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by Nathan Bransford
It's difficult to overstate how big of a deal it is to bookselling culture that the Department of Justice is reportedly planning to sue five publishers and Apple for colluding over e-book prices*.
In order to understand why this is a big deal, here's a brief recap of what led us here (this summary is described in greater detail in my post Why Some E-Books Cost More Than the Hardcover).
Wholesale vs. Agency
At the time Amazon kicked off the modern e-book market with the introduction of the Kindle, e-books were sold according to the traditional wholesale model. Essentially, publishers set a cover price and they got half, the bookseller got half. If a book was listed at $25, publishers got $12.50 on an e-book sale, the bookseller got $12.50.
Problem was from publishers' perspective, Amazon was selling some e-books at $9.99 and taking a loss on those sales, all the while locking readers into their proprietary format. Not only did this devalue what consumers felt a book "should" cost, publishers were worried that competitors wouldn't be able to enter the e-book space because they wouldn't be able to compete with Amazon's prices. No competitors would mean a virtual monopoly for Amazon, and publishers were presumably concerned about Amazon's ability to then dictate terms.
Along comes Apple and the iPad. Steve Jobs talked the publishers into the agency model - publishers set their own prices and they get 70% of the proceeds.
( Read the rest of this really fascinating post on Nathan Bransford's blog )
FYI, Nathan's blog is great for writers/authors and readers. Great community and, as a former agent, now writer, he has amazing insight into the publishing world. I can't recommend him highly enough.
It's difficult to overstate how big of a deal it is to bookselling culture that the Department of Justice is reportedly planning to sue five publishers and Apple for colluding over e-book prices*.
In order to understand why this is a big deal, here's a brief recap of what led us here (this summary is described in greater detail in my post Why Some E-Books Cost More Than the Hardcover).
Wholesale vs. Agency
At the time Amazon kicked off the modern e-book market with the introduction of the Kindle, e-books were sold according to the traditional wholesale model. Essentially, publishers set a cover price and they got half, the bookseller got half. If a book was listed at $25, publishers got $12.50 on an e-book sale, the bookseller got $12.50.
Problem was from publishers' perspective, Amazon was selling some e-books at $9.99 and taking a loss on those sales, all the while locking readers into their proprietary format. Not only did this devalue what consumers felt a book "should" cost, publishers were worried that competitors wouldn't be able to enter the e-book space because they wouldn't be able to compete with Amazon's prices. No competitors would mean a virtual monopoly for Amazon, and publishers were presumably concerned about Amazon's ability to then dictate terms.
Along comes Apple and the iPad. Steve Jobs talked the publishers into the agency model - publishers set their own prices and they get 70% of the proceeds.
( Read the rest of this really fascinating post on Nathan Bransford's blog )
FYI, Nathan's blog is great for writers/authors and readers. Great community and, as a former agent, now writer, he has amazing insight into the publishing world. I can't recommend him highly enough.