12-19-2012, 05:37 AM | #1 | |
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Publishers Now Offering Agency Pricing 2.0 (big win for Publishers)
http://www.publishersweekly.com/pw/p...-agency-2.html
Quote:
So it is not wholesale anymore but agency pricing without the "most favored clause" that kept retailers profit margin at 30%. Example: Publishers set the price at $15. Retailers will get 30% of this in commission or $4.5 if they choose to offer the book at Publisher Agency Price. Retailers can discount it as much as they like as long as cumulative maximum discount won't go below cost (overall catalog). Publisher set the ebook price at $15. Retailer Sell it at $15 = 30% profit Sell it at $13.5 = 20% profit Sell it at $12 = 10% profit Sell it at $10.5 = 0% profit (at cost) Sell it at $9 = 10% loss Look like this is a big win for publishers since they get to set the price and get 70% of whatever price they set. And with prices being lower, they will sell even more. No wonder MacMillan is joining in with agency pricing 2.0 Last edited by Top100EbooksRank; 12-19-2012 at 05:42 AM. |
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12-19-2012, 07:06 AM | #2 |
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And are they all offering these terms? What a coincidence!
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12-19-2012, 08:43 AM | #3 |
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I'm shocked!
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12-19-2012, 10:02 AM | #4 |
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So in brief, the publishers are still dictating discounts
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12-19-2012, 10:04 AM | #5 |
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The restriction [for the new Agency 2.0 publishers] is only that a retailer cannot take a net loss across all of a publisher's titles. As long as the time window that is measured across isn't too small, that doesn't seem particularly limiting. All it does is stop someone buying market share by running at a loss.
[The MacMillan restrictions are much more onerous.] Isn't this Agency 2.0 essentially what was discussed during the earlier settlement discussions? Last edited by murraypaul; 12-19-2012 at 10:07 AM. |
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12-19-2012, 12:17 PM | #6 |
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12-19-2012, 12:32 PM | #7 |
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It sounds reasonable to me. Publishers set an RRP and sell to retails at 70% of that price. Not much different to paper books, except that there the publishers sell to retailers at 45% to 55% of the RRP.
The main difference is the "no long-term loss leader". Retailers can't sell at a loss to gain market share over a significant time period. However, efficient retailers can sell at a discount to RRP permanently. |
12-19-2012, 12:34 PM | #8 |
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I haven't kept up with all of this in detail, but this sounds like somewhere on the road to a better middle ground for customers, doesn't it?
It seems like this will allow retailers a larger leverage to discount as they see fit, while at the same time help prevent a company from first selling at a loss and then, once the competition is eviscerated, raise prices as they like. |
12-19-2012, 12:52 PM | #9 |
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We may see larger discounts toward the end of the reporting period. Retailers then will know how much of their accumulated commissions they have to play with.
Currently, I see discounts of well under 30% although it may be difficult to determine as the list prices have changed also. And Kobo and BoB still don't seem to permit promo codes for these settling Agency publishers. |
12-19-2012, 12:56 PM | #10 |
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The 12 month period seems interesting, but I'm not sure if it can be properly implemented. For example, if a book has the set price of $15, a retailer can sell it for 11 months at this price and then have a higher discount and sell it for 1 month at $7.50. But if the loss per book encountered in the discount month exceeds the profit from the previous 11 months, then the retailer is in breach of contract.
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12-19-2012, 01:01 PM | #11 | ||
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Quote:
Quote:
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12-19-2012, 01:16 PM | #12 | |
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Quote:
It allows retailers to either have a constant discount, or to run weekly/monthly/yearly promotions. Or just to have random discount days. But they have to balance the books overall. I see it as benefiting retailers who have better control over, and knowledge of, their operations, vs those who are poorly managed. In other words, good for Amazon |
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12-19-2012, 01:22 PM | #13 | |
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Quote:
We're not seeing large discounts now when there is only one 12-month period possible. December 2012 starts one period then January starts the second. Retailers may be waiting to see how sales develop for several months to see how much more they can discount. Or they may do special time limited sales. Daily Deals, weekly highlights, movie-tie ins, etc. In any case. Amazon isn't, as far as I can see, discounting up to their full 30% commission. Maybe they are content matching other retailers. They must have good reasons for their strategy. |
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12-19-2012, 01:24 PM | #14 | |
Is that a sandwich?
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However, I don't know what this means:
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12-19-2012, 01:36 PM | #15 | |
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Quote:
That way, they'd be able to automatically stop the discount before the loss per book exceeds profits. |
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