Agency Pricing Seems to be alive and well in Australia

[crossi]

Sure, I have no argument with the position that publishers are free to charge retailers whatever price they want the retailer to pay. If they want to charge the retailer $5 to $500 for each copy it's completely up to them. I don't agree that they should have any say in how much markup the retailer adds if any. That interferes without any right in the retailers' running of his business in the way he sees fit. If the publisher thinks the retailer is selling a product too cheaply the publisher should raise the wholesale price.

[speakingtohe]

Books have been much more expensive in Australia for quite a long time. I have bought books in Canada which had prices in AUS/CAD/US/UK on the spine. The Australian price was always close to double the CAD one and their dollar was worth more. This is going back at least 30 years IIRC.

I asked an Australian friend who went back every two years if this was the case with all goods, and she told me no. It was often the case with imported items, but even books printed in Australia, which the one I asked her about was, were sold high in Australia but would be shipped to other countries and sold cheaper there. Nothing to do with agency then.

Helen

[SteveEisenberg]

Originally Posted by darryl

Agency pricing is not per se "illegal" but may well be in breach of competition laws, as it plainly seems to have the effect of destroying competition.

The purpose of agency was to prevent books overall from being cheapened in the eye of the public. That was the conspiracy. There was no conspiracy to harmonize the amounts paid as advances, or sell titles from different publishers at the same price.

Now, price maintenance schemes such as agency do reduce competition between retailers. But agency didn't destroy competition between Penguin and Bertelsmann, or Hachette and Perseus. What destroys competition between the publishers is mergers and acquisitions. This is especially true of the Penguin Random House deal, since, more often than with Hachette and Perseus, Penguin and Random House might have been bidding on the same book.

If I ran the world (not a good idea), I would give the publishers agency in return for banning mergers.

[tubemonkey]

Originally Posted by SteveEisenberg

If I ran the world (not a good idea), I would give the publishers agency in return for banning mergers.

I would allow retailers to set the final price, not publishers.

[JSWolf]

Originally Posted by SteveEisenberg

If I ran the world (not a good idea), I would give the publishers agency in return for banning mergers.

If I ran the world, I would make eBook prices reasonable and then we could have agency pricing as long as it is reasonable. This $14.99 for an eBook is ridiculous and I would never let that happen.

Here's my suggested pricing...

$9.99 for a book in hardcover
$5.99 for a book in paperback
$3.99 for a book out of print

That's reasonable to me.

[darryl]

Originally Posted by HarryT

Do prices fall with time? If the A$14.99 is for ebooks that are currently only available in paper form in hardback, then it seems a perfectly reasonable price. If it's for ebooks that are available as MMPB, then it is expensive, I agree. $A15 is about £8.30. Amazon UK typically charge around £9-10 for ebooks that are only available in hardback; this generally falls to about £3-5 once the paperback is released.

It should be noted that Amazon's $9.99 price point was not for all books, but for a very small subset of them: those on the NYT best-seller list.

Noted, Harry.

At the lowest price point of $14.99 we seem to be talking books available as MMPB. Discounts later are of course at the discretion of the publisher.

[darryl]

Originally Posted by SteveEisenberg

The purpose of agency was to prevent books overall from being cheapened in the eye of the public. That was the conspiracy. There was no conspiracy to harmonize the amounts paid as advances, or sell titles from different publishers at the same price.

Now, price maintenance schemes such as agency do reduce competition between retailers. But agency didn't destroy competition between Penguin and Bertelsmann, or Hachette and Perseus. What destroys competition between the publishers is mergers and acquisitions. This is especially true of the Penguin Random House deal, since, more often than with Hachette and Perseus, Penguin and Random House might have been bidding on the same book.

If I ran the world (not a good idea), I would give the publishers agency in return for banning mergers.

Steve. Thanks for your reply. I would be interested in any significant examples of competition in the market between the big publishers.

