Boy do I disagree with this! Mike Shatzkin gets it 100% wrong about the agency model!

Well, it won’t surprise you that I don’t agree with you when you disagree with me!

The first problem with your position is that there is no evidence to support it. Retailer-set pricing delivered us an Amazon monopoly on ebooks. Agency pricing, which raised prices AND created disruption in the supply chain taking books off sale at various locations temporarily, has not dented sales overall (April was a land office month for ebook sales) and is already creating serious competition to Amazon (some books outsell AMZN on iPad already!)

And the idea that consistent prices mean “no competition” is hogwash. First of all, lots of publishers (particularly aspiring ones) will set prices low precisely to attract the readers more interested in price than exactly what they read.

If you’re looking for a PC way to support my position: consider this. If retailers can drive the price of branded books down (as they did), they don’t leave room for aspiring authors to price below them and attract some sales. With Agency, we will see a bifurcated market: branded books will cost more, books by authors or from publishers you never heard of will cost less. If retailers set prices, then we’ll be seeing big authors selling for 99 cents as promotions.

And, by the way, we’ll kill brick-and-mortar faster. Are you willing to take responsibility for the degree to which your position fosters THAT?

At least when I read yours, my jaw didn’t drop. The veteran digerati are predictable.

Mike, ebook sales are up — no question about that; but whose ebook sales are up? Is it Random House’s, who didn’t sign on to the agency tactic, or is it the sales of the Agency 5? Or is the rise in sales a result of sales being made by low-priced vendors like Smashwords?

So what if we see Stephen King novels selling for 99 cents. That may reflect what the market thinks his books are worth. Isn’t that the idea of the free market?

What the agency pricing is really doing is fragmenting the market and encouraging B&N and Amazon and Google, among others, to enter publishing to compete with the big 6 by signing exclusive deals. Do you not think that Amazon has the resources to sign James Patterson and Stephen King, for example, to exclusive book deals? And wouldn’t they rather have Amazon’s marketing power behind them than that of Hachette or Simon & Schuster? Do you really think they care if Amazon pays them $10 million and sells their books for 99 cents? How likely are they to prefer earning $5 million from HarperCollins and have their books sell for $14.99? I find altruism among the top tier (earning wise) authors to be a far-fetched concept.

The iPad is too new a device to know how successful it will be in the reading market. I am not surprised that right now a few books sell better at the iTunes store than at Amazon, but no trend is discernible from the initial sales. The real test will be in 1 year.

One other thing to think about. The agency model you think is so great isn’t really an agency model. It is an Apple-dictated pricing scheme. A true agency model would let publishers set their prices as high or as low as they want — regardless of whether or not the product would sell at the designated price. But Apple set the prices that publishers could charge based on the print list price. So here’s the question: When Jobs decides that he can make more money off of books if they sold for $5 less and unilaterally changes the pricing schedule (which he could do by threatening to block access to the iPad for noncooperative publishers), how will that be any better than when Amazon decided $9.99 was the magic price? (What will happen when Jobs decides that the next Philip Roth novel is obscene and can’t be sold at any price in his bookstore?)

Bottom line is that neither Amazon nor Apple are publishers’ friends and Jobs sucker-punched publishers with the pseudo-agency model. I expect current pricing levels to last about as long as Jobs let pricing last with music downloads — until he reads his first book and decides that reading can be fun and profitable.

If this agency model is so great, then why are publishers not doing it for physical books? I only read ebooks now, but would buy popcorn and a front row seat to THAT trainwreck!

I think everyone above is missing the point that the ENTIRE point of the agency model was a hit at Amazon specifically and ebooks in general.
I don’t think that publishers get the (consumer) point that a book that a)can’t be passed on or resold, b)may become obsolete as tech changes or c)is in essence just a license to view–holds the same value as a physical book where none of the above apply. You can remove DRM (the other bugaboo) from the equation altogether while making that point.

Amazon understands the book customer, thus, in most cases priced accordingly. I don’t get how publishers hate Amazon for becoming a so-called monopoly because they gave consumers what they wanted, if their model wasn’t good, they would not have become a leader in ebook sales. Does everyone forget that the Sony Reader came BEFORE the Kindle?

Frankly, as I look around to my ebook friends, the only thing that agency pricing has done for them is to make them more savvy on where to get the ‘free’ (read pirated) ebooks.

