And the Feathers Fly! Amazon & Macmillan Duke It Out

Whew. Just hours after I posted on Friday that it looked like a battle was brewing between big publishers and Amazon over e-book pricing, the fight broke out. I won't attempt to give a blow-by-blow here, but Mike Shatzkin gives a good summary here and there will be plenty of other accounts to come. 


In brief, Amazon went to the "nuclear option," as Shatzkin puts it, by delisting Macmillan titles and it blew up in their face. Many others will analyze this event and I'm not sure the dust has settled yet, so I'll restrict myself to a couple of observations: 


First, it's very interesting to read the Kindle forum posts on Amazon. Their announcement is clearly intended to cast Macmillan as the bully in the situation, even though it was Amazon who punished the publisher. On Amazon's Kindle page, not surprisingly, a vocal audience of Kindle owners, who have come to regard $9.99 as the inalienable right of e-book buyers, are ready to see it that way. (In fact, even before both companies' announcements, posters at the Kindle forum tended to assume Macmillan was boycotting Amazon rather than the other way round.) 


Still, even among Kindle owners, there are several posters who say, "geez, 14.99 doesn't sound so bad, it's still a lot less than a hardcover." Completely lost in the conversation is the fact that all these Macmillan titles might be available for $9.99 if you're willing to wait for them, the way you do for a paperback. I think Macmillan (and other publishers who want to "window" e-books) need to make consumers much more aware of that. 

Also interesting, I also read a hundred or so comments at the NYT Bits blog post on the controversy. There, many readers knocked Macmillan but a greater number (though not at first glance a majority) saw this as bullying by Amazon. In other words, among a sample of people who aren't all Kindle fans, opinion is much more divided. (Naturally there are plenty of "plague on both their houses" opinions and a few gimlet-eyed, "hey, they're both just rational actors attempting to maximize their profits" types.) 

I don't know whether we'll see $14.99 hold as the new standard price for e-books but I think it was fortunate for publishers that Apple came along when it did, before Amazon was able to get a stranglehold on the e-book market. 


Granted, there's much debate, especially outside the Big Six publishers, over whether it's really desirable to raise e-book prices. I'm frankly of two minds about it. Will have to take that up another time. But as Shatzkin points out in the comments threat on his post, publishers who are still absolutely dependent on print books have powerful incentives to slow the erosion of prices, and even the adoption of e-books in general, which are a serious threat to bookstores, still by far our biggest sales channel.  




(Full disclosure: Bloomsbury Press titles are distributed by Macmillan, but Bloomsbury has a separate relationship with Amazon and was not a party to the dispute.) 

Image from tshirtworks.blogspot.com

Playing Chicken: Publishers, Apple, and Amazon

My post this morning raised the key question that I thought had been ignored in the first round of coverage on the iPad as e-reader: why would people pay $14.99 for an e-book in Apple's iBooks store when they can get the same title for Kindle at $9.99?  But in fact the trusty Walt Mossberg of the WSJ asked that very question of Steve Jobs at the iPad launch event--the video is now posted at All Things Digital (I found it via E-Book Newser). 

Jobs's answer has huge implications--though it's open to different interpretations. He says "the pricing will be the same." Mossberg asks, "the price will be $9.99?" Jobs: "The prices will be the same...Publishers are actually going to pull their books from Amazon because they're not happy." 

I take Jobs to mean that the prices won't be $9.99, because the higher price is what publishers have been desperately concerned to establish in the Apple deal. But obviously a $14.99 price for e-books can't be sustained if Amazon is going to keep selling the same title for less. For publishers not to undercut Apple, they would in fact have to withdraw their titles from the Kindle store. That would be a real throwdown--especially because right now, publishers are making more money on Kindle e-book sales than Amazon is. (But let's not forget that Amazon is still making loadsamoney on selling the Kindle device itself.)  It would be a significant threat to Amazon's Kindle business, and one has to wonder whether Amazon will retaliate, as they have done at other times, against publishers' print-book business. For both sides, print books are still a much larger business than e-books, so there's plenty to lose. It may be an interesting game of chicken. 

Apple iPad: Is It Actually an Amazon Trojan Horse?

