I just did a double-take reading Publisher's Lunch.  It appears Ingram's has notified its electronic client sites that it cannot furnish works by publishers who have adopted the agency model. I think Random House is the only major publisher who hasn't.

My surprise comes from the fact that I assumed Ingram's was a print distributor (getting print books in all the stores), a middleman who takes a cut but saves the publisher major shipping hassles.

 

What are they doing with e-books?  Why do we need distribution for those?  Do we need to cut further into author profits?  Just what service do they perform, since the whole buiness is an electronic click?

 

If anyone understands this, please explain.

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Those are good questions, IJ. No idea.
They were handling wholesale distribution, same as with paper books. They said they haven't worked out the details of the agency agreement sales with the publishers yet, which is why they will have to stop supplying those ebooks until they get those issues worked out.

I'm not sure how they would work as a middleman for getting ebooks out. It would involve them splitting the commission with the bookseller (which shouldn't affect author royalties, if I understand correctly), but that all still has to be worked out. I imagine they would be in the middleman position with some booksellers simply because it's easier dealing with one business entity rather than dealing individually with all the different publishing companies. The bookstores would make less, but they would also have less hassle as well.
Pepper, this raises all sorts of questions. What are book stores doing in this? If you're going to get an e-book, surely you get it electronically and not from a store. As far as I can see from my own e-versions, they are listed by the different electronic providers on the Internet. My publisher has, I think, sold rights directly to them. At least, they should have. It does affect author royalties. Mine are ridiculous with Penguin (15%), but authors everywhere are demanding more of a share, and I'm retaining electronic rights in the future. My guess is that we'll sell directly to Kindle et al. I still don't understand why we need Ingram's.
I think, to stay viable, a lot of physical bookstores are going to have to offer electronic downloads on-site, as well as offering ink and paper books. But I also think this has to do with the myriad ebook stores popping up on the web. They may contract with Ingram to supply the books rather than dealing directly with the publishers themselves.

The agency agreement specifies that the bookstore gets a certain percentage as their commission for selling the book. I've been hearing that's somewhere in the range of 30% or so. That's the part that Ingram is talking about possibly arranging to split with the bookstores they supply ebooks to. It wouldn't come out of the other 70%, which is used by the publisher for their own expenses, including author royalties. (That is, unless I'm missing something somewhere.)
I still don't like that many people splitting the pie. If the publisher (this would be the e-publisher who has bought the rights from the print publisher) markets directly off the web (like Amazon with Kindle), the author's share is bound to be much greater, say 50 %. I realize that this is still in its infancy, but I can't say I like the way everybody wants a big cut from something that is essentially not costing them much.

That's why I still like the idea of going directly to Kindle with an exclusive and taking 70 %. It might make the rest of the folks consider the part the author has had in this product.
As a bookstore operator, I have no strategy for eBooks. Offering eBooks onsite at my stores neighbours on ludicrous. How do eBooks fit into my business model? - Tears on the balance sheet.

Smiles
Bob
Yes, the e-book development is not so good for bookstores. Still, I believe they will not replace the print versions.

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