Is Agency Ebook Pricing Suppressing Sales? Hard to Say

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

agency ebook pricing sales data retailThe latest monthly data from the Association of American Publishers (AAP), for January 2015, show ebook sales in slump.

Comprising just 20% of trade sales, digital formats clocked in at $100.3 million, down more than 10% to what Publishers Lunch notes is the lowest monthly sales figure since April 2012, when the AAP reported digital sales at $99.5 million.

Some suspect the progressive restoration of agency ebook pricing that began late last year is a likely culprit for the decline.

While that may turn out to be the case, the fact is it’s very difficult to tell.

Publishers Lunch, which tracks and analyzes the AAP figures each month, has noticed considerable variation in what participating publishers report month-to-month, as each successive report includes revised data from the corresponding month twelve months prior.

Which is just one of several reasons why the latest snapshot, as Michael Cader commented yesterday, “shows how far we still have to go in obtaining reliable, consistent basic statistical measures of what’s happening in even a portion of our marketplace.”

The call for better data has intensified in the years following the ebook boom, but demand still far outstrips supply even now that the most rapid digital growth has leveled off.

That thirst has spawned an array of data dashboards and other tools within organizations, but nothing has emerged from the industry that’s shown itself fully up to more difficult task of analyzing—freely and publicly—what’s actually going on among and outside them. As I wrote more than a year ago, the absence of truly comprehensive industry-wide sales data leaves “many in the publishing world…to rely on precedent, strategic gambles and gut instincts.” The latest guesswork around what’s behind this week’s AAP figures shows that’s largely still the case.

Don’t expect it to change now that the agency model has returned to the ebook market at four of the Big Five publishers, either.

It’s no secret that the shortage of retail data isn’t an accident but rather the result of tactical and deliberate business decisions made by the biggest retailers in the industry, Amazon chief among them. Yet at the same time (and frustrating as it may be for other players), the choice to keep that information proprietary is hard to begrudge a company that created the ebook market just about single-handedly.

What likely gets ever more difficult to swallow, though—at least from publishers’ perspectives—is that that circumstance shows few signs of changing even as the market cools off and the ink on new distribution contracts dries.

As several recent initiatives major publishers have undertaken suggest, the drive to explore new distribution channels is as strong as it’s ever been. And that’s a pretty good indicator that the power dynamics governing the retail landscape aren’t on the verge of a dramatic shake-up.

As long as that’s the case, the biggest retailers’ tight-fisted approach to data isn’t likely to loosen, even if ebook sales continue on the retreat they appear (if only appear) to have begun.

6 thoughts on “Is Agency Ebook Pricing Suppressing Sales? Hard to Say

  1. Lilian

    I was making a difficult but necessary transition to ebooks (I have more than 10000 of the old-fashioned variety). The price was attractive and they don’t get termites. I was compulsively buying over 20 books a day until the new rules (agency pricing) were established. I buy a lot of non fiction books. How could I not feel as being the victim of a scam when paying 85 Sterling Pounds for an International Relations dictionary which I can download only 4 times? I have suspended purchases since late last year. I am waiting to see whether agency pricing will kill the factory of golden eggs or not.

    1. Michael W. Perry

      I doubt agency pricing has much to do with the slump. The article mentions one possibility, the fact that a retailer named after a Really Big River doesn’t share sales data, even indirectly, means that publishers are denied an opportunity to test their marketing or do followup marketing, such as when an author has another book in a series. They’re forced to depend on the Really Big River to do that marketing (or not). And that Really Big River is going to act in ways that serve its own interest rather than those of publishing in general.

      Personally, I suspect the public is expecting more of digital books and, in most cases, not getting it. The typical publisher, with marvelous tools such as InDesign, finds it far easier to create an attractive print book than a similarly attractive ebook. The new fixed-layout epub features in InDesign make creating attractive ebooks for tablets easier, but they do nothing for smartphones or for many Kindle readers. I like my Kindle 3, but every time I used it, I’m all too aware that ebooks on it look downright ugly.

