Saturday, April 3, 2010

Apple's Agency Plan's Large Effects on Prices and now Taxes


  An Amazon forum message thread posting by "Kindy Kat" points out that Amazon is now identifying books sold under the pricing structure spelled out in Apple's "Agency"-style agreements (these replace the traditional wholesaler arrangements).

  Apple's Agency agreements with publishers are reported as requiring that the publishers ensure that competing online bookstores are using Apple's "Agency" plan if the publisher wants its books included in Apple's iBookstore.

  Pricing must not be lower than Apple's (and Amazon, in return, is insisting that no pricing undercuts theirs then, and the 'agencies' (Apple, Barnes and Noble, Sony, etc.) no longer act as retailers but will instead take a 30% commission on the publisher's set price.

  The now higher e-book prices on more-popular books were recommended to the "Big 6" publishers by Apple before the iPad launch, per a Wall Street Journal report, and prices for any book from the "Big 5" will be the same at all online stores.  (Random House has not signed onto Apple's iBookstore plan yet, concerned about the large changes.)   This leaves open the possibility that while Apple must be guaranteed that no other bookstore will have lower pricing, another store should be able to have higher pricing -- another smart move if that's how it works, as people would know Apple's price would be the lowest possible from the Big 5.

  I expect (hope) that Amazon got the same guarantee.

  There'll be no need for a book-customer to check out pricing at other stores, as "The prices will be the same."  The latter wording comes from Steve Jobs to Walter Mossberg from an impromptu chat caught on a videoclip at the iPad launch event in January.

  The new Amazon product-page statement is now placed near the top of the e-book's page:

Example: A book, Still Alice, which had been $6.39 and is now $9.99. is identified by Amazon in this way:
' Sold by: Simon and Schuster Digital Sales Inc
This price was set by the publisher '

  There are also threads about the additional, less-discussed effect mentioned last week here.

  The seller is now the publisher, so taxes will be added to a purchase when the Agency-plan publisher has a presence in the state in which the buying customer resides.

  This holds true for ALL online e-bookstores such as Barnes and Noble, Sony, Fictionwise, Amazon, Apple, etc.

  Complication: The tax is currently not calculated before the 1-click purchase but we will receive info about the additional tax involved after clicking to buy, which will be accepted as an order, though we won't have a way of knowing how much that would be (currently).

  These changes are all taking place rapidly, to go into effect when the iPad launched today, to meet Apple's requirements for publisher inclusion in the new store, and the network programming involved will have to ctach up with the changes.

  Until then, Amazon will need to find a way to advise the customers of added state taxes that will show up after a one-click purchase if the publisher has a presence in the customer's state of residence.

  From a forum thread, "demi" (who contacted when she couldn't find some books that were on her wish list) posts a response from fictionwise's online bookstore):

Due to industry changes, our content suppliers are currently unable to offer certain titles from several large publishers.  We are working with our content partners to resolve this.


Best Regards,

Fictionwise Support Team '

See the ongoing Guide to finding Free or Low-Cost Kindle books and Sources
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