[darryl]

Originally Posted by Fbone

You can't compare prices between 2 very different countries without considering cost-of-living, wages, taxes, currency fluctuations and business expenses. For example, you don't include US sales tax or exchange rates in your price comparisons. That $9.99 book would cost me $10.69 or AU$11.38 today but AU$12.08 a few months ago. Of course, your prices include VAT.

Also, minimum wage is considerably higher in Australia. Currently $16.87 (with full health ins) or US$15.85/hour. In the US it is $7.25 or AU$7.72. So a US worker earning minimum wage would have to work 1.5 hours to buy that $9.99 book but an Australian worker only 0.9 hours for a $14.99 title. So from a value proposition the Australian shopper may feel its worth the $14.99 more so than the American one. In a sense, books are actually less expensive in Australia looking at this one metric.

Everyone wants to save money and the internet makes it easy to compare prices. And during 2012/2013 when the Australian dollar exceeded parity with the US, products appeared very cheap I'm sure.

While you may want retailers to reduce prices, I'm positive you don't want your wages reduced to match.

And India's minimum wage is 28 cents.

Thank you for your post. IMHO your comments are partially relevant to physical products but no electronic ones. Even with physical products the only factors strictly relevant are the extra costs of importing and otherwise getting the product to the local market. The other factors you quote are relevant to one question, the maximum price the local market will bear. And this is okay. I am not against the idea of a good profit. And with physical books this worked for a long time. It will no longer work because for electronic goods there is effectively one world market. Attempted geographic restrictions are simply attempts to turn back the clock to the good old days.

[Lynx-lynx]

Originally Posted by darryl

I couldn't agree more.

Darryl another thing is that the arguments about factoring comparative average earnings between countries (and other indices) don't make much sense to me because book buying is a discretionary purchase item, unless of course the book is a compulsory text for a course.

So as a discretionary expenditure book buying just sits in with all the other items, big and small, that either make the budget now or at some other point in time.

For me, fiction paper book buying was just a no go spend (with rare exception) no matter how much money I earnt. Fiction books were library only reads for me. Unless of course, the books were being passed around by and between friends.

As to non-fiction books, there was and still is a chance that I may buy the book rather than borrow it from the library, but not very often.

Ebook shopping via Kobo India has given me such a breadth of books to indulge my intellect and at such cheap prices (esp using Contest and other codes) that I now spend money on books that I rarely did before.

To me it seems that the Aus book market doesn't set prices that attract quantity sales - much to their own loss!!

[Lynx-lynx]

Originally Posted by speakingtohe

Books have been much more expensive in Australia for quite a long time. I have bought books in Canada which had prices in AUS/CAD/US/UK on the spine. The Australian price was always close to double the CAD one and their dollar was worth more. This is going back at least 30 years IIRC.

I asked an Australian friend who went back every two years if this was the case with all goods, and she told me no. It was often the case with imported items, but even books printed in Australia, which the one I asked her about was, were sold high in Australia but would be shipped to other countries and sold cheaper there. Nothing to do with agency then.

Helen

Yep, it's the Aus conundrum and quite frankly a lot of us are sick of it, including big business here who rightly complain about how much more it costs to buy microsoft and other IT related products here, for example.

In fact, I recall reading where it was cheaper by a country mile to fly an employee to the US to buy Adobe products there (from memory) than it was to buy the same product here. And the company did in fact do that!!

[Fbone]

Originally Posted by Lynx-lynx

Darryl another thing is that the arguments about factoring comparative average earnings between countries (and other indices) don't make much sense to me because book buying is a discretionary purchase item, unless of course the book is a compulsory text for a course.

So as a discretionary expenditure book buying just sits in with all the other items, big and small, that either make the budget now or at some other point in time.

(

Prices are determined by local conditions. The more discretionary income the higher a price may be.

Market conditions between Australia and India are quite different, therefore, so will retail prices generally speaking.

Only recently have people been able to shop across borders and this will affect local businesses in the future. Perhaps, the general economy by means of higher unemployment and increased taxes.

[Lynx-lynx]

Originally Posted by Fbone

Prices are determined by local conditions. The more discretionary income the higher a price may be.

Market conditions between Australia and India are quite different, therefore, so will retail prices generally speaking.

