Back on April 1st, the first day that the infamous Agency Five Model shook our world as eBook retailers, Scott and I posted a blog about our view of the potential effect the Agency Model on the eBook business.
Six months later, we are thrilled that we signed up our very last Agency Five Publisher and that their eBooks will be available shortly on Diesel. More about this in a later blog. (Not to gloat BUT to date most of the other indies are still missing this particular publisher.)
To celebrate, what better time for some hindsight analysis (or perhaps a better term, a post mortem) on the effect of Agency?
Here it goes . . .
This year’s biggest and most influential event?
When the A5 frenzy first struck, hundreds of articles were written about its so-called destructive potential. The top digital experts’ pens would not stop flowing, err . . . their fingers wouldn’t stop typing, we mean. Kobo predicted huge lawsuits against the A5.
Yet, here we are, over six months later, and everything seems eerily quiet on the digital front.
Yeah, granted, a few weeks ago we had a number of authors complain at the Publisher’s Weekly panel about eRights in an agency world.
On top of everything, Amazon is being forced to embrace agency in the UK and not really liking it all that much. Imagine that.
But overall, the initial huge buzz about Agency now seems nothing more than a mere whisper of its former self.
That is because the A5 publishers’ two main objectives were met:
1) Amazon – the publishers’ largest nemesis – was dealt a huge blow against their plans for world eBook domination.
2) Partnerships have been forged and now leveraged through the overwhelming power of Apple.
In other words, the A5 performed an impressive near-checkmate on the eBook chessboard.
And everyone, except for Amazon and perhaps a few authors, is as pleased as punch. Or are they?
So, how did Agency affect eBook retailers? In particular, Indies like us?
Competition: The retailers don’t have to lose their shirts through price-cutting, anymore. We no longer have to offer $29.95 eBooks for $9.99 or less in most cases, which we sell at a huge loss.
Great Customer Experience is Essential: With everyone on the same playing field, providing a great customer experience is now much morevaluable than underselling. (BTW. Stay tuned, Diesel eBook Fans! Our new site is nearly ready and it’s a beauty!)
Sales Tax: Collecting it. Definitely something we can handle but somewhat of a drag! Our customers like it even less.
Territory Rights: Without exception, all A5 publishers now offer their eBook titles in the US only. Needless to say, our foreign customers are very upset. We, here at Diesel, have been very vocal with our A5 publishing partners about this issue. Matter of fact, we had a long conversation recently with one of the A5s’ international rights team. It seems that, with eBooks becoming such a sexy topic, their foreign partners and/or offices want to hold on to all the eBooks rights.
As a result, there is huge potential for an eBook merchandising nightmare on the horizon. Since most eBook stores don’t have country filters – until the publishers can work out the accounting with their brethren across the water – be prepared to see multiple formats of the same eBook, while perusing. One for the US, one for CA, one for AU, one for the UK, one for DK, NZ, GL, AT, VI, and one for Alpha Centauri. You get the picture.
Limited Promotions: This simply takes a lot of the fun out our business. Due to contract restrictions, our customers can’t enjoy many promotional benefits with the A5 titles and, in many cases, they don’t quite understand why. Educating customers about the intricacies of the Agency model does not exactly make for a good customer experience.
GOOD FOR DIESEL, BAD FOR YOU:
Very Limited Distribution Options Going Forward: The Agency Model was supposed to provide a level playing field for everyone. However, we would somewhat argue the opposite could potentially occur. As more and more eBook storefronts pop up, publishers are now becoming completely overwhelmed with the demand to supply their content directly to a greater number of retailers.
To date, most of the A5s are only working directly with a select number of retailers (our guess is Amazon, Apple, BN, Kobo/Borders, Sony and maybe a small handful of indie retailers). They simply can’t handle all the work, operational costs and maintenance of the constant production flow of eBooks to hundreds of potential retailers. The digital warehouses that were supposed to address this problem are either way too expensive or, unfortunately, are unable to “cut the mustard”. It’s rather perplexing. Wasn’t digital distribution supposed to eliminate the heartache and cost out of the age old problem of print distribution?
Less Revenue?: If you are not one of the lucky and golden few who are receiving titles directly, then you will be forced to work with a handful of eBook distributors who will shave off a nice tidy percentage of your revenue, and institute format fees on top of that.
During the pre Agency world, a retailer working with a distributor (who didn’t offer any discounts on their books), made up to a maximum profit of 40% on each book’s digital list price. Post Agency, the max revenue drops to only 20%. However, the argument can be made that one should now be selling more books as a result to make up for that loss of revenue per book.
THAT’S IF YOU CAN EVEN GET THE BOOKS NOW: As we understand it, (at least from our own distribution channel), even if you do work with a distributor that does deal with the Agency Publishers (we know of one that dropped all Agency titles recently) you will be required to sign a three-way contract between you, the distributor and each of the A5. And we all know how fast and speedy the legal process can be, right?
So, do you agree with our premise(s)? Disagree? We want to hear your own thoughts, experiences and opinions.
Give us a piece of your mind, won’t you?