Last week the US division of Random House announced it would be moving to model which sees publishers set the final retail price of ebooks with retailers paid a set commission per sale.
The move came just days before an announcement that the publisher’s titles would be available via Apple’s iBookstore which only stocks titles made available under agency terms.
Many publishers, including Hachette, HarperCollins and Penguin, already sell books under agency terms. The model prevents retailers from discounting titles and means prices for a given title are usually the same across all outlets.
Industry watchers had expected Random House UK to wait until the Office of Fair Trading had completed an investigation into the model before potentially adopting it.
However unsubstantiated online rumours claim the publisher is currently briefing staff on a potential switch to agency terms and that an official announcement could follow soon after, possibly this week or next.
Agency pricing has been unpopular with some ebooks customers, notably those who were drawn to format on the promise of low-cost books only to see some prices increase once retailers lost the ability to discount.
The model has been seen by many industry observers as a defensive move, designed to protect the value of titles in a new and still developing market.
A spokesperson for Random House UK said the company did not comment on speculative rumours and referred us to its March 1st statement, issued in the wake of the US division’s announcement:
“New commercial models in the fast changing eBook environment are constantly under review.
“Across our territories – not least in the UK – we continue to evaluate our options and talk to all etailers as it is our mission to ensure that our authors’ books are available on all platforms to all potential customers.
“Our strategy is constantly evolving in the best interests both of our authors and consumers.”
RELATED: Amazon fight the switch to agency pricing:
(Amazon letter to cyustomers)
Recently, you may have heard that a small group of UK publishers will require booksellers to adopt an "agency model" for selling e-books. Under this model, publishers set the consumer price for each e-book and require any bookseller to sell at that price. This is unlike the traditional wholesale model that's been in place for decades, where booksellers set consumer prices.
It is indeed correct that this group of publishers will require Amazon and other UK booksellers to accept an agency model for e-books. We believe they will raise prices on e-books for consumers almost across the board. For a number of reasons, we think this is a damaging approach for readers, authors, booksellers and publishers alike.
In the US, a few large publishers have already forced such a model on all US booksellers and readers. You can read the thread we posted about that change here:
http://www.amazon.com/tag/kindle/forum?cdForum=Fx1D7SY3BVSESG&cdThread=Tx2MEGQWTNGIMHV&displayType=tagsDetail
As we're now faced with a similar situation in the UK, we wanted to share our thinking and some details about what we have observed from our experience in the US.
First, as we feared, the US agency publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster) raised digital book prices almost across the board. These price increases were not only on new books, but on older, "backlist" books as well (in the industry, "backlist" books are often defined as books that have been published more than a year ago). Based on our experience as a bookseller setting consumer prices for many years, we know that these increases have not only frustrated readers, but have caused booksellers, publishers and authors alike to lose sales.
There is some good news to report. Publishing is not a monolithic industry - there are many publishers of all sizes taking a wide range of approaches to e-books. And most publishers in the US have continued to sell e-books to us and other booksellers under traditional wholesale terms. They make up the vast majority of our Kindle bookstore - as a simple proxy, in our US store 79 of 107 New York Times bestsellers are priced at $9.99 (£6.31 GBP) or less, and across the whole US store over 585,000 of 718,000 US titles are priced at $9.99 or less.
Unsurprisingly, when prices went up on agency-priced books, sales immediately shifted away from agency publishers and towards the rest of our store. In fact, since agency prices went into effect on some e-books in the US, unit sales of books priced under the agency model have slowed to nearly half the rate of growth of the rest of Kindle book sales. This is a significant difference, as the growth of the total Kindle business has been substantial - up to the end of September, we've sold more than three times as many Kindle books in 2010 as we did up to the end of September in 2009. And in the US, Kindle editions now outsell hardcover editions, even while our hardcover business is growing.
In the UK, we will continue to fight against higher prices for e-books, and have been urging publishers considering agency not to needlessly impose price increases on consumers. In any case, we expect UK customers to enjoy low prices on the vast majority of titles we sell, and if faced with a small group of higher-priced agency titles, they will then decide for themselves how much they are willing to pay for e-books, and vote with their purchases.
Thank you for being a customer,
The Kindle UK Team
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