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


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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.

Newspapers headline Amazon UK forum rebellion against Agency pricing

KINDLE CUSTOMER ANGER AT AGENCY 'PRICE FIXING'

That was the big headline at The Bookseller.com site yesterday when reporter Graeme Neill reported on the Amazon UK forum message thread that I pointed to the day before.

Besides accusing the publishers of "greediness" and vociferously suggesting that the actions of Hachette, Penguin and HarperCollins could lead to piracy when people had been happy to pay the earlier prices, they have started a boycott which seems a bit stronger than the one already causing innocent authors no small distress in the U.S.:

' "I can't believe I'm saying this . . . because I have never ever downloaded files illegally. Not even once. And now I'm considering it. Because if publishers want to rip ME off, maybe it's not so wrong to rip them off?" '

That, by Caroline P was a popular sentiment.  As I mentioned in the earlier report, one forum writer had been upset that "One book, Just After Sunset bought at under £5 the other day, was seen to be £17.99 today, a price shown as 'set by the publisher' as they decided to do in the U.S. (where some customers ignore it and still blame Amazon for the pricing)."

The Bookseller picked up that message (out of 452 that were there when I last looked -- and there are right now about 700 postings there).  After some forum members decided to give Kindle book reviews 1-star ratings due to what they considered sudden, heavy overpricing, Neill reports:

' The move by Hachette, Penguin and HarperCollins has lead [sic] to Amazon.co.uk's Kindle chart being dominated by non-agency publishers.

  Stephen Fry's The Fry Chronicles (Penguin, £12.99) has tumbled out of the top 20, while his first memoir, Moab is my Washpot (Random House, £2.69) was in the top 15 this morning (2nd November). '

While some of us feel this method of protesting is unfair to authors, there's little question that it's effective in bringing to the attention of the world the depth of unhappiness over the current raised pricing which is to be the same at all online e-book stores.

  To make it worse, a spokesperson at HarperCollins uttered an inept, meaningless statement that was like throwing oil on water:

' Experience has shown in the US, where the market is more mature, this is the best way to stimulate competition by offering good value to consumers and maximising the number of channels to market." '

  Stimulate competition? By making sure all online e-book stores charge the same higher price for an e-book ?  The UK has stronger regulations against what could be seen as price-fixing, and reporting the situation to agencies has been another method some forumners have used in the last week.

  However, in a posting that was just made as I write this, forumner Neilleeds advises the forum that, on the £17.99 book Just After Sunset "...the price has dropped to 50p below paperback for this now so the point is not as valid as it was!"  Maybe the many reports to regulatory agencies are having an effect.

  In the meantime, The Guardian's headline was "Kindle users revolt against delays to ebook editions."   Their focus is on "Angry Kindle fans" who "have sabotaged the Amazon rating of a bestselling new book, Game Change, an exposé of the 2008 US presidential elections, to punish its publisher for delaying the digital edition of the book until February.

  The newspaper reviews on that book have been highly positive but, the Guardian says, "the book has been punished with one-star reviews at Amazon.com from frustrated Kindle users" and Neill counted about 142 forum reviewers giving the book one star and writing that the publishers are shaming themselves by "excluding and alienating a huge market that would have bought your book if you weren't so shortsighted" and advising that topical books released later and no longer timely will never be bought now.

  Last year Amazon had predicted, during the U.S. equivalent of this reaction in the UK, that "authors get the most publicity at launch and need to strike while the iron is hot.  If readers can't get their preferred format at that moment, they may buy a different book or just not buy a book at all."

  For one thing, that also leaves time for would-be-readers to see any bad reviews or to find that this is no longer a book others are talking about and they drop the impulse to buy it.

  At that time last year, Simon & Schuster chief executive Carolyn Reidy had told the WSJ, "We believe some people will be disappointed.  But with new [electronic] readers coming and sales booming, we need to do this now, before the installed base of ebook reading devices gets to a size where doing it would be impossible."

Random House, who said No to the new fixed-higher-pricing of the Agency Plan and therefore was not allowed into the Apple iBook Store, is the largest publisher of all and has not joined the other large publishers in this UK phase of the Agency plan and appears to be thriving.

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?


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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 Switches to Agency Plan with 3 Publishers

As mentioned here on Oct. 15, Amazon told its UK customers about its battles to avoid the 'Agency Plan' created by Apple with the larger publishers and that the latter would 'require' online booksellers to accept the plan to fix prices to be the same at all online stores (notably higher in most cases).  See the recent story for details of what Amazon said to its customers in a posting on the Kindle forums.  The short version is:

' 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. ... '

  But Bookseller.com reports it's come to pass in the U.K. now, also, with "publishers Hachette, HarperCollins and Penguin now setting their own e-book prices.  Customers buying an e-book from the Kindle store from any of the three publishers are told: "This price was set by the publisher." A Penguin spokesperson said: "I can confirm we are now on the agency model with Amazon as of today."

  Hachette, the leader of the 3 (or the one who required this first) switched to agency pricing in September. Bookseller says that Amazon is the first online e-bookseller to make the switch and that no Penguin or Hachette e-books are yet available for sale on either Waterstones.com or W H Smith's website.

  It seems they just withhold the e-books if the retailer refuses to go on the Agency plan.  With Amazon, the customers tend to blame Amazon, as they did in the U.S., if the e-books are not in the store and many posted on forums they'd rather have a choice and pay more than not have access to the books at all or have to find them elsewhere.  Most posted though that they didn't intend to pay the publishers' new higher prices, since they were often 50% higher.

  The reaction in the UK's forums is more angry than even what we saw in the U.S. forums.  One book, Just After Sunset bought at under £5 the other day, was seen to be £17.99 today, a price shown as 'set by the publisher' as they decided to do in the U.S. (where some customers ignore it and still blame Amazon for the pricing).  However, I just looked and they're removed the price for the Kindle edition and haven't replaced it yet. Also, Bookseller.com adds:

'A small number of HarperCollins' e-books are available at Waterstones.com and W H Smith, with a note from Waterstones.com indicating that loyalty card points do not now apply to e-book purchases.

  It is believed that an issue over loyalty card payments was behind the removal of Hachette titles from sale at Waterstones.com when the publishers switched to agency in September, suggesting that the wrinkes [sic] in the transition may soon be ironed out across all booksellers who agree to the new terms.  One retailer said: "It's still a bit fluid.  Everything is still being resolved."

The only publishers who have signed up to the agency model but have yet to implement its pricing are Canongate, Macmillan and Simon & Schuster. '

See the earlier story for more details and links to sourcing for the history of the e-book pricing wars.


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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.