Ebook publishers are under fire by the U.S. Justice Department for allegedly colluding to secure higher prices for consumers by switching to the agency pricing model rather than the wholesale pricing model.
With the agency model, publishers set the prices and retailers cannot discount the Ebooks they sell. This means publishers can charge what they want for a book, securing higher profits which they could then pass along to the authors, editors and book creators. The higher prices are paid by the Ebook consumers and this money supports the entire system.
However, with the wholesale model, retailers can reduce the price of Ebooks, offering consumers serious discounts on Ebooks, which many believe have a much lower cost to produce in the first place than printed versions.
So, is the agency model actually better for everyone; writers, publishers and consumers, than the wholesale model? This is a matter of disagreement among publishers, many of whom say the wholesale model allows some big publishers to effectively undercut everyone's prices, leaving consumers one obvious choice for where to buy their books.
Also, since retailers using the wholesale model could charge whatever they wanted for Ebooks, they could also pay whatever they wanted for those same books, thereby decreasing profits for publishers, writers, editors and everyone who creates those books.
This has been a question in my mind since I first read about the DOJ investigation. If retailers can charge less for Ebooks, and pay less for Ebooks, logic dictates that the people who make Ebooks (like myself) will also make less.
Judging from a recent article written by Smashwords founder Mark Coker, I am not the only one who feels this way.
Now I would like to hear from you. How do you feel about the Ebook pricing scandal. Are you in favor of the wholesale or agency pricing model and why?