7 Replies Latest reply on May 10, 2010 6:50 PM by JustTrish

    Send John Sargent to Jail

      Don't like the Agency Model pricing?  Send your complaints to someone that actually has authority to do something about it:

       


      What You Can Do

       

      Antitrust violations are serious crimes that can cost a company hundreds of millions of dollars in fines and can send an executive to jail for up to three years. These conspiracies are by their nature secret and difficult to detect. The Antitrust Division needs your help in uncovering them and bringing them to our attention.

       

      If you think you have a possible violation or just want more information about what we do, contact the New Case Unit of the Antitrust Division:

       

      E-mail: newcase.atr@usdoj.gov

       

      Phone: 1-888-647-3258 (toll-free in the U.S. and Canada) or 1-202-307-2040

       

      Address:

      Antitrust Division - New Case Unit
      601 D Street NW, Suite 10107
      Washington, DC 20530

       


       

      http://www.justice.gov/atr/public/guidelines/primer-ncu.htm

       

       

        • Re: Send John Sargent to Jail

          The problem of the Agency Model vs distributor pricing is far more complex than most people grasp at first glance.

           

          Much of the issue the publishers have isn't so much about the type of books going onto the kindles and nooks out there, but the books that will be going on in the future.

           

          Quality textbooks, especially the higher end ones, can be quite pricey to produce. Some fields like having dozens of authors on their papers, and this can lead to texts that run into the multiple hundreds of dollars. This isn't so much industry markup as the actual cost to coordinate, fact-check, and edit that many people into a cohesive whole.  The concern is that if people start getting books like that at Amazon's $10 a pop, it will devalue the work being done.

           

          An example of this problem already exists: WalMart.   WalMart is as successful as they are due to their ability to utterly control their pricing. Some items they sell at a loss in order to force their distributors to lower prices. This usually works. (IIRC WalMart has a Gross Yearly Product larger than most countries. . .) Some goods have become so devalued by WalMart that the various industries can no-longer support compitition.  For example: DVDs, Aquariums, inexpensive household items. . .  I could expound on that a bit, if anyone actually cares, but you should be able to understand my point.

           

          The current ebook pricing situation is being run entirely in black&white.  The publishers aren't thinking about mass-market paperbacks, the consumers aren't thinking about high end physics or medical texts (many of which are already subsidized).  What is needed is a middle ground, a model that looks at the actual cost to produce, encode, and distribute the book, and prices accordingly.  If publishers can make money on a $7 paperback, A $6 or $5 e-book is reasonable. Currently this is NOT the issue, as most e-books I've seen have been somewhere between the paperback and hardcover prices. Obviously something is amiss.

            • Re: Send John Sargent to Jail

              Seems to me that some comments are taking things to an extreme. Here is the way that I perceive/look at it. Remember, the following is MY OPINION, and not meant to be taken as some inviolate fact (the way some others are trying to present their opinions).

               

              1) Amazon sold books at a loss. Other companies had to follow suit or be driven out of business (this IS one form of price fixing (i.e. putting an artificial ceiling on prices) -- but you won't hear many of those who dislike the Agency model of pricing complaining about that...).

               

              2) Quite likely, a number of other retailers and sellers of eBooks began complaining to the publishers because they didn't like or couldn't compete against Amazon without selling the eBooks at a loss, and if the seller didn't have some sort of major draw product (like the kindle or the nook, etc.) to compensate for those lost sales, they would likely have been driven out of business.

               

              (note: if the publishers were being paid what they wanted for the eBooks (regardless of what the reseller sold them for), then they likely didn't have a problem -- it was most likely when OTHERS started complaining to the publishers (or stopped buying eBooks from them - i.e. lost sales) that their opinions started changing).

               

              3) The Publishers started trying to get Amazon to change their pricing schema to the Agency model. (Publishers setting their own prices is NOT price fixing, UNLESS it is done for the purposes of doing damage to a competitor -- note: Amazon is not the competitor of the publishers, but the client/customer of them).

               

              4) Apple stepped into the fray when it agreed to allow the Agency pricing model -- however, Apple contracts also required that nobody be allowed to sell the products at a lower price. I would possibly consider THIS to be price fixing, but on the part of Apple, not the Publishers....

               

              5) However, in order to comply with the Apple contracts, the publishers do HAVE to engage in what seems to be a limited form of price fixing (i.e. preventing ALL discounts by all sellers), but again, this is traced back to the Apple contract. Apparently, Apple doesn't really care what price eBooks sell for (Steve Jobs HAS been quoted as saying that he thinks reading is dead), so long as nobody sells them for less than Apple does.

               

              6) I do strongly believe that many of the prices that the publishers are setting are way too high. I personally feel that the proper price of an eBook should be about $1 to $2 less than the suggested retail price of a mass market paperback version of the book.

               

              If the book isn't ever going to have a mass market paperback version, then about 50% of the suggested retail price of the hard cover release should be appropriate. I won't go into a discussion on all of the background costs for a book, but selling an eBook at about 50% of the physical suggested price gives them approximately the same profit margin (when you figure the retailer's percentage against the percentage required for printing)

               

              7) Even though I believe that the prices that publishers are setting are often too high, I do not think that they are deliberately attempting to engage in "price fixing" as other have speculated/accused (whatever happened to innocent until proven guilty??), other than in the possibly limited form(s) I have mentioned above, based on contracts.

