Monday, February 08, 2010

Walking Backwards to a Net Book Agreement World?

Some would suggest that the publishers have wrestled price control back from the discount chasm that was in danger of undermining the economics of publishing, others that the winners are the authors and some that Amazon merely backed out of a price war to win a fixed margin on all ebook sales. The reasoning will differ according to your allegiance, but what is clear is that the battle is far from over and the water has just got a whole lot muddier. As always we jump to applaud something new before we understand the real implications.

We now have a clear difference in pricing models between the physical and digital book.

One is free and unrestricted the other now set by the publisher. The physical price has been set to accommodate the current high discounting and only the foolish would pay the false price on the physical jacket. It is common to see high discounted price, bundled offers and generally everyday low pricing on the hardback. Now we have a price hike from Amazon’s ebook $9.99, to an agency model price which is set by the publisher and is aimed at guarantying ‘acceptable’ ebook pricing and margin whilst also guarantying hardback sales don’t collapse.
So it will be highly possible to see a hardback for sale at a high discount competing side by side with a more expensive ebook with no discount. We will also see ‘extras’ being added to the ebook, some would suggest not to primarily enrich the content and experience, but to merely justify a higher price. We then we have tax which current is not evenly levied against the two different format types, but has to be paid for the digital copy by the consumer or buried in the price.
Last week we were in Holland and discovered their ebooks, unlike their physical book prices, aren’t controlled. So a physical book is sold at a fixed price with a tax of 6% and ebooks are sold at discount with a tax of 19%. The ebook market is growing but the ebooks are attracting lots of special bundle deals and obviously are ‘cheaper’. The Amazon deal presents us with the opposite a controlled price on an ebook and a free or unrestricted pricing on physical books. UK pbooks are tax free whilst their ebook counterparts attract full tax at17.5%.

So we wondered whether we now find ourselves walking backwards into the UK’s old Net Book Agreement or just another ebook pricing issue? In those NBA ‘safe’ days booksellers were unable to discount and except for the month of January and the National Book Sale, it was a level playing field for all. We wonder what it would have been like if paperbacks were controlled then and Hardbacks not, or visa versa? How can we advocate controlling one market whilst letting the other be free of control? What message does that send out to consumers? What is competitive and what is price fixing and anti competitive?

Some would suggest that it was easy to take on Amazon with Google Editions and Apple coming into play, but that it would be very hard to take on the physical discounters.
We now also have the next new policy of tiered pricing, where the price will drop after some period at the whim and control of the publisher. It is like a ‘sell by date’ where the shelf life is determined but some marketing manager in some distant publisher’s office. How will that be managed, communicated and explained to consumers? Perhaps it will be like the National Book Sale after all or more likely prices will be moving every month.

Finally, authors have now mainly moved over to 'net receipts' contracts, which are based on the price that publishers receive from the resellers. So what should the author deal now be on ebooks? Should it be based on net receipts, on a fixed margin, related to other renditions and will it be higher or lower in real terms to the physical book? If publishers can neatly separate the physical from the digital why can’t authors do the same.

What we have is a change of ebook pricing driven by the perceived need to control digital discounting and the agency plays of Google Editions and Apple. However can we have one price model for digital and another for physical, or is that the next target?

4 comments:

Lookman said...

I have been saying that on twitter @Lookman_ and on the Society of Authors website for a long time. As an author who has all but abandoned publishing. I think that authors should be protected by minimum wage legislation. They need a protected fixed royalty for each book sold. It is shameful what some authors are receiving. The UK government is sleeping with the future of British culture. They pay enough to the British Council. It is about time they supported the creative industries that could help the UK out of recession. Sleeping in Parliament or hanging around bars is no excuse.

LOOKMAN
Author/screenwriter/producer

Lookman said...

The publishers and booksellers asked for this collapse in the industry when they pressed the self-destruct button.
In the light of the protection, other workers receive these days I feel authors need some form of protection. I have made comments about the Net Book agreement on the Society of Author’s website and on Twitter. I would prefer that authors receive a minimum royalty per book sold in future. Squeezing royalties with marketing budgets and discounting has failed. The dire condition of authors is something the government should show some interest in; they are the very inspiration for many other art forms. If the UK is to maintain a culture, it is not just the British and Arts Councils that needs supporting.

Lookman said...

The publishers and booksellers asked for this collapse in the industry when they pressed the self-destruct button.
In the light of the protection, other workers receive these days I feel authors need some form of protection. I have made comments about the Net Book agreement on the Society of Author’s website and on Twitter. I would prefer that authors receive a minimum royalty per book sold in future. Squeezing royalties with marketing budgets and discounting has failed. The dire condition of authors is something the government should show some interest in; they are the very inspiration for many other art forms. If the UK is to maintain a culture, it is not just the British and Arts Councils that needs supporting.

Matthew W said...

Better to 'Walk Backwards' to the NBA than join the current race to the bottom in price and quality that some publishers seem hell bent on winning.

The cost of books has too long been the focus of the pricing debate. Value has been all but forgotten in physical book production, so publishers are right to want to preserve the consumer perception of eBook values. Particularly given that consumers will happily believe that eBooks should be almost free as they don't involve physical production (or indeed ownership).

Consumers frankly need re-educating. Books have a value. That value has a price. That price should be paid.

Pubishers have every right to control the pricing and distribution of their product as much as humanly possible.

Oh, and the blogosphere is far too excited about eBooks and their accompanying devices. They suck.