To me, the agency 5 have become the Pirated 5. I buy between 300 and 350 ebooks a year. I keep authors and publishers in business. However, the agency 5 pricing has totally ruined my purchasing habits. I no longer buy any books from them. Not only are their prices too high, but they have destroyed the rewards program I (used) to have to buy books. So, I now buy books from non-agency 5 publishers and simply pirate the agency 5 books for free. You screwed me over, so now I am screwing you over.

“And, by the way, we’ll kill brick-and-mortar faster. Are you willing to take responsibility for the degree to which your position fosters THAT?”

If we were taking that position, a portion of the price you pay for your car would still be going to subsidize the horse and carriage people who will now be out of work.

Bricks and mortar stores may have to diversify a little. I have written at length for this blog on ways they might do that and continue to serve their core market.

Mike Shatzkin says:
(some books outsell AMZN on iPad already!)

Without a doubt, if you refer to things like Ariana Franklin’s A Murderous Procession which is priced at $12.99 in the iBook store and $17.99 on Amazon.

Pretty impressive that the iPad book is outselling the other one. Must be a vote for the Agency model, nothing to do with the unfair price difference which was set by the publisher. I bought neither and checked it out of the library.

Lets see, now: *one* major besteseller (read: “currently hot” book) didn’t experience sales erosion from $9.99 to $12.99 but it did at $14.99, so obviously $12.99 is *the* perfect price for *all* books. One data point to set policy for an entire industry! Man, I’d like for that CEO to come forward publicly if he so strongly believes in his righteous policy. Let’s see what his stockholders think.

Fact is, one data point is meaningless. In an industry with over half a million active titles and hundreds of “bestsellers” you can find anectodal evidence for pretty much anything if you pick the right point in time.

Second, he’s cherry-picking data by focusing on the best seller. Howzabout finding a mid-list author or back catalog title that *isn’t* sensitive to a 20% price hike. Or come back in six months to see how that “bestseller” is doing then, when its *not* hot. Bestsellers tend to have short sales lives (that’s how they end up in outlet stores and discount tables); lets see how long that bestseller remains a best seller at the higher prices. Instead of remaining a top-seller for six months he just might have strangled it into a three month sales life. 20% higher per-unit profit traded in exchange for 40% less unit sales? That’s a fair deal? Tell that to the author. Or the stockholders.

Right now the PriceFixFive are seeing modest gains and accrueing all of them to the higher unit prices.
But that is at a time that ebook sales as a whole are exploding. The proverbial rising tide lifting even the leaky ships. But wait a while. Lets see what happens as the ebook market stabilizes and the numbers come in on catalog-wide *market share*. Let’s see how things look after Amazon Encore or B&N’s publishing arm start racking up a few bestsellers.

I can probably write next year’s SEC filing:
“Per unit profits increased slightly but we saw a noticeable decline in market share as the overall market is being flooded by new competitors, who persist in unsustainable discounting practices, especially in the growing ebook sector. We expect print book sales to be flat or decline slightly over the next year and to see steeper volume declines in the out years. Sales revenue is becoming dominated by short life-cycle bestsellers that accrue the bulk of their funding in the first month of sales. Overall margins are under pressure by the failure of mid-list content to move as fast as expected and we may need to trim the content acquisition budget and reduce the active print catalog to contain fixed costs. Legal costs pertaining to the 15 State AG inquiries and the three class action lawsuits from our authors are expected to mount but should not seriously impact our lines of credit. In addition, the search for a new CEO continues apace and we should have a new one in place within 6 weeks.”

It may very well turn out, in the long haul, that Agency Pricing is very good for consumers and very bad for the price fixers, just by teaching the BPHs that we live in a buyers market and free market economics actually works; that price elasticity is real and that you *can* make a small fortune out of a big one, just by raising prices. It just takes a bit of time.

What they are doing is milking the unwary for all they’re worth *now* and creating a pricing umbrella under which competitors will flourish and establish themselves at the expense of the PriceFixFive. They are in effect providing a free incubation period during which their would-be competitors can grow their catalogs, experiment with new business models, and establish their brands and market presence with no significant competition from the Oligarchs of publishing.

By the time the numbers are in and the current CEOs realize what they’ve “achieved” the die will be cast and it will be up to future CEOs to try to salvage something of the wreck the current economic illiterates are making of their Empires.

Felix, as always, you have a thoughtful and insightful analysis of this mess. Thanks for writing.

