Random House, Inc., the last of the big six houses still using the wholesale model for e-book sales, announced plans to adopt the agency model effective March 1 and the company has begun implementing the switch with accounts today. A Random House spokesperson said the company is making the change now because it is the right time. The adoption of the agency model is "part commercial motivation for our customers; part investment in their digital sales growth and ours; part ensuring our authors that their e-books will be even more widely available anywhere anytime," the spokesperson said.
Because it had not been using the agency model, Random's titles were not directly available through the iBookstore, although there were a number of apps available that allowed its e-books to be purchased through the store. Random had no comment on whether it will now be selling its titles through the iBookstore, although all signs point in that direction. In its prepared statement issued Monday, Random noted that “The agency model guarantees a higher margin for retailers than did our previous sales terms. We are making this change both as an investment in the successful digital transition of our existing partners and in order to give us the opportunity to forge new retail relationships.” “We are looking forward to continuing to work withall our retail partners—both digital and physical—on our joint mission to connect our authors with as many readers as possible, in whatever format they prefer.”With Apple widely believed to be announcing a new version of the iPad tomorrow, the switch to the agency model positions RH to directly take advantage of new reader interest in al things iPad.
The switch to the agency model for e-book sales will have no effect on the terms of sale for Random House physical books.
In the agency model, publishers set the price and designate an agent—in this case the bookseller—who will sell the book and receive the 30% commission. Adopting the model for e-books tends to mean e-book prices will rise, something both publishers and independent retailers applaud. Publishers believe low e-book prices devalue their books and cannibalize hardcover sales. Under the agency model once a price has been set it cannot be changed or discounted by the retailer and independent e-book retailers believe the higher prices of the agency model allow them to compete with big e-book vendors.
Oren Teicher, CEO of the American Booksellers Association, issued a statement hailing Random House’s switch to the agency model. “We have believed from the beginning that the agency model is in the best interest of not only the book industry, but the consuming public as well. We appreciate the careful and thoughtful deliberation Random House has brought to this issue, and applaud their decision to adopt agency pricing.” The ABA says that the more than 200 ABA members stores set up to sell e-books through the ABA’s IndieCommerce/Google e-books joint project, will be affected by Random House’s switch to the agency model.