Why Agency Pricing is BAD for Self-Publishing Authors

In the midst of the wrangling over the DOJ’s case against Apple and a collection of the Big 6 publishers (don’t ask me to remember which ones off the top of my head, okay?), which alleges the publishers colluded in setting up the so-called agency pricing1 scheme for digital books with retailers (Amazon, Apple, B&N, etc.), I’ve seen a lot arguments from self-published authors and small independent publishers is good because it gives “small fish” a chance to compete in the market. If agency pricing went away, the reasoning goes, the price of digital books published by the major NY houses would drop (despite claims from a lot of the defenders of agency pricing that it didn’t raise prices!), which would harm the sales of books that aren’t agency priced. I have a ton of reasons for objecting to this, the primary one of which is that, independent of whether agency pricing is good for sales of my books, anything that primarily harms consumers (and I don’t see how it’s possible to claim that unnaturally high book prices aren’t harmful to the people who buy them) is bad. But that’s not where I’m going with this blog post.

No, what distresses me about this line, particularly from self-published authors, is that they seem not to realize that they are subject to agency pricing. That’s right, kittens–most self-published books are, in fact, agency-priced. (Insert Edvard Munch Scream face here…)

To make this clear, I have to explain the two basic pricing models for digital books, so bear with me while I bore you with details.

Wholesale Model: Under this model, which was the dominant one until agency pricing took hold, the retailer pays the publisher a percentage of the book’s list price (typically 50%) for each unit sold, regardless of the actual sale price of the book. This allows retailers to discount books, offer coupons and other incentive programs, and generally do whatever they want with the sale price of the book. In some cases, this might lead to retailer paying the publisher more than the actual sale price for each unit, but that is of no concern to the publisher, which gets its share of the pie no matter what. If the retailer wants to to take a loss on the item, that’s the retailer’s problem, not the publisher’s.

Agency Pricing: This is actually a misnomer for what really ought to be called Retail Price Management but it boils down to this–the publisher sets the sale price for the book, and the retailer is not allowed to discount or adjust it in any way. In this scenario, the publisher is generally paid 70% of the sale price for each unit, while the retailer keeps 30% as its “cut”. This seems on its face like a better deal for the publisher, because the publisher gets a larger percentage of the book’s price, but if the publisher has to cut the price of the book dramatically in order to sell it (say from $7.99 to $4.99) rather than allowing the retailer to choose to discount, the publisher actually winds up losing money per sale (50% of 7.99 is $3.99 and 70% of $4.99 is $3.50). Of course, it also means all discounting occurs at the publisher’s discretion, so it doesn’t have to just hope the retailers discount the “right” books. (Still, in the scheme of things, I’m guessing major publishers can twist retailers’ arms to discount the “right” books under the wholesale model, too.)

So, as you may have guessed by now, pretty much all of the self-publishing venues out there work more like the agency model than the wholesale model: the author sets the price of the book, and then, depending on a host of factors including which retailer is involved and the selected price point, is paid anywhere from a high of 85% down to a low of 35% for each unit. What remains constant is the price. Under the typical terms of service, the retailer does not have the right to discount your book (although in some cases, they do offer incentive plans/coupons on them) below your list price, with the exception of Amazon, which says they’ll discount you if they find your book cheaper elsewhere.

Note, however, that all of these TOS explicitly forbid the self-publishing author from setting the price of his or her book differently depending on the retailer. In fact, pretty much all of the retailers have a Most Favored Nation (MFN) clause, which states that you may not price your book lower anywhere else than you have priced it on their site. This essentially prevents authors from pricing their books based on the percentage they’re getting from the retailer (which to me makes a lot of sense–why WOULDN’T I price the book based on how much I will earn per unit instead of how much the buyer will pay?).

So, from my perspective, agency pricing is bad. For me. I’d much rather tell the retailer how much I want to be paid per unit (by setting the list price) and then let <i>them</i> duke it out over whether to discount the book. Granted, this gives me less control over the actual sale price of my books, because I’d be relying on the retailers to decide how much to sell the book for, and they might wind up selling it for more than I’d like, but I can always adjust that by adjusting my list price downward.

