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Old 03-18-2010, 11:24 AM   #1
Kali Yuga
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NYT: "Amazon Threatens Publishers as Apple Looms"

Apparently, Amazon is still playing hardball with the publishers.

http://www.nytimes.com/2010/03/18/te...amazon.html?hp

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Originally Posted by NYT
Amazon.com has threatened to stop directly selling the books of some publishers online unless they agree to a detailed list of concessions regarding the sale of electronic books, according to two industry executives with direct knowledge of the discussions.
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Old 03-18-2010, 11:38 AM   #2
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Who's go the popcorn? This battle is going to remain interesting for some time.

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Old 03-18-2010, 01:53 PM   #3
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I'm reminded of the UAW bargaining tactic of targeting one auto manufacturer.
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Old 03-18-2010, 02:14 PM   #4
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Oooh, *now* we're looking at potential claims of illegal price-fixing, as Apple & Amazon both try to insist on "no competitor may have lower prices" contracts.
Quote:
publishers are reluctant to sign three-year contracts because the digital book world is changing so rapidly
Ya think? Nice to know publishers' brains *do* kick in at some point in the discussion.
Quote:
If Amazon does stop directly selling books from some publishers, many of those books will still be available from outside sellers that use Amazon’s site as a storefront.
Technically, yes. But removing the direct Amazon sale option may change how the books show up in searches & listings, and Amazon may have the (legal & technical) ability to remove or limit access to those titles.
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Old 03-18-2010, 03:13 PM   #5
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Go back and read the history of the robber barons of the late 19th century. You're watching a sequel.....
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Old 03-18-2010, 06:22 PM   #6
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Go back and read the history of the robber barons of the late 19th century. You're watching a sequel.....
Which is now known as standard business practice.
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Old 03-18-2010, 07:07 PM   #7
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I thought the iPad would make Amazon tread more carefully around publishers because the publisher could say 'screw you' and move over to iTunes which has a massive market share.

I guess this means Apple is playing pretty hardball, giving Amazon some room to move. Competition is all good for us!
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Old 03-18-2010, 07:23 PM   #8
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iBooks (not iTunes...) doesn't have a massive market share on reading devices, though. (Right now, in fact, it's zero...)

And no, "competition" where they're locking prices to high levels is not "good for us".
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Old 03-18-2010, 07:23 PM   #9
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Originally Posted by fugazied View Post
I thought the iPad would make Amazon tread more carefully around publishers because the publisher could say 'screw you' and move over to iTunes which has a massive market share.

I guess this means Apple is playing pretty hardball, giving Amazon some room to move. Competition is all good for us!
0% is massive market share of books? Oh, you could count the books-as-apps for the iPhone.

From Apple's point of view, it has nothing to lose and everything to gain. From Amazon's point of view, if it can use Apple's business strategy against Apple then Apple will be less of a threat.

Each company is trying to change the rules of the game to favor their own position.
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Old 03-18-2010, 07:34 PM   #10
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Quote:
Originally Posted by fugazied View Post
I thought the iPad would make Amazon tread more carefully around publishers because the publisher could say 'screw you' and move over to iTunes which has a massive market share.

I guess this means Apple is playing pretty hardball, giving Amazon some room to move. Competition is all good for us!
Competition is good if it benefits the customer. In this case, it's just raising prices and not not good for the customer. But we'll see what really happens come April.
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Old 03-18-2010, 07:51 PM   #11
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iTune dominates the music market because individual sales are cheap. Everyone can spare a dollar or two on a whim to try a song. (And since the removal of DRM, those songs play on any devices.) Trying the same locked-in software for ebooks at $13-15 each, when the books aren't readable on a number of devices people already own, is going to be worth watching. With popcorn.

People who had non-Apple mp3 players before, could burn the songs to CD and then rip the CD back to digital. It was a nuisance workaround, but it was available. Computers don't come with automatic burn-then-rip-this-ebook hardware & software. And the songs they had often weren't available elsewhere.