               

              8) To reiterate - I strongly believe that publishers have the right to set the prices for which their products sell - especially electronic products that have no physical substance. I do not believe that electronic products can/should be treated or handled in the same fashion as physical products.

               

              9) I also think that publishers are right for not wanting to allow certain retailers to use deep discounts on products to reduce their (the retailer's) competition - as that hurts everybody including the end customer in the long run (i.e. less competition means less sales overall means less profits for the publisher means less capital to produce more new products means less for customers to purchase, etc... into a slow but steady downward spiral)

               

              10) The publishers are apparently (from everything I have read/heard) using a pricing model similar to what they do for books, with initial releases being more costly, and then reducing the prices incrementally until they hit the bottom price.

               

              11) The best way to get lower prices on newer books is to not buy the new books until the prices do drop down to more appropriate levels. This WILL eventually happen, but it will be a slow process.

               

              12) Seems to me that some of those who argue so vehemently against the Agency model are apparently for the monopoly-like practices of a retailer who uses deep discounts to kill off the competition over the efforts of the publisher to make sure that all retailers get an equal chance at your money...

               

               

              As I said above -- all of this is just my opinion on this situation. I think that that is about the best that I can articulate my position on this topic, so I am going to try to stay out of further discussion on it if possible...:smileyvery-happy:

               

               

              • Re: Send John Sargent to Jail

                Rasyar, I could not have put it better myself - even if I had the time/desire to do so.

                What a lot of people don't seem to realize is that all these companies are working/existing in a FREE MARKET ECONOMY. This means that THEY can set the price they wish to sell at and WE (the consumers) can set the price we want to buy at. If the two prices don't match - then just don't make the purchase. NO ONE is holding a gun to anyone's heads and saying, "You have to buy this NOW AT OUR PRICE!"

                But the idea of sending the owner/CEO of one of the publishing houses to jail seems a bit retarded to me - again only my personal opinion and I am not a lawyer.( I do have a very extensive background in retail though as a worker/manager/owner/consultant.)

                Do I think that the prices for the "agency model" ebooks are too high - in many cases yes. In the case of NEW books, not so much (you want to read a newly released book, either pay the price, wait for your library to get it or wait for the cheaper version, just like the world was pre-ebooks - in the cases of older books that have been released as paperbacks, yes when the ebook price is higher than the available paper version.

                  • Re: Send John Sargent to Jail

                     

                    swandy wrote:

                    Rasyar, I could not have put it better myself - even if I had the time/desire to do so.

                    What a lot of people don't seem to realize is that all these companies are working/existing in a FREE MARKET ECONOMY. This means that THEY can set the price they wish to sell at and WE (the consumers) can set the price we want to buy at. If the two prices don't match - then just don't make the purchase. NO ONE is holding a gun to anyone's heads and saying, "You have to buy this NOW AT OUR PRICE!"

                    But the idea of sending the owner/CEO of one of the publishing houses to jail seems a bit retarded to me - again only my personal opinion and I am not a lawyer.( I do have a very extensive background in retail though as a worker/manager/owner/consultant.)

                    Do I think that the prices for the "agency model" ebooks are too high - in many cases yes. In the case of NEW books, not so much (you want to read a newly released book, either pay the price, wait for your library to get it or wait for the cheaper version, just like the world was pre-ebooks - in the cases of older books that have been released as paperbacks, yes when the ebook price is higher than the available paper version.

                     

                    I have never understood this reasoning.  Hardcovers are set at their own price, as their own format.  So are paperbacks and audiobooks.  The list price of a hardcover doesn't change just because a paperback has been released.  When it was released is a poor excuse.  Many books are never released in hardcover and are published immediately as mass market paperbacks.  None of those books have higher prices just because they are new releases.  They are priced as their format dictates.  Why should ebooks be exempt from this practice?

                     

                      • Re: Send John Sargent to Jail

                         

                        Nallia wrote:

                         

                        I have never understood this reasoning.  Hardcovers are set at their own price, as their own format.  So are paperbacks and audiobooks.  The list price of a hardcover doesn't change just because a paperback has been released.  When it was released is a poor excuse.  Many books are never released in hardcover and are published immediately as mass market paperbacks.  None of those books have higher prices just because they are new releases.  They are priced as their format dictates.  Why should ebooks be exempt from this practice?

                         

                         

                         

                        Yes.  This is my point exactly.  Hardcovers all have a baseline price.- somewhere around $25 give or take.  You don't have some hardcovers novels released at $25, others at $35 and yet others at $15.  Similarly, MMPBs are @ $7.99, if they priced any at $12, no one would buy.

                         

                        But somehow the marketing departments of the major publishers have all done a bang up job of convincing people that eBooks should have all sorts of bizarre pricing for all sorts of bizarre reasons.

                         

                        At the end of the day, all the are doing is granting permission to access one file to many people over and over.  And a file that, unlike music and movies, will probably not be read (ie used) more than once.

                         

                        But I wouldn't send John Sargent to jail.  That's just absurd. It's not his fault people buy eBooks at ridiculous prices.  He's a businessman and they all make hay while the sun is shining.

                         

                         

                         

                  • Re: Send John Sargent to Jail

                    @sub_rosa

                     

                    Great idea, great contribution -- thanks!