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Frequent Contributor
yahma
Posts: 34
Registered: ‎09-24-2010
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Re: Publishers join Agency Model--Where was I?

Can someone please explain the term "Agency Model"?

Thanks.

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Tboner
Posts: 144
Registered: ‎01-19-2010

Re: Publishers join Agency Model--Where was I?

Here's a quote that explains "Agency Model" for you from an article on this subject.

 

BTW this was a Google away...

 

The agency model allows publishers to set retail prices, with retailers earning commissions for each sale. The traditional system had allowed retailers to set their own prices, with some such as Amazon even selling select content at a loss in order to draw in customers. Many publishers viewed the practice as devaluing their content and threatening the long-term viability of the industry, but Random House has been reluctant to shift away from it. Even with today's announcement, Random House will continue to use the traditional model for its physical books.

 

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RHWright
Posts: 1,619
Registered: ‎10-21-2009

Re: Publishers join Agency Model--Where was I?

I'm prepared to get lambasted for this, but...

 

In theory, I think the agency model is a better and fairer structure for creators, publishers, and consumers. It also levels the playing field for retailers large and small. In particular, consumers don't have to make a purchasing decision forced by the price of content. It's the same at every outlet. It allows us to purchase based on things like preferred hardware and customer service and support.

 

As I said, this is great in theory. So far, publishers can't seem to figure out pricing in this system that makes people happy. Admittedly, the "I will never pay over $9.99 for a new release and all backlist should be $0.99" crowd will never be made happy. Personally, I'd be happy if the Agency publishers were more like RH. The items on my wishlist only went up between $0.03 and $2.00, and in some cases dropped as much as $2.00 (to $7.99).

 

Too many of them seem to be taking this as an opportunity to retest the market for how high the average consumer will pay, now that Amazon's arbitrary, artificial, loss-leader $9.99 price point has been kicked to the side.

 

I think we will see publishers try many different, innovative pricing schemes as they try to grow and maintain this relatively new market.

 

In the meantime, don't expect me to pay $13.99 for Watership Down . Good book, but not gonna happen.

 

OK, I'm gonna put my collander on now and duck & cover...:smileywink:

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swan480
Posts: 303
Registered: ‎10-19-2006
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Re: Publishers join Agency Model--Where was I?

 


RHWright wrote:

I'm prepared to get lambasted for this, but...

 

In theory, I think the agency model is a better and fairer structure for creators, publishers, and consumers. It also levels the playing field for retailers large and small. In particular, consumers don't have to make a purchasing decision forced by the price of content. It's the same at every outlet. It allows us to purchase based on things like preferred hardware and customer service and support.


 

But the problem is that it eliminates the fair market system.  And it actually is worse on small booksellers, in my opinion.  If you can't shop around and find a different bookseller with a better price or use a coupon, how are you going to choose who you buy from?  Obviously, you will have to know a bookseller in order to make the decision to buy from them, and you're no longer motivated by price to look for other booksellers than the big names.  Some people will make the decision to buy from indie booksellers, but those are the people who likely would have anyways, regardless of price fixing.  So ultimately, the agency model favors big, well-known booksellers over smaller booksellers.

 

I believe a bookseller's profit margin ought to be their decision.  If a bookseller wants to mark a book down and make less of a profit on it, why should that be any business of the publisher's?

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Coanda-1910
Posts: 128
Registered: ‎03-04-2010

Re: Publishers join Agency Model--Where was I?

 


swan480 wrote:

 


RHWright wrote:

I'm prepared to get lambasted for this, but...

 

In theory, I think the agency model is a better and fairer structure for creators, publishers, and consumers. It also levels the playing field for retailers large and small. In particular, consumers don't have to make a purchasing decision forced by the price of content. It's the same at every outlet. It allows us to purchase based on things like preferred hardware and customer service and support.


