why this would be a thing for authors to cheer over?

I've always been under the impression that Authors were ecstatic when they'd wake up one morning and find out that Amazon had discounted their book.

Well, it depends.

If you have agreement with Amazon, that gives you 70% of the price, the agreement has a catch or two.
Like, you get 70% of sale price and not list price.
Another nice catch is, that when somebody discounts your book, Amazon matches the price.

So.
You publish your book on Amazon. List price $1.99.
For each book sold you get 0.7x$1.99. Nice and dandy.
You also publish on Smashwords, with the same price $1.99
Then comes third party, that gets the books from Smashwords and discounts your book to $0.0
Amazon matches the price, and your "sales" skyrocket. Except now you make 0.7x$0.00 on each sale.
You - the author - rush to Amazon and try to change the contract to 35% of the List price. No problem here, 0.35x$1.99 is significantly more than 0.7x$0.0 and you make the difference up on volume. BUT! (You knew there would be a but, didn't you?) But, the process takes 2 days or more.

[tompe]

Notice that the cause of the "price fixing" in this case is Amazon's rules.

[abookreader]

Notice that the cause of the "price fixing" in this case is Amazon's rules.

True. And I do wonder about the long term effect since the Agency Pricing agreement doesn't extend to Amazon from what I can tell.

So now Amazon can clearly undercut all the other retailers at will, and from what I'm reading still reduce commission structure - correct?