News

HC and Hachette UK refine agency model

HarperCollins and Hachette UK are the first UK publishers to introduce a refined agency model with Amazon.co.uk.

The online giant removed the text indicating that HC and Hachette UK's e-book prices were "set by publisher” today after concluding negotiations with the publishers following the European Commission ruling that the original agency publishers had to terminate their current agency agreements, and come up with new terms.

Publishers Simon & Schuster, Hachette, Holtzbrinck, Apple and HarperCollins offered to terminate ongoing agency agreements and give retailers freedom to discount e-books, subject to certain conditions during a two-year period, last December, following an antitrust investigation by the European Commission into concerns about price-fixing.

The prices of HarperCollins and Hachette e-books have already dropped slightly on Amazon today (3rd April). HC's The Hobbit by J.R.R. Tolkien was selling for £3.65 on Kindle, but £4.99 as an e-book at Waterstones; Game of Thrones: Song of Ice and Fire was selling for £3.67 on Kindle but £3.99 as an e-book at Waterstones; and Hilary Mantel’s Bring Up the Bodies was selling for £8.36 in Kindle but for £9.99 as an e-book from Waterstones. Before the changes, Amazon was selling those titles for the same price Waterstones currently is.

For Hachette, The Host by Stephenie Meyer was selling for £4.93 on Kindle, but £4.99 on Waterstones and J K Rowling’s The Casual Vacancy was selling for £8.08 on Kindle but for £9.99 as an e-book at Waterstones.

Titles by Simon & Schuster have not yet been altered on Amazon.co.uk and titles still say they have been set by the publisher.

A spokesperson for HarperCollins said: “Our trading arrangements are in line with our commitments to the European Commission, published in full on their website on 13th December. At the time we said that our goal has always been to give consumers the widest choice at the fairest price while simultaneously ensuring that authors receive a just reward for their endeavour. That remains our position.”

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All this could have been avoided if publishers had windowed the ebook publication to follow the hardcover as they do with mass market or even trade paper back formats. Instead they wanted to come up with a business model to maintain prices while simultaneously issuing the ebook with the hardcover.

Pricing two products that essentially give the consumer the same thing while reducing the price of one format over the other was a bad idea to start with and it has unfortunately been very painful for our industry on a lot of levels.

I realize this is sludge under the bridge but I hope that publishers take note for the future.

Now as the ebook format is succeeding there has to be a discussion about publishers paying fair royalties to authors. Publishers should not be the only ones benefiting from the lower cost of producing ebooks as print books continue to decline in over all numbers. Especially as publishing houses downsize their businesses and reduce overhead across their publishing operations because of the ebook boom.

Robert Gottlieb
Chairman
Trident Media Group, LLC
Like us on Facebook
www.tridentmediagroup.com

One problem is that if you window the ebook release until after the hardcover you get 100 one star reviews on Amazon complaining about it. Another is that if you release the ebook with the hardcover at the hardcover price point you get 100 one star reviews on Amazon complaining about it. See Amazon listing for Brandon Sanderson's finale to the Wheel of Time series for the former phenomenon, and JK Rowling's Casual Vacancy for the latter.

What consumers clearly want is for the ebook to be released at a paperback price point as soon as the hardcover is available. But this kind of flies in the face of the traditional reverse-auction method of selling books (the longer you wait to buy, the less you pay.)

On the issue of royalty rates, let's remember that we are already paying up to 25% royalties; 20% sales tax; 30% as an agency cut or more if a reseller discount; we've thus already given away 75% of cover price, and we're only saving about 10% of cover price by not having to print and distribute it. Paper and logistics are cheap; eliminating them doesn't suddenly produce a huge pot of money.

We should also remember that consumers DO think that eliminating print means that ebooks are zero-cost to produce, and so they think that they should cost almost nothing to buy. The mythical money-pot is expected to be passed on to them in savings, not on to us, you, or authors in extra profit margins.

Yes iucounu and what consumers also want is free petrol. That is an empty argument. Made by people who want everything as cheap as they can buy it. Publishers have never published books in lesser priced formats on that basis and should not.