      Over time, fixed-layout epub will make many ebooks as attractive as their print counterparts. And hopefully over time Amazon will either join the epub club, a move long overdue, or help Adobe develop fixed layout export features for InDesign as handy as those for epub. Publishing desperately needs the ability to layout an attractive book once and have that layout work with both print and tablet-sized readers.

      For reflowable text, those creating readers need to teach their software developers a few basic rules of good layout and insist that those be built into readers. Pages shouldn’t break badly for graphics. The graphic should move gracefully to the next page. Widows, orphans and a host of other ugly ills that printers have been weeding out of print books probably since Gutenberg need to be handled well by the reflowable reader itself. It can’t be that hard to have a reader wrap a page early, so a single line, a single word or even, as I have seen it, as single part of a word, \ly\ is all that wraps to the next page. That says sloppy and people don’t buy sloppy products.

      In short, the magic of ebooks has worn off. Readers now expect them to look as attractive as print books and, not finding that, they’re either not buying or are buying a print book that they can loan to friends.

      Also, the ambiguity about whether buying an ebook means you really own it, is also deterring sales. A print books is mine forever to keep, loan, sell, or give away. An ebook isn’t.

    2. Maru Kun

      I have been a massive ebook purchaser in the past – I have about 800 e-books on my kindle and expensive ones at that (non fiction, literary fiction, technical) but in the past few weeks I have again and again put off purchases because the ebook costs more than the paperback or even the hardback.

      To give you a great example the e-book of the critically acclaimed biography Napoleon A Life was USD45 while the hardback was USD27!! The ebook price was nearly double the hardback!!! I think I was being doubly gouged because I was buying from outside the US but publishers must be insane to think that people are going to be paying a big premium to buy an ebook.

      I am now hunting out second hand books using Amazon and will be spending the next couple of months catching up on more obscure and out of print books I always intended to read until the publishers wake up and realise their ebook sales have slumped and get back to more realistic pricing.

  2. Smart Debut Author

    Gross AAP publisher dollars being nearly flat, while AAP ebook dollars are down 10%, means:

    1) The AAP publishers are now selling fewer total books at that same revenue (because print units are priced higher).

    2) The AAP publishers are now making less profit (because ebooks have much higher profit margins than print books).

    Also, pre-agency, Amazon used to discount Big Five ebooks to the point where Amazon made no money on them (many in the industry claimed that Amazon was selling ’em at an overall loss). So pre-agency the Big Publishers were getting nearly 100% of what consumers spent on their ebooks. No longer. Under agency, the Big Five are only getting 70% of what consumers spend on their ebooks, further reducing their ebook profits (as they are no longer getting subsidized by the Amazon discount).

    Basically, four of the Big Five have “succeeded” in shifting *some* of their ebook sales to print (while driving another big chunk of their ebook sales to indies and Amazon imprints). And in the process, the Big Five gave up a huge part of their “record” ebook profitability.

    It’ll be interesting to see how their bottom lines weather 2015.

  3. Just a Reader

    The notion that Amazon’s close-mouthedness “means that publishers are denied an opportunity to test their marketing or do followup marketing” doesn’t quite make sense to me. Publishers should(!) know how many of their own books, paper or electronic, are selling. They just don’t know how the other publishers’ books are selling or how the self-publishing market is faring. But that seems to be the normal situation that any wholesaler faces in conventional business settings. It certainly doesn’t mean that they can’t test their marketing of their own products, or experiment with price points or promotions or track data over the history of a series.

  4. Travis

    Is it possible that the Indie book market (nefariously labeled ‘self-published’) is the primary culprit? Many Indie books have no ISBN for tracking, using only an Amazon ASIN number.

    Could it be that the amount of untraceable Indie bestsellers filling Amazon’s top lists has grown to the point that AAP’s data is wildly out of touch with actual market sales volume?

    How can the AAP make any claims about the market without taking into account ASIN-only sales? Ignoring ASIN-only books in your stats is like ignoring 25-40% of the ebook market on Amazon.



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