Most Favoured Nations – the lesser of 2 evils

I was not happy when I first came across this clause in an ebook retail contract, so my initial reaction was relief when it came under the same black cloud as The Agency Model, as one of the bad-boys of price fixing.

 However, now I’m not so sure that I’ll be glad to see it go. 

 It occurs in contracts where the publisher sets a suggested retail price for the retailer to base their own price on.  The retailer may sell at the suggested retail price (srp) – and a lot do, or they may offer their customers discounts – it’s up to them. 

The most favoured nations clause is in the contract between the publisher and the retailer, and by signing it, the publisher agrees not to give a title a lower srp at another retailer than the one he gives for that book to this retailer.  This sounds fair enough – the price (srp) is the price, and don’t confuse things by setting different prices in different shops, even your own website bookshop.

But some contracts take it further.  In order to put this into practice, the retailer asks the publisher to agree that the book may not go on sale anywhere at a lower price than their price.  This gives the retailer the right to trawl the web, to see if the book goes on sale anywhere in the world at a lower price, then drop their own price to match it. 

This is good for the retailer, because it gives them the right to match any special offer or price promotion or local price set to suit a poorer country.  This undercuts the effect of any retailer’s special promotion which is intended to attract customers.  It gives Amazon the right to never allow itself to be ‘undersold’; it gives any other retailer with that clause in their contract the right to price-match Amazon.  Which is why publishers fear it triggers a “race to the bottom”.

It is not good for publishers because it takes all control over pricing completely out of their hands.  Publishers cannot favour their own websites with special offers, because those offers will be discovered and matched.  They can’t do exclusive short-term promotions with particular retailers, perhaps in conjunction with a local radio interview, or newspaper extract, because that special limited offer will immediately be replicated all over the world.  What you do for one, you have to make available to all.  Perhaps it means publishers will come up with more creative marketing offers than price promotions, as they had to in the days of the net book agreement!

So why am I now better disposed towards the dreaded Most Favoured Nation clause?

Well there are a lot of dangers to ebook publishing, and admittedly one of them is the race to the bottom in pricing (exacerbated by many factors).  But what I see as a greater danger is the over-dominance of one retailer.  The Most Favoured Nation clause works for smaller retailers as well as large, so it gives them the chance to price-match the strategic discounting used by a big retailer trying to undercut them.  By allowing all the retailers to compete on the same terms, the publisher frees them to compete on price with the big ones. 

The problem is, dropping the price is an expensive pursuit because someone has to pay for that discount in lost revenue.  Under most contracts the retailer will have to pay the publisher the same amount (the wholesale price), regardless of how much they sell it for.  It takes nerves of steel to drop the price close to, and perhaps even below that wholesale price – and only certain retailers can afford to do that for long. 

So the ‘race to the bottom’ it provokes is not good for small retailers, but at least the favoured nations clause permits them to run in that race, rather than being left on the starting line with their wares priced out of the market. 

So the reason I favour the Favoured Nations is because it’s the lesser of two evils: although it’s bad, it’s not as bad as the alternative – life without bookshops.

Tools of Change, Chicago

I enjoyed reading the tweets from the one-day conference in Chicago the other day, so I thought I’d summarise just a few of them and share them here.  You can see the full range on Twitter at #tocchicago

Children’s Books

How to handle the friction between children’s ebooks and the desire to reduce screen time?
For many children, picture books are their first introduction to art.

Re childrens ebooks: what’s useful? What’s a gimmick? Engaging without distracting is the tricky part
What helps readers understand? What is engaging and motivating? What disrupts learning? Good questions generally, not just for children’s books.

Poetry

http://Pf.org Mobile poetry app: built to target folks standing in line. Works in single servings, which causes more poems to be accessed. Includes a fun “spin” browsing feature + mood categories.  Has increased exposure for poetry foundation. Reach up 300% while overall engagement has gone down.

Repackaging existing content helps expose it to new audiences.  Context may be just as important as content.

Uses of and representations of poetry online is the nexus of many online issues: Digital formatting can play havoc on poetry, where formatting is everything.

poetry will continue to have to compete agains Angry Birds & Pinterest but it will also thrive

Maybe the http://pf.org data suggests that print is the best home for poetry. Is that too radical? Hmm.
Maybe not:  Catherine Halley’s talk got me to give poetry a chance via Poetry Foundation’s app http://www.poetryfoundation.org/mobile/

The paradox of attention span: should lead toward shorter content, but poetry often requires more attention & time than prose

Crowd  Publishing

Distance.cc, a quarterly journal devoted to long essays about design. Funded by Kickstarter.

First Kickstarter effort by @nickd: cadence.cc, a book on design.  Sold out print run last year, still available as eBook. “my book wasn’t published by me, it was published by my audience.”

Readers are out there but you have to meet them on their terms on their devices.

“The more time you spend running around freaking out, the less time you spend building the future.”

“We need to stop thinking like publishers, and think more like software companies”

Distance Authors getting good visibility. An editor helps writers think through ideas and people take them more seriously.  A key feature is editing. “difference between an essay and a rant is that an essay offers an actual solution.”   prefers well-written and passionate writing to just passionate writing (Wants fewer rants, more essays)

Distance’s business plan included keeping it’s owner eating three burritos a week: “If either of those goals proves untenable – paying writers or eating burritos – the project is a no-go.” Ha!
Supply-chain issues still essential to authors. Self pub created closer connection to work, audience.

Information

“Seek information, not affirmation.”

We are creating a new form of ignorance that’s killing us. It does not distinguish between highly informed and well informed.  We’re not suffering from information overload, we’re suffering from information over-consumption.  What are healthy levels of information consumption? schedule your various channels/forms of information consumption; don’t consume right now just because you can

“Who wants to hear the truth when they can hear that they’re right?”   we’re a more polarized nation now b/c no matter what crazy thought you have, there’s a media outlet to tell u ur right.  The desire to be right frames our mass media. “Opinion tastes better than news” and pizza tastes better than broccoli.  We’ve industrialized our media for poor consumption habits the same way we have with fast food

Content

Content trapped forever in your CMS is the new content trapped in your CD-Rom.
Big question 1: can I get my data out in an open, easily-readable format?
Question 2: Can I get my data out for the same price I paid to put it in?
Question 3: (most important & overlooked) How much time will it take for me to get my data out?

people put themselves in data jail all the time

Have we gone fr “information wants to be free” to the 2nd half of that quote “or it wants to be expensive”?

Content is not a commodity. Data is a commodity. There are no sensationalized 5-day weather reports.

The idea that you should wake up and be a producer instead of a consumer changes your relationship with information.
Still thinking about writing 500 words every morning before 8am. Thinking about other changes too.

Show your work when publishing; empower readers to make up their own minds.  Not to do that is disrespectful.
instead of saying “this is great content,” think about WHY it’s great for your audience.

Libraries are the first line of defense against piracy.  This is an interesting question.

Credits

Thanks to #tocChicago Tweeters: @nelltaylor, @petdance, @theanalogdivide, @digipub. @aburke8  et al

and the speakers they Tweeted: Junko Yokota, Doug Siebold, Nick Disabato, Clay Johnson, Brian O’Leary.
Here are some of their slides:

http://nickd.org/log/nickd-oreilly-toc.pdf
http://www.slideshare.net/mobile/bfoleary/using-content-to-acquire-new-members