Screen shot 2010-03-29 at 4.30.46 PM.pngThis is from the Kobo blog. It’s important stuff and worth reprinting in full:

From next week onward, April Fool’s Day will also be known as Agency Day or “The Day We Turned the eBook Market Upside Down and Shook It Until It Rattled”. Not that this will necessarily be a bad thing, but there will definitely be some changes. We’ve been blasting through new contract paper for agency publishers at a fairly frantic pace*. When the dust settles, it’s going to be a different world, whether you’re an ebook reader, industry watcher, publisher, or retailer. So to get you ready, here are some of the things you’ll notice starting April 1.

We’re Going to Party Like it’s $9.99

Or less! It’s the Last Days of Discount. We’ll have some great last minute promotions before they go away. How’s this: $2 off every ebook you buy between now and midnight on March 31st! Use this code: 2party and share it around!

Some Prices Will Go Up

No two ways about it. Bestseller prices are going to rise from many major publishers and we can expect more to follow. In the US, a lot of $9.99’s are going to become $12.99’s and some will be more. Not much we can do about it — we aren’t allowed to discount them. It’s pretty much a case of take the publisher’s price or lose the books.


Some Prices Will Stay the Same or Go Down

Not all publishers are doing agency (for now). So you’ll still see some books that are discounted (including from some major publishers). And we’ll be doing our best to be competitive everywhere we can.

Comparison Shopping Goes Away (Sort of)

Hunting for the best price is going to be a thing of the past, at least for titles from “The Agency 5″. The price will be the same everywhere that those books are sold. The new fight will be on shopping experience, reading experience, device coverage, and how much freedom the user has with the books they’ve been given. (That’s something we’re feeling pretty good about.)

Promotions, Discounts and Most Loyalty Programs Go Away

With agency, the price is the price. We lose most of our ability to issue coupons, promotions, special discounts, kickbacks, buy-X-get-one-free. We could still do it for non-agency titles, but then we end up in a weird situation of “Get $1 off, but only on these books, and definitely not on these other ones.” That’s not fun. And worse, it’s confusing to consumers. We’re sad about that, obviously. Not just because they’re a great way for us to drive sales, but because they help us focus attention on specific great books, reward our loyal customers, and celebrate the launch of new features, apps or services.

Marketing Wars

With price competition going away, expect to see a lot of focus in the ebook space on brand building. When prices are the same, the fight becomes on attracting customers on each service’s merits. Expect to see TV ads with people reading on devices under trees, on beaches, while bouncing joyously on trampolines, on bearskin rugs.

Random Acts

There is definitely going to be some weirdness in the coming weeks and months. Retailers are going to be trying to figure out what they can and can’t do, and occasionally making some missteps along the way. Publishers are going to be holding the pricing levers for the first time, so we can expect a bit of lurching there.

Some Delistings

As we’ve already seen, some retailers and wholesalers may not make the transition to agency in time. Publishers may not be able to close all deals by the beginning of April. Retailers may find themselves presented with terms they can’t agree to. There are a lot of system changes that have to be made on just a few days/weeks notice. We may see some books disappearing (temporarily, we hope) from some ebook retailers come April 1st.

One thing is for certain — this is the first time a media industry has raised the price on an existing format across all retail channels simultaneously. One way or another, business students and marketing junkies will be studying this for years to come. We’re going to be watching closely, working with publishers, sharing data, and generally trying to make this transition as smooth as possible.

* To give some sense of pacing, the first time we negotiated with some of these publishers it took us 4-6 months to close agreements. We will have renegotiated every agency publisher we’re working with in 20 business days. Extreme!

14 COMMENTS

  1. All together now- “I won’t buy fiction over $9.99.” Damn the publishers! What they really want is to destroy ebooks. Not happening. So hold fast, and watch them crumble.

    For the next year or so, read Public Domain books (at no cost) and let them weep. ‘Bout time I read “Moby Dick.”

  2. @Richard Askenase: I’ll match you and go one better. I’ll buy *nothing*, print or e-book, from the Price-fix Five.

    Of course, since I have three bookcases full of unread books and get 70% of me ebooks from BAEN, that’s an easy vow to make… 😉

  3. @ Richard Askenase: Nope. Not with you. I used to buy a lot of hardcovers at over twenty bucks. While there are some excessive prices that I won’t be able to stomach, if I really want the book, I’ll usually pay the price. For a new release, ten bucks is really cheap, and that’s great. But publishing costs money.

  4. What’s it called when competing companies in an industry collude to fix prices?

    Negotiations between MacMillan and Amazon were legal, but I’m pretty sure the “Agency 5” are pushing the limits when they make these kind of business decisions together to control the e-book market.

  5. Here is the probably the most important thing which has been said about the ebook market all year: “The new fight will be on shopping experience, reading experience, device coverage, and how much freedom the user has with the books they’ve been given.” I am SO glad somebody finally seems to get it!

  6. Nice, clear overview from Kobo in that blog entry. The promotion is also nice. I’ll definitely go through Kobo’s selection and see if there are any I want to grab before the prices go up.

    I’ve only ever had one must-have criterion when it comes to ebook prices: never more than the cheapest p-book price. If they do that, I won’t complain much about the loss of discounts. We’ll see how it goes.

  7. Apart from pyschological value is there really much difference between $9.99 and $12.99? I will buy books happily in that range if I want them.

    It is the $20+ prices that stop me, and make me wait for reductions/sales etc.

  8. @Christo: That kind of depends on how much you read. I’ve had a Kindle for almost a year now and my Amazon library is 76 books. Granted, about a third of those were free or near-free promotions I wouldn’t have “purchased” at normal price, but they’re more than made up for by the books I bought from Baen, Fictionwise, Kobo, Mobipocket.com, Smashwords, etc. A $2-$3 increase across the board … well, do the math. It adds up fast.

  9. @Ted It sure does add up – I daren’t add up the cost of the 900+ ebooks I have purchased over the last 5 years. If it is a book I really want, I would consider get it at anything less than $15, otherwise I wait for promotions and rebates before leaping in. Fictionwise 100% rebates are quite useful!

  10. “I’ve only ever had one must-have criterion when it comes to ebook prices: never more than the cheapest p-book price. If they do that, I won’t complain much about the loss of discounts. We’ll see how it goes.”

    That’s about how I look at it (if it’s a book I really want), although it’s nice when the price is a few bucks less than print.

    At this point it’s a done deal so it’ll be interesting to see how the prices actually play out. I’m sure a lot of the worries are real, but I think some of what’s going around might be FUD.

  11. How is this different from a Cartel? I’m all for ways to get retailers to provide better services, compete for customers etc but fixing prices I’m not sure I agree with. There are positives I presume that the retailers will see more profit because they are not having to discount to get customers – so really if you give your customer a great buying experience and all the things mentioned in earlier posts then you should be able to keep your existing loyal customers and make more money (unless the publishers are raising wholesale prices too!)

  12. In all this mess, I feel sorry for the less known authors. Large discounts and free offers have allowed me to try out authors I have never read before. A few of those were so good I immediately bought every ebook of theirs available. I am not likely to read an unknown author’s work if I can’t get it cheap.

  13. There is a lesson to be learned here from second-hand bookshops. These basically set prices on the basis of how much time they save the customer: messy shops with few books, no real arrangement, books in boxes or piled on the floor = cheap; tidy shops with neatly arranged, easy-to-find books = expensive. Once an Internet eBook distributor has all the books I want, and I can find them and obtain them easily (and read them on any device), then I am prepared to pay a premium. But as long as I have to hunt around from site to site, and usually come away disappointed, then I’m not about to pay more than a few dollars for the books I do find.

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