by Thom Chambliss
Reproduced with permission from Pacific Northwest Book Association Footnotes. Chambliss will be the speaker at the May 17 meeting of Book Publishers Northwest.
With the lawsuit filed against several of the largest publishers in the country challenging the way in which those publishers decided to adopt the “agency plan” for selling their eBooks, all kinds of people are speaking out about the demise of publishing as we know it. Maybe they’re right. My guess is, though, that at least some publishers will figure it out, will go their own way, and will eventually adopt agency plans–not just for eBooks, but for all of their new releases, new paperback editions, and new eBooks.
Why would publishers set minimum prices for their books? Simply to accommodate those authors who want to protect the value of their work, and in doing so, to protect the broadest and deepest ways of distributing books in a free market. Let me explain.
The movie industry has dealt with the issue of digitized product now for more than twenty years; perhaps the book industry can learn from its model. The movie producers, comparable to our publishers, decided early on NOT to release their movies directly to video at the same time as they released the films to theaters. Why? To maintain the value of their long and expensive work. Any movie released “direct to video,” without first being run in theaters, was assumed to be so bad that it would lose money in theaters. Over the years, the film industry has established a logical, progressive marketing pattern for their products: first a film is released only to theaters, only at full price. Then the movie is released to video at full retail, and simultaneously to pay TV at premium prices. Finally, usually after a few years, the film is sold to network TV and the DVD is re-priced for mass-market sales.
What is the lesson for publishers? I believe that many publishers of quality books will soon begin selling their front list on an agency plan, meaning the book’s price will be set by the publisher, NOT by the retailer, so that those people who most want the book will pay a premium for it. This would allow ALL retailers to sell the books competitively; no one vendor would be able to discount the book lower than its competitors. Perhaps, for many front-list titles, sales quantities would initially decline, because an author’s book would not be available anywhere at massive discounts. However, after a reasonable time set by the publisher, that hardcover edition could be sold at discount by whomever. If the book had been well-received by the book buying public at its premium price, the newly discounted copies might see massively increased sales. Then, with the release of the first trade paperback edition, another wave of marketing would take place, dictated by the success of the total premium and discount-priced sales of the hardcover, and sold initially only at the premium paper price, under agency pricing. Again, within a time adopted by the publisher, those editions would eventually be sold at discount. At that point, the eBook versions would be released, many initially sold at publisher-set agency prices, before eventually being offered at discounts set by the retailers.
What advantages would such a system offer? Basically, the same advantages that it offers to the movie industry: the publisher maintains its income and control over the initial release of the product, provides itself with upcoming opportunities to re-market each new edition of the book, and assures the author that he or she will continue to provide the editorial and promotional opportunities, and income, that direct-to-eBook releases don’t offer.
Some people complain that publishers should release their books at the lowest possible price, because the public shouldn’t have to pay a “premium.” Are these same people complaining that the movie studios should release all of their new movies to DVD, at the lowest price based on the cost of transferring the data to disc? If not, why not? Probably because they know that that model would be disaster for the movie producer, and would mean that no one would be able to produce movies at a profit. That is the dilemma facing publishers today: they cannot make a profit by releasing their new books direct to eBook at the lowest cost of data transfer. Some of us respond to that with “Well, duh.”
God forbid that I, or anyone else, should tell publishers what to do. I mean this as a suggestion that publishers look at what is working and why. Yes, if publishers moved to agency plan sales for all of their “new releases,” in every format, it would mean that independent retail bookstores could again compete on the sale of books, and a lot more of them might survive in such a rejuvenated industry. And, yes, I work for some of those book retailers, so I have a vested interest. But I also believe that publishers, big and small, provide enormous benefit to their authors and thus to the public. Almost every book they publish is chosen not so much with profit in mind, but to share ideas, often at a loss.
Publishers pay up front to acquire books; invest in editorial processes to improve them and make them even better than their first drafts; invest in sometimes wide and sweeping marketing and promotional programs to help the books reach their widest audience; and print, package and distribute the books, all in the hope that they will make enough money to pay for the investment. And, if they are enormously lucky and successful, additional profits may just help pay for the publishing of other books that might not ever make back the expenses. That is the nature of publishing.
If Amazon, or any one discounter, ever becomes the only source of publishing and distribution of books in this country, free speech will become a lost dream. I encourage my publisher friends to think for themselves, and to save themselves while they still can.