March 2, 2012

Do indies want agency terms?


Last week Independent Publishers Group CEO Curt Matthews wrote a blog post titled “What Should an E-book Cost?” Like most attempts to quantify the financial costs and benefits of publishing, Matthews’ analysis got a bit lost in the numbers. But at the end of his piece there was a genuine revelation: that his company—and perhaps other smaller publishers and distributors—would prefer to be selling ebooks on Amazon under the agency pricing model used by New York’s big six publishers. But, Matthews wrote,

Only the six biggest publishing companies have had the market power to compel Amazon to accept the Agency Model, which allows the publisher to keep 70% of the e-book list price. Independent publishers have had to accept the Wholesale Model, which has let us keep only about 50% of the suggested price. That is a 20% difference.

This isn’t exactly right. Agency pricing presents publishers with big issues, which may in fact be preventing some indies from making the switch: there are concerns with tax collection, pricing, distributors, and—perhaps most seriously—tussling with Amazon, which doesn’t like agency pricing. And the price difference between terms isn’t simply that of 20 percent, as publishers tend to price books at higher prices under wholesale terms, making net dollars under the two systems at times look identical. But there are indeed reasons to switch, especially control over consumer pricing.

But there may well be something to Matthews’ claim: some of the largest and most prestigious independents in the country remain selling on Amazon under wholesale terms: W.W. Norton, Grove/Atlantic, and Bloomsbury, as well as indie clients of Perseus/PGW/Consortium and NBN, to name just a few, all sell their books on Amazon under the wholesale model.

Could they switch to agency terms if they wanted? At least one indie player, distributor and self-publishing platform Smashwords, has tried. In a December piece for Huffington Post, Smashwords founder Mark Coker noted that he only deals with retailers offering agency terms and has so far been unable to get such terms from Amazon—though he postulated this may be because his company is a competitor. Or, in his words, Smashwords “supply Amazon’s competitors.” But, Coker added, “We’re eager to supply Amazon our entire catalog, but unlike every other leading ebook retailer, Amazon to date has been unwilling to provide us agency terms.”


Kelly Burdick is the executive editor of Melville House.