Mike Shatzkin thinks all authors should support agency pricing

Mike Shatzkin’s latest post suggests that writers, even those who don’t write for major publishers, should be grateful that the publishers implemented agency pricing, and should be rooting for it to continue out of sheer self-interest. He casts the publishers as being analogous to unions that improve working conditions for everyone, even non-union workers.

Shatzkin suggests that there’s no guarantee the current conditions that allow self-publishers to publish cheaply and keep a large chunk of royalties will continue. He says that the higher prices are prolonging the lifespan of printed books, which will reduce revenues as well as the marketing value of having printed books visible to consumers. Lowering e-book prices would also make it harder to differentiate between them and self-published “riff-raff”.

A cost-driven print book commercial model has created a legacy business which has made consumers willing to pay $25-30 for what is for many an 8-10 hour immersive reading experience. Millions of readers conditioned this way find paying around half that price to be a great bargain. The entire mechanism by which those printed books have been selected and delivered — the aggregation and curation of the major publishers’ offerings — is depended upon by the consumers who spend all that money.

He admits that books will get cheaper, but suggests that when they do writers will make less money. If consumers find agency pricing to be too high, he says, that’s “understandable”, but writers who oppose it are acting against their own self-interest.

It’s understandable that Shatzkin would take this line, given that he’s spent decades in the publishing industry—plenty of time to be steeped in its attitudes. Note the importance he gives to artificially prolonging the lifespan of print, when even he admits that it’s on its way out.

Why is it so important that prices be kept high? Sure, high prices can be a selling point in luxury goods for the Grey Poupon set, but can books really qualify for that? I’ll grant there might be some “you get what you pay for” going on there, but one of the basic axioms of economics is that the lower you price something, the more people are willing to buy it, and the goal of pricing schemes should be to find the profit-maximizing “equilibrium price”—the price at which the number of consumers who buy multiplied by the profit per item equals the highest amount.

But instead, publishers seem to be desperately putting the cart before the horse. “Because our e-books cost this much, then this is how much e-books are supposed to cost. See? We wouldn’t be pricing them like that if they weren’t supposed to be that expensive! Now pay up and be happy.” They’re not pricing to maximize profit, they’re pricing to try to keep their ailing business model alive. Meanwhile, more progressive publishers like Baen have been happily selling e-books at $6 each, and even bundling Internet-sharable CD-ROMs full of them into printed books, for years without apparent detriment to their business.

Shatzkin points out that the biggest sellers in e-books tend to be the same as the biggest sellers in print, even at agency pricing levels. But that doesn’t necessarily mean anything—big best-sellers develop a momentum all their own that has nothing to do with the quality of the book—people will buy them even at those high prices just to see what all the fuss is about, or because their friends are. What about all the midlist books priced at agency levels? Could their sales honestly not be improved by more moderate pricing, perhaps to the point of reaching a better equilibrium? Might not fewer people be driven to piracy if they found e-book prices more reasonable?

Of course, I’ve never actually worked in the publishing industry, so I’m not privy to all the factors that go into such a decision. And I’m sure no small part of it is driven by my consumer’s desire for e-books to be cheaper so I could buy more of them. (I’m just glad so many of my favorites are already published by Baen! Though ironically enough, I just paid $15 for an E-ARC of a P.C. Hodgell novel, so apparently I’m not immune to paying agency-level prices myself if I think I’m getting appropriate value for the money.) But it just seems like an affront to common sense the way the publishing industry is being dragged kicking and screaming where it ought to be working out how it could best move with the flow.

About Chris Meadows (4149 Articles)
TeleRead Editor Chris Meadows has been writing for us--except for a brief interruption--since 2006. Son of two librarians, he has worked on a third-party help line for Best Buy and holds degrees in computer science and communications. He clearly personifies TeleRead's motto: "For geeks who love books--and book-lovers who love gadgets." Chris lives in Indianapolis and is active in the gamer community.

6 Comments on Mike Shatzkin thinks all authors should support agency pricing

  1. Steven Lyle Jordan // August 29, 2011 at 9:08 am //

    As long as self-publishers can ultimately sell their books from their own websites, there’s no reason to care about agency pricing by the publishers. It’s just one more way to drive authors out of the Publishing Castle to go it on their own.

  2. A union???? He’s kidding right? A union dosen’t keep 94% of the income it’s workers bring in. Let’s get real here. Publishers were making money hand over fist and now they don’t like that authors can actually put their fist into the pie and take a larger chunk.

  3. And just like unions, the people who pay the price are the consumers. Most unions these days are in it for their own power, NOT to improve working conditions for workers, just like publishers. Funny how that works. Like many other industries, technology has eliminated the middle man, creating a closer relationship between creator and consumer at a lower price.

  4. “A cost-driven print book commercial model has created a legacy business which has made consumers willing to pay $25-30 for what is for many an 8-10 hour immersive reading experience.” I know a lot of people who read and not one of them is willing to pay $25-$30. What they’re willing to do is buy those $25-$30 books after they’ve been discounted 25-50%. Do that many people really pay full price for hardcovers?

  5. Who takes 8-10 hours to read a book? Right now I can buy the DVD of a TV series season and get around 25 hours of ‘immersive viewing’ for around $30. I can buy an agency-priced eBook and get, say, four hours of reading. So according to this model eBooks should be priced around $5.

  6. “He casts the publishers as being analogous to unions that improve working conditions for everyone, even non-union workers. ” THAT made my day! Great! 😀

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