The biggest advantage to this over the agency model we have now is DISCOUNTS SELL BOOKS. I don’t know how else to say that. When The Lesson Plan was discounted on Amazon (because they were price-matching its lower price elsewhere), it sold far more copies at $1.96 than it’s selling now at 99 cents. That red slash through the price is the best marketing money can’t buy, IMO. And I’d like to let the retailers fight amongst themselves over how little they can charge for my books and still pay me my per unit price than have to decide whether to take a 70% royalty by pricing at $2.99 or take only a 35% royalty so I can charge less.

Now, maybe other authors don’t see it the way I do. But from my position, agency pricing is not just making NY books more expensive than they need to be; it’s making my books more expensive than they need to be. And I think that’s a bad thing.

The Wait is Over!

Hot Under the Collar is now uploaded and available for sale. Yay!

I really love this novella, and I hope you will, too. I do want to warn you it’s a little “tamer” than some of my other books in the explicit sex department (if you’ve read my backlist, it’s a bit hotter than The Reiver and not quite as hot as The Lesson Plan). These characters were just a little shy; what can I say?

At 37,800 words, it’s also the longest manuscript I’ve published since the novellas in Behind the Red Door. Hopefully, that pleases you.

And Walter is…well, as far as I’m concerned, Walter is both sigh-worthy and swoon-worthy, and if he were real, I’d so steal him from Artemisia!

So, here’s a list of buy links to get you started:

Currently, Apple, Kobo, and Sony all get my books by distribution from Smashwords, so that will take a few weeks (although I’m hoping Kobo will get their new platform up and running soon and I’ll be able to go direct with them). I’ll add buy links to new retailers as they become available.

A Scene for Father’s Day

As I’m working to wrap up Hot Under the Collar for my editor by the middle of this week, it occurred to me that it’s a shame it wasn’t ready for release on Father’s Day because this story features a very sweet (I think) relationship between the heroine, Artemisia Finch, and her father, Horace Finch. I realized this morning that their bond is based to a large extent on mine with my own father, who passed away almost 14 years ago and who would have turned 82 tomorrow if he were still alive. My dad and I were a lot alike in many ways; for example, I think if he’d lived long enough for Twitter hashtag games, he would have relished them as much as I do. He was also a writer who left behind two completed, unpublished novels based heavily on his career as a US Border Patrol anti-smuggling detective. I miss him a lot, and in many ways, I think this story is a little bit for him.

In honor of my dad and Father’s Day, here’s a preview of Horace and Artemisia from Hot Under the Collar:

“You’re late,” Horace Finch observed without rancor as Artemisia entered the solar with the tea tray.

It was their custom to have tea together in this room every afternoon at four o’clock sharp, rain or shine, sickness or health. She had never before been late. There had never been a reason.

Until today.

“Yes,” she acknowledged, setting the tray on the table next to his chair.

Her father sat, as he always did, in the one of the two large wingbacks facing the windows that overlooked Finch House’s small but beautifully manicured formal garden and the thick forest beyond. Situated on the outskirts of town, the property had been in the family for nine generations, the land purchased in the early 1600s by Alexander Finch, a perfumier who’d made his fortune crafting personalized scents for Tudor London’s rich, famous, and royal. In keeping with its original owner’s profession, the garden boasted a profusion of sweet-smelling flowers that bloomed in every season except the depths of winter. At this particular time of year, the planter boxes were filled to bursting with a breathtaking array of colors—the purple of lavender, the pink of campion, the bright yellow of daffodils, the white of primroses, and a hint of scarlet courtesy of the budding Finch roses.

It was easy to understand why her father loved the Finch House so and refused to leave it. In truth, Artemisia loved it, too. On days like these, when the sun was shining and the flowers were in bloom, she even wondered whether she would have the strength to leave it all behind when her father was gone and she was no longer tied here by love and duty. Would being freed of the stigma of her past be worth the loss of all this? Sometimes, she wasn’t sure.

And yet, if she lived anywhere but Grange-Over-Sands, she would not be planning to embark on a clandestine affair with a gentleman like Walter Langston. Anywhere else, she would either take him openly as a lover or demand he treat her as a respectable woman by courting and marrying her. Here, however, complete discretion was the only choice—for his sake.

“You seem preoccupied,” her father said. “Is aught amiss?”

She shook her head as she set the tray on the table between the two chairs. “Not at all. I was just thinking about how lovely the garden is this time of year.”

“And perhaps about a certain young vicar?” Her father’s face broke into a wide grin as he spoke.
Hodgson. She should have known he wouldn’t be able to keep his counsel. If he had let on about the kiss he had interrupted, she would sack him as soon as she laid eyes on him.

