Death of the agency model?

[DiapDealer]

The article goes on to say that Apple might leave the ebook business altogether if agency pricing goes.

They might as well. It's not like iBooks was working out as well as they'd hoped anyway.

[JSWolf]

It means maybe the death of iBooks and Apple's ePub variant.

[Andrew H.]

Originally Posted by DiapDealer

They might as well. It's not like iBooks was working out as well as they'd hoped anyway.

I like Apple, but one of the (many) reasons I've bought my e-books in Kindle format is because I never felt 100% confident that Apple would stay in the book business.

[Fbone]

The two publishers that are refusing to settle are Pearson and Holtzbrinck (Penguin and Macmillan) along with Apple.

The "cooling off" period as explained in one article is a period of time before the resumption of agency pricing can proceed.

[scrapking]

Originally Posted by BuddyBoy

And, unfortunately for folks like you and me, there are ebook shoppers who are willing to pay higher prices, enough to maximize the profit of the supply meets demand curve at a higher price than we'd like to pay.

I guess I'm part of the problem then. I'm against agency pricing, but in favour of paying what a book is worth. If I'm loving a series and the next book in the series debuts at $13.99 for the e-book, I'm thrilled to pay that. I also buy indie books at $0.99. It's not about the cost itself, it's about what I perceive the value to be. I'll pay nearly any asking price as long as I think I'm getting value.

The world has become obsessed with low prices. Wal-Mart's slogan recently has been "Save money, live better." Yet, people I know who shop at Wal-Mart replace their products more frequently than people who buy from specialty shops that offer a broader range of quality, and better advice to their customers than any box store. The Wal-Mart customers paid a lower price, but did they get better value in the long term? In most cases, no.

I'm not against paying for what I want, and don't begrudge authors and publishers making money off of giving me what I want. If they go too high I won't buy, I won't pay any price. But why should I complain about, for example, $8.99 for a book I'll be enjoying for weeks when a movie ticket can cost that (or more) for a less than two hour experience? How about the $60 video game that's about 8-10 hours long, how's that compare to the time it takes to read an average length novel? $8.99 for an e-book from a beloved author is a bargain compared to most forms of pay-as-you-go entertainment.

And I must re-iterate: I'm against agency pricing, and part of that is *because* I feel that authors deserve to be paid what the market determines their writing is worth (not an arbitrary amount that the publisher tries to force all books to be sold at).

[stonetools]

Originally Posted by Andrew H.

I like Apple, but one of the (many) reasons I've bought my e-books in Kindle format is because I never felt 100% confident that Apple would stay in the book business.

Actually, I think its likely that any settlement awill carve out exceptions that will enable Apple to remain in the ebook retail market. More anon.

[Elfwreck]

Originally Posted by Andrew H.

I like Apple, but one of the (many) reasons I've bought my e-books in Kindle format is because I never felt 100% confident that Apple would stay in the book business.

Apple's failure in the ebook business has nothing to do with pricing and everything to do with access: when the only people who can even *look at the catalog* are those who've bought a $500 device, the market is too small to be sustainable. Sony at least puts their storefront online; you can't buy without their program (not, notably, their device), but you can see what they have.

[HarryT]

Originally Posted by Elfwreck

Apple's failure in the ebook business has nothing to do with pricing and everything to do with access: when the only people who can even *look at the catalog* are those who've bought a $500 device, the market is too small to be sustainable. Sony at least puts their storefront online; you can't buy without their program (not, notably, their device), but you can see what they have.

That's not entirely true, Elfwreck. You can use iBooks on an iPod Touch, which certainly doesn't cost $500.

I completely agree with the thrust of your argument, however, which is that Apple are shooting themselves in the foot by making the iBooks environment so "closed". That's why I read on my iPad - but with the Kindle App.

[John F]

Originally Posted by Elfwreck

.. when the only people who can even *look at the catalog* are those who've bought a $500 device, ...

