More on raids in price-fixing probe. Publishers "explain" high ebook pricing.

The title should read, "...try to explain" the fixed higher-pricing of e-books.  See earlier article here on the raids.

The Guardian has a piece today on the raids, which includes quotes from some publishers trying to explain or defend the fixing of pricing so that prices are generally much higher and must be the same at all online bookstores needing Agreements with the Big 5, with no way for the online stores to offer sales or lower prices no matter what the case.  Random House has decided not to join Agency pricing in Europe during this time of probing questions.

Benedicte Page and Leigh Phillips report from Brussels, where they say that officials there have "refused to say how many or which publishers were targeted although a spokesman for Hachette, famed for its dictionaries, confirmed that it was among them.  The inquiry is understood to be focused on French companies."

Excerpts of particular interest, emphases and bracketed comments, mine:

' The EU competition spokeswoman, Amelia Torres, said: "We have suspicions of collusion to keep prices high.  But if our suspicions prove to be founded, this would have an impact across the EU because ebooks are sold across borders."  She added that the firms involved face fines if the commission finds "hard evidence".

The development comes on the heels of an investigation in January by the UK's Office of Fair Trading into whether arrangements between certain publishers and retailers over the sale of ebooks "may breach competition law".

Investigation teams have asked many of the biggest London publishing houses, including HarperCollins, Hachette and Penguin, for all records and documents relating to ebook sales.
. . .
Publishers see the agency model as crucial because it allows them to trade with Apple [which created the Agency plan and insists on it], which was already using it for iTunes, and also to control the price at which their ebooks are sold.
. . .
Ronald Blunden, Hachette's head of communications, denied that the company engaged in price fixing. "Emphatically no," he said. "We are dealing with distributors [such as Amazon] who have considerable clout.

"We found that in the US, electronic retailers began to apply large discounts on ebooks, driving the cost down.  Steadily the spread between the price of a printed book and an ebook became so substantial that we felt it was just unacceptable."

"It's important for the publisher to control the retail price," Blunden continued. "We don't want the items sold below cost, as the perceived value of books becomes damaged.  Once this happens, can we expect online retailers to absorb the cost of financing the editing and publishing of books?"

John Makinson, the Penguin group chief executive, argued that the "very important" agency model contributes to a competitive ebooks marketplace.  "To have vibrant competitive markets, it's important that Apple and the other digital vendors have a place in that market.  The agency model made it possible to have that choice," he said.

Makinson added that he saw "a certain irony" in an OFT [Office of Fair Traiding - UK] investigation designed to ensure competition and consumer choice.  "That in our view is what the agency agreement has provided," he said.

Their view of 'competition' is that the online booksellers must not be allowed to offer lower prices, which means online bookstore "Sales" are no longer possible and the customer cannot look for a lower price elsewhere as it would be fruitless.  Some consider this 'price fixing' while others consider it necessary publisher-control of book pricing, no matter how artificial or without reason.]

Novelist Nick Harkaway, author of The Gone-Away World, agreed. "If the agency model is really a problem under EU law, the law is the problem, not the industry," he said. "Otherwise you fall back into a situation where Amazon controls the market.  This is not to demonise Amazon, but they are a massive portion of the physical market and if their wholesale model also dominates the digital book market, it becomes much harder to negotiate with them." '

The Bookseller's deputy editor, Philip Jones, feels that if you let the market decide, then ebooks will become "too cheap" and they'll be unable to pay authors, editors or all the infrastructure that sustains the industry."

Yes, if an industry or individual companies (as we saw with digital music and with companies still limiting themselves to distributing physical copies of DVDs) cannot find a way to adjust to a vastly changing world, they won't be able to sustain the infrastructure as it stands.  The answer is not unceasing efforts to Stop the World from moving naturally (and insisting customers just pay up, and up) but to modify their infrastructure to reflect the real world and evolving technology, no matter how upsetting it may all be for them to have to change anything.

Read more at The Guardian story.

EARLIER BLOG ARTICLES ON THE E-BOOK PRICING WARS, WITH SOURCING
A Kindle World Blog history of articles on the e-book pricing wars


Kindle 3's   (UK: Kindle 3's),   DX Graphite

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Check often: Temporarily-free late-listed non-classics or recently published ones
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.
UK-Only: recently published non-classics, bestsellers, or highest-rated ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.

3G Kindle at AT&T stores - Random House US goes 'Agency'- Indie author's $$$Sales

KINDLE NEWS March 1, 2011

AT&T WILL SELL THE 3G/WiFi KINDLE-3 AT STORES STARTING MARCH 6
This means you can "test drive" a Kindle 3 at any AT&T store soon, and there are about 2,200 AT&T stores.  Here is info from AT&T on this.