Paul, you seem to be confusing what some of the more vocal consumers think with what’s actually happening. There’s ample reason to believe that the major publishers are adopting agency pricing at least in part to prevent Amazon from successfully using the trick that railroad robber barons used in the late nineteenth century to take over and control a market.

Imagine a town with a modest, locally owned railroad connecting it to the rail network of a city not far away. Then a large rail baron builds his own rail line paralleling the local one and, because he can finance it from profits elsewhere, he is able to substantially undercut the price of the local rail company. Does that sound like what Amazon was doing when it bought ebooks at $14.95 wholesale and sold them for $9.95 retail? It should. It’s the same trick. No doubt, the rail baron had some local consumers singing his praises and talking about just how greedy the local railroad was. Again, just like Amazon

Aha! But there is a catch. Unable to attract customers at its higher prices, the local railroad goes out of business. There is now only one rail line to the town. What happens then? Precisely what you’d expect. Now owning the market, the rail baron is able to dictate prices and conditions. If you want to travel or ship goods from that little town, you do so on his terms.

My hunch is that we’ll need the major publishers to maintain agency pricing for top-selling books until consumers establish buying patterns that aren’t dominated by any one source. Remember, to have a competitive market, you must first have a market. You can talk until the cows come home about publishers destroying competition, but there’s simply no way half-a-dozen publishers can dominate a market like one Amazon can.

I don’t think the railroad example is a valid one. I don’t think Amazon will ever be the only ebook seller in town. For one thing all the different formats insure that other ebook sellers will still have customers. There are a lot of Sony and Nook owners (just to name a few) who can’t buy from Amazon due to DRM issues. Not to mention all the free books and independent publishers. Furthermore even if there was no DRM and just one format, once Amazon raised the prices, sales would decline causing them to lower prices again, and/or another company would jump in with lower prices.

Having been an author’s agent I am fascinated by the above exchange but rather depressed that the emphasis only seems to be on finding a model where the consumer can pay very little and the distributor can make shed-loads and the publisher only wants to maximise his profit and no-one seems to be factoring in how the creator of the words you are reading should be paid. If publishers have to sell to Amazon at a below cost price they don’t take they do not take the hit; the author does. Just think about it Paul before complaining about the good val of $12.99 for something you want to read for what is probably more than a year’s work by someone who might just have written an interesting and good book, not a bestseller.

The BPHs and their apologists seem to think that Amazon is their enemy and seem determined to destroy it at all costs. Now, aside from the fact that they can’t (Amazon isn’t just, or even primarily, about books anymore) there is the fact that their great anti-Amazon hope (end discounting and price-based competition on *their* precious books) is neglecting the real threat; the horde of viable alternatives to the Oligarchs which will be only to happy to see price-based competition, both at the retailer level (Amazon vs B&N vs Apple vs whoever) and the *book* level (one book vs another).
The Oligarch seem to think *their* books are the only ones worth buying and that somebody interested in one of their books today will eventually buy it, no matter what they do.
Both are demonstrably false; just because somebody is interested in a book today doesn’t mean they’ll be interested in it tomorrow so windowing will *not* increase or even sustain sales. If the price is unacceptable today, consumers will simply move to another book; we live in a market of abundance not a market of scarcity.
And, as to the idea that only Oligarch-approved books are worth buying; well, reality shows that the public *is* increasingly buying other publishers’ content. The Oligarch’s combined market share is hardly dominant. And yes, one of the reasons why their market share is withering is Amazon; their infinite shelf space and crowd-sourced marketting (which is what the reviews and automatic recommedations add up to) allow books to compete based on their intrinsic value not their publishing source. Only problem is, Amazon is not the only retailer doing this; so are all the others. B&N, Apple, Borders, BooksBoard, etc; everybody doing ebooks has infinite shelf space and everybody offers up customer-based reviews and profile-matchig recommendations. And everybody is tapping into the disintermediation wave to set up their own house brands.
Amazon simply does it best.
In holding up the threat of a hypothetical Amazon monopoly, the BPHs merely reveal their own disconnect from reality; Amazon doesn’t control the modern retail market, they merely *conform* to it. What they are doing is merely what is necessary for a retailer to survive and not get dragged down by the BPHs bad decision-making.
One more time: it is a buyer’s market.
It is consumers that actually control it, not publishers and not retailers. In trying to eliminate price-based competition and raise prices, the BPHs aren’t attacking Amazon, they are attacking consumers.
And consumers are aware of this atack.
They are responding appropriately by showing their disdain, by taking their business elsewhere, to other competitors. Other publishers.
And these other publishers are only too happy to take their chances and take advantage of the opening the BPHs offer them to grow their sales, burnish their image, gain the “stamp of legitimacy” the BPHs think is their birthright.
What we’re seeing is a clash of worldviews; one seeks to turn the clock back a half-century or more to a top-down supplier-controlled market, the other seeks to adapt to a new era of abundant content, abundant distribution channels, and consumer control.
Content is no longer king, folks.
Money is king.
And consumers have the money, they can give it or they can withold it. It is time for the BPHs to get off their high horses and sing for their supper.
Or else.

