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Apple pitching its agency model to book publishers

Publishers being courted by Apple for their content indicate that the Cupertino firm is positioning it's agency model as superior, and more profitable, than Amazon's wholesale model.
Written by Jason D. O'Grady, Contributor on

http://mapsinternational.co.uk/blog/wp-content/uploads/2009/07/apple-ebook.jpg9 to 5 Mac spoke with two New York-based publishing sources that claim to have been contacted by Apple about providing content for its upcoming tablet computer.

My takeaway from the several bullet points made in the piece, is that Apple is pushing its "agency model" to distinguish its tablet computer from other e-book devices, like the Amazon Kindle.

The agency model is defined as projects funded as a fee-for-service by clients, who either use or re-sell the content. Apple uses the "agency model" now with the App Store, taking a 30 percent cut of whatever the developer charges for an app.

Michael Shatzkin writing for Idealog agrees that Apple's “agency” model is better suited than Amazon's “wholesale” model for e-book sales.

The “agency” model is based on the idea that the publisher is selling to the consumer and, therefore, setting the price, and any “agent”, which would usually be a retailer but wouldn’t have to be, that creates that sale would get a “commission” from the publisher for doing so.

The wholesale model, on the other hand, is when the publisher “sells” the book to an intermediary (i.e. Amazon, Borders, B&N) based on the publisher’s established retail price and a discount schedule, typically around 50 percent. Then the purchaser resells that e-book at whatever price they like.

Apple's pitch to publishers appears be to that selling their books through the iTunes Store for a 30 percent commission is much better than selling them through Amazon at a 50 percent discount.

How long can it be before Amazon follows suit?

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