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.
And yes, the Texas and Connecticut attorney generals are still very concerned…
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?
PROS:
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!)
CONS:
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?
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Agency pricing means I buy fewer books from favorite authors. I have switched to all digital reading, no more buying paper for me. Unfortunately (for me), agency pricing means I would have to pay more for the e-book than the paper version. Why would I want to pay more (in some cases $2) for a book I cannot share with family and friends? It feels like I’m being gouged. Because of this pricing model I no longer buy books by some of my favorite authors and am now buying more books from small e-publishers.
I miss my favorite authors, but I have to be responsible to my wallet.
Myself as well. I tracked it for 6 months and my book buying dropped sharply. This month I had ten books on my list to buy and I’m still deciding if I will get any of them. It doesn’t make sense to spend more for a rented copy.
Have to agree with Lisa. Switched to ebooks mostly because they were cheaper and I had the idea that it would be a bit greener (with 1 less tree turned into my book and fewer CO2 emissions from the delivery process), but now they’re more expensive AND I can’t buy them anyway because I’m in the UK? Lame. Very lame. Back to paper books and for the most part it’ll be second-hand retailers for fiction.
I am buying a lot less since there are no longer any sales. It is cheaper to buy a book at a bookstore or go to the used bookstore. Am very disappointed and will not be purchasing ebooks unless there are some incentives. I have continued to purchase from some smaller publishers who will still give sales and deals. I don’t begrudge the authors and publishers from making money but let’s be reasonable.
your strap line says it all ‘eBook Ramblings and Diatribes’ and its a pity that i wasted so much time reading it
I’m still buying ebooks, but I’m buying indie. I only have a few autobuy authors in NY conglomerate, most of which I buy in PRINT to avoid NY’s pricing system for ebooks (and it is a nightmare for readers and only panders to NY’s business model and not to their customers’ wants and needs at all), but indie press has its head on straight. They price well and don’t limit where the books are available like NY chooses to do. To top it off, I find a lot of authors writing what I want to read in indie, when NY is still stifled. All told, NY has lost many sales they would have made to me, and indie has gained them.
B
For me the whole ebook world changed April 1st. I was an early adopter and big investor in ebooks, with a goal of replacing many cubic meters of physical books collected on shelves and in my garage. I settled on the Palm Reader etc .pdb format because it was the only DRM offering that let me read on any device any time without some binding of the books to a set of specific devices. On April 1st I lost access to books, some of which I had purchased and never downloaded, and of course, access to new A5 offerings. As the publishers have come back on line, not all of them offer this format any longer. They seem to be consolidating on Adobe DRM formats. I’m not willing to ‘rent’, which is what it feels like when I can’t move my books around at will when I get new hardware. I buy the few titles of interest that I can get in the pdb format, but I’m really using the library a lot now.
Dear Kelley
It may be, as you say, that the latest issues related to territorial restrictions are very upsetting for foreign customers. But more upsetting is the fact that your website has not yet altered to reflect these issues. I am (or was) a regular customer in the UK who has recently wasted an enormous amount of time attempting (unsuccessfully) to purchase books from your website. Visit my ticket to see the many hours of frustration involved not only in attempting to purchase, but also in interacting with your support center.
Dear Mr. Wardle,
On behalf of the Diesel eBook team, I do most sincerely apologize for the frustration and for your time being wasted attempting to purchase eBooks only to find out that territorial rights restricts us from completing the purchase. A truly bad customer experience from my point of view! I just reviewed your complete ticket from our customer service staff and wish to address the issue of selling eBooks on our site without any indication to our international customers about the country restrictions. We understand that this is a huge problem and I am very happy to report that this problem will be ameliorated very shortly. We will be launching a new and improved Diesel eBook Site later this month that addresses this issue with two new features. The first feature will be found in our new and improved Advanced Search Engine page. Customers will be able to filter their searches via their own country codes. There will be a drop down menu of country codes that will filter your results. The second feature that will be added is to list all applicable country codes on each product page. In this way, customers can ensure that they are perusing a book that is indeed legally available to them.
Obviously, the most ideal solution is simply to make all eBooks available to everyone but unfortunately we are legally not allow to operate in such a way (although our goal is to make our customers as happy as possible). Also please note that we do forward comments and e-mails like yours to our publishing partners. The publishers are aware of this issue and are working to find a way to resolve but it turns out that eRights is a downright thorny topic. Not as easy as it looks to us from the outside. (I must publishers the credit where the credit is due!)
