First it was the Gutenberg press, the movable type setting the standard. Then, plates of either metal or plastic helped newspapers and books become easier to produce. For the longest time, that was the standard. The “agency model” reigned supreme and pricing was set based on costs for editing, printing, marketing and incidentals like review copies. Publishers were happy with that, basing 10-12 percent royalties for authors on their costs and still making a profit.
But the digital age has come and the major players in the publishing game are being left behind. Not only are authors dodging round the “gatekeepers” of agent and acquisitions editor by publishing their own books, but the big players in selling books – Amazon, Apple, Barnes & Noble, as well as publishers like Smashwords – are thriving in the indie publishing world by helping the authors do just that, and then promoting their books. Hardcovers and paperbacks are giving way to the new format of ebooks, those same companies putting out ebook readers like the Kindle, the iPad, the Nook and those devices are selling in the millions. Ebooks are also selling in the millions with authors Blake Crouch, J. A. Konrath, John Locke, Amanda Hocking are selling one million books each. Ereaders are expected to dip in sales this year but not ebooks – they’re expected to increase even more.
And you would think that with all of this happening, the major publishers would be riding along with the wave. They’re not. In fact, the “Big Six,” as they’re known – Penguin Group USA, Random House, Simon & Schuster, Hachette Book Group, Macmillan Press, HarperCollins – went to war with Amazon over book pricing, stating that Amazon’s $9.99 pricing was devaluing their books. Random House pulled their books from Amazon’s site until the bookseller finally gave in and agreed to what’s become the standard of $12.99 – $14.99 for traditionally published ebooks.
Two things came of that. First — indie books, published through the booksellers and Smashwords (among others), priced at $.99 – $2.99 started making the best seller list. Sales of indie books went through the roof, making successes of authors that couldn’t get noticed before. Second — a law suit was filed in California District Court claiming that Apple Inc and the Big Six were guilty of price gouging. The suit claims that Apple’s contract with these publishers stated that Apple had to have the lowest price on their ebooks and all other booksellers had to carry a more expensive price. Arguments are expected to begin soon on that suit. The Federal Department of Justice has also been investigating and has stated that they, too, will be filing an antitrust suit in Federal court against the same litigants.
In the meantime, the major publishers are insisting that ebooks are just as expensive to produce (not true), not big sellers (again, not true), and refusing to bend. They want their own pricing, insisting that it’s about making money and they won’t make as much in ebook sales. And, again, that’s not true. Perhaps the sales will not net as high a profit margin as quickly as they would like, but ebook sales are expected to jump another 200% this year, according to Publisher’s Weekly, which noted that sales have been increasing in that large an amount annually. And the so called “agency model,” built on pricing, cannot compete – you get a higher profit selling books at $1.99 than you will at $12.99 because there’s precious little overhead and more sales mean more profit.
In the digital age, the majors need to finally accept that the “agency model” doesn’t work anymore. It’s outmoded and irrelevant. The indies have known this all along and making their way into the publishing world much like indie films and indie music have redefined the models in the movie and music industries. The “indie model” is obviously succeeding and will become the industry standard. Publishers who don’t grasp that will be too late to the party and lose more and more authors that could have made money for them.
As an indie author before the title was even coined, it’s something I know very well.