Is Agency Pricing Coming to UK?

[astra]

Some have enough means that spending $10 on a hundred books per year is not an issue. However, most people don't have so much spare cash.

[HarryT]

Originally Posted by astra

Some have enough means that spending $10 on a hundred books per year is not an issue. However, most people don't have so much spare cash.

I'm not actually sure that's true, astra. 100x$10 is $1000 a year - about £640 a year, or about £12 a week. I know lots of people who spend much more than that much on their interests, even if it's just spending an evening at the pub (during the course of which you'd almost certainly spend more than £12). Reading is actually a relatively cheap hobby compared to many.

We are fortunate that, at present, many eBooks can be bought for a lot less than $10, and I'd be sorry to see that change.

[Fbone]

If the publishers in the US werent happy with Amazon's $9.99 bestseller pricing, they wouldnt be happy with anything less than £6 [+VAT] in the UK.

[HarryT]

Originally Posted by Fbone

If the publishers in the US werent happy with Amazon's $9.99 bestseller pricing, they wouldnt be happy with anything less than £6 in the UK.

The article quoted said that publishers appeared to have accepted that eBooks should be priced about 25% below paperbacks. The normal price for a paperback in the UK is around £7, so that would suggest a price of about £5.25 for an eBook. Amazon UK seem to charge on average about £4-£4.50 for the typical eBook, so that respresents a modest, but not catastrophic, increase.

[Fbone]

Originally Posted by geertm

Saw this mentioned on Teleread.
According to The Bookseller Hachette UK will start agency pricing on Monday September 20.
http://www.thebookseller.com/news/12...om-monday.html

I hope that Amazon has learned from the situation in the US and will not cave in to the publishers this time. Otherwise probably all the big publishers in the UK will be using the agency model in the near future.

I wonder if this kind of price fixing is something the EU can do something about?

EDIT: I wonder if this is why the new WH Smith store does no longer sell e-books outside the UK. Do they already know that agency pricing is coming? And do the agency publishers not permit selling outside the UK?

Very interesting. A test would be to compare Hachette ebook prices today with those listed on Monday.

[Fbone]

Originally Posted by HarryT

The article quoted said that publishers appeared to have accepted that eBooks should be priced about 25% below paperbacks. The normal price for a paperback in the UK is around £7, so that would suggest a price of about £5.25 for an eBook. Amazon UK seem to charge on average about £4-£4.50 for the typical eBook, so that respresents a modest, but not catastrophic, increase.

Are you accounting for VAT on the ebook?

[HarryT]

No, but we don't know whether the publishers are either .

We'll just have to wait and see what happens. As I said earlier (it may have been in a different thread), British law is very intolerant of anything that smacks of price fixing, and the previous book pricing cartel - the "Net Book Agreement" - was ruled to be illegal in the 1990s, so I'd be surprised to see full-blown "agency" pricing in the UK as exists in the US. The publishers know that it would be pretty certain to be judged an anti-competitive practice and prohibited.

[Fbone]

I posted this on the other thread. Reposted for continuity.

Are UK retailers permitted to sell merchandise below wholesale costs? According to the article this is what Amazon is doing. They are losing money on the sale of certain items.

This is not legal in the US. Anti-competitive.

[brecklundin]

Originally Posted by Fbone

I posted this on the other thread. Reposted for continuity.

Are UK retailers permitted to sell merchandise below wholesale costs? According to the article this is what Amazon is doing. They are losing money on the sale of certain items.

This is not legal in the US. Anti-competitive.

that is not in any fashion true...as a retailer I can sell my mechandise at ANY price I deem it will bring. Loss leaders are a common practice...

[murraypaul]

Originally Posted by HarryT

Yes, I completely agree with you there. I'm very happy with the current typical £3-£5 price that Amazon UK are charging for eBooks. I think that's a fair price for everybody.

To follow up on the casual price thing, I was browsing Amazon looking to see if there were any new free releases I was interested in, and one of the books they were highlighting at the side of the page was Wolf Hall, by Hilary Mantel. The brief write-up sounded interesting, so I went to the page. The fuller review sounded right up my street, and at £2.86 it was an instant purchase. At £5 it would have been a sample, at £10 I wouldn't have bothered at all.

