MIND MELD: What’s Your Take on the Amazon/Macmillan eBook Disagreement?
The big news last week was the Amazon/Macmillan eBook Disagreement, so we asked this week’s panelists:
Here’s what they said…
Same as it ever was. Amazon did this before, delisting various Print on Demand titles in an attempt to get those authors to sign up for its internal POD service. We also saw something similar with Apple, when music labels tried to pressure that company to do price maintenance. The “big issue” has less to do with ebooks or readers than with the simple fact that e-commerce allows for instant manipulations of pretend inventory. Ultimately, Amazon will start selling Macmillan books again. They’re not Dumpstering the books already in their warehouses, they’re just refusing to fill orders and will probably only do it for a few days. Amazon pays taxes on its real inventory even if pretends on its site that no such inventory exists.
Kindle and other dedicated readers are ultimately not going to take off for the simple reason that there aren’t enough people who read books voraciously enough to support a market for readers-they represent a $200 surcharge one must pay to be allowed to read. Publishing makes most of its money on the one or two books a year that people who only buy one or two books a year buy. Those people will skip the next Twilight or Atkins-style instant diet book or other phenomenon if it requires a special machine to read. Amazon’s attempt to save Kindle in the face of smartphones and tablets that do all sorts of things as well as allowing for reading will ultimately work about as well as its attempts to sell short fiction and articles for 49 cents (Amazon Shorts, failed), its attempt to corner the POD services market (not working), its attempt to get everyone to buy Segways (when was the last time you saw one under the feet of a civilian?) etc. Amazon is a company that spent years selling “Zen gardens” via mail order-these gardens were fish tanks full of rocks. It took the firm quite a while to figure out why they had to keep shipping and reshipping these things to customers, who’d end up with a box of shattered glass and just order a free replacement. Amazon STILL sells sledgehammers and ships them for free. Macmillan shouldn’t be overly worried and really neither should anyone else. This is slow news day stuff.
Amazon objects to MacMillan having the audacity to price its product. MacMillan objects to Amazon having the audacity to choose what items it will and won’t sell.
But in the PR war, Amazon, which was losing for a day or two, when it was pointed out that its idiotic decision not to handle any MacMillan/St. Martin’s/Tor/whoever hardcovers and paperbacks hurt the authors (who were the one innocent party in this foolishness), was then able to point out to its millions of steady customers that, well, it was *trying* to hold the price point at under $10.00, but those avaricious bastards from MacMillan insisted on gouging…
A pox on both their chickens.
Over at TobiasBuckell.com I spent over 4,000 words trying to explain this. But I think Scott Westerfeld wrote a vastly more considered take. In short, Amazon, which has cornered most of the market for book sales in both print and electronic versions, is fighting to keep that dominance (as it is allowed to). Macmillan, now pointing to the Apple iPad and it’s different terms, went back to the table, as the eBook ecosystem looks to be changing (as Macmillan is also legally allowed to). These things happen in business. They disagreed.
On the one hand, this is a very boring Corp. vs Corp. fighting over distribution channels and who will control what. What made it get online was that, instead of continuing to fight it out in boardrooms, Amazon chose to take their entire marketplace, previously a neutral ‘we’ll sell anything because we love customers’ sort of area, and chose to nuke all the books for sale in any format, of any kind, by Macmillan, as well as remove all Macmillan books from your wishlists, and free sample chapters of any Macmillan eBooks from your Kindle.
It’s an interesting lesson for people about making Amazon your prime retail location, by the way. With most of my backlist sales previously being through Amazon, by dint of my being somewhat known online, I know I’ve learned something.
The change in the eBook market will probably be largely invisible to consumers. As Steve Jobs said, most prices will probably sit around the $9.99 price point, because it’s an invisible psychological breaking point (same reason why most trinkets on TV are for sale for $19.99!), but new releases for some companies will be as high as $14.95 for a period of time as the books are new and earning back the investment it took to create them on the books (cost of cover art, editing, proofing, marketing, etc). I’m actually happy to see that Macmillan is saying $5.95 as a low end price, because previously they’ve had the low price as the price of a paperback ($7.99 these days), which is high for an eBook once you’ve got a novel a couple years old that has either made a profit and earned back the investment it took to create it, or has already been written off the books.
