Tuesday, November 02, 2010
NBA = Net Book Agency
We don’t welcome back the Net Book Agreement in the UK and especially through any backdoor and have written before of this somewhat valueless move.
We now have three major trade house setting or ‘fixing’ the prices of their ebooks in the UK. Anyone now wishing to sell their books must sell at the price the publisher sets and the commercial terms are on a fixed commission basis. We also now have two major retailers refusing to play and even after publishing an open letter objecting to the practice, Amazon have understandably capitulated. As Amazon's commission is now guaranteed on all ebook sales, some will suggest Amazon is secretly rubbing their hands at the move.
The statement from HarperCollins in yesterday’s Bookseller states, " Experience has shown in the US, where the market is more mature, this is the best way to stimulate competition by offering good value to consumers and maximising the number of channels to market."
However, some would suggest that ‘good value to consumers’ is illogical as value is determined by price. In this case the price goes up and will no doubt go up again with 20% VAT in the New Year. Some would also question just how it maximizes the number of channels to market if two of the UK’s major retailers channels aren’t playing and Amazon was clearly taken there against its will. Finally, the US experience matters little, as it is a very different market,is covered by different laws and different business relationships. Some would suggest that once again the US parents are probably demanding their UK children step in-line.
So why are we not going whole hog and bringing back fixed retail pricing for all books? After all its deep discounting fears that is driving the latest hysteria. We now have a consumer muddle with a wholesaler pricing model for physical books and an agency fixed price model set by publishers for ebooks. A reseller can't offer a discount even if they wanted to. Yes the recent poll in the Bookseller came out in favour of the agency model, but that is hardly consumer based research and some would suggest that is like asking communists party members in China to vote against the state.
When America's book publishers wrested control of e-book prices from Amazon earlier this year and established this new agency model, the results where predictable prices went up. Amazon started to make money on loss leaders and it was hardly consumer orientated, but there again it was hardly done by consumer facing people.
So where is this all leading? If ebook sales are only expected to capture some 15% to 25% of market share over this next 5 years, will authors really benefit from this dual market? Will it favour best selling front list and penalise mid and back list authors? Will mid and back list authors vote with their feet and go for the higher prizes available for going alone and price point at a level that earns them more whilst clearly differentiating themselves for this non value pricing?
If publishers set the price then they become effectively the reseller and in some cases liable for more than just setting the price. Under agency, publishers can experiment with prices as much Amazon did before agency agreements were established but can they react and change prices as effectively across the market? How will they bring prices down or will they simply stay at the original price set. Publishers are once removed from consumers and this is only going to demonstrate how big that gap is.
If agency pricing is aimed at creating a level playing field for all retailers to compete evenly on ebooks, we would suggest that no one wins a beauty contest in an ill fitting one piece standing next to a stunning Amazonian in a cute bikini. Levelling price is not the answer and some would suggest not why we got into this net ebook agreement.