Also, they will carry ONLY the 3G model, not the WiFi one, since they provide the 3G cellular wireless, which is free for Kindle customers (and best used with text-oriented sites with slower E-Ink) and it's speculated by JPMorgan & Chase Co. analyst Philip Cusick that AT&T will get a few dollars per Kindle sale.  These will sell at the same price as from Amazon: $189.

RANDOM HOUSE ADOPTS APPLE'S "AGENCY" PLAN TODAY, FOR HIGHER E-BOOK PRICES
L. A. Times's Carolyn Kellogg reports that the last of the "Big 6" publishing houses is moving to the Agency model for e-books, which is noted most of all, by consumers, for its higher e-book pricing over the last year that it's been put in place.  Apple's iPad2 announcement tomorrow will probably include that Random House has been accepted into Apple's iBook store, rather than kept out because they would not accept the Agency model terms earlier.

  I mentioned other day that the Agency model and the pricing wars have less to do with the amount of immediate profit-taking than 'control' over the e-book market, which is threatening the paper-based book market and its profits - the main and admitted concern of the Big 6 publishers.
  As Random House put it:

' "Going forward, Random House will set consumer prices for the e‐books we publish, and we will provide retailers with a commission for each sale," Random House said in a statement.  The agency model guarantees a higher margin for retailers than did our previous sales terms. We are making this change both as an investment in the successful digital transition of our existing partners and in order to give us the opportunity to forge new retail relationships." '

  Translation: Apple is ultra-likely to announce Tuesday that Random House has come within the fold.

  Apple and Random House are said to have been in negotiations since December.  We can hope that Random House may choose to set lower prices than the Big5 did during the last year.  The American Booksellers Assn. gave "strong support" to the move.

RANDOM HOUSE UK WILL STAY OUTSIDE OF THE AGENCY DESPITE U.S. MOVE
Not surprisingly, to those following the UK scene, Random House's UK company is not going Agency.  The Office of Fair Trading ("OFT") launched an investigation into e-book pricing in February, and publishers outside the Agency model "said they would be more cautious about it while it was under review."

  The Amazon UK forum "Agency Pricing" message thread is still going strong (with 1727 posts since mid-October, and the last message, dated today, says:

' Posted on 1 Mar 2011 10:21 GMT
Izzy says:
Well I'm glad many of us emailed the OFT and that they are looking into it because Random House US is going agency too, but not Random House UK... phew.  It's very unlikely that any UK publishers will switch to agency while it's under investigation. '

They have been comparing pricing and ways to bring e-book pricing back to what made sense to them as Kindle owners until the Agency plan started taking hold even there.

INDIE AUTHOR AMANDA HOCKING SELLS 450,000 BOOKS (99% ARE E-BOOKS) IN JANUARY.
That's sort of old news, courtesy of USA Today on February 9, but the story has been picked up more in the last couple of weeks and while I won't name the online zines that had so much "misinformation" in them (Amanda Hocking's word), including the misspelling of her name several times in one article as well as statements that she receives 70% of a sale for 99-cent books (not true, it's 35% for books under $2.99), it's been time-consuming to try to get more factually-based info.  But we have access to her blog for that.

Her success in sales should be given some attention by the Big 6 publishers in connection with their favored higher-ebook-pricing Agency plan.  They tend to insist that no one will be 'discovered' without their help.

According to the USA Today article, she started self-publishing in March, was selling hundreds of copies by May and thousands by June, at prices between 99c and $2.99.

' "More astounding: This January she sold more than 450,000 copies of her nine titles. More than 99% were e-books."
. . .
In fact, Hocking is selling so well that on Thursday, the three titles in her Trylle Trilogy (Switched, Torn and Ascend, the latest) will make their debuts in the top 50 of USA TODAY's Best-Selling Books list.

A recent survey shows 20 million people read e-books last year, and more self-published authors are taking advantage of the trend. '

  To see Amanda Hocking's list of facts to offset the misinformation online, see the 'Misinformation and Corrections' entry at her blog.

  Essentially, she is 26, has published eight books and one novella, "so there are nine works that you can purchase from Amazon, Barnes & Noble, Apple, and Smashwords."
  She was never traditionally published and still has not been traditionally published.
  Hocking first published two books in April 15, 2010 and in less than a year, she's "sold over 900,000 copies of over nine different books."
  Has been on the USA Today Bestseller list but not the NY Times List.
  She has an interview with Elle that will be in the April issue and is due to be interviewed by Better TV in late March.
  She writes "young adult paranormal romance and urban fantasy, mostly."

