Extra Ether: Agency Pricing

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A dizzying amount of copy is hitting the fan of the publishing community about the U.S. Department of Justice’s (DOJ) investigation of “agency pricing.”

This post is an off-day Writing on the Ether collection of selected writings on a potentially a key moment in the digital evolution of the industry.

Most of what’s being written is opinion, of course. While much of it is sincerely observed and well-intended, the scope of the issues involved can make the debate sound shrill.

Some say that agency has engendered competition during Amazon’s rise, buying time for Barnes & Noble and others to gain traction in the market. Others point to failing independent online bookselling efforts and a huge influx of low-priced content.

This is a time when the “mash-up” — a congeries to your literary friends — is not helpful. We need calm, ordered comment to work through complex issues, especially when commercial and legal elements meet the possibility of ethical implications. “All’s fair” is too easy a throwaway.

Reserving judgment is a keenly viable option in times of upheaval. It often separates publishing professionals from knee-jerking fops. Don’t let anyone push you with “What do you think?” Tell them you’re watching, waiting and learning.

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Getting started

It was on Thursday we learned of the DOJ’s warning of a potential lawsuit involving ebook pricing and five of the Big Six publishers, plus Apple. Thomas Catan and Jeffrey A. Trachtenberg had the story in the Wall Street Journal: U.S. Warns Apple, Publishers.

I recommend you start by looking one day earlier at Jeff John Roberts’ March 7 piece at paidContent: The E-book Investigations: Are Publishers And Apple Breaking The Law? There, Roberts — paidContent’s lead reporter on this story — looks at threatened class-action lawsuits, a great many of them, on the same issue. He explains the question of legality in the concept of a manufacturer imposing prices. It’s a helpful prelude to the next day’s news that the DOJ, itself, might sue, following its own probe and that of European Union investigators.

Note that in their New York Times writeup, Government Pressuring Publishers to Adjust Pricing Policy on E-Books, Julie Bosman and Edward Wyatt mentioned an unnamed publishing executive, saying the DOJ was interested “augmenting” the current agency system rather than tossing it.

Naturally, some observers see sport in predicting whether agency prices might survive the challenge. In that regard, it’s helpful to read Mathew Ingram’s piece at GigaOM, definitively headlined: DoJ warning means one thing: E-book prices are coming down. A part of what you get here is Steve Jobs’ apparently explicit role in the advent of agency pricing, as indicated in a paragraph in Walter Isaacson’s book on the late Apple chief. The point to pick up here, as Ingram writes it, is this:

Whatever happens, it seems likely that publishers will either choose to modify the agency-pricing model voluntarily or be forced to do so. And the outcome of that process, at least in the long term, is likely to be lower e-book prices.

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Who’s sorry now?

There are members of our community who will have argued loudly for or against  agency pricing at the time it was put into place in 2010. For some, what went around is coming around.

At this point, however, those past positions are less useful than a lean forward. And that makes it useful to turn, for a rational starting point, to Mike Shatzkin.

In If the government makes agency go away, Shatzkin is careful to note that right-headed observers “make no ‘agency is dead’ declaration(s).” We don’t know the outcome yet of the DOJ’s present actions, no matter how certain one zealous analyst or another may sound.

Shatzkin then steps you through the effects he thinks key stakeholders might experience if agency is struck down. He includes smaller publishers and authors in his analysis. On authors:

Over time, the biggest losers here will be the authors. The independent authors will feel the pain first. Agency pricing creates a zone of pricing they can occupy without much competition from branded merchandise. When the known authors are only available at $9.99 and up, the fledgling at $0.99-$2.99 looks very attractive and worth a try. Ending agency will have the “desired” effect of bringing all ebook prices down. As the big book prices are reduced, the ability of the unknowns to use price as a discovery tool will diminish as well. In the short run, it will be the independent authors who will pay the biggest price of all.

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James Scott Bell, in something of a pep-talk response, Jockeying for Position in the Muddy Publishing Future, takes a respectful but game stance on Shatzkin, writing from the authors’ camp:

We didn’t create the Big Six or Amazon. But we will use them just like they use us. We will make strategic decisions, as they do. It’s called doing business, and writers are better positioned than ever to do it in creative ways.

Then Scott goes on to identify one emotional strain in the debate, with the surefooted grace you might expect of an accomplished writer who knows what his fellows need to hear:

Even if some of the big publishers fall off their horses, we writers will still be in the race. Even if bookstore shelf space continues to dry up, we writers will still be coming at you.

Because we are creating stories, which is what people want and need in this crazy world. We are weaving dreams, getting under your skin, keeping you up at night, making you laugh and cry and maybe sometimes throw our books across the room. We are storytellers. And we are not going away no matter how hard it rains.

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In the more cerebral deliberations of journalism, Laura Hazard Owen and Mathew Ingram have done a weekend point-counterpoint piece. (Neither calls the other an “ignorant slut,” which might have been fun — do you know the reference I’m making?) Their piece is headlined E-Book Smackdown: Who Should Control Pricing—Publishers Or Amazon?

