Questions for 2011, part 1: Will the agency model hold?

Questions for 2011, part 1: Will the agency model hold?

2011 opens with perhaps more uncertainty than most years for the trade. You all know the reasons why: a stuttering economy, a shaky high street, falling print sales and, germane to this site, difficulty in gauging which way the digital winds will blow. So, over the next few days, we will attempt to address some of the big questions facing the industry this year.     

First up: will the agency model hold?

The swift answer is probably, given that publishers who have gone to the agency model with previously non-agency retailers (which includes three of the big four publishing groups) are holding a firm line and show no sign of moving back to a wholesale model. C.e.o. of Hachette (the first UK publisher to cross the agency Rubicon) Tim Hely Hutchinson said as much in a letter to Hachette authors at the end of last year: “As we are setting prices that are reasonable, I am confident that most people who understand the industry will see that it is the fairest method of pricing.”

The question is do consumers understand the industry? “Isn’t this a cartel? Is this not illegal? I thought the Conservatives abolished price-fixing on books back in Thatcher’s time? I will write to my MP and see what response I get.” That is “Joe” on Amazon.co.uk’s Kindle discussion forum in the thread following Amazon’s open letter to customers explaining why it had to adopt the agency model for some titles—and Joe’s tone is pretty much in keeping with the rest of the posts.

Amazon’s letter itself is a clever bit of marketing, spelling out the agency versus wholesale model without jargon and intimating that its hands were tied and it was being forced into the measure by ruthless publishers. The letter ends: “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.”

The gauntlet has been thrown down. In 2011 publishers—not as adept in communicating their ideas to the public as they are to the trade—must take it up and prove to sceptical readers why agency is in the consumers’ interests, and not just publishers’ own.