And the “or else” is this:
http://online.wsj.com/article/SB20001424052748704912004575253132121412028.html#printMode
June 3rd, 2010 WSJ article on the increasing viability/respectability of self-published authors.
Just anecdotes, so far, but they are telling anecdotes.
This is the real enemy of the BPHs; not discounting and not price competition; they are fighting the wrong war with the wrong tools.

@Pantasillia:
One word: disintermediation.
Check the WSJ link in my post above (if its still live).
eBooks are an *opportunity* for writers to get out from under the oppressive thumb of bad publishers and go find a different publisher with a different business model.
But first they have to take their fate in their own hands. No risk, no reward.
Essentially, the writers willing to work “on consignment” stand to make out like bandits, those that rely on advances will be ground into servitude unless they get on Oprah.
(And Oprah is going away.)

Different spin.

I have an iPad and love it. Does everything promised and replaces a laptop for me for carry around. I bought my son a big Kindle for college last year in the hopes that textbooks would be coming to it – no luck on that yet!

I also love Amazon and almost always buy used books there. Price-price-price. I also love the power of the Amazon search. It is the Mac UI of the web and nails things almost all the time. Location, location, location = Amazon also.

I have a large library at home and will always want to own certain book in hard form. There is no way an ereader can match flipping through a book in speed and in how the brain remembers relative location inside a book and on certain pages to find things quickly.

But, I will read e-books on planes and such. What I would pay for is a library model where I just check out the e-book for $.99 for a week or two and then is disappears. Many books I would read that way. They are just throw away fiction or pop nonsense that I never want to own – Stephen King comes to mind.

The library model in digital form will do to publishing what iTunes did to music in the end. Most people would use it because most books are throw away after a read anyway and just entertainment too many times. The few books you want to keep everybody will pick themselves out of the swamp of drek.

As of this moment, Amazon is offering a print copy of Stephenie Meyers’s new book, The Short Second Life of Bree Tanner for $6.99 in print and $9.99 on the Kindle. Does this make sense to anyone?

I look at this whole pricing thing as much like the shift from audio cassettes to music cds. Even though a cd was cheaper to produce, it cost more – simply because the industry decided that was how things should be.

If they can keep the price of e-books close or even more to the physical copies, the profit potential is enormous. I think all the publishers are engaged in fantasy if they actually think that is going to happen long term, however.

Oh dear. As a used and rare bookseller and former digital librarian, I say this re: Felix’s fulminations:

The uproar over published raising prices is simply economic self interest on everyone’s part. Buyers like cheaper prices – publishers like higher prices for their product. Publishers should certainly be able to set whatever prices they want for their books. Doesn’t Amazon make demands of publishers that independent’s can’t make? Doesn’t Amazon try to set its own terms, aka the dustup with Macmillan? Apple NOR Amazon should be try to determine what those prices should be. You folks tearing at apple are smearing Amazon with the same brush, whether you know it or not. Remember Amazon’s dustup with Macmillan? Or are you waiting on the Kindle ebook history of it? Amazon is as much about control as Apple, and the Kindle/Sony eReader will be in museums long before I am in a grave.

Also, self published vanity press stuff is 99% crap. For every Paolini there are hundreds if not thousands of authors spewing pointless pages. The only advantage digital publishing makes is that it will hopefully save thousands of trees from being wasted on stuff only the very few really want to read. I look forward to the (very few) discoveries that will be made, but I will buy from a known house with real editors first.

And any author with talent would greatly prefer being published by a known house over a vanity press, whether they got an advance or no. New, long, postmodernist words like disintermediation will not change the above.

Correction in order:

Instead of ” and neither AUm”, I meant “.”

Lord protect the editors. At least I am not self publishing.

regarding:

“If they can keep the price of e-books close or even more to the physical copies, the profit potential is enormous. I think all the publishers are engaged in fantasy if they actually think that is going to happen long term, however.”

