Agency pricing

[Andrew H.]

Originally Posted by vaughnmr

You might want to verify your assumptions. Amazon recently stated that one of Patterson's ebooks dropped 48% in sales after the cartel raised the price $2.00. I would say that IS being price sensitive.

*Overall,* sales tripled, e-books outsold paperbacks, and agency pricing didn't seem to have much effect. One example of people being price sensitive is meaningless when compared with the aggregate. (Although of course it may matter to James Patterson). That's how statistics work.

I

[vaughnmr]

Originally Posted by Andrew H.

*Overall,* sales tripled, e-books outsold paperbacks, and agency pricing didn't seem to have much effect. One example of people being price sensitive is meaningless when compared with the aggregate. (Although of course it may matter to James Patterson). That's how statistics work.

I

Here's the quote from Amazon:

"Unsurprisingly, when prices went up on agency-priced books, sales immediately shifted away from agency publishers and towards the rest of our store. In fact, since agency prices went into effect on some e-books in the US, unit sales of books priced under the agency model have slowed to nearly half the rate of growth of the rest of Kindle book sales."

[saoir]

Angst :: Brilliant piece of info .. Thanks !!

[saoir]

Originally Posted by AzB

This is, of course, one of the reasons the music industry had to deal with rampant piracy a dozen years ago. The price for cds was fixed ridiculously high. This makes piracy more attractive to those who would otherwise probably not bother with piracy.

You are absolutely right. The prices of CDs was totally outrageous, and still are !
In my local music shops they are still selling CDs of recent albums for $20 ! and a lot of middle rating CDs are still $13 or more.
This is why piracy of music is alive and well.

Sadly the publishing industry seems to have learnt nothing.

[AzB]

Originally Posted by Andrew H.

I don't think that's quite right. CDs weren't that expensive 10 years ago...

They were $13-15 15 years ago.

Az

[Andanzas]

Is anybody happy with the agency model? I mean, besides the big five.

[CleverClothe]

Originally Posted by Andrew H.

Itunes uses agency pricing and most people don't complain about the price.

Not true. Apple determines the price of songs, not the record companies. But there are some options now.

The app store uses an agency model, but it is also a controlled market.

[snipenekkid]

Originally Posted by Andrew H.

The problem is not agency pricing (which is neither asinine or anti-free market). The problem is the agency *price.*.

Itunes uses agency pricing and most people don't complain about the price. Ebay uses agency pricing, and likewise.

If the publishers had moved to agency pricing and sold new bestsellers for $5.99, everyone would be talking about how Amazon was ripping us off with its $9.99 prices, how it was right for the publisher to set the price, how we don't need middlemen, etc. The only problem with agency pricing is that, in this case, the publishers set the price at a price people believe to be too high.

But that has everything to do with the price, and little to do with the agency.

Ummmm, no, they most certainly do not. All eBay provides is a venue to conduct business. Each seller is responsible for the transaction. eBay sells NOTHING to the consumer they do sell space to the seller and that is the extent of their involvement other than some oversight to help ensure transactions are fairly safe and within the law.

Agency pricing has been well outlined in the thread but it does not apply to the eBay model it also does not apply to other venues such as a flea market/swap meet where the venue only provides a location for the independent sellers to conduct business. Sellers do not even sell under the license of the venue. I suppose it could be argued a consignment shop is a form of "agency pricing" but I don't think it fits what is being discussed here as in consignment shops the shop has latitude in what they actually sell the item for, they can bargain with potential buyers. Still a consignment shop is closer to the agency model being discussed in this thread than pure venues.

The Amazon Marketplace is also just a venue as well and the relationship between Marketplace sellers and Amazon are different legally than the relationship with the Agency 5 publishers.

Just wanted to make the distinction that eBay sells no products what-so-ever. Ebay also is not directly part of the transaction with the consumer unless there is a problem and then they attempt to moderate any issues. Amazon is a retailer who also has what amounts to a hybrid-marketplace with a mix of different types of sellers plus Amazon is a seller in the same marketplace.

[HamsterRage]

The thing that is anti-free market about it is that (almost) all of the big publishers worked together to impose the agency model. Essentially, they acted as a shared monopoly to fix the prices.

[Andrew H.]

Originally Posted by snipenekkid

Ummmm, no, they most certainly do not. All eBay provides is a venue to conduct business. Each seller is responsible for the transaction. eBay sells NOTHING to the consumer they do sell space to the seller and that is the extent of their involvement other than some oversight to help ensure transactions are fairly safe and within the law.

And all Amazon does with the agency books is act as a venue through which the publishers can sell their books at their price, in exchange for 30% of the sale price. It doesn't matter that Amazon acts as a retailer for other books.

