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Penguin deputy c.e.o. Tom Weldon has this afternoon sprung to the defence of the agency model as something that will protect the long term health of the book industry, after Amazon.co.uk attacked it yesterday as "damaging".
In a message to agents, obtained by The Bookseller, Weldon said Penguin's first and foremost concern was to "protect the value of our author's books, as well as the long-term health of this exciting new segment of the publishing industry". He said: "We believe that the agency model is more likely to provide authors with a just reward for their creative content, while establishing a fair price for the consumer."
Penguin were one of the publishers who signed up to the agency model upon the launch of the Apple iPad in May. Hachette is the only publisher who is setting prices in the UK under the agency model. However, the other agency publishers, HarperCollins, Simon & Schuster and Canongate, as well as Penguin, are expected to follow suit.
Weldon said he accepted digital books are less expensive to produce than physical books and those savings should be "fairly allocated" between readers, authors and publishers. He said: "With this in mind, we expect to price Penguin e-books below the list price of the comparable physical books, even though we will have to absorb the VAT that is levied on digital books but not on their physical counterparts."
Last night, The Bookseller reported that Amazon had emailed its customers criticising the agency model of e-book pricing. It said it would "continue to fight" against higher prices for e-books, claiming the model was "a damaging approach for readers, authors, booksellers and publishers alike". It claimed sales fell for agency e-books and urged publishers "not to needlessly impose price increases on consumers".
The letter in full:
Penguin note to agents 15th October 2010
You may have seen that Amazon UK sent an email this morning to its Kindle customers and we wanted you to be aware of Penguin's position on the pricing of e-books.
Our first and foremost concern is that we protect the value of our authors' books, as well as the long-term health of this exciting new segment of the publishing industry. We believe that the agency model is more likely to provide authors with a just reward for their creative content, while establishing a fair price for the consumer. Under the agency model, publishers sell work directly to the consumer, enabling them to set the price. Under the traditional resale model, the retailer purchases books from the publisher at a pre-agreed discount to the recommended retail price (RRP), and then is free to resell them at whatever price they decide, even if it means making a loss.
We understand that digital books are less expensive to produce than physical books, and that the benefit of this cost saving should be fairly allocated between readers, authors and publishers. With this in mind, we expect to price Penguin e-books below the list price of the comparable physical books, even though we will have to absorb the VAT that is levied on digital books but not on their physical counterparts.
If you have any questions, please feel free to contact me.
With best wishes,
Tom Weldon