What’s good about this one is that neither person smacks the other down, neither side “wins.” Both Ingram and Owen get in some good points, and the conversational tone and structure of the article is a nice break from the many pulpit pieces coming from others. A snippet:

Ingram: Who has done the most to make it easy for new authors to reach an audience, traditional publishers or Amazon? I would argue that it is Amazon by a landslide, thanks to the Kindle platform and related features—many of which provide writers with a far greater share of the proceeds from their work than any traditional publisher has ever dreamed of paying.


Owen: Not if those authors want to reach print readers. Around 80 percent of book sales are still print; bricks-and-mortar bookstores are still a major source of discovery of new titles (the number-one source, in fact, for kids’ books).

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No uncertain terms

Possibly the staunchest defense of the agency-pricing model has come from Scott Turow, writing as president of the Author’s Guild in Letter from Scott Turow: Grim News:

We have no way of knowing whether publishers colluded in adopting the agency model for e-book pricing. We do know that collusion wasn’t necessary: given the chance, any rational publisher would have leapt at Apple’s offer and clung to it like a life raft. Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open.

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In direct response to Turow, Joe Konrath and his usual second banana, Barry Eisler, revive their self-publishing tag-team and offer a little entr’acte, Barry, Joe & Scott Turow.

Take the line above in which Turow, in his statement, talks of how we don’t know that collusion between publishers occurred. Here’s how Konrath and Eisler handle that:

Joe: Translation: It could be that publishers didn’t collude, but all independently came to the same conclusion and independently presented it to Amazon at the same time with exactly the same terms.

Barry: Like the coincidental lockstep 17.5% digital royalties offered in all legacy publishing contracts. These things just happen sometimes. By accident.

Joe: Could be some sort of hive mind. Or psychic powers. I wonder if the DoJ will believe the “it’s-just-random-luck” defense.

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But seriously, folks

Here’s an extensive argument against agency pricing headlined Gnashing of Teeth: Publishers vs. Readers at Publishers Weekly’s PWxyz blog. It’s by Peter Brantley, of the Internet Archive’s BookServer Project. He writes:

It’s also worth noting that publishers’ move to agency pricing helped create the retailer market concentration that publishers now decry as inevitable. Small independent online booksellers were devastated by the move to agency. Books On Board took months to recover, adversely impacting its relations with suppliers. Diesel Books took six months to get agency publisher books back into inventory; All Romance eBooks has reported that it took over a year – and in all that time, their customers were not being well served. All of these retailers, as well as Fictionwise, found their loyalty programs, their “buy one, get one free” (BOGO) promotions, and the ability to do spot sales, immediately crushed. (Fictionwise was absorbed by Barnes & Noble.) These ebook vendors were a serious counterweight in passionate reader communities against Amazon, and agency hurt them badly.

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And Brian O’Leary, in his post Trusting Readers, turns to the evidence of sales data to write:

We’re five years into the viable age of eBooks. Purchase behavior over that time demonstrates that readers buy the lion’s share of eBooks at prices well below what traditional publishers want them to pay. Using agency terms may defend the price and saleability of physical books in the short term, but it has also brought a host of new entrants into the low-price eBook market.

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Finally, with so many voices competing for our attention — some rational and wise, others joy-sticking rants — let me give you a longer read, soothing for its higher view and steeped in institutional memory. This isn’t specifically on the issue of the agency pricing question. Instead offers a broader, elegiac overview of our landscape.

Jason Epstein, once the publisher of Mailer, Vidal, Nabokov, Roth, and so many others, ends clinging a bit sadly to his print volumes in Publishing: The Revolutionary Future at the New York Review of Books he co-founded. But he declares his bias boldly: “If by some unimaginable accident all these books were to melt into air leaving my shelves bare with only a memorial list of digital files left behind I would want to melt as well for books are my life.”

And on the way to that big paper hug, he gets off some fine observations about the depth of the current upheaval and the fleeting idea of, eventually, an industry less freighted with fear.

I appreciate how he remembers that all is not social, nor commercial, nor judicial, nor even platforming. Some of it is still creativity:

The difficult, solitary work of literary creation demands rare individual talent and in fiction is almost never collaborative. Social networking may expose readers to this or that book but violates the solitude required to create artificial worlds with real people in them. Until it is ready to be shown to a trusted friend or editor, a writer’s work in progress is intensely private. Dickens and Melville wrote in solitude on paper with pens; except for their use of typewriters and computers so have the hundreds of authors I have worked with over many years.

The central product of the beleaguered publishing world, in fact, is untouched. It is not “all changing!” as the alarmists among us like to shout.

As I’ve said before, the author is not digitized.

In coming days, a grain of salt will be your most important asset. Everyone close to the agency-pricing pageant will want to sway you with pressing prose and cheeky tweets, “I told you so” high-fives, and warnings of industry annihilation.

This is, after all, an industry of expressive people, sometimes prone to tabloid blog headlines and apoplectic reception of minor news.

“There is a lot of bumping going on in the turns,” as James Scott Bell puts it.

Today we’re all jockeys. Ride high.

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Image for this edition of Extra Ether: iStockphoto/4×6

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