Apple reluctant to settle e-book pricing probe

[gb18]

"...the proposed settlement could see the shredding of current "agency model" contracts..."

We can only hope.

http://www.appleinsider.com/articles/12/04/04/apple_reluctant_to_settle_e_book_pricing_probe_in_shad...

[TnTexas]

I'm not so sure ending it wouldn't be the equivalent of playing with a snake.

[patgolfneb]

Apple with its deep pockets has less incentive to settle than the others, especially if their attorney's feel DOJ is over reaching, which is plausible based on this article.

[bklvr896]

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gb18 wrote:

"...the proposed settlement could see the shredding of current "agency model" contracts..."

We can only hope.

http://www.appleinsider.com/articles/12/04/04/apple_reluctant_to_settle_e_book_pricing_probe_in_shad...

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Why can we only hope?  I don't see the end of agency model reducing prices.  If they return to the wholesale model previously in place, the retailer pays about $13 per book.  In order to make any money, they have to sell the book for more than that.  If they sold it for $13, that would only cover the cost of the book, they have to factor in overhead and profit.

The only retailer I can see who would be able to sell the books at the percieved price of $9.99 is Amazon.  No other retailer, except for Apple, who has a really insignificant share of eBook market, has the deep pockets needed to sustain this.

It seems as though a large number of folks here are expecting lower prices if the agency model ends.  If the the wholesale model changes, maybe, but if they return to the previous wholesale model, not so much.

[TnTexas]

Part of the reason the agency model came into existence in the first place was because the publishers were afraid that Amazon would continue to do exactly that - sell ebooks at below cost prices until they ran everyone else out of the ebook business. And then raise the prices.

[Irishelf]

Do you people really think retailers pay so much for the books?  They don't pay anywhere near $13.  List prices for books are as realistic as list prices for new cars-they are artificially inflated to make the consumer think they got a great deal.

[flyingtoastr Scribe]

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Irishelf wrote:

Do you people really think retailers pay so much for the books?  They don't pay anywhere near $13.  List prices for books are as realistic as list prices for new cars-they are artificially inflated to make the consumer think they got a great deal.

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For a new release hardcover from a major publisher BN/Amazon/whoever pays between $10 and $14 per copy (depending on the author of course. James Patterson books cost a whole lot more than a first-time author).

For once I really know what I'm talking about.

[Fred011]

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Irishelf wrote:

Do you people really think retailers pay so much for the books?  They don't pay anywhere near $13.  List prices for books are as realistic as list prices for new cars-they are artificially inflated to make the consumer think they got a great deal.

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I think the real numbers are very "elusive". I've seen blogs written by authors that conflict with what is said here and by publishers.  There are all sorts of litigation going on, and there are lots of opinions about which model serves which segment of the industry best, from author to consumer.

Where there is big money, there are no doubt lots of accounting gymnastics going on.

[Doug_Pardee Distinguished Bibliophile]

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gb18 wrote:

We can only hope.

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I don't think "the end of Agency Model" would go quite as wonderfully as many people think.

First off, it would only affect the five publishers. Random House would still be using the agency model, and they control titles from a fairly large list of popular authors.

Second, just before the Agency Model went into effect, four of the publishers — Hachette, HarperCollins, Macmillan, and Simon&Schuster — were saying that the alternative was "windowing": holding back the e-book release for a period of time, typically six months, after the hardcover release. If those four publishers are barred from selling on Agency Model for a time, I fully expect to see them go to windowing. Given Penguin's generally reader-hostile practices, I wouldn't be surprised if they joined in.

More controversially: it could be the beginning of the end for B&N. Already we see a lot of whining about how B&N's prices on non-Agency e-books are higher than Amazon's. Imagine what happens when that occurs "across the board." B&N has poured a huge amount of money into developing NOOK models and the e-bookstore, but continues to lose quite a bit of money on those operations and has begun accounting for them separately from the rest of B&N. There is speculation that B&N might sell off the NOOK/e-book business. But who would buy it if there's no money to be made?

[keriflur]

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Fred011 wrote:

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Irishelf wrote:

Do you people really think retailers pay so much for the books?  They don't pay anywhere near $13.  List prices for books are as realistic as list prices for new cars-they are artificially inflated to make the consumer think they got a great deal.

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I think the real numbers are very "elusive". I've seen blogs written by authors that conflict with what is said here and by publishers.  There are all sorts of litigation going on, and there are lots of opinions about which model serves which segment of the industry best, from author to consumer.

Where there is big money, there are no doubt lots of accounting gymnastics going on.

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The models are pretty straightforward.  Under the wholesale model, the vendor buys the book for 50% of the cover price, and sells it for whatever they want to sell it for.  Under the agency model, the pub sells the book for whatever they want, and the store gets 30%.

For most adult books, for new releases, this means that under the wholesale model the retailers are paying over $10 per book, and from what I've seen (from what I buy) that's usually a lot closer to $13-$14 per book (with a cover price of $26-$28).  For most YA, retailers are paying around $9 per book (which usually retail around $18) for new releases.

If you've got articles/blog posts from authors/agents/pub insiders that say differently, I'd love to read them.