Volume 257 Issue 27 07/12/2010

The Price Is What?
Thanks to the agency model, e-book prices get a little wacky
By Calvin Reid
Jul 12, 2010

The launch of the iPad and the implementation of the agency model has led to wildly varying prices for e-books. The agency model allows publishers to set the retail price of their e-books and designate an "agent" who will sell the book at retail and collect a fee for doing so. While the new pricing model has allowed certain publishers to take away control of e-book pricing from Amazon—publishers complained that under the old wholesale model, Amazon's $9.99 e-book price point was too cheap and cannibalized print sales—it has also left consumers with a sometimes bewildering patchwork of inconsistent pricing.

In some instances the prices in Apple's iBookstore match Amazon's, particularly for Macmillan, HarperCollins, Simon & Schuster, Hachette, and Penguin, who use the agency model at both accounts. For Random House and others who continue to use traditional wholesale pricing, prices remain lower at Amazon than in the iBookstore. And while some industry members have wondered if the agency model is legal, interviews with a number of copyright lawyers suggests that the pricing model, while in the words of one may be "an attempt to circumvent the first sale doctrine under the U.S. copyright law," it most likely would withstand any court challenge.

For the most part, iBookstore pricing falls between $11.99 and $16.99, with a few titles at $9.99 and lower, while on Amazon, the retailer makes sure the consumer knows who is setting the (often) higher price on some of the e-books it sells (see chart comparing Penguin's agency-priced The Help and the resale-priced The Passage). For instance, Macmillan is selling Janet Evanovich's new bestseller, Sizzling Sixteen, a $27.99 hardcover, for $12.99 both on the Kindle and through the iBookstore. It's much the same for Hachette's Chelsea Chelsea Bang Bang, priced at $12.99 for both the Kindle and iBooks editions (although discounted to $15.20 for the hardcover). HarperCollins's surprise bestseller, Sh*t My Dad Says, also sells for $9.99 for both the Kindle and iBooks editions, despite being an agency model e-book. Of course a consumer could buy the discounted hardcover  ($15.99 list), which sells for $8.79 on Amazon. No word from Harper on whether it's worried about the hardcover edition cannibalizing its e-book sales. 

On the other hand, Stephen King's Under the Dome is available for $9.99 for the (agency model priced) Kindle edition, but rises to $16.99 on the iBookstore—so buyer beware and go figure. And pricing can get even stranger. Kensington Publishing offers its books through the agency model for Apple and sticks with the wholesale model for Amazon. The resulting pricing for the iBooks and Kindle editions is much the same—except when it isn't. Mary Monroe's novel, God Ain't Through Yet, sells for $9.99 for the Kindle and $10.99 in the iBookstore, but L. Devine's Drama High: Cold as Ice, a popular African-American teen series, is priced at $5.71 on the Kindle (a non–agency model price) and $8.99 in the iBookstore—Kensington's genre titles range from $4.99 to $9.99 in the iBookstore.

John Wiley & Son recently announced that its books are available through the iBookstore (the house declined to confirm whether Amazon accepted the agency model). Frommer's Florence, Tuscany and Umbria, from Wiley's popular travel series, sells for $21.99 in paperback ($14.95 on Amazon), $13 for the Kindle edition (a non–agency model price), and a whopping $21.99 in the iBookstore. And this for a travel book, a subject particularly well suited for the digital format.

Despite the anxiety it generates, the agency model seems to be having just the effect big publishers wanted—control over pricing and an e-book retail market with multiple players. Independent e-book retailers like Bob Livolsi of BooksOnBoard.com have been particularly critical of the way publishers rushed the transition to the agency model—Livolsi says he still does not have access to Hachette or Macmillan agency titles, but he also acknowledged that the agency model has "leveled the playing field. Apple and Amazon are not undercutting our prices and our average selling price is up."