The agency model: hot or not?
by Joel Naoum - May 13th, 2010
I’ve implied in the past that ebooks are likely to change the way we buy, sell, read and perhaps even write books in the future. One of the ways things are already changing is the way that publishers supply ebooks to booksellers. This is what’s called the ‘agency model’. The agency model has the potential to fundamentally change the way that publishers interact with people who read books, so it’s worth knowing the basics.
To understand it, though, you first have to get an idea of how dead tree books are sold now. In the current dead tree publishing model, the company sells a certain amount of books to a bookshop and ships them out in dead tree boxes. The bookseller tries to sell as many as possible. Whatever is left can be returned to the publisher. There is a recommended retail price (RRP), but the bookshop decides how much to sell the book for – and they’ve demonstrated a lot of flexibility in doing so. In Australia for example, the big discount stores (K-Mart, Target and Big W etc.) will sell books for a fraction of the recommended retail price. Borders, on the other hand, has been known to increase the price. In other words, books are sold pretty much like any other product.
The agency model is something that has come out of selling ebooks – specifically when Apple came on the scene with the iBookstore and the iPad. Basically what it means is that instead of the bookshop selling digital products directly to you, the bookshop becomes an ‘agent’ (hence ‘agency’ model) of the publisher. The publisher sets the price of the ebook and then give the bookshop a license to sell ebooks on their behalf.
I’ve covered the reason for this change in a previous blog, but the consequences so far have been steady prices for readers (Amazon have increased the prices of ebooks by a few dollars, but other ebook stores will eventually drop their prices). It also means that no single bookshop (I’m looking at you, Amazon) can artificially prop up a price point that no other store can match. This is essentially what K-Mart, Target and Big W do in Australia with dead tree books. You can get very cheap books in these stores, but not a big range. Smaller bookshops around Australia have closed as a result, and the sales for midlist authors (authors who don’t always sell in the big discount chains) aren’t as good as they used to be.
So, the questions is – is the agency model hot or not? As with all of these kinds of questions the answer is that it’s complicated. Do you prefer a good range or a good price? The prevailing wisdom is that the cheaper books become, the fewer risks publishers will be able to take on new and interesting authors. Having said that, ebook stores do not have the physical limitations of their dead tree cousins – the range of books they can supply is almost infinite. What do you think? Sound off in the comments.