Feigning nonchalance, she settled into her chair and began to pour out. “So you heard Mr. Langston was here, then?”

He nodded as she passed him his teacup, his hand trembling ever so slightly as he took it from her, another lingering effect of the apoplexy. She had learned months ago not to fill his cup to the brim, lest he spill the scalding liquid on his lap.

“I hope he lived up to my estimation of him by treating you like the lady you are. If he was anything but a gentleman…” Her father let the thought hang, obviously aware that he was hardly in any condition to threaten to thrash anyone for pressing inappropriate attentions on his daughter, let alone a man as obviously fit and vigorous as Mr. Langston.

Some of Artemisia’s tension dissipated. Apparently, Hodgson had managed to keep the kiss to himself, after all.

“He was a perfect gentleman, Papa,” she lied, lifting her teacup to her lips in the hope of covering the blush she felt spreading to her cheeks. She rarely told an untruth to her father—he was the least judgmental of men she had ever known, after all—but in this case, it would be best for all concerned if she kept her transgressions to herself. Especially since she was on the verge of a transgression that she suspected she might well one day repent. “I must admit, Mr. Langston is not at all what I expected.”

Her father chuckled. “I don’t suppose he is what anyone was expecting, especially after more than twenty years of Samuel Withers in the pulpit.”

Artemisia’s lips twitched. Mr. Withers had never, as far as she knew, been either young or handsome or remotely interesting. Balding and rheumy-eyed with a weak chin and a weaker disposition, the former vicar had spent the better part of a generation putting the residents of Grange-Over-Sands to sleep in their pews.
“Still, he seems to take the doctrine of forgiveness rather more literally than most clerics. Even in London, I would have been unlikely to escape a lecture on the sinfulness of my ways.”

“All the more reason I quite approve of him.” Her father lifted his cane, which leaned against his chair, and thumped it on the floor for emphasis. “Seems to me a good many churchmen don’t pay much attention to the actual scripture, especially when it comes to matters of sin and repentance. The world would be a considerably better place if folks paid more attention to the beams in their own eyes and a damn sight less to the motes in the eyes of others.”

Artemisia thought it best to change the subject, for she knew if she allowed the conversation to continue, her father would launch into a tirade against his former friend, the Earl of Sandhurst, and the man’s unwillingness to acknowledge or redress the injury his son had done her all those years ago. The past was past and best left dead and buried with the tiny stillborn babe she’d borne. No amount of anger or complaint could change what had happened, and as Walter Langston had observed, it was foolish to repent what one did not regret. A marriage to Robert Beaumont would have been far worse than the actual outcome. She was now a wealthy woman, dependent on no one for her keep. Perhaps she ought to thank the earl’s son for his refusal to make an honest—and desperately unhappy—woman of her.

“It looks as though the roses will be in full bloom next week. We should consider which bushes have the best chance of producing this year’s champion at the county fair.”

Her father, fortunately, could nearly always be derailed from any train of thought by talk of roses. The Finch red roses, a variety bred by that long ago perfumier for both its color and its fragrance, grew nowhere else in England and, aside from Artemisia herself, were her father’s greatest pride and joy.

Sometimes, she envied those roses, for unlike her, they never gave her father cause for heartbreak or disappointment. Not that he had ever given her reason to believe he loved her any less for her faults. Still, it saddened her that he would never have the opportunity to give a gentleman permission to court her, walk her down the aisle at her wedding, or hold a grandchild in his arms. All because she had succumbed to a foolish infatuation.

And yet, here she was, on the verge of succumbing to another foolish infatuation. She ought to send word to the vicarage that she had changed her mind about the ride tomorrow. To do otherwise was madness. But the low hum of desire in her belly and the memory of Walter Langston’s lips on hers, sweet and seductive and oh so skillful, were a form of madness.

What was more, she was tired—deathly tired—of being alone. Perhaps it was Georgie’s fault for sending that letter and reminding Artemisia of how very isolated she was, how deprived of human contact and especially of the warm, wonderful contact of a male human body against hers. Or perhaps it was Walter Langston’s fault for sweeping her into his arms and demonstrating exactly how much she missed the feel of a lover’s arms around her.
Either way, her course was set. Tomorrow, she would take the vicar of Grange-Over-Sands as her lover. And if she regretted that decision, she would have only herself to blame.