You can also use iTunes on a PC (to look at the catalog).

[Elfwreck]

Originally Posted by HarryT

That's not entirely true, Elfwreck. You can use iBooks on an iPod Touch, which certainly doesn't cost $500.

Sorry, and thanks for the correction. I knew that when the iBookstore opened, it was iPad only; hadn't realized they'd expanded it to other iThings. (Is it accessible by PCs, or only on mobile iThings?)

I completely agree with the thrust of your argument, however, which is that Apple are shooting themselves in the foot by making the iBooks environment so "closed". That's why I read on my iPad - but with the Kindle App.

It's interesting watching Apple repeat the same mistakes that made first several waves of ebook readers flounder. The whole "we will sell devices which are tied to our ebook store, so our customers will buy books only from us, and read only books they've bought from us..." we've got over ten years' worth of attempts to pull that off, and none of them have worked.

To be fair, "we will make an ebook reader so anyone can read books on it, and not tie it to a store!" has also not been overwhelmingly successful, but it hasn't failed as badly as the attempted lock-in devices. Access to the DRM usable by most of the stores has made it at least a feasible business plan.

[stonetools]

Originally Posted by Elfwreck

Apple's failure in the ebook business has nothing to do with pricing and everything to do with access: when the only people who can even *look at the catalog* are those who've bought a $500 device, the market is too small to be sustainable. Sony at least puts their storefront online; you can't buy without their program (not, notably, their device), but you can see what they have.

Apple's business model is that iBooks is a service they offer people who buy their hardware. Apple isn't all that concerned about market share: their goal is that the buyers of their hardware are satisfied with iBooks.
That said, there are a lot of their customers who AREN'T satisfied with iBooks and are going with Amazon.
I think Apple's long term plan is to complete on quality, innovation, and user experience rather than price or breadth of catalog. So far its early days , but time will tell.

[ProfCrash]

Apples store was doomed to failure because you can use Apps for all the other stores. So if you have a Kindle and an IPad you have no incentive to buy from Apple. Or a Nook or a Kobo.

[stonetools]

Originally Posted by ProfCrash

Apples store was doomed to failure because you can use Apps for all the other stores. So if you have a Kindle and an IPad you have no incentive to buy from Apple. Or a Nook or a Kobo.

Seems to me you are arguing that the road to success for Apple would have been closing their platform to other bookstores. That's heresy round these parts.

[ProfCrash]

Worked for Amazon didn't it?

I am not in favor of that, I am just saying that most e-book readers had no incentive to use IBooks. Apple has made it clear that they have no real interest in the e-book market. In that way they are very similar to Sony. They both have a bookstore but neither are particularly engaging or complete. They are both more interested in selling the hardware then the books. (shrugs)

[stonetools]

THe best report I havev seen on the settlement negotiations has been at WIRED.



LINK

The key terms of the settlement are:

1.Eliminating the “most favored nation” clause between Apple and the five publishers, which guarantees that the publishers cannot sell e-books at other retailers at prices lower than those offered in Apple’s bookstore;
2.Temporarily pausing or modifying agency relationships between publishers and retailers. The WSJ’s sources call this a “cooling-off period.” The intent would be to ensure that any new agreements would be negotiated at arm’s length, unlike the initial simultaneous move to agency and price maintenance in 2010 — which raised concerns that the publishers illegally coordinated their actions.

You all should RTWT.

My conclusions:

1. The agency model will survive . All the DOJ wants that the publishers revert TEMPORARILY ton the wholesale model . After six months or a year, they are free to return to the agency model.
2. Apple opposes these terms right now because:

First, Apple does not want to be a wholesale purchaser of e-books, even for six months or a year. It doesn’t want to price e-books, and it doesn’t want to bear the risk that e-books don’t sell. It’s not equipped for that.

3. Eliminating the MFN clause is the most likely result of the settlement-despite the fact that MFN clauses are legal and commonplace.