Spilled Ink

Publishers (thanks to Apple) have been using price-fixing to hold the ebook market hostage since 2010. Along with the European Commission, the US government is jumping aboard this long-overdue investigation. More info at the WSJ article. Whether anything will come of this is up in the air.

Antitrust enforcers are examining the “agency pricing” model, which Apple introduced with its iPad tablet in April 2010. Until then, e-books had been sold under the standard “wholesale model” used in the industry. Under that arrangement, publishers sell books to retailers at a wholesale price, and retailers then set the price they charge consumers.

To spur sales of its Kindle e-readers, Amazon heavily discounted e-books, pricing many new best sellers at $9.99. Amazon shouldered the loss to sell the books cheaply, but many publishers felt the practice undercut their ability to sell hardcover books at higher prices.

Apple took a different tack. It told publishers that consumer books would be part of the launch of the iPad if enough publishers agreed to sell their titles under the agency-pricing model, a strategy that effectively prevented discounting. Apple would take a 30% cut.

The model became the de facto standard for books written by many of the country’s most popular writers, because publishers told Amazon it had to abide by the same terms and Amazon complied. The shift effectively ended Amazon’s ability to offer sharp discounts or undercut other retailers like Apple.

An e-books pricing model, which Apple started using with the launch of the iPad, pictured above, has attracted the attention of the U.S. Justice Department and the European Union.

Before he died this year, Apple’s former chief executive, Steve Jobs, told his biographer that the arrangement gave the publishers leverage to stop Amazon’s heavy discounts.

“We told the publishers ‘We’ll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway,’” Mr. Jobs was quoted as saying by Walter Isaacson.

“But we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too. So they went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.’”

(Source: sabrinawrites)

The legacy of book publishers has always been free of ads, and while it should continue for fictional books, Roth-Ey said there is definite potential to explore digital ads for books such as information guides.

“Certain kinds of books create immersive reading experiences whereby ads would be too interruptive for readers, and publishers and even advertisers aren’t likely to put a premium on that. But information books, for example a Collins birds guide, could provide very valuable real estate for contextual advertising - in this case potentially a binoculars manufacturer.”

This is absolutely the most ludicrous idea in relation to ebook publishing I’ve read in quite some time. Agency 6 publishers already gouge buyers on ebook pricing, cripple their files with DRM, and are now expecting readers to quietly accept ads within books (non-fiction or otherwise). I know this article references HC, but I’m sure other publishers are eagerly monitoring this strategy. The day ads start appearing within my ebooks is the day I stop buying ebooks.

(Source: sabrinawrites)