As to a the review matter you mention above the work will stand on it's merits.

As to royalty rates. You numbers are weighted in favor of the publisher. When you say "we are already paying 25%" what is the 25% against? The answer is the 25% is paid on a net to the publisher not the gross. That is a fundamental change from a royalty based on the selling price.

As a result of the increase in ebook sales and the fact that paperbound books are selling fewer copies major publishers are cutting back in a variety of areas in size and back office. The example I point to is the huge profits for Bertelsmann in 2012 and the efficient cutting that is taking place due to the needs of a modern day publisher the result speaks for itself.

Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
Like us on Facebook

Ah, you are of course right about the royalty being paid on net. Still, though, the percentage we're paying on ebooks is, in general, significantly more than the percentage we're paying on print books - and indeed print royalties are increasingly paid on price received, too.

Plus in the UK we lose 20% of the sale price of an ebook to the tax man (or, more accurately, we lose 5% to the tax man and 15% to Amazon in Luxembourg.) Those easily swallow up the savings we make by not having to print the ebook - printing and shipping is only going to run us about 15% of cover price.

Across any given number of sales, ebooks aren't that much more profitable than p-books. The advantage is that they're lower risk, because there's virtually no per-book cost to us, so that's nice if the book does well. We've still spent most of the money we'll spend on them up-front, though.

As to the 'empty argument' about what the consumer wants: of course consumers will want the moon on a stick. I'm not saying that's what they ought to be given. I'm just pointing out that publishers (and indeed authors) are often damned if we do, damned if we don't. If we do as you suggest and hold back ebook releases until after the hardcover window, it'll get slammed by angry fans.

iucounu - well made points my friend. I'm not sure why you're wasting your time though, there are a large group of posters on here who only ever want to indulge in publisher-bashing - however misguided - and therefore any valid or well-reasoned arguments that burst that convenient bubble are routinely dismissed.

By Corey T, there is a substantial difference between author advocacy and "publisher bashing". I have personally spent the last 35 years trying to hold back the tide from publishers attempting to keep books in print because they are on a server (which basically turns the licensing agrangement between an author and a publisher upside down because the book can never go out of print under this scenario and fundamently gives the publisher ownership in the work), to reducing royalty payments to authors on a wide spectrum to mention a handful of issues. Recently the Macmillan group tried to institute draconian business terms in their boilerplate agreements and they were forced back from those positions by those that had the leverage to do so while small agencies could not. The list is long and with the consolidation of publishing it is going to get harder not easier for authors.

There is an across the board push by trade publishers to get more draconian business terms in their agreements then every before which are costly to authors as large international entities along with their corporate councils devise methods to take more ground.

By Corey T, until you are in the trenches each day dealing on these matters on the authors side, I suggest you think twice about calling people "publisher bashers".

Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
Like us on Facebook

All this could have been avoided if publishers had windowed the ebook publication to follow the hardcover as they do with mass market or even trade paper back formats. Instead they wanted to come up with a business model to maintain prices while simultaneously issuing the ebook with the hardcover.

Pricing two products that essentially give the consumer the same thing while reducing the price of one format over the other was a bad idea to start with and it has unfortunately been very painful for our industry on a lot of levels.

I realize this is sludge under the bridge but I hope that publishers take note for the future.

Now as the ebook format is succeeding there has to be a discussion about publishers paying fair royalties to authors. Publishers should not be the only ones benefiting from the lower cost of producing ebooks as print books continue to decline in over all numbers. Especially as publishing houses downsize their businesses and reduce overhead across their publishing operations because of the ebook boom.

Robert Gottlieb
Chairman
Trident Media Group, LLC
Like us on Facebook
www.tridentmediagroup.com

One problem is that if you window the ebook release until after the hardcover you get 100 one star reviews on Amazon complaining about it. Another is that if you release the ebook with the hardcover at the hardcover price point you get 100 one star reviews on Amazon complaining about it. See Amazon listing for Brandon Sanderson's finale to the Wheel of Time series for the former phenomenon, and JK Rowling's Casual Vacancy for the latter.

