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Some post price fixing settlement thoughts

Five dollar bill stackI have a number of thoughts running around my head over the Agency pricing resolution and the post settlement state of affairs.

1)  Will Agency pricing be brought back in two years.

Per the terms of the settlement, publishers’ right to control prices will return in two years.  The question is whether the publishers will ask for this from retailers and whether retailers will agree.  As John Sargeant said, agency pricing is only worthwhile if every one is doing it.

[W]hen Random House agreed to be bound by the Penguin settlement, it became clear that all five of the other big six publishers would be allowing the whole agent’s commission to be used as discount, and Macmillan’s stand-alone selling at full agency price would have no impact on the overall marketplace.

Publishers can pull their books from retailers who do not agree to adopt Agency pricing as Macmillan did with Amazon back in 2010.  But we do not know whether Amazon caved because it was aware that all the publishers were going to impose it or because of Apple or whether Amazon feels threatened by the absence of a particular publishers’ catalog.

My best guess is that publishers will not ask for full control over pricing, but will try variations such as the one suggested by the settlement.  That form of Agency pricing allows retailers to discount but the aggregate dollar amount of the discount cannot exceed the aggregate commission.

2)  Will all the publishers allow their books to be coupon or loyalty club eligible?

They should be.  In the Impact Statement, the DOJ asserts that the agreement contemplates the following:

An e-book retailer that enters an agency agreement with a Settling Defendant under Section VI.B would be permitted to discount that Settling Defendant’s individual e-book titles by varying amounts (for example, some could be “buy one get one free,” some could be half off, and others could have no discount), as long as the total dollar amount spent on discounts or other promotions did not exceed in the aggregate the retailer’s full commission from the Settling Defendant over a one-year period.

However, we have seen that there are several publishers’ books whose prices are not being coupon eligible at places like Sony or Kobo or available for inclusion in buying clubs.  It could be that the publishers are still negotiating retail contracts or it could be that publishers are asking for things (like accounting for the discounts so that the aggregate amount is not exceeding the commissions) that are simply too onerous for retailers, other than Amazon (who has been discounting publishers’ books slightly), to undertake.

So, in theory yes, but in practice, I would guess that discounting will remain the province of the retailers who have the ability and willingness to cede to the publishers’ accounting requirements.  This doesn’t help retailers to compete against Amazon but instead gives Amazon a greater tool in its arsenal.

3)  The success of low priced books will affect the pricing of major publishers’ books more than Amazon’s discounting. 

Amazon hasn’t discounted books dramatically. Instead, individual authors self publishing are driving the prices down.  The top selling books are usually under $3.99. Both Smashwords and AllRomance, the price of ebooks have declined in the past year.  Smashwords says during the period of Agency pricing, the average price of books declined from $4.16 in October 2010 to $2.97 in March 2012.  Lori from All Romance said “the average retail price of eBooks, from $4.66 in 2010 down to $4.13 in 2012.”
Recently, NAL acquired “The Submissive”, a book that was put out through a pulled to publish company.  The pre acquisition price was $7.99 and after NAL acquired it, the price was dropped to $5.99.  Intermix, the digital first publishing arm of Penguin, is putting out full length  novels at the $2.99 price point.
Carina Press is experimenting with price points by discounting all its novel length books to $2.99 during the month of their release and for the pre-order period.These pricing experiments are coming about because of the success of low priced books raising the profile of authors and generating discovery; not because of Agency pricing.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

13 Comments

  1. Estara
    Feb 17, 2013 @ 04:51:55

    I didn’t know Intermixx was Penguin, interesting. I’m most interested in their rereleases of Nora Roberts Silhouette Romance series. They’re not as good a deal as the Jove series collections, though, they’re still selling them singly. I have some paperback collections of those which were certainly cheaper at the time. Well, if I want to read them in e, I have to accept the price they offer them at.

    Also, thanks for keeping up with this topic and for your insightful explanations, as ever.

  2. Claire
    Feb 17, 2013 @ 09:56:42

    Can I ask I all the books sold by amazon.com no longer have the ‘price set by publisher’ statement (using amazon as an example as I buy most of my Ebooks there).

    I’m in the uk an understood that the eu had passed similar judgements, but when I look online there are still a lot of books with ‘price set by publisher’. Do you know when this will actually stop, or is it just amazon.co.uk being slow?

  3. library addict
    Feb 17, 2013 @ 10:11:55

    I want to get Nora’s digital backlist from Penguin/Intermix as well as Jayne Castle’s Guineviere Jones series, and thought that once they settled these books would be coupon eligible or at least ARe’s loyalty club eligible. Nothing has really changed with the settlements if the publishers are still dictating the terms. As much as I love Nora (and some of these books are my favorite rereads) I cannot justify paying $6.99 for a book that was originally $1.75 to $4.25. Especially when I already own them in paperback.

    I have a whole list of books on my to buy list labeled as “Once no Agency Pricing.” It’s not like I am looking to get these books 2-for-1 or something. I just want them to be coupon eligible.

  4. Lisa J
    Feb 17, 2013 @ 10:51:38

    @library addict: “It’s not like I am looking to get these books 2-for-1 or something. I just want them to be coupon eligible.”

    Exactly. Or, I would like to be able to use my rewards dollars at BoB.

    I also have the NR books in paper and I would love to have them in e also, but I cannot justify spending $6.99 for a book I already have, just for convenience.

  5. Carrie G
    Feb 17, 2013 @ 10:56:38

    You wrote, “These pricing experiments are coming about because of the success of low priced books raising the profile of authors and generating discovery; not because of Agency pricing.”