The only reason some books prices in ebook form are cheaper than print copies is because the publisher can sell a TON of them.

IF they can’t sell a lot in print or in ebook form (i.e. the audience is small, like an academic book on a medieval Norman Duke) then the ebook is gonna be a lot more than $9.99 or $14.99, because the publisher still has the costs of editing, prep, etc. and can’t spread those out over a jillion copies like they can with mass-popular works.

Just because a book is digital doesn’t mean it is economically feasible to price it low. Each title has its own economics. Same reason why some obscure classical music digital albums are more expensive than the latest tune by Lady GaGa.

What was good enough for grandpappy should be good enough for us?
Bet the buggy whip makers thought the same.

I understand change can be scary but the only thing worse than facing change is ignoring it and getting run over by it. But some people are actually capable of ignoring the onrushing train right up to the point it runs them over.

Nothing can be done for them but to let them go under.

Felix T. Cutting out the middle man is fine and dandy if you know how to set type, design a jacket, market a book and arrange for publicity etc. Most authors I know are hopeless at this sort of thing and what is more hate doing it as they want to write. There used to be a rule of thumb that the author and the publisher after costs of production etc. made the same amount of money out of any book. In the 1930s there were contracts where each of the publisher, author and bookseller got 30% of the price. Simple and fair as each contributed their talent. In the noughties the author might get 2.5%, Amazon 70% and the publisher the remainder. Not fair. And that is on a normally priced book but Amazon might discount it after a while if they wanted a loss leader. If the punter just wants cheap books go to Abebooks or ebay where you can get loads of books for less than 50c.

Pantasilla; that is the whole point about how ebooks *are* changing publishing.

They make most of those traditional skills obsolete. And the rest, the ones that wil remain relevant, editing, proofing, etc, are already available via agents and freelance professionals.

*That* is the whole issue that has the Big Publishing Houses scared; over the last 50 years they have concentrated their core inhouse competency in functions that are no longer vital to publishing,as we move forward to a world where ebooks are the mainstream.

The smaller publishers have long understood they need to sing for their supper, that they need to add value to the product, that they need to strip cost out of their production processes. That they exist to bridge the author to the consumer.

The BPHs don’t get this; they are in arrogant denial. They think they *are* the publishing industry, when in reaity they are a diminishing part of it and if they don’t wake up and smell the lack of ink they are going to end up in Chapter 7.

“They make most of those traditional skills obsolete. And the rest, the ones that wil remain relevant, editing, proofing, etc, are already available via agents and freelance professionals. ”

All that is just lipstick on a pig if the core writing quality is not there. And the author will have to pony up to pay for all that and manage it. And agents will only take on authors who they think will sell – and that means thru an established publishing house.

The “smaller publishers” do much the same thing as the bigger publishers, and perhaps they do it more efficiently, but that is still a far cry the digital vanity press torrent of junk.

I’m all for revolution comrade, but arrogance goes both ways. I think you need to learn how current publishing actually functions before you force the czars to abdicate.

I retired four years ago but was one of the very few agents who refused to grant e-rights to a paper-print publisher unless my author was in control. In the same way I would not give them translation or film rights. These are not rights either BPH or even small publishers are best at exploiting. I am a firm supporter of an author’s right to control their copyright and benefit from it. Google’s arrogance in assuming ownership of digital – and Amazon insisting publishers allowed them to digitise large sections, “because it would help sell the book” when the author was going to make less than half a peanut from the sale but Amazon would make a lot, enraged me and then depressed me because the “trade”, all business people having to maximise profits for shareholders or themselves, could not see this from an author’s p.o.v. and I could see nothing was about to change. I sold e-book rights in specified formats and my authors received between 50% and 75% of what the buyer paid. But these were published books so the “filtering” and editing had been done.
I think that if e-books are a substitute for paper books the price should be similar. This does not mean as high as a hardback at £25 or as cheap as a mass market paperback at £2.99, but should take into account the cost of writing the book, the editorial work, the – albeit minimal – marketing budget and so on. Even if the savvy author employs his own editor and pr people they have to be paid. If there is a market for it perhaps if you buy a hard copy you get a special deal on the e-version. There are many possibilities but the main thing is that the author should always be at the centre of the equation.

