What’s wrong with Agency pricing
As I’ve made it clear elsewhere, I hate the Agency Model. I think it’s anti-customer, and I long ago took a pledge not to buy any Agency Priced ebooks. But I’ve never really explained why I hate it.
I’ve been listening to people defend the Agency Model for some time now, and most of the arguments betray a misunderstanding of the basic facts of the situation.
The Agency Model, as implemented in the US, consists of 2 parts of an economic plan that have nothing in common. Also, there was no reason that both parts of the Agency Model _had_ to be implemented together. Here are the 2 parts:
- a 70% going to the publishers
- a non-discountable price set by the publisher
I know that the first can be implemented without the second because Smashwords already did something similar with their ebookstore. Smashwords pay content creators a far larger cut than any other distributor. (I think it was 70%, but I forget.)
If publishers had simply demanded a 70% split, I would applaud. I think they should have done it quite sometime ago. There was really no reason for digital to have the same split as paper; the costs aren’t the same.
My objection, and this has always been the issue, is the non-discountable price. It blocks price competition, and that harms customers.
Of course, if ebookstores hadn’t been turned into agents for the publishers then we wouldn’t be able to call this the Agency Model. But that is irrelevant here.
I could go on and discuss why I think publishers implemented the Agency Model, but it’s not relevant to my basic objection to the model itself, which is pretty simple. The Agency Model hurts me as a customer. It prevents me from shopping around and finding the lowest priced ebook.
image via Flickr