More on the agency model and H-C blowing up library e-books

As you’re probably aware, the last of the major publishers to hold out against the agency model of pricing for e-books has finally given in.  Or maybe I should say sold out.  Random House announced earlier that it would join the other publisher not so affectionately nicknamed the Big Five in adopting the agency model for e-books.  What this means is that the publisher and not the retailer will set the price for e-books.  So, no more shopping for competitive prices.  E-titles will cost the same across the board, no matter which online retailer you use.

Now, it’s been interesting to watch some of the reactions across the web over the last few days to the news.  On the kindle boards, readers were gnashing their teeth at the sudden increase in price for a number of books.  And, folks, we aren’t talking small price jumps.  No, we’re talking increases of multiple dollars.  And we are talking about some very restless and angry customers.   Customers who may decrease the number of their purchases simply because they can’t afford — or won’t pay — as much for an e-book as they will for a mmpb.  More than that, when they see the price of an e-book for a title that has just hit the market and the projected for price for the mmpb that will be out in just a few months AND the mmpb is less than the digital title, well, the natives start doing the war dance.

But what is really telling have been the justifications for the change to the agency model. Random House talks about how this will make more money for them and for their retailers and will even the playing field for the independent booksellers who now sell e-book titles through google books, etc.  But no where have I seen anything about the authors — the creators of the e-book — getting more money.   While I appreciate anything that helps save the indie booksellers, let’s face it — this is simply one last grab at trying to maintain the status quo and not adapt to the changes pounding the industry right now.

There’s one other point I want to address about the above link.  One of the reasons the author of the article cites as being “good” about RH’s adoption of the agency model is “blockbusters everywhere!”  Gee, this wasn’t a problem before Apple opened the iBookstore.  Remember, everyone, we didn’t have the agency model until Apple and Steve Jobs got into the mix.  As for blockbusters everywhere, the only ones left out were those who purchased solely from Apple and, gee, they didn’t have to.  Kindle, Nook and the other major e-readers all have applications for the iPad, iPod touch, etc.  So Apple users weren’t tied to iBookstore.  Also, has anyone noticed how Apple hasn’t offered apps for non-Apple platforms, thereby losing sales?

’nuff said.

As for Harper-Collins and its decision that e-books sold to libraries will basically self-destruct after 26 check-outs, they’re really started a firestorm of protest.  Librarians are up in arms, calling for boycotts of H-C and, in some cases, even the jail-breaking of DRM on H-C e-books.  Why?  Because this decision will wind up costing libraries across the nation who offer e-books to the patrons in one way or another.

The most obvious way is that the libraries will have to contract with OverDrive for more “copies” of each e-book.  Let’s face it, that presents a problem in this day and age when libraries are facing huge budget problems.  Libraries across the nation are being forced to reduce hours, reduce their acquisitions, reduce staff numbers and are having to reduce hours — when they aren’t closing altogether.  Having to find more money in their budgets to buy additional copies of e-books because H-C has applied some magical formula and come up with the number 26 because, supposedly, that’s how many times a print book is checked out before it’s taken out of circulation.  C’mon, guys.  Apples and oranges here.

I don’t know about your libraries, but mine checks out books a lot more than 26 times before it is taken out of circulation.  The exceptions are when the binding breaks down — then it is temporarily removed and the binding is repaired — water damage, etc.  But normal wear and tear doesn’t kill a book that quickly.

But let’s look at it from another side.  Libraries are facing an increasing demand for e-books.  If, suddenly, they can no longer offer books — or if someone has been on a waiting list for months and months for an e-book only to suddenly be told they won’t be getting it because it reached that magical number of 26 checkouts, can you imagine the bad feelings?  Patrons make or break a library.  Angry patrons complaining to city councils can definitely break it.  And all over something libraries have no control over.

