Tuesday, April 3, 2012

What eBook Pricing Deal Means To You

The Justice Department is edging closer to a deal with five major eBook publishers who allegedly colluded to set prices higher for consumers.

At issue is whether Apple convinced a handful of major eBook publishers, including Amazon to use an agency model for pricing books rather than the wholesale model. With the agency model book publishers were allowed to set the prices of eBooks, rather than just selling them directly to retailers and allowing them to set the price. Retailers were then unable to offer special discounts on books for customers, regardless of what they might have wanted to do. This created a fairly even playing field for retailers, but left consumers paying more for their eBooks.

The forthcoming settlement is all but assured at this point, meaning everyone will switch back to the wholesale model, allowing retailers to set their own prices, likely forcing prices down for consumers. This model is also likely going to work in Amazon's favor. They currently control about 65 percent of the global eBook market. Apple, on the other hand, controls less than 10 percent of the eBook market meaning they won't be able to offer the same lower prices which are expected from Amazon after the switch.

What I wonder about is how this will affect book writers. You know, those people who actually prepare the works that these corporations then take complete control of. Once retailers are able to set their own prices they will undoubtedly begin to put pressure on publishers to reduce their prices. These declining revenue's will eventually be passed on to authors. Less money to go around, who do you think is going to get screwed?

There certainly are reasons to rejoice if you are someone who reads eBooks. Prices are likely to begin falling immediately and increased competition between retailers is almost guaranteed to push them down even further as times goes on.

Book writers, on the other hand are likely to face, perhaps not a tougher market to break into, but certainly a reduced pot of rewards for all their hard work. Publishers will have no choice but to pay authors less in order to recoup revenue losses incurred as a result of retailers setting book prices.

That's good news for book readers, but bad news for the people who write those books. (Like me.)

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