  Her Trylle Trilogy has been optioned for a film and is "a paranormal romance without vampires, shifters, mermaids, fae, angels, dragons, ghosts, or ninjas."
  On the other hand, her latest, Hollowland, IS a zombie urban fantasy, a bit more gritty than her previous books but romance remains part of the mix.  It already has 83 customer reviews with an average rating of 4.5 stars.  I have no idea why zombies are so 'in' these days and will add that's not a draw for me, but I do like that she has used a background of very-early writing focus and years of serious classes in writing and has exploded on the scene, enjoyed by many paying-customers despite no help whatsoever from the traditional large publishers.  Read her blog to see the avenues she uses for getting the word out.
  Here's her Amazon Author page.

EARLIER BLOG ARTICLE ON AUTHORS AND KINDLE PUBLISHING
Authors and Kindle Publishing.

EARLIER BLOG ARTICLES ON THE E-BOOK PRICING WARS, WITH SOURCING
A Kindle World Blog history of articles on the e-book pricing wars


Kindle 3's   (UK: Kindle 3's),   DX Graphite

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Check often: Temporarily-free late-listed non-classics or recently published ones
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.
UK-Only: recently published non-classics, bestsellers, or highest-rated ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.

Amazon UK tells Kindle customers about "Agency" plan's higher pricing

Teleread's Paul Biba had an alert for us this morning about an Amazon UK announcement which, it turns out, was made to customers on their Kindle forums.  You can read his linked post, "Amazon UK tells customers about agency pricing and resulting higher prices" to see how he learned about it.

 Since it is Amazon's statement about its conflicts with Big5 publishers over e-book pricing in the U.S. and what Amazon is doing to resist the Agency plan in the UK, readers of this blog might find the forum post interesting.

Here is the Amazon UK forum announcement:

' Initial post: 14 Oct 2010 17:29 BST
Last edited by the author 22 hours ago
Amazon.co.uk Kindle Team says:
(AMAZON OFFICIAL)
Dear Customers,

Recently, you may have heard that a small group of UK publishers will require booksellers to adopt an "agency model" for selling e-books. Under this model, publishers set the consumer price for each e-book and require any bookseller to sell at that price. This is unlike the traditional wholesale model that's been in place for decades, where booksellers set consumer prices.

It is indeed correct that this group of publishers will require Amazon and other UK booksellers to accept an agency model for e-books. We believe they will raise prices on e-books for consumers almost across the board. For a number of reasons, we think this is a damaging approach for readers, authors, booksellers and publishers alike.

In the US, a few large publishers have already forced such a model on all US booksellers and readers. You can read the thread we posted about that change here:
http://www.amazon.com/tag/kindle/forum?cdForum=Fx1D7SY3BVSESG&cdThread=Tx2MEGQWTNGIMHV&displayType=tagsDetail.

As we're now faced with a similar situation in the UK, we wanted to share our thinking and some details about what we have observed from our experience in the US.

First, as we feared, the US agency publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster) raised digital book prices almost across the board. These price increases were not only on new books, but on older, "backlist" books as well (in the industry, "backlist" books are often defined as books that have been published more than a year ago). Based on our experience as a bookseller setting consumer prices for many years, we know that these increases have not only frustrated readers, but have caused booksellers, publishers and authors alike to lose sales.

There is some good news to report. Publishing is not a monolithic industry - there are many publishers of all sizes taking a wide range of approaches to e-books. And most publishers in the US have continued to sell e-books to us and other booksellers under traditional wholesale terms. They make up the vast majority of our Kindle bookstore - as a simple proxy, in our US store 79 of 107 New York Times bestsellers are priced at $9.99 (£6.31 GBP) or less, and across the whole US store over 585,000 of 718,000 US titles are priced at $9.99 or less.

Unsurprisingly, when prices went up on agency-priced books, sales immediately shifted away from agency publishers and towards the rest of our store. In fact, since agency prices went into effect on some e-books in the US, unit sales of books priced under the agency model have slowed to nearly half the rate of growth of the rest of Kindle book sales [Emphasis mine.].   This is a significant difference, as the growth of the total Kindle business has been substantial - up to the end of September, we've sold more than three times as many Kindle books in 2010 as we did up to the end of September in 2009. And in the US, Kindle editions now outsell hardcover editions, even while our hardcover business is growing.

In the UK, we will continue to fight against higher prices for e-books, and have been urging publishers considering agency not to needlessly impose price increases on consumers. In any case, we expect UK customers to enjoy low prices on the vast majority of titles we sell, and if faced with a small group of higher-priced agency titles, they will then decide for themselves how much they are willing to pay for e-books, and vote with their purchases.

Thank you for being a customer,
The Kindle UK Team '

The varied responses to the Amazon UK letter are an interesting read.

Background
For those new to the situation and interested in the background of the e-book pricing wars, the earlier stories posted here include:

  . WashPost: State AG probes Apple, Amazon over e-Book prices. What?
  . Amazon removes Macmillan books
  . Amazon surrenders to Macmillan and Steve Jobs
  . Steve Jobs pulls his puppet strings but says too much
  . Amazon plays hardball to keep lower pricing option
  . Why are some e-book prices higher than hardcover ones?


