Macmillan comes to terms with Amazon

[fjtorres]

...a bit ahead of schedule.

A multi-year deal, no muss, no fuss, no public spectacle.


From Tor.com:

http://www.tor.com/blogs/2014/12/a-m...m-john-sargent

Late last week Macmillan reached an agreement with Amazon on a multiyear deal for print books as well as a multiyear deal on the agency model for e-books, starting on January 5, 2015. All our other retailers will also be on the agency model, leaving Apple as the only retailer who is allowed unlimited discounting. Irony prospers in the digital age.

This odd aberration in the market will cause us to occasionally change the digital list price of your books in what may seem to be random fashion. I ask for your forbearance. We will be attempting to create even pricing as best we can.

Under our deal with Amazon your net percentage of the proceeds will not change. You will be affected, as you always have been, by our changes in price. Your books will continue to be featured in Amazon promotions and deals.

In reaching agreement with Amazon, we have not addressed one of the big problems in the digital marketplace. Through great innovation and prodigious amounts of risk and hard work, Amazon holds a 64% market share of Macmillan’s e-book business. As publishers, authors, illustrators, and agents, we need broader channels to reach our readers.

More at the source.

[DiapDealer]

As publishers, authors, illustrators, and agents, we need broader channels to reach our readers.

No John. You're reaching your readers just fine already. What you (Sargent) mean, is that you need broader channels to ensure that authors and readers can continue to support you and your way of life.

[pwalker8]

No, quality competition is always a good thing. As far as Apple being the only ebook store not using agency pricing, that isn't irony, that is Judge Cote.

[fjtorres]

The irony is that under wholesale, when Amazon discounted an ebook, the discount came out of Amazon's pocket only and both the publisher and author made the same amount per unit regardless of what the consumer paid.

Post-conspiracy, when Apple discounts and Amazon price matches, everybody is chipping in to cover the discount. So the amount per unit the publisher and author get depends on Apple's willingness to discount. That is what Sargent is warning his authors about.

Apple can discount like crazy (to take market share from Nook and Kobo) and still make a profit; Amazon matches (protecting its market share) and makes a profit, and the publisher (and their authors) have no say so, agency or no agency.

(Betcha wholesale doesn't look so bad anymore, does it, Mr Sargent?)

Not quite the outcome the conspirators wanted but one that the Judge probably approves of.

[DiapDealer]

Originally Posted by pwalker8

No, quality competition is always a good thing. As far as Apple being the only ebook store not using agency pricing, that isn't irony, that is Judge Cote.

I don't care about competition (or lack thereof). I was only adressing Sargent's faulty suggestion that Amazon having 64% of McMillan's ebook market share is somehow limiting their ability to reach readers. At best, it's a dumb statement: at worst, it's a disingenuous one.

[Phogg]

Originally Posted by DiapDealer

I don't care about competition (or lack thereof). I was only adressing Sargent's faulty suggestion that Amazon having 64% of McMillan's ebook market share is somehow limiting their ability to reach readers. At best, it's a dumb statement: at worst, it's a disingenuous one.

Not that the possibilities are mutually exclusive.

[darryl]

Originally Posted by DiapDealer

I don't care about competition (or lack thereof). I was only adressing Sargent's faulty suggestion that Amazon having 64% of McMillan's ebook market share is somehow limiting their ability to reach readers. At best, it's a dumb statement: at worst, it's a disingenuous one.

Agreed. To actually spell things out, the problem for McMillan in Amazon having such a large share of the sales of their ebooks is that McMillan is not in a position to dictate terms to Amazon. It does not enjoy the essentially unfettered control of its ebook market that it has enjoyed with its print book market for so long. MacMillan does not have total control. It wants total control.

[Phogg]

Originally Posted by darryl

Agreed. To actually spell things out, the problem for McMillan in Amazon having such a large share of the sales of their ebooks is that McMillan is not in a position to dictate terms to Amazon. It does not enjoy the essentially unfettered control of its ebook market that it has enjoyed with its print book market for so long. MacMillan does not have total control. It wants total control.

I suspect they do.
Towards regaining total control that they once had, I would evaluate sites like kickstarter and indie editors as a bigger long term impediment than Amazon.

[darryl]

Originally Posted by Phogg

I suspect they do.
Towards regaining total control that they once had, I would evaluate sites like kickstarter and indie editors as a bigger long term impediment than Amazon.

I agree that they have more problems than just Amazon, including Kickstarter and Indie Editors. But don't forget Amazon's own publishing business. I think Amazon will experience a hiccup with Kindle Unlimited, which is great for readers and Amazon but is starting to look like it is not so great for authors. However, it is an experiment, and I suspect that Amazon will eventually get it right, even if it means abandoning it or making non-participation a real option for its KDP authors.

Because right now I am asking the question as to why any new author would want to publish an ebook with one of the big publishing houses. They seem to be surviving on their existing authors and chasing a few blockbusters, including print only and sometimes regional contracts with successful Indies.

