Agency Model or Be Damned

I don’t how many times I started this piece today on the arrival of the iPad and the agency model. Frankly, by mid-morning, I gave up. There was just too many deals with Amazon to report by publishers, and too many comments like:

‘Oh, oh, it’s on-it’s off; our Amazon buy buttons are off – no, no, they’re back on again. Shit, no, we were wrong, they’re back off again. No, actually, we had it wrong all along; our print book buy buttons are on, but our ebook buttons are off.’
If there was one saviour later today, it was Jason Boog over on GalleyCat. Boog did a great job of pulling together the multitude of reports this evening – long after I’d given up. Here is Jason’s summary piece for the day; by reading it, you will at least save me from posting up a mind-boggling list of links, and it will help to tighten some nuts on what I am about to say. Thanks Jason.
Before we begin, let’s get one thing out of the way; what is the agency model? Here is a pretty down-to-earth definition by The Idea Logical Blog:

“The ‘agency’ model is based on the idea that the publisher is selling to the consumer and, therefore, setting the price, and any ‘agent’, which would usually be a retailer but wouldn’t have to be, that creates that sale would get a ‘commission’ from the publisher for doing so. Since Apple’s normal ‘take’ at the App Store is 30% and discounts from publishers have normally been 50% off the established retail price, publishers can claw back margin even if they don’t get Apple to concede anything from the 30%.

So making this change, if it works, accomplishes three things for big publishers. The obvious two are that they gain a greater degree of control over ebook pricing than they ever had over print book pricing and they get to rewrite the supply chain splits of the consumer dollar.

But the third advantage for the big guys is the most devilish of all: they may gain a permanent edge over smaller players on ebook margins.”

What we are seeing unfolding in the publishing world at the moment is deep-rooted in a failure by large publishing houses to take hold of their industry and direct its development more than twenty years ago when the largest fish in the publishing sea decided to eat up as many little fish as they could. The landscape of publishing that emerged when the tummies got fat was one wholly controlled by retailers – big mother-fucker retailers who had retailing and profit as their core objective – certainly, not books or literature. It stood to reason, and the view of man and woman in the street, that massive corporations like Google, Amazon and Apple where going to come out on top because they were the ones to hold the first cut-keys to the castle of digital content. They had the vested and commercial interest as well as the vision and means to realize the importance of controlling and managing digital content for profit.
It is comfortable to lampoon Google for their attempts to digitize written content not nailed down to the floor and protected by a ring of wolves wrapped in copyright legalese; blame Amazon for developing an online presence and fulfillment network capable of placing a book on your doormat or PC desktop quicker than most large publishing houses can; blame Apple’s developers for producing the two most domestically recognized devices of the past ten years – the iPhone and now the iPad. Yes, we could also try and blame Apple’s introduction of the iPad as the real reason why publishers were forced to introduce the agency model.

It wasn’t Apple, Amazon or Google’s fault, whatever nonsense you hear elsewhere.

What the introduction of the iPad did do was to drag publishers into the world of e-book jousting between Amazon’s Kindle and every other e-reader device. It’s just that the Apple iPad is the first real contender to the Kindle throne, as a device and utilising the more flexible epub format.

Publishers do not like their hand being forced, and this has been happening here. We could have gone on with the wholesale model of distribution and retail for years, ignoring the advent, development and accessibility of e-books for another five years, but sooner or later, we would have had to acknowledge that the wholesale model is just another set of terms set between publishers and their wholesalers and retailers. Once there was the mere mention of agency model, wholesalers and distributors knew they were going to be dealing in an industry hosting two different models.

There is an inherent and deliberate spin here in terminology by the publishing industry.

Actually, this has nothing got to do with models, but instead, it is a desperate attempt by publishers to arrest back control of the books they produce – whether the books are in digital or print edition. Books are books, and make no mistake, the so-called agency model will and should be rolled out across all books, whatever the format or channel of third-party sale.

What I do feel grievous and questionable is that now the penny has dropped with publishers (that they have been running toward the touchline without the ball)–what we have all known–is that they expect to climb aboard their newly created agency express train and expect wholesalers and distributors like Ingram Digital to have their own models ready to slot into place immediately and deal with accounts operating on different terms of contract. Outside of the large publishing houses, I actually don’t believe smaller publishers adopting the agency model have thought through the full implications. I sense a blind ‘better to be in than out until we figure out if this whole agency thing is actually going to work’. The agency model is in danger of becoming a bandwagon for large and mid-sized publishers, and like so many boom economies built on the ideals of easy profit and growth during the early part of this decade, it may ultimately prove to be built on a fragile deck of cards, underwritten by an accelerated expectation of e-book growth and an eventual standardization of e-reader formatting–both of which I am not convinced of the current projections and sales I have seen in the US and Europe.
I want to believe in the next five to ten years that we will be operating in an industry of 50/50, digital/paper sales, but I just don’t, certainly not for fiction. I can see a multitude of possibilities involving libraries and publishers working together to utilize digital content and marry it to profit for both.
I want to believe that the haste in the industry I am witnessing is for the good of books and readers alike, but right now, I don’t. I just see a bandwagon rolling down a hill, let loose from the rails for the first time in twenty years. I am amazed how many want a seat on the wagon without really thinking through what it will do for them and exactly where it is going to take them and their businesses.

Just some thoughts on a pretty hectic day…
…and judging by the links to the tales below, quite a few more…

PW on Penguin

GalleyCat on Hachette


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