Kindle 3's   (UK: Kindle 3's),   DX Graphite

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Check often: Temporarily-free late-listed non-classics or recently published ones
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.
    Also, UK customers should see the UK store's Top 100 free bestsellers.

Free Kindle books (non-classics). See them easily anytime. UPDATE2

UPDATED April 12, 2010 - Original posting April 4, at 10:42 PM
  I added a 2nd method of seeing latest free non-classics (latest free contemporary) but also needed to add that some international Kindle users in Europe, Canada and some other countries are in high wireless-cost areas, so Amazon charges about $2.30 for the otherwise free book, sorry to say.  Amazon hopes to be able to change this someday with low-cost local arrangements.

If you want to always be able to see the latest currently free non-classics Kindle books without waiting for someone to tell you which are free today, do bookmark these two pages:
  (1) the Latest Free Nonclassics page (shortcut http://bit.ly/latestfreenonclassics)) and
  (2) the Late-Listed Free Nonclassics page (shortcut http://bit.ly/latelistedfreenonclassics), to see the 55 to 65 non-classics or non-public domain books that are free at any particular time (very often only briefly)

 This set, in two views, is the main source for free-book information used for blogs though many will prefer newest ones pointed out daily.  However, you can catch them even earlier this way if you use the link before the new books are reported.  The free non-classics usually last a few days, some less, and some stay on for quite some time.

  While I omit the hundreds of 'excerpts' for the ongoing Amazon contest, be aware that a very few of the new free non-classics displayed on these pages are promoting a "Chapter" or two.  They are clearly marked but can still be missed.

  Although the first group is sorted by 'publication date,' Amazon's publishers will sometimes offer for free -- suddenly and temporarily -- books that were published even a year to 3 years ago.  So latest free ones can be in the middle.
  Often they're so new that they're listed as least-selling of course, so I've added a link for that method also.  Use these links whenever you want to, and you'll see quickly which ones are new though.

ALTERNATE VIEWS OF THE SET
  While at the page, you can choose at top right to see them sorted by Bestselling and Average Customer Rating as well.  I've used only one image for this article, as you will quickly see which currently free e-books might be of interest depending on genre and product descriptions there.

The new free books are dominated by the Christian Fiction genre, and some will find those inspiring while others are looking for more general-interest books or for other genres.

FREE BOOK HIGHLIGHTED IN IMAGE ABOVE
The book whose image you see for this blog article is Bite Me, by Parker Blue who is offering the book free as a promo for his more recent book.  Bite Me has 9 customer reviews averaging 4-1/2 stars.  The paperback is listed at $12.78 and the Audible audio version at $13.10.

The book is described as "An edgy book for teens that spans the gap between YA and adult fiction..." and, as with so many bestseller books today, it has a vampire-hunter theme.

[From original posting, unchanged]
FREE BOOKS THAT DISAPPEARED WITHIN A DAY, AND AGENCY-PLAN SOFTWARE CHANGES
There were temporarily-free Kindle books released as free the last couple of days which are currently missing from the Kindlestore lists -- there may have been a glitch that caused the listing of a bunch of HarperCollins free-books that are currently missing.  There are also longer-term free books that are temporarily missing due to the rather huge programming changes needed to convert the store price calculations to Agency for the Big5 publishers and all their many imprints, not easily identifiable usually as under the big tent of the larger publishers.

 So, missing books are likely due to programming changes being made (or errors) in the rush to program store-wide price calculation changes needed by the time of Applestore's opening Saturday to make sure prices are as high as Apple and Big 5 publishers insist they be from now on.

  The big switchover to Apple's Agency plan requires that iBookstore publishers get all other online bookstores to change to the higher-pricing Agency plan for their e-books as a condition for their inclusion in Apple's store.
  In previous blog entries I've noted there will be taxes on these also, as that is based on states where the publisher of the book has a presence.

 The larger publishers have been very pleased to find a new bookstore willing to (and even recommending that publishers) raise prices 30-50% while demanding that other online e-bookstores do as well.

 But that meant that other bookstores like Amazon's and Fictionwise are having to switch to the Agency plan with its higher customer-pricing.
 "Competition" has brought on non-competitive prices that are, coincidentally considerably higher.

 Therefore it's not super likely that HarperCollins, who just made an Agency agreement with Amazon, would be likely to have lots of free books for more than a day or two.  If they do bring those back, as a promo, it'll be a nice surprise, but they disappeared after one day -- and if they're not brought back, then it was entirely a network programming error.   We'll see.

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See the ongoing Guide to finding Free or Low-Cost Kindle books and Sources
 There is also a page of links that confine searches to mid-range priced e-books for those looking for a larger selection of non-classics below $7.