Pantasilla, if you could convince me that higher costs actually led to more profits for authors, that would be one thing. But right now, I think they are going toward either propping up publishers as they see sales decline for various reasons, and propping up parts of the supply chain that they really should be working on phasing out by now (e.g. DRM development costs, paper-based costs etc.) It’s hard for readers to feel sorry for authors when a) things seem so non-sensical from their point of view (e.g. the Stephen King book that retails new in paperback for $6 but costs $25 in ebook) and b) many readers are prevented from doing actual purchasing due to things like DRM and geographical restrictions. I have personally written to authors about these issues and been told (if anything) ‘oh well, that is not within our control.’ Imo is authors want more money, they need to stop calling for increased prices and obsolete technical restrictions that drive customers away and focus instead on banding together into some sort of author’s coalition that will help them negotiate a better deal for themselves. The problem is NOT the reader here.

You know, I don’t personally have a problem with their “hardback” pricing. It’s over-pricing the “paperbacks” that’s cut my ebooks spending from almost $500 per month pre-Agency price-fixing model, to around $100.

But my library borrowing is increasing again…

(And yes, I know I spent way too much, so for me, this might be a good – temporarily good – thing to gain control of my lack of impulse control). It’s not doing the authors whose books I’ve been borrowing any favors, though.

Joanna I do see where you are coming from and now I am out of the publishing/author/book loop and am just an ordinary punter I sympathise with readers’ desire to keep prices as low as possible. But I know that 1% of authors generate 90% of the income for the trade as a whole. If you take that 1% – the bestsellers if you like – out of the equation – the possible profit is very small. A good writer, whether literary, practical or of general non-fiction often only sells 1500 in hardcover- say $20 ea. ($3000 at 10% royalty) – and 6-7000 in paperback, say at $8, ($2800 at 5% roy which is generous these days as usually any high discount sales are accounted on publishers receipts, i.e. after the discount to the bookseller is knocked off), the earnings for the author would be something in the region of $6000. One hears about the huge advances authors are getting but there are an awful lot of authors who only get an advance of $5000 or even less.
Why should the big chains and Amazon etc get the massive discounts of as much as 70%? It is because publishers, once the set price of books went, have been daft enough to allow it to happen. But it means the chains are now geared up to this sort of profit per book – huge premises, high salaried executives, etc – and it is hard to change. But looking at it from the author’s p.o.v. any erosion of their share of cover price when an ebook replaces a paperprint one, could be very damaging. And $6000 for a year’s work is not exactly a princely wage.

Pantasillia, have you considered that ebooks can enable the other 99% to make a living wage by shifting money from the high-visibility 1% to their output? The technology disruption of ebooks levels the playing field a lot and the new emerging publishing channels will likely be moving sales from tthe BPHs to smaller publishers/packagers and the authors.
Frankly, I see authors fears of ebooks as slaves looking at an open cage door and cowering in a back corner out of fear of freedom.
Yes, ebooks = change.
But as you pointed out, for most authors the status quo is so bad, it can hardly get worse, so what is there to fear?
They should jump in; the water is fine.

Felix, don’t get me wrong; I rejoice in any change which might allow an author to earn more from their creative effort and allows more people access to their work. I don’t think authors are frightened by ebooks; they are concerned that digitisation leaves them with a less easy to control copyright and of course this is ultimately all they have to sell. And the vast majority are not able to spend many hours a day on blogs, twittering or otherwise generating interest in their work. Many have to do another job to pay their way and a large proportion are not computer savvy. I know many who still use a manual typewriter rather than a computer and this is because it improves their writing – time to think and the discipline of NOT being able to cut and paste. But I digress. The current chaos is because the Big Boys did not embrace ebooks and work out how to change the business model when they first became available. They saw them as a fad like the CD-RoM on which they had lost fortunes and the early e-readers, only five years ago, were expensive and clunky objects. Only the most techno-loving authors knew anything about them and most agents and book sellers also ignored them.
But now it is different and some model has to be invented where an author can control their copyright and fairly benefit from it. Google blithely digitised out of print books whether they were in copyright or not. They then intimated they were doing authors a favour in selling them. In some cases this might be so but some writers do not want certain books reproduced or they might want to make changes. THEY should be in control. But unless they happened to hear the news on the grapevine they might know nothing about this piracy.

Pantasillia, I agree with most of what you say.
Especially on Google and their vile land grab.(Funny how they talk of “orphan works, as if the creators are dead, huh?)