Well, it wasn’t about price. It was (is!) a battle for control of the price. Traditionally, publishing houses have set price – they print the price right on the book. They want to hang onto that model. Amazon wants to set the price itself so it can use low prices to keep the Kindle dominant.
This makes perfect sense for each side of the dispute.
Publishers do have a lot of costs that go into producing books, and shareholders and owners that would like to see some profit. They also have to spread the risk of all of their books (not all of which make a profit) across their entire line. So some books have to be really profitable to make up for the many books that aren’t profitable. The move from a physical book to an ebook removes a few specific costs – printing, inventory carrying costs (the cost to rent space to warehouse printed books etc.) and some of the distribution costs (shipping, and cost of accepting and counting returns, and probably other stuff I don’t know about). It doesn’t remove the cost for acquiring the work (author advance, legal costs, editor salary, overhead etc.) or for producing the work (copyedit, cover design) or for marketing the work. Publishers need to make sure the cost of a book falls above the cost of acquiring, producing, and marketing it (whatever format the book is in). This isn’t an exact science: the more books you sell, the less each copy has to cost, kind of. There are fixed floors such as the cost of distribution (Amazon’s cut or Border’s cut), royalties (my cut), overhead, etc. At any rate, publishing houses are a business, and their goal is to make money providing entertainment in the form of books.
Amazon’s goal to is to have the Kindle/Amazon platform be to books what the iPod/iTunes combination is for music. Which is why this happened right after the iPad/iBooks announcements. The business model for iBooks is more like what the publishing houses want. Now, the iPad may or may not take off (despite its flaws, I’ll buy one) but if Apple does iBooks right and gets that on multiple platforms, it could be a real contender for ebooks. Amazon wants to block that. If they can set the price, and Apple can’t, then Amazon can win. I don’t blame Amazon, although I did not like their tactics one little bit, and I hope they got spanked by the market.
The ebook market is too diffuse and chaotic for me to suggest this signals a change, or even yet a settling. I think this battle shows the publishers are finally taking ebooks seriously. The numbers went up. The Kindle is good. The Nook is good. The Amazon store is good. I think this spat is a sign that the ebook markets is a dawning light for traditional publishers the same way that Bill Gates woke up one day and saw the Internet (and was already too far behind to gain control). I don’t think the business model for ebooks has settled yet. What I hope is that the publishing houses are learning from the RIAA, because they have almost exactly the same problems.
I need to see publishers survive. I do want a publisher, and an editor, and for someone else to handle distribution and sales. I want to tell stories and help market. That way I can spend more time learning to be a great writer and I don’t have to spend valuable energy learning how to be a great book designer. And it means readers get good quality books. I think that all of this can be good for reader, writers, and publishers in the long run. Especially if we end up with multiple reading platforms and sales platforms.
Any issue that affects writers is naturally going to have a lot written about it. This MacMillan/Amazon thing is a case in point. I don’t think I can add much more to the conversation that has seen a ton of contributions from writers that are infinitely smarter than I am. I will say that Amazon’s business model seems to be to undercut the competition until that competition goes out of business. Amazon then moves in and takes over the world. So is this retailer trying to put this publisher out of business so it can position itself as The Publisher?
Maybe so, maybe not. Instead of offering my own half-baked opinions in this latest Amazon pissing contest, I thought I’d round up the opinions expressed on the Book View Café’s blog posting of last week “The Way of the Buggy Whip.”
Madeleine Robins began by answering the charge that ebooks should be free because they don’t cost “nothing.” Editors, proofreaders, cover artwork, to say nothing of the author’s efforts, all cost over and above the costs of printing and binding.
I’d like to add that as a person whose job it is to repurpose print files for the web, there’s no such thing as turning a print book into an ebook without effort. So even if the author and editors won’t need to get paid again for the ebook, the conversion techs, the proof-readers, and the site administration folks, all need to get paid as well. These people don’t exist in the print-only world.