This also highlights why I think Amazon will dominate the eBook selling business for a while even leaving aside device/format issues, they are just better at selling books than anyone else. They consistently put books in front of me that interest me enough to click-through and find out more. They manage to sell me things I didn't realise I wanted, which is the hallmark of a successful retailer. They actually manage to get close to replicating the experience of just browsing a real book store, not really knowing what you are looking for. By comparison the other book sites/apps (especially the Apple one) fail miserably.

[Fbone]

Originally Posted by brecklundin

that is not in any fashion true...as a retailer I can sell my mechandise at ANY price I deem it will bring. Loss leaders are a common practice...

In my state it's not legal. Perhaps, I am confusing manufacturing costs with wholesale. I thought it was referred to as "dumping."

One example was a gas station as a promotion sold regular gas a few cents under wholesale expecting to make it up with premium gas and convenience store items. The state authorities came and forced him to raise his price.

[speakingtohe]

Harry T has made a number of salient points. As have others.

I would like to mention one other (hope I am not duplicating)

In order for a publisher to carry a new author or a nontraditional type of book that might not sell, they have to do better than break even or make a token profit on some other works.

And as Harry T pointed out an ebook sale usually means a lost pbook sale.

[SensualPoet]

Certainly in my household, an ebook sale does NOT cannibalize a pbook sale. In fact, owning an ereader has actually brought the household back to book-buying. So each sale is a net gain for the publisher.

Second, while it's true ebook prices are often the same or higher than pbook prices, we are comparing actual ebook prices with highly discounted online vendor pbooks -- not the prices you see in the bricks-and-mortar store. As a general rule, ebooks are significantly cheaper than what I'd pay in my local bricks and mortar bookshop.

An example I love to cite: Steig Larsson's The Girl with the Dragon Tattoo is $13.50 from Penguin Canada and that's the price at the till at my local Chapters/Indigo. This is a flimsy mass market edition, not a handsome, better bound trade edition. Yet Penguin Canada will sell me the same novel at $7.99 from kobobooks and $7.65 from Amazon -- Penguin Canada editions each. (The hard cover is $32.)

Penguin is one of the "agency five" and both Kobo and Amazon "did the deal". I am simply not seeing the impact except possibly in a handful of just released titles which the publishers believe they can sell at $12.99 and higher. They're wrong: I am simply redeploying my funds to something cheaper in the meantime and will buy those titles later when they are more reasonable and assuming I am still interested.

[FizzyWater]

Originally Posted by speakingtohe

And as Harry T pointed out an ebook sale usually means a lost pbook sale.

This is true for me. If I could never buy another paper book, I'd be a happy person!

[fjtorres]

Originally Posted by Fbone

In my state it's not legal. Perhaps, I am confusing manufacturing costs with wholesale. I thought it was referred to as "dumping."

One example was a gas station as a promotion sold regular gas a few cents under wholesale expecting to make it up with premium gas and convenience store items. The state authorities came and forced him to raise his price.

Some governments feel the need to regulate the pricing of "essential" products. It is not universal even in those states.

"Dumping" is the sale of products below manufacturing costs across national boundaries. It is only deemed illegal if it harms local producers.

Otherwise, selling below cost happens all the time and is called "clearance", "fire" sales, or just plain "doorbusters". Check the thread on Sony reader pricing at Target for a perfect example.

A better example of what Amazon does can be found in supermarket weekly fliers: they are loaded with loss-leader sale items intended to draw in traffic and customers that will then buy other, regular-priced, items. It is called "basket pricing" because, while the supermarket may lose money on the sale of the discounted items, they make it back on the rest of the purchases in the shopping basket. Perfectly legal and standard practice in volume-based retailing.

Proponents/apologists for agency pricing just like to pretend that books are a special product, immune from normal laws of economics like price elasticity or even from competition. Never mind that the Price-Fix Five only control a minority fraction if the total ebook market. Time will tell just how wrong they are, but for now their small- and mid-size competitors (and Random House) are thrilled at the nice pricing umbrella the scheme is providing them and the market share the Price Fixers are donating to them.