Macmillan CEO Explains "Agency Model" for Selling Ebooks

No more "windowing" of bestsellers; $9.99 prices, but not for bestsellers

Norman Oder -- Library Journal, 03/03/2010

• Dispute with Amazon resolved
• iPad ushers in new era of ebook sales
• Print and e-titles to release simultaneously

Last month, Macmillan and Amazon had a much publicized dispute, with the latter briefly pulling the publisher’s titles after Macmillan changed its ebook terms from the longstanding wholesale model to the "agency model," in which the publisher sets the prices and retailers get a fixed commission. 

Now, with other large publishers following Macmillan by planning agency sales via Apple’s iPad and other partners, and Macmillan using the agency model for all ebook retailers as of the end of March, Macmillan CEO John Sargent has set out his thoughts regarding key areas: availability and price.

(He noted that he will address other issues, including the long-term or author royalty consequences, as well as illustrated books and books for young children, at a later date.)

No “windowing” of bestsellers
In his blog post, Sargent noted that no longer would the publisher hold back new titles, a process known as “windowing.” All new adult trade books for which Macmillan has e-rights will be available when the printed book is released.

“We are also working hard to make more books available in digital editions,” he added. “The consumer will have broader choice and much greater availability.”

Significant price ranges
Noting that print books are produced in different prices and formats, he wrote that digital books will be priced individually, with most ebook versions of new hardcovers priced between $14.99 and $12.99. While that’s about half the print price—a “tremendous discount,” he wrote—it also represents a victory over Amazon, which has priced bestsellers at $9.99, a price point resisted forcefully by publishers. 

“Ebook editions of New York Times hardcover bestsellers will be priced at $12.99 or lower while they are on the printed list,” Sargent wrote. “E-book editions of paperback new releases will be generally priced between $9.99 and $6.99.”

Pricing of “e-paperbacks”
Just as hardcover titles later become cheaper paperback versions, so too will prices go down in the digital world. 

“It is too early to estimate the timing of the price reductions for those cases in which we do not issue a paperback edition,” Sargent wrote, noting that the digital price will go to $9.99 or lower either before or at paperback publication date.

He acknowledged concern that some $9.99 books will no longer be available but noted that $9.99—or lower—would apply to many backlist titles.

Support and skepticism
While some commenters were supportive, others were skeptical. One wrote, “You have had ten years in which to implement ‘variable pricing’ but there are still literally hundreds of Macmillan titles on Fictionwise and eReader that are priced at hardcover or trade paperback levels well after the physical books have gone to paperback.”

Another suggested that ebook prices must remain lower than paper books, given that the latter can be easily transferred to other readers: “And if you really want to win over your audience, ditch the DRM.”