Why Smashwords went Agency

Mark Coker, CEO of Smashwords, wrote a blog post yesterday and he explained why Smashwords had decided to adopt the agency model. Somehow I missed it yesterday (still trying to figure out how).

It's quite long, so here is an excerpt of the most important part:

...around July, Amazon increased their royalty rates for direct publishers to match the Apple 70%. For the authors who chose to work directly with Amazon, they had to agree that their books would not be sold elsewhere for less, and if Amazon discovered the book priced elsewhere for less, they had the right to discount the author's book to price-match the competition.

This is when the proverbial fertilizer hit the fan for some Smashwords authors who publish direct with Amazon via DTP and then use Smashwords for all the non-Amazon retailers. I recall receiving one especially frantic email from a Smashwords author on disability retirement who was faced with the prospect of seeing his Amazon sales slashed due to discounting at our retailers.

This isn't the first time I've heard this story, sadly.

I wonder if anyone expected Smashwords to go down this path when the A5 announced their cabal with Apple?  I didn't.

About Nate Hoffelder (11466 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader: "I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

1 Comment on Why Smashwords went Agency

  1. I get lambasted for my posts that are unfavorable to Amazon, but this is a perfect example of why I avoid buying and supporting Amazon. Amazon has gotten so big that it’s able to dictate terms and pricing to everyone and those who continue to buy from Amazon help build its strength.

    Am I the only one who finds it fascinating that Amazon complains about Agency pricing and being dictated to by outsiders yet doesn’t hesitate to do the same thing whenever it can?

    I don’t believe that Amazon has 70% of the ebook market yet, but I do believe that as soon as it thinks it is in a position of absolute unassailable strength in the ebook marketplace, there will be a rise in pricing (i.e., a lessening of the Amazon discount), which is typical strategy of most monopolists.

    Tell me again why Amazon won’t let other device makers include its DRM scheme? Or why Amazon won’t adopt ePub? Or, better yet, why Amazon won’t let me buy an ebook unless I have a device registered with it capable of reading the ebook? Why can’t I simply buy an Amazon ebook and download it to my computer even if I do not have Kindle4PC on my computer or own a Kindle device?

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