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Ebook pricing...and other ways publishers control the market.

10/16/2010

4 Comments

 
Now that the kindle store in UK is beginning to trade, amazon have alerted customers to an 'agency model' of ebook pricing. This is effectively a cartel of several major publishers who come to an agreement, rather than to compete, to fix their digital download prices at an agreed high rate. This is already happening in US and I believe amazon.com indicate books produced by participating publishers so readers can consider their option to buy.

At first sight, this may appear like a greedy way to ensure high profits. These publishers claim that their costs of editing, advertising etc are so high that it costs them as much to produce an electronic book as a print one. But I think it's more than that, I think it's about control.

Over the years, the biggest publishers have almost entirely gained control of the publishing industry. They've been able to do this because they buy not only advertising in the media but also virtually all the display space - and even shelf space - in high street bookshops. With very few exceptions they also control what books get reviewed in the national press. Very simply, the big publishers decide what books readers will buy and read (even though many readers don't realise this) by ensuring these are the only books readers get to see or to hear about. Of course, many more books are produced independently by author/publishers or small presses. But however respected these small publishers are, readers will find it a challenge to find their books, relegated as they are to the back shelves (if they are stocked at all). Similarly, the big publishers command the stock routinely bought by libraries.

Now, whilst the biggest publishers have control over the market of printed books, their domination of the ebook market is not guaranteed. For the first time, books from all sources are equally and affordably available. Readers are no longer restricted to the small percentage of books displayed to them in the high street, neither are reviews restricted to those written by the national press, any customer can write one.

The response of some of the big publishers to e publishing is to agree, among themselves, to fix their prices. And while this drives up the average price of an e book and raises the cost readers expect to pay, it also does something else. If their is no financial advantage to buying a book in electronic form then many readers will buy it in print. And if they can ensure the demand for a high volume of print books, the big publishers can maintain their control of the publishing industry.
4 Comments
Jackie Luben link
10/15/2010 11:12:40 pm

Very interesting Ali. I'm following your comments at Amazon, though trying to avoid the eating orgy at the moment.

Reply
Nick Daws link
10/15/2010 11:15:57 pm

Very interesting point, Ali. But doesn't this also create a good opportunity for indie authors, who can significantly undercut the big-name publishers on e-book pricing?

Reply
Ali Cooper
10/15/2010 11:30:50 pm

Hi Jackie, Hi Nick, Well, it's certainly noticeable that amazon UK customers, having first bought a lot of free public domain books, are now buying a lot of cheap indie books. And of course, this is very good indeed. But at some point, new kindle users will have to decide whether to buy the latest releases by their favourite authors as e or print books. Some readers are already saying that if such books are flagged as price fixing, they'll borrow the books from the library rather than buy them at all. I do think mainstream publishers are worried by the fact they don't automatically have the same control over e books that they do over print. And I wonder whether encouraging readers to stick with print is their response.

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Tony Gough link
10/17/2010 05:58:23 pm

Much food for thought Ali, but I'm not sure if the publishing houses can any longer exert the kind of control you mention, given the state they are in at the moment. With a number of top authors already committed to publishing eBooks, and finding different routes into print, the publishing houses have little idea of how to stem the flood taking place. The companies distributing my eBooks are doing so at a list price set by me, and then discounting according to their own pricing policies. As a consequence there is a level of price competition in the market, which is benefitting everyone. As for readers, the choice is enormous and those with eReaders are now beginning to 'force' the market in a direction it obviously doesn't want to go. The problem isn't whether it's eBook or print, it's the lack of standardisation for eBooks with several available formats, and the sooner the industry adopts a single format the better it will be for all concerned. In effect the reader will determine how the future develops and publishing houses will have to fall into line with what the customer wants; and the customer has clearly indicated that it wants eBooks, at a price that they consider 'fair' to both themselves and the author. The rise of the independent publisher will continue to act against any form of 'price fixing' and my guess is that any action by the publishing houses is nothing more than scare tactics to try and maintain their dominance in the market. Great blog by the way.

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    I'm Ali. I'm an author and musician, living in Devon, and I teach guitar.

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