Much has been made of Random House’s refusal to embrace Apple and the other five big publishers’ agency pricing model, pleading inexperience at setting its own prices. As we mentioned a few days ago, Mike Shatzkin thinks Random House wants to maximize its short-term profits by being the only big publisher receiving full wholesale price from Amazon for its e-books.
Erik Sherman of BNET has another theory: he thinks Random House is opposed to agency pricing because it would give authors access to too much information.
He points out that publishers often use a number of creative accounting methods to disguise the actual royalty rates that authors are getting—”deep discount” sales, royalties based on wholesale rather than cover price, “reserve for returns”—and that agency pricing would make everything, of necessity, much simpler.
[I think] Random’s big concern is the agency model itself. For the most part, the transactions are clear and the exchange of money straightforward to follow. A publisher sells a given number of copies and gets a fixed percentage of list price for each. Forget reserves, confusing discount levels, and effectively dropping author royalties. There is no way to obfuscate the business details, and authors can demand what they should make, rather than have complexities and “mistakes” that leave authors poorer and a publisher richer.
Is this simply authorial paranoia, or could there be some truth to it?