Australian ebooks market expanding, seeing agency model creep

Yesterday’s announcement of the first Australian paid content released into Apple’s iBookstore has been met with a mixed response locally.

In a market only boasting one major player – REDgroup Retail, with their Angus & Robinson and Borders/Kobo offering – the more the merrier, right? Maybe. Some are worried about Apple propensity to adopt the “agency model” of ebook pricing. Some are underwhelmed by Apple’s initial range, which is said to be 40,000 titles, 10,000 of which are self-published Smashwords books. And others have expressed disappointment at the prices, which seem to be commonly $A12 or above. (Keep in mind the Aussie dollar has just surpassed the value of the Greenback.) After being “locked out” of using the service, or being repeatedly promised inclusion, many local publishers are also very upset at not being invited to supply ebooks to the local iBookstore at launch.

Still, encumbant Australasian e-tailer REDgroup Retail is not taking the challenger lightly at any price point. Malcolm Neil, the firm’s Group Communications Manager, says REDgroup is keeping a close eye on the new player. “They’re Apple; we’d be crazy to be complacent,” he says. “We’re cheaper across the board on most titles, but there will always be vagaries. I think they may have gone ‘agency’ – it’s hard to tell.”

The agency model

Ah, there’s that “a” word. Sadly, it’s already here.

For those new to epublishing, the “agency model” is the term used when publishers are able to set the retail pricing of their titles, regardless of where they are sold. Publishers seem to love it, retailers are increasingly forced to put up with it (even the mighty Amazon has been dragged kicking and screaming to the agency model in the US and recently in the UK), and consumers hate it.

It is, by definition, an anti-competitive way of selling. If a retailer wants to discount titles to increase sales/market share/publicity, they can’t. The wholesaler (publisher) has fixed the price. Consumers hate it because it almost always sees the average price of ebooks rise.

REDgroup has today announced it has signed global publisher Hachette, but also that Hachette has required that it set the retail price of its books in Australia. Yep – the agency model genie is out of the bottle.

Says Mr Neil, “Yes, we’re ‘agency’ with Hachette, but I think they’re sensible – they won’t overprice their books. Still, the proof is in the pudding – it’ll be tested by the consumer.”

If the reaction to the recent switch to anti-competitive price in the UK is any guide, it may get very testing.

Agency by stealth

REDgroup’s Borders.com.au and Angus & Robertson now have agreements with all six major publishers in the Australian market – the first company to sign the “full set” – and it seems it is prepared to “go agency” with more publishers.

“There are many companies that have moved to the agency model in the UK,” Neil says. “It’s quite possible the same will happen here.”

In any case, it’s full e-steam ahead Down Under. In a release, REDgroup’s Managing Director, Ecommerce and Digital, James Webber is spruiking the Hachette deal regardless:

“Our customers are eagerly waiting for authors like Maeve Binchy, Patricia Cornwell, Justin Cronin, Peter Fitzsimons, Charlaine Harris, Barry Humphries, Stephen King, Hugh Mackay, Alexander McCall Smith, William McInnes, Stephenie Meyer, David Mitchell, Sir Michael Parkinson, and Jessica Watson to appear in our range. These titles will become available shortly.”

The release continues,

“Since launching in May, the borders.com.au and angusandroberston.com.au websites, powered by Kobo, have sold well in excess of 100 000 ebooks, 20 000 Kobo eReading devices and delivered over 200 000 apps to readers on PC,s iPhones, iPads, Macs, and other smartphones.

Apps and ereaders in Target

Mr Neil last week told Bookbee that the group was selling about 1000 ebooks a day, and are working hard to push ahead with the technical side of etailing. As well as apps for iOS, Mac and PC, today sees the release of the Android and Blackberry versions of its Kobo-branded local apps.

REDgroup has also signed a deal with retailing chain Target. Target Australia have recently started selling ereaders – currently a 5-inch Lazer EB101 for $99 and 6-inch EB-601 (oddly branded as Rank Arena) for $199 – and will include Borders branding in Target catalogues to direct ebook buyers to REDgroup’s content.