Another Flaw in the eBook Agency Model

Some major book publishers (HarperCollins, Simon & Schuster) have opted for Amazon’s “Agency Model” to sell their eBooks. Simply put, this means that the publisher sets the price and Amazon sells then delivers it at that price.

However, it also means that Amazon is not the seller anymore, and they’ve gone through the trouble to let you know that they have no control over the pricing of a particular title.

This also has tax implications. 

Amazon is very careful about where it keeps distribution centers and any other physical presences in the United States. That’s partly because once the company has a physical presence in a state, they have to collect state sales tax.

However, since Amazon is not the seller of the eBook I recently purchased and HarperCollins has a physical presence in the state where I live, Amazon must collect tax on their behalf.


So even though I may no longer be paying for shipping on a physical book, I now have to pay sales tax on it, depending on the publisher.

Thanks, HarperCollins.

2 thoughts on “Another Flaw in the eBook Agency Model”

  1. So the big questions here is elasticity… Are you going to skip any books because they cost a couple bucks more? Would you increase buying if they were $7.99?My thought is I don’t care much as long as they are under $20, and I’ll continue to base purchases more on reviews.The tax thing is pretty lame though…


  2. In the case of the book that inspired this post, it’s the eighth book in a series and I’ve been waiting a year for it, so I just grabbed it.That said, I did immediately notice the price – the other books in the series were $9.99 or less.Apple’s iBookstore and B&N’s eReader will create some competition for Amazon but in the end, regular pricing will probably only differ by a few pennies.So no, the pricing will not likely affect my purchase decision, though as the eBook prices creep closer to the hardcovers, it will ruffle my proverbial feathers.


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