In any case, I will be writing to you directly in order that we may discuss this further. Thank you for bringing your concerns to our attention since you are a valued customer. We look forward to your further feedback in order to make Diesel eBooks a much better store.
All the best,
Kelley
Interesting article which covers most issues surrounding agency model – albeit from US perspective (has recently been introduced in UK). In agreement with Very Limited Distribution Options and I suspect overtime that this is what will force agency model to break down unless publishers create their own (shared) distribution platform for e-books.
Worth reading http://www.futurebook.net/content/agency-question#comment-216 which looks at Agency vs Distribution models in UK and EU from a legal persepective. I wonder whether UK publishers have actually covered all bases here and suspect the Agency model in UK may be subject to challenge.
“And everyone, except for Amazon and perhaps a few authors, is as pleased as punch. Or are they?”
I think you are forgetting the most important group. The readers. After years of complaing that people read less you have discovered the great trick
“no longer have to offer $29.95 eBooks for $9.99 or less in most cases, which we sell at a huge loss.”
As so many other s I will simply skip books I feel are overpriced and support other smaller publisher.
By the way:
“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?”
Perhaps you wanted to be funny, but it sounds that your company simply isnt prepared to take over the work from “the devil ” Amazon.
I think this post is totally shortsighted. As the rest of the comments mentioned, my ebook buying has dropped dramatically. What the Agency 5 should do is an individual customer analysis of pre and post agency pricing.
Midnightsun has it nailed:
“Perhaps you wanted to be funny, but it sounds that your company simply isn’t prepared to take over the work from “the devil ” Amazon.”
That’s exactly how it sounds like to me. As far as we are into the digital book game, I simply cannot believe that it is as expensive now as it supposedly was in the beginning to distribute these books.
I buy way more from indie sites (I love Smashwords) at this point and will continue to do so. That is not to say that I have not bought a couple of my most favorite authors at asking price but the publishers apparently have no idea what they are missing out on as far as what I am willing to spend to feed my reading addiction. That’s too bad! I would have thought their marketing departments were a little more savvy.
Amazon launched two new Kindle e-readers priced at $139 and $189 late Wednesday, with the cheaper version a Wi-Fi-only e-reader and $10 less than the Wi-Fi-only Nook.
ComputerWorld
In general I have found that my book sales have dropped sharply, thes big guys are just taking all the traffic all the sales and all the profits. Its really a no win situation for us.
Hi, i am kayla scott.
I think you are forgetting the most important group. The readers. After years of complaing that people read less you have discovered the great trick But overall, the initial huge buzz about Agency now seems nothing more than a mere whisper of its former self.
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I have definitely reduced the number of eBooks I purchase. I was shocked recently when I looked at my computer folder of books and realized that my last download date was pre-Agency. Prior I had been purchasing about 5+ eBooks a month. I have since purchased more eBooks, but most multi-format or indie. I have purchased a few Agency eBooks, but those purchases were made with gift cards or were continuations of a series I had been reading for years. The higher prices and move away from Mobipocket to ePub has made me think more about each of my eBook my purchases than I did the past. I do a lot less ‘impulse’ buying.
The lack of format choices is disturbing too. For me, getting a good price on a novel with PDF being the only format isn’t a great deal; Mobipocket had much better formatting, even ePub is decent on my PocketBook. I guess eventually I’ll get use to the new world, but I was naive enough to think that eBooks would equalize over time, not get more expensive.
As a consumer, I’ve noticed 2 big changes in my buying patterns since agency pricing was implemented:
1) I’m more aware of who publishes what ebooks now. There are plenty of smaller, independent publishers whom I consider more consumer friendly then the agency publishers, and that’s where my ebook dollars have gone.
2) I’m not buying as many ebooks from independent retailers as I used to. Most of my ebook dollars have gone to the ebook retailers associated with my devices. The thought behind this being, with more parity in prices what’s the point in shopping around?
The second point is ironic considering that I’m not buying that many agency priced ebooks. But while the agency pricing has soured me on the major publishers, it did plant the idea that shopping around is a waste of time. Much more convenient to buy from one or two places than 9 or 10 places.
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