My main point is that the people with the most to *gain* from the mainstreaming of ebooks, the mid-list and new authors, for the most part are not standing up for themselves; instead they are letting the entrenched oligarchic powers (and the million-dollar advance types) set the terms of debate and poison the well. If they don’t recognize that in the current market their relationship with their readers is part of the job they are in for sad times. Good bad or indifferent this is simply the reality of the 21st century. Doesn’t mean they have to spend eight hours a day online promoting their work, but an hour or two a month posting a blurb or two on a personal web page would maintain a line of communication open. (Not insulting the intelligence of the buyers by parroting corporate spin would also help.) Given that the BPHs will *not* promote any book not expected to be a monster seller (your basic self-fullfilling prophesy) *somebody* has to pick up the marketting slack for mid-list books. In recent years it has been retailers. Well, thanks to the Agency Price Fix, that option is likely going away. With both Amazon and B&N doing House Brand publishing and ebooks taking up an ever growing share of sales the power of the BPHs is headed the same way as their reputations; down.

It is in no author’s interest to tie their *personal” brand to a reader-hostile conglomerate. Not when consumers and authors have a common interest; getting the ideas out to as broad an audience as possible and getting as much money as possible to the authors so they can crank out more stories. You won’t see much debate on that.

The problem is that such an agenda poses a threat to the entrenched powers who see *their* slice of the revenue pie is what comes under pressure by the elimination of their paper-driven controls so they have chosen to try and retake control through price fixing to protect their interests. But it has to be understood, especially by the authors, that it is the Big Publishing Houses’ interests that the Agency model serves. Not their and not consumers’.

Not the customers interests, as they are being deprived of the ability to play one retailer against the other and are now expected to pay more than under the wholesale model for the exact same content(which renders most of the apologists laughable), and certainly not the authors, who are going to find their share reduced because it will be calculated against the new street prices, not the old list prices, and because their higher-priced Agency books will be in competition with content from publishers more interested in maximizng *total* revenue instead of maximizing *Unit* revenue. (As an agent, I’m sure you understand the difference, right? Volume matters. 100% of nothing is still nothing.)

It is well documented that Agency pricing was instituted to shield Apple from competition, on the theory that giving the other retailers a larger share of *per unit* revenue would bribe them into stopping price competition at the retail level. (riiighhht!)

Unfortunately for the 5 BPHs suckered into the scheme, number 6 didn’t bite. (Let’s hear it for Random House! Lets hope that 40% boost holds up.)

Neither have most of the mid- and small-size publishers that still make up over half of the Amazon and B&N catalog.

Price fixing only works when everybody plays so the poor authors being fronted by the Price Fix Five are in for a hard time until the scheme collapses.

The origins and intent of Agency pricing are too well documented for any informed person to fall for the BPHs party line at this late date. Defending the scheme only aligns you with the people who have publicly declared war on readers.

And that is not the side any rational, informed person wants to be in, in a buyers’ market.
Peace!

“What I would pay for is a library model where I just check out the e-book for $.99 for a week or two and then is disappears.”

My public library has been lending ebooks (and audio) for a few years now FREE of course. It’s great for non-keepers or trying new authors. I don’t rent paperbacks from them, and therefore I shouldn’t have to pay for an ebook loaner. That’s not a good thing unless it’s a new release, then I might bite.

“have you considered that ebooks can enable the other 99% to make a living wage by shifting money from the high-visibility 1% to their output?”

Whoa. That is a big if. You are implying that the ONLY reason the 1% make so much money is some publisher-initiated conspiracy that will be broken when ebooks gain more traction.

I absolutely disagree. that 1% make more money often because a) they wrote or wrote better what folks wanted to read and b) they did have some publisher and bookseller umph behind them. The idea that publishing houses are

Simply saying ebooks will spread the wealth around is nonsensical. As Pantsilla said, there are already many more authors in the print world that do not make nearly as much money as the top 1%, and how one thinks ebooks will magically transfer wealth from Stephen King to Noname McJohnson is beyond me.

I do notice, Mr. Felix, that you are avoiding my arguments. It seems easier to proclaim the revolution than to make it happen.

er.. to finish the abandoned thought:

The idea that publishing houses are somehow “reader-hostile conglomerates” is well, in need of substantiation. And the continued ignoring or excusing of Amazon for price fixing ebooks while accusing Apple of the same also weakens your perspective.