Agency pricing has been well outlined in the thread but it does not apply to the eBay model it also does not apply to other venues such as a flea market/swap meet where the venue only provides a location for the independent sellers to conduct business. Sellers do not even sell under the license of the venue. I suppose it could be argued a consignment shop is a form of "agency pricing" but I don't think it fits what is being discussed here as in consignment shops the shop has latitude in what they actually sell the item for, they can bargain with potential buyers. Still a consignment shop is closer to the agency model being discussed in this thread than pure venues.

The Amazon Marketplace is also just a venue as well and the relationship between Marketplace sellers and Amazon are different legally than the relationship with the Agency 5 publishers.

These are all agency relationships. It *does not matter* that Amazon provides additional services for its 30%. And it certainly does not matter that they happen to sell other books as a retailer. Why would that matter?

Just wanted to make the distinction that eBay sells no products what-so-ever. Ebay also is not directly part of the transaction with the consumer unless there is a problem and then they attempt to moderate any issues. Amazon is a retailer who also has what amounts to a hybrid-marketplace with a mix of different types of sellers plus Amazon is a seller in the same marketplace.

True enough. But I don't see how it matters.

Originally Posted by HamsterRage

The thing that is anti-free market about it is that (almost) all of the big publishers worked together to impose the agency model. Essentially, they acted as a shared monopoly to fix the prices.

Those are two different and unrelated points. Most of the big publishers went to the agency model. Where is the evidence that they have unlawfully fixed prices?

[jbcohen]

Folks I was looking for a discussion of facts not an argument about the ethics of agency pricing. Facts just are wether you agree with them or not. I notice in the list of the Agency pricing companies that it does not involve some of the companies I deal with all of the time including a division of Harlequin Books called Golden Eagle. They are a company that makes and sells, frequently direct to their customers, a bunch of series books: Executioner, Super Bolan, Deathlands, Outlands, Stony Man and Rogue Angel. http://readgoldeagle.blogspot.com and http://mackbolan.com

[JSWolf]

One thing that was left out of the Agency model...

There can be no sales/discounts on agency eBooks.

Fictionwise had a business model that worked well. But since the agency nonsense, Fictionwise had to give that up.

[HamsterRage]

Originally Posted by Andrew H.

Those are two different and unrelated points. Most of the big publishers went to the agency model. Where is the evidence that they have unlawfully fixed prices?

Not at all unrelated. As I remember it, Amazon was happy setting its own prices in order to further its business objectives. The shared monopoly acted as one to force Amazon to conform to its business model, at which point Amazon lost all control of pricing.

I think it's pretty clear to everyone, that since the prices of books from all of the publishers instantly shot up by 30% under the "Agency Model" that the competitive element had been effectively removed from the pricing. It's also clear, over the fullness of time, that this has been detrimental to the consumer, since the prices haven't dropped and there are no sales and so, and so on.

The bit about "unlawfully" fixing prices is your own issue to deal with. I never commented on the lawfulness of the act. However, since you brought it up Andrew, I guess it's fair to assume that you found this action, if not technically illegal, at least immoral.

[Keryl Raist]

Originally Posted by Andanzas

Is anybody happy with the agency model? I mean, besides the big five.

I am. I've got one book out, so obviously I'm not a big player in the market.

However, I can set pretty much any price I like. I can find whatever number maximizes my sales/profit and price in accordance to that.

Amazon has the freedom to set their cut however they like and use that to leverage the publisher into a set of prices.

If you price from 2.99-9.99, you get 70% of the price.

If you price below 2.99 or above 9.99, you get 35%.

Now, when you see ebook prices higher than that and with a pbook at a price lower, you see publishers shooting themselves in the foot to try and keep pbooks alive.

As a side note: Technically a free market is any situation with near unlimited buyers and sellers, and no external body setting the price of any given item, thus allowing the "true price" of an item to be found. Ebay is probably as close as most of us will ever get to one.

Agency pricing, where the agent can set whatever cut he likes, and the producer can set any price he likes only stops being a free market if no one else can sell the good in question. So, for any given book, it's not a free market, but for books as a category, it is.

[Andrew H.]

Originally Posted by HamsterRage

Not at all unrelated. As I remember it, Amazon was happy setting its own prices in order to further its business objectives. The shared monopoly acted as one to force Amazon to conform to its business model, at which point Amazon lost all control of pricing.

There is no such thing as a "shared monopoly." That is an oxymoron.

The bit about "unlawfully" fixing prices is your own issue to deal with. I never commented on the lawfulness of the act. However, since you brought it up Andrew, I guess it's fair to assume that you found this action, if not technically illegal, at least immoral.

"Fixing" prices and "setting" prices mean the same thing. It is not illegal for a seller to fix the price of an object he is selling. In fact, doing so is fundamental to the free market.

Since you were complaining about the shared monopoly fixing prices, I assumed that you meant that there was some sort of problem with it. After all, people do use "price fixing" as a shorthand for a criminal violation of the antitrust act.

Or do you just mean that someone other than the seller should set the seller's prices?