Patricia Rice, who is launching as a new member this week at Book View, stated that the brawl between the titans wasn’t about readers getting cheap books, it was about who gets to control the market.
Jennifer Stevenson expanded on that, saying neither of the titans in this battle are interested in increasing the content providers’ share. Both would be happy to reduce that share to near zero. “It’s not personal. It’s about money.”
Laura Anne Gilman pointed out that MacMillan’s proposal included prices based on a sliding scale, not a set price. The idea being that people who want bestsellers as soon as they come out will pay the top price. If someone is willing to wait until the furor around the title dies down, they’ll get a better price.
Sarah Zettel thought that the whole thing might be sparked by what Apple is doing. Now that iTunes is positioning itself to become a major ebookstore, Amazon is reacting to Apple’s cozying up to publishers. She also thought Amazon is trying to lure people into buying Kindles and so locking themselves into having to buy Kindle’s content.
I find Sarah’s first point interesting. Could this clash then actually be between Apple and Amazon?
Judith Tarr felt the real losers in this argument are the authors. Those with releases coming out while this argument goes on lose precious time. She thought that this action may drive more authors to alternative formats.
To wrap the whole thing up, Sylvia Kelso placed a plague on all e-reader (the devices, not the people that read ebooks) houses. She is going back to second hand books to find affordable reads.
Of course there are a lot more opinions on what all this means, ebook-wise, publishing-wise, and writing-wise. However the clash ends, I imagine readers will be getting cheaper ebooks in the beginning and then things will sort out to some model where the behemoth publishers make a ton of money and a few writers make a living. Maybe not the same ones as now, but so goes the free market.
My take on the Great E-Book Kerfuffle is that this “disagreement” is pushing people to think hard about the changing publishing business and how we conceive of books, authors, and readers in the commerce of art and entertainment. What first catches my attention is that this situation has generated so many different discussions and brought so many people into the conversation on the future of the book. We’re hearing from writers about its effect on their livelihood, both in terms of immediate repercussions from the delisting and what this altercation means for the future of their work. We’re hearing from a wide spectrum of readers, from those who treat books as a disposable commodity (literally eye candy!), to those who are concerned that quality books will disappear in a chaotic foment of permissive, unfiltered self-publishing. Who we’re hearing from a lot less are the two principal companies involved in this fracas, as they negotiate and issue the odd statement (VERY odd in regard to Amazon’s response) about the model of pricing e-books. But what I find most intriguing is that this is not just about price, but about control.
Amazon has attempted to maintain control by, in essence, violating Wheaton’s Law to make their point sharply. Why? Well, since it is difficult to infer Amazon’s actual line of reasoning, we have to look at the effects of their behavior. Given that they are receiving mostly positive (at worst, generally uncritical) press, that there are lots of readers complaining vociferously about cost, and that their $9.99 model is being trumpeted in some quarters as demonstrating how much they care about their customers, it would seem that they were looking to draw out support to bolster their position. And they did it without making any sort of formal, official statement (just an informal one in a corner of their storefront). It seems that their silence is calculated to let this combination of support and disruption occur to bolster their position in negotiations and to accumulate some symbolic capital to deploy later. The purpose is, as I said in a blog post on this last week, is to maintain a high level of control. “The question of control is going to be the central dispute as this mercantile war unfolds. Price control, product control, format control: how the players deal with these issues will likely determine the success of the e-book market.” It is clear, however, that this issue has gone beyond just the e-market.
This standoff has gotten a lot of folks thinking about the evolution of the entire book business and their place in it. It has made authors and agents stake out a position of self-interest and examine the workings of the business closely and publicly. It has pushed readers to proclaim their loyalties and to inform the business about how they consider and buy e-books (and thus their position in relation to physical books, bookstores, and even publishers). It has emboldened other publishers to jump into the donnybrook’s aftermath to advance their own claims to control. Unwittingly, Amazon (or, one could argue, Apple, whose support of the agency model stimulated this showdown) has instigated a serious reconsideration of how the system is evolving and where everyone fits into the changing world of the book.
