Q: What Is the agency model in eBook pricing?
A: The agency model is when a reseller allows the publisher to set the price charged to its (the reseller’s) customers. The common agency model terms for eBooks have been that the publisher keeps 70% of the proceeds and the reseller earns a 30% commission. This is different from the traditional pricing model in the book publishing industry, where prices have been controlled by the reseller. In the traditional model, publishers sell their books to resellers at a discount of approximately 50% (legal and illegal discount variance is a topic for another day!). Resellers offer the books to consumers at whatever price they choose.
The “agency model” for eBook pricing is back in the news with a deal reached between Simon & Schuster (S&S) and Amazon (confirmed October 21, 2014), which S&S CEO Carolyn Reidy acknowledges is a “version” of the agency pricing model. [Read more...]