Well, I think it is also a faulty assumption to assume that the ebook buyer would have bought the hardback in absence of an ebook option. I am a lifelong reader, read in the range of 100 books a year, and have never bought a hardback in my life. In my case, it was second-hand stores, until ebooks came along, and the author gets zero profit on those. When pricing the book, you have to consider not just what IT costs, but what the cost is of whatever alternatives the reader also has available. Would you rather price the hardback $2 higher and lose a bunch of readers to the second-hand paper market? Or would you rather price it reasonably and have them buy it new, from you? I don’t think this is about customers being so cheap that they want to deprive the author of their due. I think it’s about a) customers not wanting to feel like they are being thought of as stupid and are being taken advantage of (e.g. the $25 ebook of the $6 mass market paperback) and b) customers not feeling like that’s what the higher price is going for anyway

Felix I think you are unrealistic about the feasibility of authors standing up for themselves. There are organisations such as the Society of Authors, the Authors’ Agents Association in the UK and similar organisations in the States, who are doing what they can to fight the author’s corner. But if you think of each author as a separate business working in isolation you can see how hard it would be to get a majority of them to gang up and turn down offers from publishers. Most of them are thrilled to get any sort of offer and are not going to risk losing a deal because of some small print which might well be remote for them. If the agents and organisations gang up they are at risk of infringing the anti=trust laws. There are a very few altruistic best selling authors who will take a stand on behalf of other writers but it is rare, and not to be relied on. I know a lot of best selling authors who are not at all happy about the present situation. For instance why should Amazon insist on exclusivity if you do a deal with them – what about all the people who have Apple machines? Are they not to be able to get an ebook? It is pretty nerdish to have multiple platforms and most normal people buy one and pray it wont become obsolete for a few years. I think many people are trying to work this through and to suggest authors are siding with the BPH against their readers is a mistake. Authors have been at the bottom of the heap for thirty years or more. Publisher’s have been complaining about massive advances but these only go to a very few. Author’s and their agents have been asking for them if they possibly can because unless a publisher has paid up a large amount they do sweet FA after the first few months to promote or sell the book.

I am not an advocate for the Agency Model. Nor am I against it. Personally I do not think ebook rights should automatically be part of the initial grant to a publisher. I probably live in cloud cuckoo land but I think publishers should offer for what they can do – i.e. publish paper print books – and the author can then find the best ebook outlet. It might well be a branch of the publishing house but not necessarily. Once the market for ebooks reaches critical mass most of the BPHs will have an ebook section and there will also be smaller specialist ebook producers. One of the best ebook publishers I know started life as an agent and over ten years ago saw the opportunities in digital publication. I sold him several major authors and we agreed terms platform by platform.

Whatever emerges after the brouhaha has settled I hope it will be fair for the three producers, author, publisher and seller, and also fair for the reader.

And Lynn you are right; there is always the library and so long as the author gets his Public Lending Right payment in the same way as he does on pbooks – no problem.

And Occam; publishers are certainly not “reader hostile” but I do think that perhaps some of their Boards of Directors and senior executives are in danger of being more interested in their shareholders and protecting their own lifestyles than in supplying their readers with affordable and wide-ranging literary works of all genres.

Joanna I agree; ebooks are something different. I agree with Atilla in that one might well want both ebook for reading in certain situations and hard or paperback to mark up, curl up with in the evening or pass on to children. I buy books at charity shops, jumble sales, second hand shops, railway stations, and even in book shops and occasionally – if reluctantly – from chains. They all have their place.

PS I now have a massive physical book problem = far too many of them and not enough shelf space. Time for me to restock the charity shops, jumble sales etc etc. How do I get all my books digitised?

Yes, Pantasillia, I too have too many books. Tis is why I prefer ebook for fiction, then I can buy as much as I want and not have to store it 🙂 I still do prefer paper for cookbooks and some other things.

Thanks for the info in the comments!

Now I know where to get library ebooks – the library! Duh! And I hear that the vanity press is what I thought it was — not very good quality. And some insight into Amazon pricing for authors. I wrote a book on energy that was never published and lapsed and an finishing a fiction book and now will have to find alternatives to Lulu I guess.

On the tech side: I just loaded Safari 5.0, sorry I live in Sillycon Valley it’s in the water here, and tried the ereader feature on this article. It makes a nice page for the blog post, but does not allow one to read the comments the same way. Technology keep going and going.

The agency pricing model is basically price fixing. If there were any type of regulatory control in this country it wouldn’t be allowed to have gone on this long.