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Publetariat Dispatch: Price Wars and Book Industry Illegal Activities

Publetariat: For People Who Publish!
In today’s Publetariat Dispatch, independent bookstore owner Bob Spear shares some insight into how book pricing works.

This has been a huge issue lately. To better understand it, let me  describe a couple of different pricing models or customs which are at  the heart of this controversy.

Wholesale Model: The publisher establishes a book’s  recommended price and sells it to the booksellers for a percentage off  that price. The bookseller can then sell the book for whatever price  (sometimes higher) that he wants to.

Agency Model: The publisher sets a price for the  book and then discounts it 30% to the reseller, who must agree to sell  the book at the price the publisher establishes and cannot discount. The  result has been for the publishers to push up the prices of their books  because they can.

Impact on E-books: This has pushed up the price of  E-books and has resulted in a major conflict between some of the major  publishers and Amazon, who wants to keep the prices low for their Kindle  market. In their efforts to control the situation in their favor, the  major publishers began allegedly sneaking around in a variety of  price-fixing activities. Ooops, they got caught at those and the  following cover-up attempts. This brought the Federal Department of  Justice into the fray with an anti-trust suit against five publishers  and Apple. In the meanwhile, E-book distributor Mark Coker of SmashWords  has come on record that he prefers the Agency Model because it allows  the authors and the publishers to control the prices. This levels the  playing field for smaller book retailers and preventing large retailers  from loss-leadering their small competitors to death.

All these recent activities are pushing down E-book prices and tying  the hands of the major publishers, which may hasten their demise.

Bottom Line: The forces of greed and control battles  point to the obvious solution of self-publishing. Once a pariah in the  book industry, self-publishing is becoming acceptable, as long as the  author does a professional job of publishing his books. The legal fight  has an indirect impact on self-publishers in terms of common price  ranges. It all points to a much different business model.
This is a cross-posting from Bob Spear‘s Book Trends blog.


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