As anyone on Planet Earth knows, Apple announced its new iPad device Wednesday with enormous hoopla. There's particular excitement among publishers because Apple has agreed to sell books in an iTunes-like store at prices somewhat higher than Amazon has been charging for new titles on the Kindle.

The excitement is somewhat paradoxical because although Apple is giving publishers a better split of sales proceeds (70 percent vs. Amazon's 50), these sales will actually make the publishers less money: Apple "iBooks" prices will be capped at $14.99, while right now, Amazon is paying publishers half of a list price that could be $25 to $30.

Furthermore, what no one has mentioned so far is that Amazon already has a Kindle reader app for the iPhone which allows you to buy books and read them--and supposedly all iPhone apps will work on the iPad.  So will you potentially have a choice of buying an e-book from
Apple's iBooks store for $14.99--or, buying the same title from Amazon, on the same device, just as conveniently, for $9.99?

I feel as though I must be misunderstanding something, because this seems like a setup to make iBooks completely irrelevant in a hurry.  This will be no skin off Apple, because the iPad will be just as good an e-reader with a Kindle app as it is with iBooks. So it could be a "Kindle killer" in the sense of luring potential customers of Amazon's device. But it could at the same time actually strengthen Amazon's hold over the book market--the exact opposite of what publishers hoped would happen.

In that case, our joy at the tablet will be short-lived. Not as short-lived as Adolf Hitler's, though, in this latest expression of the unquenchable internet meme:

Two New Approaches to Publishing: Notes from Digital Book World

I’m just back from attending the Digital Book World conference. I thought briefly about attempting to give an overview of  the whole thing, but there’s way too much ground to cover. For what might be called the strobe-light account, I recommend searching Twitter for #dbw, where many participants tweeted updates from the panels. And Publishers Lunch has posted summaries of most of the key sessions.

Out of many informative and sometimes provocative presentations—and unfortunately I missed several because I could only be in one room at a time—two new “business models” that people talked about yesterday especially intrigued me. One might be called an attempt to fix what’s most broken with the traditional big-house trade publishing business. In that sense it’s backward rather than forward-looking, but a smart and promising way of addressing our problems. 

First, the profit-sharing model of HarperStudio, as explained by founder Bob Miller, where instead of traditional advances and royalties (he reports), the publisher pays a small advance, but splits all revenue, minus direct costs (but not overheads) evenly with the author. The beauty of this approach is not only that it drastically decreases the house’s unearned advance risk, but that it aligns the interest of publisher and author more closely throughout the process.

Marketing budgets and strategies, for instance, can come out of a conversation between publisher and author, not the kind of negotiation where the author and publisher haggle over whether to spend on a book party or a publicity tour.  Bob’s account of the warm fuzzy feelings between HarperStudio and its authors sounds almost too good to be true, but as someone who has always tried to make the author part of the publishing team, even with a more conventional contract, I think there is a lot going for his program. (Roger Cooper’s Vanguard Press, which also offers authors less money up front, more later, plus a guaranteed marketing budget, is a similar and also appealing consultative approach.)

If HarperStudio and Vanguard are smart attempts to fix what’s broken in Big Publishing, Richard Nash’s Cursor is an attempt to “skate to where the puck is going to be,” in Wayne Gretzky terms. Looking forward to the likely future (see my post from Monday) when general-interest publishing is a relic and the publisher’s relationship with a community of interest is its key asset, Cursor envisions selling those dedicated readers not just books, but a variety of ways of interacting with authors—expensive, deluxe editions; 99-cent e-books; even classes or other forms of in-person access. As Richard noted in his presentation, paying $25,000 for an MFA, as thousands in our country do annually, is really a very expensive way of buying access to established writers.  Also novel is his plan to make contracts with three-year terms (and no advances), in the belief the publisher should earn the author's ongoing loyalty rather than aking him  (His session, too featured some other innovative models, Eoin Purcell’s Greenlamp and Angela James’s digital-first Carina Press at Harlequin. Cursor seems to me the most ambitious of the three.)

These ventures have been much written about already,  and in truth it's too early to say how well the results will pan out over the long term.  But they look to me like really welcome developments which, if they work, could point the way for publishers large and small to follow. I wish them all success and will be following them closely.