What consumers clearly want is for the ebook to be released at a paperback price point as soon as the hardcover is available. But this kind of flies in the face of the traditional reverse-auction method of selling books (the longer you wait to buy, the less you pay.)

On the issue of royalty rates, let's remember that we are already paying up to 25% royalties; 20% sales tax; 30% as an agency cut or more if a reseller discount; we've thus already given away 75% of cover price, and we're only saving about 10% of cover price by not having to print and distribute it. Paper and logistics are cheap; eliminating them doesn't suddenly produce a huge pot of money.

We should also remember that consumers DO think that eliminating print means that ebooks are zero-cost to produce, and so they think that they should cost almost nothing to buy. The mythical money-pot is expected to be passed on to them in savings, not on to us, you, or authors in extra profit margins.

Yes iucounu and what consumers also want is free petrol. That is an empty argument. Made by people who want everything as cheap as they can buy it. Publishers have never published books in lesser priced formats on that basis and should not.

As to a the review matter you mention above the work will stand on it's merits.

As to royalty rates. You numbers are weighted in favor of the publisher. When you say "we are already paying 25%" what is the 25% against? The answer is the 25% is paid on a net to the publisher not the gross. That is a fundamental change from a royalty based on the selling price.

As a result of the increase in ebook sales and the fact that paperbound books are selling fewer copies major publishers are cutting back in a variety of areas in size and back office. The example I point to is the huge profits for Bertelsmann in 2012 and the efficient cutting that is taking place due to the needs of a modern day publisher the result speaks for itself.

Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
Like us on Facebook

Ah, you are of course right about the royalty being paid on net. Still, though, the percentage we're paying on ebooks is, in general, significantly more than the percentage we're paying on print books - and indeed print royalties are increasingly paid on price received, too.

Plus in the UK we lose 20% of the sale price of an ebook to the tax man (or, more accurately, we lose 5% to the tax man and 15% to Amazon in Luxembourg.) Those easily swallow up the savings we make by not having to print the ebook - printing and shipping is only going to run us about 15% of cover price.

Across any given number of sales, ebooks aren't that much more profitable than p-books. The advantage is that they're lower risk, because there's virtually no per-book cost to us, so that's nice if the book does well. We've still spent most of the money we'll spend on them up-front, though.

As to the 'empty argument' about what the consumer wants: of course consumers will want the moon on a stick. I'm not saying that's what they ought to be given. I'm just pointing out that publishers (and indeed authors) are often damned if we do, damned if we don't. If we do as you suggest and hold back ebook releases until after the hardcover window, it'll get slammed by angry fans.

iucounu - well made points my friend. I'm not sure why you're wasting your time though, there are a large group of posters on here who only ever want to indulge in publisher-bashing - however misguided - and therefore any valid or well-reasoned arguments that burst that convenient bubble are routinely dismissed.

By Corey T, there is a substantial difference between author advocacy and "publisher bashing". I have personally spent the last 35 years trying to hold back the tide from publishers attempting to keep books in print because they are on a server (which basically turns the licensing agrangement between an author and a publisher upside down because the book can never go out of print under this scenario and fundamently gives the publisher ownership in the work), to reducing royalty payments to authors on a wide spectrum to mention a handful of issues. Recently the Macmillan group tried to institute draconian business terms in their boilerplate agreements and they were forced back from those positions by those that had the leverage to do so while small agencies could not. The list is long and with the consolidation of publishing it is going to get harder not easier for authors.

There is an across the board push by trade publishers to get more draconian business terms in their agreements then every before which are costly to authors as large international entities along with their corporate councils devise methods to take more ground.

By Corey T, until you are in the trenches each day dealing on these matters on the authors side, I suggest you think twice about calling people "publisher bashers".

Robert Gottlieb
Chairman
Trident Media Group, LLC
www.tridentmediagroup.com
Like us on Facebook