Publishers moving to agency model and looking to charge higher prices.
The controversy around Amazon's business model for e-books rages on: now publisher Hachette has announced that it's switching to an 'agency' model for selling e-books, following rival Macmillan.
That means Hachette wants to set the prices for its e-books and pay a commission to the stores that sell them - for example Amazon, and Apple's upcoming iBooks store.
"There are many advantages to the agency model, for our authors, retailers, consumers, and publishers," says a letter sent from Hachette's chairman and CEO David Young to agents.
"It allows Hachette to make pricing decisions that are rational and reflect the value of our authors' works."
Those pricing decisions are likely to involve raising the price of new e-books from the $9.99 currently favoured by Amazon.
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Macmillan announced its own switch to the agency model last week, and saw its e-books swiftly removed from Amazon's virtual shelves - although Amazon admitted that it would ultimately have to capitulate to the change in policy.
Meanwhile, this week News Corp boss Rupert Murdoch - whose company owns book publisher Harper Collins - also laid into Amazon, saying that "We don't like the Amazon model of selling everything at $9.99... We think it really devalues books and it hurts all the retailers of the hard cover books."
The end result looks set to be higher e-book prices on Amazon's Kindle, matched on other stores like iBooks.
Is this a wise move on the part of the publishing industry? VC David Pakman has blogged his thoughts on the controversy, based on his experiences with the music industry when he was boss of subscription download service eMusic.
"They offer many unreasonable arguments against this: books are “worth” more, authors won’t make enough money, it’s bad for the industry, etc," he writes about the book firms.
"These are not economic arguments, but are meant to maintain the status quo economics as long as possible. And it’s ultimately bad for them."
He warns that the publishing industry could face a similar decline to the music biz if it continues in its current policy.
"Trying to play hardball with the market ultimately won’t work. See the music industry whose sales are now $20B worldwide, down from $40B, and I think are going much closer to $10B – $12B before finding bottom."
