Agency Model for E-book Pricing Prevails

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8 March 2011

I know the title of this post sounds like something from a trade magazine.  I actually am a self-proclaimed un-expert on this issue, but I’m trying to get up to speed. According to Publisher’s Weekly (a week or so ago – see, I know, I’m behind), Random House was the last of the big publishing houses to switch to the agency model of e-book pricing:

In the agency model, publishers set the price and designate an agent—in this case the bookseller—who will sell the book and receive the 30% commission. Adopting the model for e-books tends to mean e-book prices will rise, something both publishers and independent retailers applaud. Publishers believe low e-book prices devalue their books and cannibalize hardcover sales. Under the agency model once a price has been set it cannot be changed or discounted by the retailer and independent e-book retailers believe the higher prices of the agency model allow them to compete with big e-book vendors.

What I’m not clear on is why Random House took so long, what were they weighing in terms of the downside of the agency model.  I know it’s great for consumers if e-books cost $1.99; but it’s not good for book sales, and thus not good for authors.  Some things (this author believes) are worth paying for, and if we value them, we’ll hopefully be willing to do so.

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