With ebooks, Apple is competing with Amazon, CoolERbooks, Barnes & Noble, BooksonBoard, and maybe Fictionwise; people will be checking which store has the cheapest ebooks. (And Apple's contract says they do. Which will limit what books they can get; they won't be able to offer Fictionwise's range.) They'll try to capture the mainstream-pop market, but they'll have to ignore the indie publishers--and any content they can't host, becomes lost customers. Especially since sites like Fictionwise, Smashwords & Webscription have *simple* interfaces--click here to pay; click here to download; no special software required.

Popcorn. I need popcorn.
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Old 03-18-2010, 08:24 PM   #12
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There are a couple issues here. It's not Apple or Amazon, but the publishers that want higher ebook prices. If publishers had not gotten their way, then NO ONE would have been able to buy ebooks until some time after the hard backs have been released. Just as it is with paperbacks.

The second issue is that ebooks are network only "things". There is no store front, no location boundary. People will shop for the cheapest price. Amazon has been willing to lose money on every ebook they sell. As such -- NO ONE ELSE would have any incentive to sell ebooks. This is not a good thing for the publisher, and it's not a good thing for the customer.

This is not new folks. It's called "dumping". You sell a product for a loss, run all your competition out of business....then you are free to jack up the prices to anything you want.

We all understand "loss leaders" where soda or milk is put on sale to get people into the store. But in Amazon's case -- the entire set of bestsellers was turned into loss leaders all the time.

So Apple says "I'll let you set your prices to whatever you want on our book store -- but only if Amazon and everyone else isn't allowed to undercut our prices". Why should Apple spend it's time and money setting up the iBookstore if the publishers are going to continue to let Amazon sell every desirable book for a loss?

People do not need to worry that the rest of economics will fail to provide downward pressure on the price of ebooks. Publishers can't set the price to $100 and just make sure that Apple and Amazon sell for that price. No one would buy them.

The publishers are going to start with a certain price and the market will teach them what is or isn't acceptable.

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Old 03-18-2010, 08:44 PM   #13
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The publishers are going to start with a certain price and the darknet will teach them what is or isn't acceptable.
Mm-hum.

Also, Amazon should of called their bluff on windowing releases. Remembering they can't selectively hold back books, they'd of has to do it with everyone. And new ebook sales would of gone dead. Inside of a year, they'd of been crawling back to Amazon..
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Old 03-18-2010, 08:55 PM   #14
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Amazon has been willing to lose money on every ebook they sell.
Sorry, that's not the way it is. Amazon offers bargain prices for a lot of bestselling titles, but the "long tail" of eBook sales is the way publishers intended them to be, and publishers as well as authors as well as customers benefit from these. And Amazon makes some money with them.

Quote:
It's not Apple or Amazon, but the publishers that want higher ebook prices.
Yup, important to keep that in mind. Both Amazon and Apple simply use their weight to to either hold or gain the upper hand. Amazon in threatening the major publishers, Apple in offering a higher price level.

Well, waiting for the hot dog vendor at the 7th inning stretch ... popcorn's already out.
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Old 03-18-2010, 10:56 PM   #15
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Amazon has got itself into this mess all on its own - I have no sympathy for them and their bully-boy tactics. Since I still buy print books that have a visual component, I've been using the bookdepository instead for few months now and am very happy with their service.

Having said all that, the real problem here is the agency model. People have got fixated over short-term issues with pricing, but this is just the first example of how the agency model can cause long-term harm to the market. Part of the blame lies with Apple, which has elevated the culture of control to a dangerous level, but a large part of it lies with Amazon itself. They got too big, they got drunk on their own power, and they devalued other people's product in order to grab yet more.

Amazon and Apple are just Scylla and Charybdis, a pox on both of them. If you want ebooks to have a future, then buy them from Fictionwise, BooksonBoard, Smashwords, B&N or any of the other smaller outlets.
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