 

But the problem is that it eliminates the fair market system.  And it actually is worse on small booksellers, in my opinion.  If you can't shop around and find a different bookseller with a better price or use a coupon, how are you going to choose who you buy from?  Obviously, you will have to know a bookseller in order to make the decision to buy from them, and you're no longer motivated by price to look for other booksellers than the big names.  Some people will make the decision to buy from indie booksellers, but those are the people who likely would have anyways, regardless of price fixing.  So ultimately, the agency model favors big, well-known booksellers over smaller booksellers.

 

I believe a bookseller's profit margin ought to be their decision.  If a bookseller wants to mark a book down and make less of a profit on it, why should that be any business of the publisher's?


 

It means the smaller bookseller has to provide some value beyond simply price (as does the larger bookseller, for that matter). As RHWright suggests: hardware, customer service, and support.

 

For example, under the Agency model I can be reasonably sure that ebooks I buy from the major publishers will cost the same no matter where I buy them from - which means if some mom-and-pop bookstore were to come up with a much better search and suggestion algorithm, I'd probably bookmark that page and never look back. I'd be able to select books more interesting to me and spend less time digging through slush. In a more traditional distributor model, creating that sort of streamlined customer browsing experience isn't really worth the trouble - because I'd still end up just price-shopping around afterwards anyways.

 

By no means has it "eliminated" the fair market system. Anyone is still free to create an eBookstore, and the one who provides the most value to customers will still be the most popular. All it's done is place one restriction on how a bookstore can provide value.

Distinguished Bibliophile
ABthree
Posts: 4,123
Registered: ‎01-27-2010

Re: Publishers join Agency Model--Where was I?

[ Edited ]

 


RHWright wrote:

I'm prepared to get lambasted for this, but...

 

In theory, I think the agency model is a better and fairer structure for creators, publishers, and consumers. It also levels the playing field for retailers large and small. In particular, consumers don't have to make a purchasing decision forced by the price of content. It's the same at every outlet. It allows us to purchase based on things like preferred hardware and customer service and support.

 


That, summarized simply and elegantly, has been the intellectual argument for monopoly ever since capitalism began, and was the argument for mercantilism before that.  And, except for the consumers, it CAN be structured to be more beneficial to the other stakeholders than free competition is.  That's the model on which the CAB structured air travel in this country for years -- back when you could get a hot meal on your transcontinental flight, but the seat cost you a thousand 1960 dollars.  All the carriers were in the black, and quite happy.  As with regulated air travel, unless you count freeing them from the stress of having to make choices as a "benefit", all the benefits to all the others come at the expense of the consumer.

 

 

Make no mistake:  as soon as we talk about leveling "the playing field for retailers large and small", we're talking about subsidizing the small and the inefficient.  While the subsidy appears to be at the expense of the large and efficient, ultimately it's at the expense of the consumer, who is the only source of real revenue in the cycle.

 

Competition inevitably creates winners and losers, but the consumer is generally among the winners.  Market management by sellers, of which the Agency Model is a textbook example, can create fewer losers; in the market managers' ideal world, just one -- guess who. :smileyvery-happy:

+LORD, preserve the good in their goodness, and+
+in your kindness, make the wicked become good.+
-- St. Basil the Great+
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GetLostInABook
Posts: 116
Registered: ‎01-29-2011
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Re: Publishers join Agency Model--Where was I?

So what will they do when I decide that the benefits of an ereader are out-weighed by the pricing, DRM, inability to lend and borrow, ect...  and go back to buying most of my books from used book stores where the publishers, authors and so on don't get any of the money from my purchase?

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frantastk
Posts: 743
Registered: ‎06-29-2010
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Re: Publishers join Agency Model--Where was I?

Okay, don't shoot me, but I just found an unexpected plus of the Agency model. A little while ago my little local indie bookstore (okay it isn't little, it's enormous and freaking awesome!!) partnered with the Google ebookstore to sell e-books. I was sooo excited that I could support by local bookstore that I've been going to and hanging out since I was in high school by buying e-books. Until I clicked the link to their Google store. Umm, the e-books were going for twice what they were in the actual Google store and the selection wasn't that great. Well, it just occured to me that Agency books might no be allowed to be marked up and I was right. So my local store gets to sell the books for the same price they are everywhere. Granted, they probably get a smaller cut than they would if the books were more expensive. But I'd much rather buy a book there for $8.99 than for $16 or $17 like it was before, just for the sake of supporting my favorite store.

