I think this is what lies at the heart of the current Amazon/Hachette battle. Amazon says e-books should cost $9.99; Hachette says pricing is their decision.

There are three possible owners of a book: the author, the publisher, the reader*. In the past, because it was difficult and expensive to get a book printed, ownership of the stock was clearly part of the publisher’s job. The author owned the copyright, which was leased (or occasionally sold) to the publisher in return for a royalty, often including an advance payment against anticipated royalty earnings. When the book went out of print (when the owner/publisher decided not to reprint any more) the rights might revert to the author. Similar arrangements still hold in the world of e-books, though the relationship has really changed. Contracts will perhaps change to catch up with reality.

In a recent interview with Publishers Weekly, Hugh Howey said “There is so much room to grow the culture of reading so that everyone reaps the benefits. Right now, I have aligned myself with Amazon, because their customer-centric philosophy has done more to encourage reading and drive this industry forward than any other single company on the planet. Many think I’m overstating the case to suggest this, or that I sound like a shill. I’m a lifelong reader, bookseller, critic, writer, and publisher. If there’s a company out there that is doing more to get people reading, I’m open to hearing who has as an alternative for me to support. Publishers who refuse to compete, who collude to raise prices on customers, who offer lockstep and dismal digital royalty rates? The media, who seems to care more about the health of middlemen than what’s best for readers and writers? The Authors Guild, who advocates for large corporations and the top 1% of writers? Independent bookstores, who blacklist my books and the works of those who publish with Amazon imprints? If anyone can name a company working harder than Amazon to get more books in the hands of happy readers, please let me know what company that is. Because I’ll abandon my support of Amazon in an instant and throw my puny little weight behind whoever it is. All I care about is books being read. I’m a shill for whoever makes that their prime directive.”

Now of course it is true that Amazon’s negotiating stance does enable them to say they are on the side of cheap e-books, and we have no reason to believe that they are not sincere in their belief that lower prices are “better” for readers. I don’t doubt their analyses showing that more dollars are raised by selling more books at $9.99 than fewer at $14.99 — though of course I do question the assumption that price is the only thing that makes someone buy a book. It’s only simple arithmetic once you accept their premiss. But the issue is who has the right to decide this sort of question. In the olden days of print, there was obviously no question about that: the publisher fixed the retail price of a book, and booksellers would sell it at that price, or (more recently) at a discount off that price. (See “Net Book Agreement”.) We all seem still to get along fine with that arrangement with print books — the publisher prints $29.95 on the book cover and the retailer offers it at some discounted price and the customer is happy to have gotten a bargain. But because they are not physical objects, e-books seem to be different.

But should publishers have the right to “fix” the retail price? Given that the publisher has to make the investment in getting the book produced (less for an e-book, it’s true, but still there) they do need to be able to guarantee that they sell at a price sufficient to cover their costs, their payments to the author, and their justifiable profit. Amazon is a retailer. They may be absolutely right that their customers would prefer to pay $9.99 for this book but of course they do not have full insight into the economics of that individual title. How does this work with clothing or shoes? Or music or newspapers? Clothing tends to be sold at what in book terms would be the discounted price. The manufacturer sells at the price they agree to and the retailer marks up that price — if the item doesn’t sell at the marked-up price you’ll find it on the sale table at a “discount”. Of course e-books don’t have any physical reality, so the sale table isn’t an issue (though believe it or not, I know of publishers who will accept a return of an e-book). It’s The New York Times that decides to charge $5 for their Sunday edition — your corner newstand is not going to try to attract your business by offering it for $4.50, and the NYT are the ones who determine what a subscription will cost you. The music business is notorious for losing control over pricing with disastrous consequences. Publishers do “own” their books, despite what Hugh Howey and other “indie authors” scream. They need to be able to determine the price they will sell them at. If authors think that publishers charge too much, then the self-publishing route is open to them. You don’t notice Hugh Howey arguing that Amazon should be able to fix the price of his own books — even if they do have opinions about that.

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* (A retailer could be said to own the book at the point between publisher and reader: but so many books in bookstores are there on virtual consignment, since they can always be returned. Amazon has it is true made some agreements with publishers making their books non-returnable; these terms are agreed to in return for additional discount — but by and large books in a bookstore are there till they sell, or if they don’t till they are returned. Payment terms are such that many books end up being returned before the invoice covering their “sale” to the bookstore comes due.)

My 2010 post “This is my book” may be relevant here.