But what does H-C have to say about the uproar?  Here is an open letter to libraries about their decision.  H-C recognizes the importance of libraries but — and this is a big but — “Our goal is to continue to sell e-books to libraries, while balancing the challenges and opportunities that the growth of e-books presents to all who are actively engaged in buying, selling, lending, promoting, writing and publishing books.”  In other words, they are more worried about making sure libraries are as humstrung by DRM as is the purchasing public.

But let’s see what else they have to say.  “. . .our goal to make sure that all of our sales channels, in both print and digital formats, remain viable. . . ”  More of the same.  Limit digital in anyway possible to keep the print end alive.  But don’t ask us to change our business model because we won’t.  At least not one moment before we absolutely have to.

“We have serious concerns that our previous e-book policy, selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book eco-system, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors.”  So, are they going to start putting limits on the number of times a print book can be checked out?  Or, conversely, start paying authors royalties based on the number of times an e-book is checked out?

“Twenty-six circulations can provide a year of availability for titles with the highest demand, and much longer for other titles and core backlist. If a library decides to repurchase an e-book later in the book’s life, the price will be significantly lower as it will be pegged to a paperback price point.” Wow, a whole year.  Possibly only 26 readers and then the title goes POOF.  As for tying the price of repurchasing the title to the paperback price point, well, I sure hope that’s written into the contract now because I seem to remember the publishers that adopted the agency model saying e-book prices would come down when the mmpb came out.  How closely have they stayed to that promise?  Well, let’s just say, I stopped holding my breath a long time ago because the price drops aren’t occurring as quickly or as deeply as represented.

I’ll admit now that I am a big supporter of libraries and I think this is a lousy decision by H-C.  A decision that hurts libraries and their patrons.  More, it hurts the author and even H-C because the decrease in the number of e-titles the libraries offer will lead to a decrease in sales.  People often use the library now to check out authors they haven’t read before.  Or to check the latest book from an author they used to like a great deal but who had disappointed in a book or two.  If they like what they read, they will then go buy books by that author.  The same goes with e-books.  This is a no-win decision for all involved and very short-sighted, imo, on H-C’s part.

For more information on this, check out this article from the Des Moines Register.

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8 Comments

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8 responses to “More on the agency model and H-C blowing up library e-books

  1. Pam Uphoff

    When someone recomends an author to me, the library is my first stop. If I like them, I’ll read everything the library has, then buy the rest and keep buying everytime the author puts out a new title. If I really, really like the first taste, I’ll buy every book the author has ever written.

    The library is an incredible sales tool. Someone at H-C doesn’t understand that.

    • Pam, it’s the same with doing give-aways or deeply discounting early books in a series. The whole point is to entice new readers. Unfortunately, too many in the industry don’t seem to understand that.

  2. bobbyshane

    It’s looking more and more like the major traditional publishers are digging their own graves!

  3. Thomas Wicklund

    I’m trying to figure out how the “agency model” can work. Last I checked, it is illegal for a manufacturer to set retail prices. They can suggest a price — “manufacturer’s suggested retail price” or MSRP, but they can’t enforce it.

    Any references to how this works legally?

    • That’s one of the reasons a number of state attorneys general are looking into the practice. It’s also why the British authorities are looking into — and, I’m guessing, why RH isn’t going to the agency model there.

      But I have another spin on the question. The agency model didn’t come into being until the iPad. It’s been widely discussed that it came about as a result of talks and agreements with Steve Jobs. If true, that falls square into the fixing of prices and inhibiting competition prohibitions. I suspect the publishers think they can get away with it because they believe they are only selling licenses to e-books, and not an actual “book”. It’s going to be interesting to see what the courts finally have to say about the matter.

      • Thomas Wicklund

        That makes sense. I’m not sure the “license” argument will work. Retailers put software (which is “licensed”) on sale today, unless these are always done in cooperation with the manufacturer. I’d guess we’ll need to give this a number of years and possibly the Supreme Court before it’s decided.

  4. Lin W

    Why am I getting an awful feeling that, in an attempt to “fix” this, somebody will write a law that inadvertantly outlaws selling a used book?

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