    Can you explain this statement? I was thinking that the success of lower-priced books is at least an indirect result of the agency pricing and the shift of many readers (especially those who read much more than national average) to lower priced, lesser known authors. The boycott of Agency priced books led many readers to give unknown authors a try and after a year or so, the idea of paying full retail price for an ebook became unthinkable for many. It seems to me buyers used to be more than willing to pay the discounted prices at Amazon and other retailers, but now that they are used to paying under $3 for so many books, they scoff at paying $5 or more. I see people who fill their ereaders with free-to-$3 books to the exclusion of all else. And with so many well-known author’s now releasing back list titles or releasing a “teaser” book in digital format to tempt buyers, many don’t see much reason to buy new releases at retail, or even at the “old” $5.99 price point.

  6. Darlynne
    Feb 17, 2013 @ 10:58:25

    I keep waiting to see something, some result from this settlement that has anything to do with me, a reader and consumer. I’m speaking specifically about the still agency-priced books that have languished in my wish lists all over the internet while the publishers figure out what they’re doing. Honestly? It seems as though the publishers will continue to drag their feet until the two years are up and we’ll be right back to agency pricing. Sounds like politics as usual to me.

  7. Anne V
    Feb 17, 2013 @ 11:49:47

    I don’t see how it’s to any ebookseller’s advantage to discount on behalf of publishers in the current environment. It’s certainly not to my long-term advantage as a reader to have ebooksellers buffer publishers from the realities of the market.

    Initially, Amazon needed to subsidize everything – the titles and the devices – to accelerate adoption and build the ecosystem. That ecosystem is up and running now, though, and it’s not going away. Why should Amazon and other ebooksellers subsidize publishers who colluded in efforts to price-fix that were specifically directed at Amazon and consumers? Why is it the responsibility of ebooksellers to protect readers from the utter disregard of publishing? Why should readers continue to take the hits for publisher’s unwillingness to adapt their business models?

    The Big 6/5 have demonstrated that their attachment to their existing business model overrides any awareness of or interest in their actual market, which remains readers. It seems very self-destructive and I don’t understand it, but after the last 5 years, that’s fairly obvious.

    As a person who buys books, I appreciate knowing whether the seller (Amazon/ARe/B&N/BoB) set the price or whether the publisher set the price. It helps me sort out where my loyalty lies.

    Retailer discounting didn’t inspire publishers to revisit their pricing practices and business model – it inspired pricefixing and protectionism, and left the market wide open for self-publishing and an ebook reading public that is increasingly tolerant of poor & nonexistent editing, copyediting and proofreading.

  8. Wahoo Suze
    Feb 17, 2013 @ 14:31:46

    I think Carrie G has a point. This whole agency pricing thing happened just when I bought my e-reader (a Sony, as nothing else was available in Canada at the time). All of a sudden, the authors I regularly bought just weren’t available to me (geographic restrictions), or were only available at prices I wasn’t willing to pay (more for digital than paperback).

    So, in order to actually use my new toy (which I bought purely because I just did not have room to buy more physical books), I was forced to go looking for books that I wouldn’t normally even be exposed to (which turns out to be mostly m/m romance). That wouldn’t have happened if my usual preferences were still available to me.

    As a result of geo-restrictions and stupid pricing, my taste in romance has changed. Additionally, as self-publishing has become more respectable, and as I’ve learned more about the business model of traditional publishing, I’ve become convinced that there’s really no reason for me to even try to support traditional publishers. They gouge their customers (readers), and they take gross advantage of their suppliers (authors).

    I think the the publishing industry is undergoing a sea change. It will always exist, but it won’t really be recognizable in another decade or so. I think the big six will shrink or disappear (like the cliched buggy-whip factories of the early 20th century), but the world won’t really miss them. Readers will still have stuff to read, and writers will still be writing.

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  10. SAO
    Feb 17, 2013 @ 23:54:45

    Wahoo Suze states my thoughts exactly. The traditional publishers are basically middlemen demanding too much for providing too little value. They are too busy defending their business model to really experiment with different ways to provide value.

  11. Susan
    Feb 18, 2013 @ 02:00:47

    I still have a ton of $9.99 (or higher) books languishing on my wish list. Just not going to do it.

    Due to space limitations, I’m purging some of my book collection. I’d like to replace many of my older titles with ebooks, but can’t justify spending $7.99 for a duplicate copy of a 10-yr-old book.

  12. eggs
    Feb 19, 2013 @ 17:38:34

    I too would love to replace many of my old yellowing “keepers” with ebooks, but also find the $10+ pricing prohibitive. If I were B&N and had actual physical bookstores where people could drop stuff off, I would be giving readers a 35%-50% off coupon for a replacement ebook to anyone who turned in their hard copy. Turn in a paperback of Devil’s Bride, get a 35% off coupon for an e-copy of Devil’s Bride. Like-for-like non-exchangeable book specific coupons only would stop the system being abused. This seems like such a non-brainer to turn non-buyers into buyers.

    Not only would this turn non-buyers for specific books into buyers, it would force hardcore readers to actually go INTO the bookstore to get their coupon, something many of us haven’t done for years. Chances are B&N might even sell an extra book or two if they got these kinds of readers to come inside. I have no idea why they don’t do this already. In fact, I have no idea why the publishers don’t subsidise something like this to get their backlists moving again. Can you imagine how many copies of Nora Robert’s backlist they could sell by doing this?

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