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!
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This is great for indie authors. I intend to undercut everyone with ebook novels at $2.99. And $2.99 looks even better when major publishers are raising book prices to $12.99 and higher for ebooks.
What they don’t seem to understand though is that now isn’t the time to be charging outrageous prices. They will lose their shirts. They “think” they’ll lose their shirts with lower pricing but they definitely will with this, IMO. There are just too many small publishers and indies putting out good books at much more affordable prices. Unless a book is by a famous person that someone just “loves” I don’t see them paying $12.99 for a digital copy.
The funny irony in all this is that it’s usually larger companies that can afford to give lower prices, but in the digital world it seems to be just the opposite.
I don’t think I’d ever be willing to sell my erights. They are just too valuable to me to give to a publisher who would price me out of the market.
>>>The price will be the same everywhere that those books are sold.
Eh, until the U.S. Department of Justice and Federal Trade Commission wake up and have a say about this. Restraint of trade, price-fixing, et al.
And won’t you have a say if, for example, you see a book a publisher is giving away for FREE at the Apple iBookstore yet Kobo must keep it at the publisher’s full price?
You know whose stock I would be investing in right now if I could? Random House’s.
They (and the indies) are going to have a field day with this. A FIELD DAY.
@Mike Cane:
As of 2007, it’s not price-fixing any more (in the US). In the 2007 case Leegin Creative Leather Products, Inc. v. PSKS, Inc. dba Kay’s Kloset, the US Supreme Court declared that it was not price-fixing for a supplier to refuse to supply someone unless they sold at the supplier’s specified price. This reversed the rules that had existed since 1911 in the US.
The ‘agency model’ publishers are going to be imposing uniform pricing across all bookstores. iBookstore will not be able to offer a price lower than Amazon or any other e-book sellers. Anyone who tries to sell for less will be cut off from selling at all.
@Doug, but it’s going to be a moot point because of the small publishers and indie authors who will severely undercut those prices. For the first time small publishers and indie authors actually have a competitive “edge.” By the time the major publishers involved in the agency model pull their heads from their collective posterior regions, it might be too late for them.
So now that the Canadian dollar is nearly par with the US are Canadian prices going to be closer to or the same as US?
Whether it’s price fixing or not (I tend to think it is), there will still be people who will sue these publishers on those grounds, so the publishers will be pumping out big bucks defending against lawsuits they never would have had to face.
Plus, their agency pricing will last as long as the big publishers play by it. It worked for the automakers & airlines until some started price wars.
Well, this ought to be fun.
Kobo – of course you can still discount. Go ahead – discount non-agency titles. Offer advantaged pricing on specific titles – add a graphic to the book’s listing (just like the bright orange ’sale’ sticker the bricks and mortar stores put on some of their books). Instead of promoting an entire genre in your emails promote specific authors or specific books. Seriously, why would you not promote the publishers who aren’t holding a gun to your head?
I refuse to pay more than 9.99 for an ebook, especially when I can get the paperback for much cheaper.
Wow, and after I got my iPod (and the Kobo app!) a few months ago, I told my husband I may never buy a paper-based book again. I guess it’s back to the used book store for me, at least until the publishers decide to sweep in and control them, too. I refuse to be gouged. It’s sad how the music industry is moving forward in the digital age, and the book industry is moving backward.
I first heard about this eBook publisher “agency model” through a Globe and Mail technology article last week. As far as I can tell and read from a few different sources now (including this blog), this reeks of price fixing among a cartel of book publishers. This is illegal under the Competition Act of Canada, and I’ve submitted an official complaint to the Competition Bureau. I’ve heard back from a representative; looking forward to developments from here.
I have purchased 200+ ebooks and audiobooks within the past year . . . I LOVE reading on my iTouch and listening on my iPod. But this whole concept of price fixing and gouging reminds me that I can always go back to the Public Library and read books for FREE . . . if the publishers really DON’T want to deal with the concept of digital publishing . . . in audio or eBook formats . . . they are truly succeeding with this move. But I thought the whole purpose was to SELL books . . . I refuse to pay more for and ebook than I would for a paperback book . . . . PERIOD!!! And if I choose to close my wallet and not buy ANY books . . . how is that going to help their sales bottom line??? I guess this will definitely give a boost to independent publishers . . . they will have a field day profiting from the greed of the big publishing houses.
Well, I guess I know what publishers I won’t be buying ebooks from, now. Do they seriously think that raising the cost of digital media will encourage people to buy it?
I agree with Rick in ON – Kobo, you should totally offer sales, discounts, coupons, promotions, etc. on all non-Agency books.
Any newer news? Talk about frustrating…
And no, I’m not sure I understand how this ‘agency model’ pricing system compares, or doesn’t compare, with the 2007 case Leegin Creative Leather Products, Inc. v. PSKS, Inc. dba Kay’s Kloset in the USA.
And is this still an example of illegal price fixing in Canada?
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