[pwalker8]

Originally Posted by DiapDealer

I don't care about competition (or lack thereof). I was only adressing Sargent's faulty suggestion that Amazon having 64% of McMillan's ebook market share is somehow limiting their ability to reach readers. At best, it's a dumb statement: at worst, it's a disingenuous one.

I would say that most businesses who has one reseller who controls 64% of their sells would consider that a major problem. It's neither dumb nor disingenuous. We have all seen that Amazon is fond of playing hardball with it's suppliers (another aspect in which Amazon follows the Walmart model).

You should care about competition or the lack thereof. Competition is what makes the free market work and forces innovation. Otherwise, you would be dealing with companies like the Post Office, or the pre-break up AT&T (remember the old comedy skits "We are AT&T and we don't have to care"?)

[fjtorres]

Originally Posted by darryl

Because right now I am asking the question as to why any new author would want to publish an ebook with one of the big publishing houses. They seem to be surviving on their existing authors and chasing a few blockbusters, including print only and sometimes regional contracts with successful Indies.

A question that is getting dicier by the minute, really.

The BPHs have apparently adjusted their thinking about ebooks. They now see them as pure profit generators and, in accounting terms, as assets rather than products. This has lead to a change in thinking reflected in new contract terms. (And their quarterly financial reports.)
The change is not in authors' favor.

KKR has a detailed look at the way it used to be and how it has changed:

http://kriswrites.com/2014/12/17/bus....ZmoWXmU4.dpbs

Essentially, with the new contracts, signing with the corporate publishers is not terribly different from work for hire, with residuals. The publisher gets control of all the associated IP and derivatives, as close to forever as legally possible.

Selling a book under those terms is pretty close to selling not just the story but also the characters and milieu. Kinda like in Hollywood, where selling a screenplay means selling the right to make sequels and remakes. They may be royalties forthcoming (or not, depending on contract land mines) but the author has no control over what is done with the IP they created after they sign the contract.

VAMPIRE DIARIES is an (extreme) example of where this is headed.

At a minimum, if the author of a popular book doesn't want to do a sequel or prequel or derivative, the publisher can just shrug, turn around, and farm the project to somebody else. And the author won't be able to do a thing. A future J.K. Rowling won't be able to decide that Harry Potter is a done and over with after volume 7. Instead, the publisher will be free to do RETURN OF THE POTTER, BRIDE OF POTTER, SON OF POTTER, and VOLDEMORT'S RETURN ad infinitum.

What George Lucas did with STAR WARS voluntarily will be the norm now, whether the author wants to or not.

So, when Sargent says they will be experimenting he doesn't just mean looking for new ways to sell the story; he means more ways to exploit the IP inside the story.

[DiapDealer]

Originally Posted by pwalker8

I would say that most businesses who has one reseller who controls 64% of their sells would consider that a major problem. It's neither dumb nor disingenuous. We have all seen that Amazon is fond of playing hardball with it's suppliers (another aspect in which Amazon follows the Walmart model).

Listen carefully: "How does that affect 'reaching their readers'?"

I have no problem with MacMillan wanting to broaden their retail ebook base (for their own financial security), I have no problem with MacMillan wanting to gain more control over their ebook business (for their own financial security). I simply have a problem with Sargent saying it's about being able to "reach readers," which has never been a problem--even when Amazon was playing "hardball." Readers buy the books/authors they want to buy, wherever/however they have to. They've never NOT been able to buy MacMillan etitles somewhere (except when they don't make them available).

[murg]

Originally Posted by pwalker8

I would say that most businesses who has one reseller who controls 64% of their sells would consider that a major problem. It's neither dumb nor disingenuous. We have all seen that Amazon is fond of playing hardball with it's suppliers (another aspect in which Amazon follows the Walmart model).

Considering that the publishers systematically destroyed all of Amazon's competition, I'd say this was karma in action.

Originally Posted by pwalker8

You should care about competition or the lack thereof. Competition is what makes the free market work and forces innovation. Otherwise, you would be dealing with companies like the Post Office, or the pre-break up AT&T (remember the old comedy skits "We are AT&T and we don't have to care"?)

And the phones worked in America. Quite well. None of this "it's your supplier of <other phone service> that is causing the problem".

[SteveEisenberg]

Originally Posted by murg

Considering that the publishers systematically destroyed all of Amazon's competition, I'd say this was karma in action.

Amazon was using loss leader pricing on many bestsellers. This can work for them because books are only 10 percent of their business, and they can use bargain books to drive often affluent readers into buying more profitable items.

Amazon's competition had far less ability to make up for losses on bestsellers. Agency would have helped them.

[Phogg]

Originally Posted by murg

Considering that the publishers systematically destroyed all of Amazon's competition, I'd say this was karma in action.

And Karma for you.