Amazon.co.uk tells customers it will 'fight' agency pricing

<p>Amazon.co.uk has hit out over agency pricing telling Kindle customers that it &quot;will continue to fight against higher prices for e-books&quot;, and has urged publishers &quot;not to needlessly impose price increases on consumers&quot;. It has also revealed that for those publishers who have adopted the agency model in the US the rate of growth in e-book &#39;unit sales&#39; is now &quot;half the rate of growth of the rest of Kindle book sales&quot;.<br /><br />In the email, sent today (14th October), the giant retailer states: &quot;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.&quot;<br /><br />The move follows the decision by Hachette UK,<a href="../news/128795-hachette-uk-expects-short-transition-period-to-agency-model.html" target="_blank" title="http://www.thebookseller.com/news/128795-hachette-uk-expects-short-trans... revealed by<em> The Bookseller </em>in September,</a> to switch some booksellers to agency pricing, leading to a number of booksellers including Waterstone&#39;s and W H Smith to remove its e-books from sale. Amazon.co.uk has continued to set it own e-book prices and sell Hachette UK titles. In a statement issued to <em>The Bookseller</em> it said there would be &quot;a short transition period from wholesaler terms to the agency model for our e-books&quot; and that the move was designed to &quot;create a level playing field for large and small booksellers alike&quot;. It is understood that other major UK publishers plan to follow Hachette.</p><p>Amazon has up to now refused to comment on the development. But in an approach that mimics the one taken by its US parent earlier this year, it has instead written to customers and posted the email on its <a href="http://www.amazon.co.uk/tag/kindle/forum?_encoding=UTF8&amp;cdForum=Fx3I... target="_blank" title="http://www.amazon.co.uk/tag/kindle/forum?_encoding=UTF8&amp;cdForum=Fx3I... blog</a>. In the email, sent by the The Kindle UK Team,&nbsp; it states: &quot;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.&quot;</p><p>The email added: &quot;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.&quot;</p><p>Amazon&#39;s move will infuriate rival booksellers and disappoint those UK publishers aiming to move to the agency model. It is still not clear why some booksellers have been moved to agency terms, while Amazon currently continues to trade on non-agency terms, a move that has led to criticism from retailers that Amazon effectively has a clear run at maximising sales pre-Christmas, as it is the only retailer that can undercut Hachette&rsquo;s terms.</p><p>In the US, Amazon was ultimately forced to comply with those five publishers who moved to agency terms those continues to try and undermine the agreement, with a note accompanying agency-priced books stating that &quot;price was set by the publisher&quot;, which Amazon says serves as &quot;an indication that [the publisher] has tied Amazon&#39;s hands on the price of the Kindle edition&quot;. </p><p><br /><br /><strong>Amazon email to customers in full</strong><br /><br />Dear Customers,<br /><br />Recently, you may have heard that a small group of UK publishers will require booksellers to adopt an &quot;agency model&quot; 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&#39;s been in place for decades, where booksellers set consumer prices.<br /><br />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.<br /><br />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:<br />http://www.amazon.com/tag/kindle/forum?cdForum=Fx1D7SY3BVSESG&amp;cdThre... /><br />As we&#39;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.<br /><br />First, as we feared, the US agency publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon &amp; Schuster) raised digital book prices almost across the board. These price increases were not only on new books, but on older, &quot;backlist&quot; books as well (in the industry, &quot;backlist&quot; 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.<br /><br />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 (&pound;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.<br /><br />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. This is a significant difference, as the growth of the total Kindle business has been substantial - up to the end of September, we&#39;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.<br /><br />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.<br /><br />Thank you for being a customer,<br />The Kindle UK Team </p>