In response, everyone has had to articulate where they see the system going, how it works for them now, and what changes may be necessary in the future. Authors have had to simultaneously reiterate their importance as the producers of the written works while pointing out their relative lack of power in decision-making, their reliance on the services that publishers provide, and the shaky contingency of their compensation. Middlemen (agents, retailers, and even editors) have had to justify their necessity as part of the process of making and distributing books, often by defending the publisher or authors. Readers have taken an assortment of positions ranging from angrily attacking the publishers and authors to threatening to take their business from one or both companies elsewhere. Readers have been the most demanding and often the most strident commentors in this situation, putting other interested parties on the defensive while projecting scenarios from the future that seem utopian at best, dystopically disorganized at worst.
I don’t think this “signal[s] a change” in the e-book market; the market is still nascent and fluctuating, often floundering as it grows. It has not really solidified, and there has been insufficient reflection about its effect on the larger book market or how it needs to be developed to benefit all parties. Some people have taken the e-music business as a template for the e-book market, but with the exception of DRM and formatting issues I think that is a poor guide. A novel is not a 3-minute pop song, and how we engage and own books is quite different. While both media are art and entertainment, they occupy very different cultural niches and produce their wares distinctively. Calls for novelists to do what some bands do and disseminate their works directly, for example, fail to take into account that novel-writing and songcraft work differently. The solution to the e-book quandary will have to take into account how books are produced and received to make the transition successful for everyone.
More attention has to be paid to authors and readers/fans, for different reasons. Authors generate the very stuff of the business, and also occupy an important social position, particularly in genres with deep social linkages, such as SF. Yet authors are caught in-between the publishers who sometimes underappreciate and (let’s be honest) exploit them, and the readers who either demand too much from them or want to erase them as individuals. What burgeoning aspects of the e-book market might give authors more power in the system, or better streams of compensation? Could the individual publication of shorter works connect authors to readers and possibly allow them more direct control and revenue? And could possibilities such as this one be more attractive to readers?
The response of readers to this situation have been diverse, and the lesson in here is that “readers” cannot be an undifferentiated category. Certainly the idea of “serious” and “casual” readers has been around for a long time, but one insight that I gleaned from readers’ comments on this issue is that there are many sorts of readers, and that the market has to deal with them in a more nuanced way. There are “casual” readers who read occasionally, but there are also casual readers who read whatever is cheap, or fits a genre or narrative expectation, or whatever title or cover catches their eye. There are “serious” readers who do not only read serious books, but buy a lot of books for variety, or specialize in one area and obtain everything in that area, or who purchase with a sense of entitlement, picking and choosing carefully based on what sometimes seem the most baroque of criteria. Some of this splintering has been fueled by the e-book market, but is also an effect of larger changes not just in the book business, but in consumer culture. We not only have to think of the e-book market itself, but the changing social and financial world that encompasses it. On the other side of this dispute is a need for more serious contemplation about how we buy, own, and consume in the evolving landscape of the 21st century.
When the news broke on Twitter that Amazon had pulled first all Macmillan e-books, and later all Macmillan books (including Tor) from their site, the assumption was made (rightly, as it turned out) that it related directly to Macmillan’s agreement regarding the iPad.
And my first reaction — beyond annoyance — was to remind people this wasn’t about pricing; it was about control. Despite Amazon’s attempted spin (some of the worst I’ve seen in years), the battle here was not over how much e-books should cost, but who got to dictate terms, the producer (Macmillan) or the retailer (Amazon).
Looking at this not as a writer, with my fortunes tied up in the outcome, but from a purely business perspective, Amazon’s been the 900 pound gorilla for a very long time, demanding and getting their way. Good business for them, but not so good for everyone around them (including readers), who were subject to their whims (such as restricting the Kindle to the Amazon-owned stores).
With the iPad, Apple got their gorilla on as well, but they took a different tack: they went to the publishers as potential market partners, not adversaries. This, rightfully, made the folk at Amazon sit up and take notice, with Macmillan [to switch metaphors for a moment] taking the first shot across the bow, a warning of what would happen to them if they didn’t immediately agree to Amazon’s terms.
