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Agency Pricing


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Initial post: 14 Oct 2010 17:29:49 BDT
Last edited by the author on 14 Oct 2010 18:04:24 BDT
Dear Customers,

Recently, you may have heard that a small group of UK publishers will require booksellers to adopt an "agency model" for selling e-books. Under this model, publishers set the consumer price for each e-book and require any bookseller to sell at that price. This is unlike the traditional wholesale model that's been in place for decades, where booksellers set consumer prices.

It is indeed correct that this group of publishers will require Amazon and other UK booksellers to accept an agency model for e-books. We believe they will raise prices on e-books for consumers almost across the board. For a number of reasons, we think this is a damaging approach for readers, authors, booksellers and publishers alike.

In the US, a few large publishers have already forced such a model on all US booksellers and readers. You can read the thread we posted about that change here:
http://www.amazon.com/tag/kindle/forum?cdForum=Fx1D7SY3BVSESG&cdThread=Tx2MEGQWTNGIMHV&displayType=tagsDetail

As we're now faced with a similar situation in the UK, we wanted to share our thinking and some details about what we have observed from our experience in the US.

First, as we feared, the US agency publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster) raised digital book prices almost across the board. These price increases were not only on new books, but on older, "backlist" books as well (in the industry, "backlist" books are often defined as books that have been published more than a year ago). Based on our experience as a bookseller setting consumer prices for many years, we know that these increases have not only frustrated readers, but have caused booksellers, publishers and authors alike to lose sales.

There is some good news to report. Publishing is not a monolithic industry - there are many publishers of all sizes taking a wide range of approaches to e-books. And most publishers in the US have continued to sell e-books to us and other booksellers under traditional wholesale terms. They make up the vast majority of our Kindle bookstore - as a simple proxy, in our US store 79 of 107 New York Times bestsellers are priced at $9.99 (6.31 GBP) or less, and across the whole US store over 585,000 of 718,000 US titles are priced at $9.99 or less.

Unsurprisingly, when prices went up on agency-priced books, sales immediately shifted away from agency publishers and towards the rest of our store. In fact, since agency prices went into effect on some e-books in the US, unit sales of books priced under the agency model have slowed to nearly half the rate of growth of the rest of Kindle book sales. This is a significant difference, as the growth of the total Kindle business has been substantial - up to the end of September, we've sold more than three times as many Kindle books in 2010 as we did up to the end of September in 2009. And in the US, Kindle editions now outsell hardcover editions, even while our hardcover business is growing.

In the UK, we will continue to fight against higher prices for e-books, and have been urging publishers considering agency not to needlessly impose price increases on consumers. In any case, we expect UK customers to enjoy low prices on the vast majority of titles we sell, and if faced with a small group of higher-priced agency titles, they will then decide for themselves how much they are willing to pay for e-books, and vote with their purchases.

Thank you for being a customer,
The Kindle UK Team

In reply to an earlier post on 14 Oct 2010 17:42:17 BDT
Damaskcat says:
Very helpful Kindle UK Team - thnak you for keeping us in the picture

Posted on 14 Oct 2010 17:49:02 BDT
Dennyboy says:
So thats it looks like books could be changing in price and a lot of people who wont pay more than 3.50 for a book wont be buying any!

Posted on 14 Oct 2010 18:00:41 BDT
Joe says:
Isn't this a cartel? Is this not illegal? I thought the conservatives abolished price-fixing on books back in Thatchers time?
I will write to my MP and see what response I get.

Posted on 14 Oct 2010 18:09:38 BDT
rayv says:
Well done Amazon We the paying public will fight this price fixing in my opinion. We shouldn't buy the books of these greedy so and so's.

Posted on 14 Oct 2010 18:17:38 BDT
Paul13 says:
This sounds very much like the "Net Book Price" situation of a number of years ago when all books had to be sold at the price set by the publisher. If I remember rightly, this situation ended when big sellers and supermarkets challenged the practice and won. I see no reason for the publishers returning to their old ways and wonder why they are doing so. As I see it there are some real advantages to the publishers from selling e-books. Unlike paper books they cannot be passed around or end up in second-hand book shops. Each book sold will have a relatively small readership limited to an individual or family. This should lead to increase sales. I would be interested to know the breakdown of an e-book's price compared with a paper book. By this I mean how much goes to the publisher, the author, end seller etc. From this information we might get an insight into why the publishers want to change the rules.
Paul

Posted on 14 Oct 2010 18:25:01 BDT
Mr. A. Neil says:
Is there any way you could put a flag, or star or some other symbol on the product pages of the publishers who are trying to force their prices on us, so we know which books to avoid (or at least to think twice about buying) ... or put a "fairtrade" symbol on the products of those publishers who don't?

Something like?:
"warning: buying this book will support a publisher who wants to increase book prices for all"

Posted on 14 Oct 2010 18:33:07 BDT
Izzy says:
I *think* that the publishers under Hachette are: Little Brown Book, Headline, Hodder & Stoughton and John Murray. Anyone in the know please feel free to confirm/correct/add as necessary.

