Amazon will drop smaller publishers if they insist on the agency model

surprise.jpgYesterday we published a couple of articles on Amazon/Apple and the larger publishers. Now comes some news about the smaller ones.

According to published sources, Amazon has told smaller publishers that it would not negotiate “agency model” terms with anyone other than the initial five Apple partners. If a publisher outside this list insisted on the agency model then Amazon would drop their entire list, both print and digital.

Welcome to the real world of commerce. Publishers have been protected for so long that I bet this comes as a shock. Not to the rest of the sales world, however. This is, actually, a real opportunity for smaller publishers. The initial 5 have locked themselves into a rigid pricing model and they don’t understand the retail space. By staying away from this model, and by cooperating with a retailer who understands pricing better than anyone, the smaller pubs can try all sorts of marketing schemes to beat the big guys. Don’t forget, the “agency model” guys have now taken over price control and have absolutely no experience as to how to use it. It will be fun to see what happens.

Thanks to Erin Biba for the heads up.

8 Comments on Amazon will drop smaller publishers if they insist on the agency model

  1. So we have a showdown? Apple won’t carry any publishers that don’t go with the agency model; Amazon won’t carry any who do go with the agency model, except those big five. Interesting times.

  2. I certainly don’t see a problem sticking with Amazon’s standard terms. They pay royalties based on list price. If they want to price it lower (they do for my titles), more power to them.

    As for Apple, I have to admit they haven’t (yet) been beating down my doors but I’m happy to do an agency model with them and a distribution model with Amazon. Let them battle it out–I want both to be successful.

    Rob Preece
    Publisher

  3. But what if Amazon insisted on pricing lower than you were willing to price it on Apple, putting you in violation of your contract terms with Apple?

  4. I don’t quite buy your reasoning. If Amazon’s scheme is so good, why do they have to force it on everyone but the Big Five? That makes no sense. And if the giant corporations who market and sell most of the bestsellers don’t understand pricing, then you’re certainly not going to find that expertise among harried small publishers who can’t afford marketing studies or expert advice.

    The problem isn’t these two models. Both have their advantages and disadvantages. It’s this bullying demand that a publisher not market a book more cheaply elsewhere, even if the conditions of sale are very different there and particularly on his own website. That’s what gets my blood pressure up. It also places authors and publishers in a potentially nasty legal situation if they inadvertently do something that Amazon lawyers think is a violation of their contract.

    Be very, very careful what you sign. It may be better to market ebooks through a more obliging middleman who offers better terms such as Ingram or Smashwords.

  5. Amazon seems to me to be caught in the classic monkey-jar trap. (that’s where some goodies are put in a jar; the monkey grabs them, but can’t pull his fist out of the jar when loaded with goodies. Rather than let go of the goodies, the monkey is trapped.)

    They started off wanting to be ‘Earth’s biggest bookstore’ and now see a potential for selling ebooks. So they are prepared to damage their reputation and not sell all print books, just to keep going after the chimera of iTunes-like monopoly over ebooks? This is just not grownup behavior.

    It will be interesting to see how closely the big publishers match one another’s prices under this ‘agency’ model, and if the governments of the world decide to prosecute them under antitrust and price-fixing laws.

    — asotir

  6. The whole thing is hilarious, considering every one of these publishers could simply write off selling through Amazon and Apple, and sell directly online through their own sites.

  7. Steve,
    Some of us do sell through our own sites…and through Amazon etc. Moving from all direct to sales through distribution was a major step (and a hard one as distributors are an expensive option) but it definitely resulted in more sales for me and my authors (although it resulted in reduced direct sales). There is value to readers (and therefore to publishers) in having points of contact where readers can browse books from multiple publishers to find just the story they want to read. Few readers would take the time to shop every publisher for promising new authors although they might hunt down favorite best-selling authors.

    Regarding some of the other comments, I guess I have a hard time seeing that there are significant moral issues in whether to offer an agency model or a standard distribution model.

    Rob Preece
    Publisher

  8. There is value to readers (and therefore to publishers) in having points of contact where readers can browse books from multiple publishers to find just the story they want to read.

    No argument there. But in this case, there seems to be a diminishing “value” in operating through such contentious outlets. If this keeps up, authors/publishers may need to find more effective ways of promoting their catalogs, or at least, other outlets that are a bit more focused on promoting books and less on promoting themselves and beating down their rivals.

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