Again: this wasn’t about pricing, since there was easily room for negotiation between Macmillan’s “$6-$15″ range and Amazon’s “everything $9.99.” It was about who controlled market conditions.
Macmillan refused to change course, and Amazon backed down. I call that a win for publishers, hopefully for writers, and assuredly, although some may not believe it, for readers. History does not say good things about what happens to the consumer, once a monopoly in anything has been achieved. As I said to someone at the time, Henry Ford discouraged other people from making cars not because he didn’t think they could, but because he was afraid that they would.
I have no idea if the agency model will work better for the industry overall than the previous system. I don’t know if one e-book will rise and the other fall, or if something else will come along next year to change the game entirely. What I do know is that there’s now room for the market to decide where this new and growing aspect of publishing will go. And that’s as it should be.
The main change this signals for the ebook market is that it is finally being recognized as a major income stream for publishers, and thus worth fighting over. The arrival of Apple in the game brings in the one player with an access network that could actually rival Amazon. In a very smart move, Apple decided it would court its suppliers (major publishers) rather than dictating to them. If Amazon was really as surprised as it appeared that publishers would prefer this approach, they have badly misread the “Big 6.”
For readers, I think this is a good situation as it will open up the ebook market and ensure that the publishers pay more attention to access and quality of product. For writers, I am crossing my fingers that this will mean a chance of increased income and audience. For publishers, it is absolutely necessary that they take ebooks seriously and begin to organize this end of their business in a well…business-like fashion.
I’ve thought about this, on and off, pretty solidly since I was asked this question. There’s been a lot said about the Amazon/Macmillan disagreement, and a lot of passion has been evident in those discussions. For the most part, I’ve found myself puzzled by events, and have spent my time trying to work out what it might all mean.
I tend not to idealise large, multi-national companies that are looking to protect enormous market shares worth billions of dollars, so I can’t say I was surprised or shocked by events, though I was dismayed by them. What we’ve seen is one company, Macmillan, wanting to pursue a new business model in order to improve company profits, and another company, Amazon, that wants to pursue a different business model in order to protect its market share. Amazon’s delisting of Macmillan books is a business tactic that they have pursued as part of their negotiations with Macmillan.
While that tactic has unwisely inconvenienced readers, and very unfairly cost writers potential income from Macmillan books that may have sold during the period they were delisted (the one thing I could actually get angry about in all this), it really is not much more than that. I actually have wondered if Amazon’s handling of the public relations around this decision may ultimately have a greater impact than the delisting itself (it probably won’t, but I’ve wondered).
I’ll also be honest and say I’m not sure what it means for publishers, authors and readers. Recent developments – like Hachette and HarperCollins becoming involved – suggest that publishers will ultimately get the pricing model they’re seeking for eBooks. If I understand the model correctly – and I may not – that should make eBooks more profitable in the long term. I don’t see any real negative in this for readers: while new release eBooks may be more expensive, this will partly be offset by older titles selling for less.
Do I think it signals a change in the eBook market? No. I suspect it signals a change in thinking about the market. There seems to be popular readiness for eBooks and eBook readers. Amazon has sold an undisclosed number of their Kindle reader, and many new devices, including last year’s nook and the recently announced iPad are attracting a lot of attention. eBook readers seem set to be the next cool gadget/toy to have.
This implies a potentially significant increase in the number of eBooks sold. However, despite all of the talk, the eBook market itself is still small and a LOT of books remain unavailable. My own suspicion is that there’ll be a lot of jockeying for positioning in the marketplace; that the iPad will take a large part of the hardware/reader market; and that eBook sales themselves will stabilise at a somewhat higher level, but not go through the roof. I do have a suspicion, though, that the toylike iPad will be used for other things (magazines come immediately to mind), while eBooks will stabilise as a small, dependable part of the overall book market, but not be much more than that.
Filed under: Mind Meld
Like this post? Subscribe to my RSS feed and get loads more!