The Agency Model For Authors And Publishers?

Andrew Zack plays devil’s advocate in the Huffington Post with an article entitled, The Beginning of the End…of paper books. This was an article that slipped under the radar for me, but it does pose some intriguing possibilities for publishers who pursue the ‘agency model’ when negotiating contracts and terms with booksellers. To recap, the ‘agency model’ is where a publisher allows a bookseller (be they Waterstones, Amazon, Walmart or Barnes & Noble) to become an agent and sell their digital e-book catalogue for a 30% commission on retail price. The difference with the ‘agency model’ is not just that the retailer is not getting the 40% to 50% discount they get under the present system – a system tailored to paper books, but the publisher takes back control of setting the retail price as well as tying the release of an e-book into the hardback publication.

“Publishers tend to have one of two royalty structures for eBooks: fifteen percent of retail price or twenty-five percent of net received. Under the first rate, an author would receive $2.25 on that sale. Under the second, $2.62. This may be the first time earning a “net” royalty is better than a retail royalty.

So have we stumbled upon a model that actually works better than the current model? Could this model work for printed books also? And could it be the long-sought route to a net royalty structure that works for both publishers and authors? Imagine if publishers turned brick-and-mortar bookstores into “agents” who got a thirty-percent commission? Certainly this would be better for publishers, who routinely grant fifty-percent discounts off list. Could it be done? Perhaps, but it would change the market for consumers, who have gotten very used to going online to Amazon or into a Barnes & Noble Bookstore and seeing books discounted thirty or forty percent or more. But books could be cheaper.”

Frankly, with HarperCollins and Hachette on board with Macmillan, I half-surprised the so-called big six powerhouses in publishing did not go for broke and attempt to introduce this across the board including printed books.Though, this may be the first step in that direction, particularly if booksellers are allowed the free-for-all policy that exists on returns.
Zack really decides to up the anti and play devil’s advocate by suggesting, why can’t authors use the ‘agency model’ when they sell their books to publishers?

“But let’s take that $25 and split it three ways: $8.33 for the bookstore, $8.33 for the publisher, and $8.33 for the author. The publisher makes nearly the same money. The bookstore makes more money, and the author makes a lot more money. But we know publishers won’t agree to take less money, especially given production costs. So why not thirty percent to bookstores, thirty percent to authors, and forty percent to publisher? If bookstores sell at full retail price, they will make more money than buying at fifty percent discount and selling at thirty percent off list. Publishers will make about the same money than selling at a fifty percent discount and paying a royalty based on list, and authors will make a lot more money.”

It is certainly an intriguing idea and brings the greatest benefits to the author. Ultimately, the buck is stopping somewhere, and you can pretty much guess that will be with the book consumer who has grown accustomed to deep-discounting on big sellers and the marker $9.99 e-book. In some ways Partnership Publishing already uses such a model, both with commercial publishers and in the world of self-publishing, with author and publisher often sharing 50/50 of what is left after print costs and the bookseller’s discount.
Sometimes the models and ideas spoken of in publishing are not so much new, but rather already exist in some form and are simply untried at the top level of the publishing industry.  

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