Posted on 14 Oct 2010 18:42:47 BDT
Dennyboy says:
http://www.hachettebookgroup.com/publishing_publishing-groups.aspx

Izzy here are all the companies and subsidiaries involved

In reply to an earlier post on 14 Oct 2010 18:51:17 BDT
D. Clark says:
Is there any way you could put a flag, or star or some other symbol on the product pages of the publishers who are trying to force their prices on us, so we know which books to avoid (or at least to think twice about buying) ... or put a "fairtrade" symbol on the products of those publishers who don't?

Something like?:
"warning: buying this book will support a publisher who wants to increase book prices for all"

I'd like to see something like this too :)

Posted on 14 Oct 2010 18:53:52 BDT
Knightmare says:
Thanks for the information Amazon. I for one will definitely not be buying books at unfair prices and hope that everyone will stick to their guns and not let the publishers bully us into paying over the odds for their products.

Posted on 14 Oct 2010 18:54:53 BDT
Last edited by the author on 15 Oct 2010 07:38:45 BDT
Ethereal says:
Doesn't this mean that self-published e/kindle books will be even better placed in the market because they can undercut the publishers?
Edit: negged by a publisher perchance?

Posted on 14 Oct 2010 19:02:01 BDT
Last edited by the author on 14 Oct 2010 19:10:15 BDT
Kindle Power What about a BOOKS to AVOID thread???

Posted on 14 Oct 2010 19:35:30 BDT
M. Daniels says:
This is retail price maintenance by the back door and should be challenged. Why not take a full page spread in a broadsheet and bring it to more people's attention

Posted on 14 Oct 2010 19:36:10 BDT
Paul13 says:
I wonder if the publishers are under pressure from the sellers of traditional books. There are a lot of book shops who must be seeing the e-book as a real challenge. Also, there are all the others who live off the paper book, printers, second-hand book shops etc. Not buying e-books from the above mentioned printers might not be the real answer, especially if we then go out and buy the paper version.

Posted on 14 Oct 2010 19:48:55 BDT
Last edited by the author on 14 Oct 2010 19:52:29 BDT
A Reader says:
I thought a conspicuous, coloured icon for those as well. The legal issues with such a labelling would have to be clarified first. The other problem is several of those are amongst the biggest publishers in the business - in the top five - will we really not buy a title when our favourite author comes out with their new release within their fold? I hope Amazon takes the lead in changing their 1-click only buying option and perhaps give us some way to set desired price bracket for our basket or want list so we can be notified and so reward good pricing.

Posted on 14 Oct 2010 20:04:23 BDT
Cuchulainn says:
Well, this is interesting, we do have some great laws against price-fixing and monopolies in the U.K. and the E.U. This might not exactly work the way the publishers want.

Posted on 14 Oct 2010 20:33:33 BDT
In the US, Amazon flags these books with "This price was set by the publisher." If it's a book I really, really want to read, I'll get it from the library. I won't even buy the paperbook which is what these publishers want.

I'm sorry that this hurts the authors, but they, too, need to band together and start protesting these piratical practices.

In reply to an earlier post on 14 Oct 2010 20:39:38 BDT
S.L. Baum says:
***Is there any way you could put a flag, or star or some other symbol on the product pages of the publishers who are trying to force their prices on us, so we know which books to avoid (or at least to think twice about buying) ... or put a "fairtrade" symbol on the products of those publishers who don't?***

On the US site - amazon has a note to let us know - here is an example of a Ken Follett book

Fall of Giants [Kindle Edition]
Ken Follett (Author)
Print List Price: $36.00
Kindle Price: $19.99 & includes wireless delivery via Amazon Whispernet
You Save: $16.01 (44%)
Sold by: Penguin Publishing
This price was set by the publisher

**This price was set by the publisher** is our indication that Penguin Publishing has tied Amazon's hands on the price of the Kindle edition of this novel.

S.L. Baum
A Chance for Charity (The Immortal Ones)

Posted on 14 Oct 2010 20:41:12 BDT
Mrs Stoves says:
sadly this will just open the door for pirated books.

Posted on 14 Oct 2010 20:45:48 BDT
1jim says:
I too would like a warning on the book page so I could choose not to buy it, I hope they use the phrase above (Margarets post)
I would have thought Amazon.co.uk was big enougth to launch a legal challenge, I was under the impression that you could have rrp, a suggested selling price or other indication of what they would like to get for the book but they couldnt dictate the price the retailer charged (Im sure they used to call that price fixing)

Posted on 14 Oct 2010 20:45:56 BDT
Charlie says:
Greedy publishers....surely if it starts being cheaper to read a "real" book then people will

Posted on 14 Oct 2010 21:03:45 BDT
What I can't understand is that, even though Amazon discounts the sales prices, the publishers were getting paid on their list price. They lost nothing the way things used to be.

Posted on 14 Oct 2010 21:04:15 BDT
Paul13 says:
I'm not sure it is as Charlie puts it "Greedy publishers". They get paid for e-books as well as paper ones. Its those who deal only in paper books who must be pulling the strings. I think Margaret Lake has it right get the book from the library.

Paul

Posted on 14 Oct 2010 21:21:03 BDT
Charlie says:
I have just got my Kindle and thought of paying a tenner for a book for instance is not an appealing one. No wonder Amazon aren't happy...will affect their sales and ultimately the book market
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Discussion in:  kindle discussion forum
Participants:  373
Total posts:  1883
Initial post:  14 Oct 2010
Latest post:  16 Dec 2012

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