Tuesday, March 1, 2011

Agency pricing model on ebooks

Yesterday Random House announced, with only one day's notice, that they would be switching to the agency pricing model today, March 1st.  The agency pricing model is another gift to us from Apple, as they negotiated this idea with the major publishers when they were bringing out the iPad in part as an ebook reader.

Basically, in the agency pricing model, rather than selling ebooks to the bookseller at a wholesale price and letting the bookseller choose the markup, the publisher chooses the price and the bookseller simply gets a cut (usually 30 percent).  This article explains the agency pricing model pretty well, but they don't blame Apple, even though they say in the article that Apple was in negotiations with the publishers for this very reason.

The agency pricing model is what we have to thank for the fact that we don't get to use coupons or our Barnes & Noble memberships to get discounts on ebooks, as we would with physical books.  On the B&N forums, it is generally implied that Apple negotiated the agency pricing model on purpose to eliminate competitive pricing in the ebook market — they wanted to price their ebooks higher, but didn't want to suffer the consequences.

For some reason (hmmm, what reason could that be? maybe the elimination of the free market system?) ebooks that use the agency pricing model tend to be more expensive than others.  A lot of Random House's ebooks doubled in price overnight, and I even saw one that more than tripled.  Thank heavens I'd bought most of the ones I wanted.  The rest I guess I'll be getting from the library, because I can't stomach paying $9.99 or $12.99 for an ebook that just yesterday was available for $4.99 or $5.99.

Anyone else turned off by this whole agency pricing thing?  How does it impact the decisions you make on what ebooks you buy, and what you get from the library?

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