 

Other than that, I hate this whole Agency thing (so please don't kick me out, please, please,please). :smileywink:

 

Fran

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bklvr896
Posts: 4,818
Registered: ‎12-31-2009
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Re: Publishers join Agency Model--Where was I?

 


swan480 wrote:

 


bklvr896 wrote:

 

I don't subscribe to the $9.99 or less price point

 


 

I don't either; like I said, I actually generally pay even less, unless it's a book I really want.  But I'm much quicker to buy a $5 book than a $10 book.  That's not because of Amazon; that's $10 is twice as much as $5.

 

 


bklvr896 wrote:

 

Some books are worth more to me, I would previously have purchased as HC, therefore, I have no issue with paying $12.99 for the eBook, other's don't have that value to me, so I wait until it comes down in price

 


 

Which contradicts everything you just said about how older ebooks shouldn't cost less.

 

Take everything but paperbacks out of this discussion.  My point is that a book originally released in paperback is going to stay at the same price for the paperback, regardless of how old it is. If I buy a new paperback copy of a book released five years ago, it's going to be the same price.  Neither the publisher nor the retailer reduces the price of a paperback due to the age of the book.  So why should I expect them to do the same for an eBook?  Why would the age of the book factor into the price for an eBook when it doesn't factor into the price of the print book, again, assuming it's only ever been released as a MMP.  

 

And if you add in HC books, then, when it is first released it is one price.  A MMP is released a lower price, but 5 years from now, that MMP is still the same price.

 

The thing with older ebooks is that they don't cost as much to produce.  The expense of designing the cover, formatting and editing, etc. was most likely paid off long ago, and of course they don't cost anything to print or ship.  The other thing that the publishers ought to be considering is supply and demand.  If there is less demand for something, such as an older ebook, the price threshold at which people will buy the item is lower.  This is, after all, or at least is supposed to be, a free market society -- something which agency pricing seems to ignore.

 

Again I go to, they don't take any of this into account when selling print books, the price doesn't get lowered on a MMP due to age or time or demand, so why expect it with an eBook.  And the cost of cover design (although there may be royalties that have to be paid, I have no idea how that works) may have been paid off for that book, but current overhead costs would be allocated to any books currently produced.  But it goes back to expecting the age of the book to factor into the price, when I've never seen that happen with print books.

 

I don't have an objection to paying good money for ebooks I genuinely want.  I do, however, weigh a number of factors when considering whether the price is too much, and unfortunately for Random House, many of the books I had on my wish list now fall into that category.


Random House seems to be living in some alternate universe right now with eBook pricing, they've definitely gone off the deep end.  But, if a Random House book, with an equivalent MMP when from $5.00 to $7.99 that's probably not going to stop me from buy the book.

 

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ellsbells930
Posts: 169
Registered: ‎09-03-2010
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Re: Publishers join Agency Model--Where was I?


GetLostInABook wrote:

So what will they do when I decide that the benefits of an ereader are out-weighed by the pricing, DRM, inability to lend and borrow, ect...  and go back to buying most of my books from used book stores where the publishers, authors and so on don't get any of the money from my purchase?


Exactly.  I used to buy almost all of my books from library used book sales & schools used book sales.

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Ya_Ya
Posts: 3,334
Registered: ‎09-29-2010
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Re: Publishers join Agency Model--Where was I?

 


ellsbells930 wrote:

GetLostInABook wrote:

So what will they do when I decide that the benefits of an ereader are out-weighed by the pricing, DRM, inability to lend and borrow, ect...  and go back to buying most of my books from used book stores where the publishers, authors and so on don't get any of the money from my purchase?


Exactly.  I used to buy almost all of my books from library used book sales & schools used book sales.


They existed just fine before.  And unless you two represent the majority (clearly not because ebooks are selling at current prices) the profit from the rest of the market makes up for the minority that defects.