Only recently have people been able to shop across borders and this will affect local businesses in the future. Perhaps, the general economy by means of higher unemployment and increased taxes.

Fbone but that's what doesn't make sense, because our Aus publishers know via their own research that discretionary spending on books has never been 'high' on the list for Australians.

And yet they seem to want to charge more and have less customers, rather than charge a lesser price and have more customers.

They've clung to some sort of logic that really hasn't produced the best financial results for them or for our Aus authors.

[darryl]

Originally Posted by Lynx-lynx

Fbone but that's what doesn't make sense, because our Aus publishers know via their own research that discretionary spending on books has never been 'high' on the list for Australians.

And yet they seem to want to charge more and have less customers, rather than charge a lesser price and have more customers.

They've clung to some sort of logic that really hasn't produced the best financial results for them or for our Aus authors.

Australian publishers (by which I mean Australian subsidiaries of the large publishing houses, seem to simply long for the good old days. These are the days when there were no ebooks and no Amazon. The US Publishers and the UK Publishers simply divided the world markets up between them. Australia, of course, fell under the UK sphere. Parallel Importing rules allowed local readers to be treated with absolute contempt, and this is the way they were treated.

I can see nothing that is happening which is inconsistent with the view that the big Publishers, both in Australia and Worldwide, want to try and preserve a status quo rendered obsolete by technology. Like most industries that have found themselves in such a position, and there are many, the participants have lobbied endlessly and sought legislation to protect their failing business models. Geographic restrictions are an attempt to destroy the one world market created by the Internet and EBooks, by artificially recreating the plethora of world markets that used to exist. The major problems for the Publishers is that there is little justification for doing this other than their own vested interests, and that the technology used is easily circumvented. Further, the only way that this can be made to work is by a combination of geo-blocking technology and draconian legislation ruthlessly enforced. And for what gain?

And of course, as you say, in the case of books the spending is discretionary! How on earth do they believe that they can succeed? Better for them to face facts and come up with a profitable business model that works in the new market.

[Fbone]

Originally Posted by Lynx-lynx

Fbone but that's what doesn't make sense, because our Aus publishers know via their own research that discretionary spending on books has never been 'high' on the list for Australians.

And yet they seem to want to charge more and have less customers, rather than charge a lesser price and have more customers.

They've clung to some sort of logic that really hasn't produced the best financial results for them or for our Aus authors.

I don't know how publishers operate in Australia. Since it has been this way for some time it may be difficult to change.

I'm sure it's very frustrating. Maybe instead one should look at all the positives to living in Australia: high standard of living, friendly people, great weather, low crime, accessible health care, affordable housing, beautiful countryside, beaches, flora and fauna, stability, prosperity. It's no wonder Australians are listed as one of the happiest in the world.
http://www.cnn.com/2014/03/20/travel...ries-to-visit/

Perhaps, that's worth paying a few dollars more for books.

[darryl]

Originally Posted by Fbone

I don't know how publishers operate in Australia. Since it has been this way for some time it may be difficult to change.

I'm sure it's very frustrating. Maybe instead one should look at all the positives to living in Australia: high standard of living, friendly people, great weather, low crime, accessible health care, affordable housing, beautiful countryside, beaches, flora and fauna, stability, prosperity. It's no wonder Australians are listed as one of the happiest in the world.
http://www.cnn.com/2014/03/20/travel...ries-to-visit/

Perhaps, that's worth paying a few dollars more for books.

Yes. Of course it is. If the choice was between all of the wonderful things you mention and cheaper ebooks then there is no real choice to make. But it is not. Australia is not called the lucky country for nothing. But we are always looking to make things even better. It does not seem to me to follow that the fact that we are lucky in many areas means that we should be ripped off, or indeed that our prosperity is a licence for us being ripped-off, though it may be a rationalisation for some.

I'm not sure what country you yourself are from, but each have their advantages and disadvantages. The US is also a very lucky country, as is the UK, New Zealand and others. That does not mean that readers in any country deserve to be ripped-off.