Amazon pulls MacMillan?

[TallMomof2]

Rather than selling e-books wholesale, according to the newsletter, publishers are attempting to negotiate a deal in which they retain ownership of the titles and license Apple to distribute them on a commission basis. Distributors would pay only for the books they “sold” at a fixed rate independent of the retail price.

This is from Globe and Mail and the way I read it is that this is how MacMillan is doing an end run around "price fixing" by turning retailers into distributors.

[charleski]

Originally Posted by Barcey

Personally I'm not concerned about an Amazon monopoly. They can't have one selling a virtual product.

And yet that's precisely their aim with the Kindle, and has been all along.

[tompe]

Originally Posted by Barcey

Country specific I guess. In Canada we have first release best sellers in the library. You generally have to go on a waiting list to read them though.

The waiting list was my point. For a best seller the libraries does not matter. People do not want to wait.

[Kali Yuga]

Originally Posted by charleski

Personally, I'm wary of agency pricing for books. It was tried in the UK for a long time and it didn't work. But Amazon's flat-pricing model is even worse and Amazon's levels were unsustainable.

FYI, Amazon doesn't have a "flat pricing model," there is a wide range of prices for ebooks, old and new. (E.g. Wendy Doninger's The Hindus: An Alternative History is $20, whereas the hardcover is $23.) The point of contention is that Amazon wants wide latitude over pricing, including the ability to steeply discount even if that means taking a loss. Publishers, on the other hand, want to protect the value of their work.

The unanswered question is whether chopping 33-50% off of the consumer price is going to lead to a commensurate increase in revenues and/or profits.

But in the end, I'm not sure all this brouhaha will really matter that much. If people are truly unwilling to buy ebooks at $15, sales will plummet and the price will get adjusted anyway. Similarly, if $10 is a truly unsustainable price, then retailers won't be able to offer it often or for long. Although I don't believe in a "perfect" price, I do think it's difficult to maintain a price that is too far from what people are willing to pay.

Originally Posted by Pardoz

Which would be precisely why Apple offered those terms in the first place, of course. Call me a cynic, but that strikes me as the whole point of Apple's move.

Not really. The key is that Apple is fundamentally a hardware company; selling ebooks and other digital content is primarily (though not exclusively) a means to drive iPad / iPhone / iPod sales. IMO they're not that concerned with selling ebooks; it's just a convenient "hey, look at this cool thing we can do with our snazzy hardware" approach. In contrast, selling music was the whole reason for the original iTunes Music Store, so at that time price was far more critical.

[Barcey]

Originally Posted by charleski

And yet that's precisely their aim with the Kindle, and has been all along.

I don't think their aim is a monopoly. Amazon understands they can't have one with virtual products. They want market dominance. There's a big difference.

[Barcey]

From a business viewpoint I have to admire what Steve Jobs has done. If you can't sign a good deal then sign a bad deal under the condition they match it with Amazon.

When I was watching the iPad announcement and he threw up the picture of the Kindle I was expecting him to do the typical product comparison/bashing. I was surprised that he just said that Apple was going to stand on the shoulders of what Amazon accomplished. I guess what he meant was they were going to stand on their shoulders and kick them in the head.

[Pardoz]

Originally Posted by Kali Yuga

The key is that Apple is fundamentally a hardware company; selling ebooks and other digital content is primarily (though not exclusively) a means to drive iPad / iPhone / iPod sales.

I don't think you can separate the two that cleanly. You could as easily say that Amazon is fundamentally a content company: selling Kindles is primarily a means to drive e-book sales.

With no content, your hardware is just a paperweight, and if you sell somebody the hardware you've probably got them as a customer for content. Apple saw that synergy with music but dropped the ball completely on books. Amazon picked it up and ran with it, and now Apple's moving to intercept before they get completely shut out of the game.

[tlrowley]

Joe Konrath has a great blog post breaking down the current situation from the point of view of an author (lots of authors are blogging on this, of course). What I found especially interesting was the summary he receives from Amazon listing his book sales, all of which is extra money since his publisher wasn't interested in the out-of-print books. With Amazon DTP as his publisher, he earns almost as much on a $2.99 Kindle book as he does on a $24.95 hardcover. At current sales rates, when the new Amazon 70/30 split comes into effect in June, he figures he'll be grossing 40K per year, on titles his publisher didn't want. That's not too shabby.

With the history of the music and movie industries to study, the story of how the publishers can get themselves into this sort of a mess would probably make for good reading

[BearMountainBooks]

Originally Posted by charleski

And yet that's precisely their aim with the Kindle, and has been all along.

It may be their aim, but they've been very generous to indie authors--they don't demand any exclusivity, they pay decent royalties and they started an opportunity that has been hard to beat. They also allow any publisher that wants to post with DRM. That right there is not much of an attempt to be a monopoly (although I'm not disputing that they are aggressive in going after market-share.) The DRM, from what I read, was at the behest of the big publishers. I think they are able to turn it off if they want as well (and turn on or off the text-to-speech.)

Amazon also offers the opportunity for authors to restrict geographically or not.

So...while they may wish to dominate, they have opened up the field as well.

[starrigger]

Originally Posted by BearMountainBooks

The DRM, from what I read, was at the behest of the big publishers. I think they are able to turn it off if they want as well (and turn on or off the text-to-speech.)

Maria, this is unfortunately incorrect. Amazon insists on DRM with publishers. (I don't know who first wanted it, but that's the situation now.) Where I think you've been misled is that indie authors submit their work differently from the way publishers do. Indie authors can turn DRM on or not. Publishers submit through a channel that doesn't give that option.

If you look at the E-reads section at Fictionwise and Webscription, you'll see that all their books are multiformat, DRM-free. The same books in the Kindle store carry DRM. That's not because they want it, it's because they submit to Amazon through the Mobipocket store, and they're given no choice. Same with Sony, and I presume B&N.

One of the holdups on Tor ebooks was that they were trying to work out DRM-free distribution deals, and it was hard. (So I was told by a Tor staffer.)

I think you're right about the TTS function, though I don't know if an actual mechanism is in place to turn that on and off.

[Kali Yuga]

Originally Posted by Pardoz

I don't think you can separate the two that cleanly. You could as easily say that Amazon is fundamentally a content company: selling Kindles is primarily a means to drive e-book sales.

You could, but in the case of ebooks, you'd be wrong.

Bezos has publicly and explicitly stated that Amazon's intent is for both the devices and the content to earn a profit. They did not want to go for the "cell phone model" (where the device is subsidized by content revenues and/or enforced contracts) or the "iPod model" (where content is subsidized by hardware sales). As a result, you have Kindle apps for multiple devices, including ones that would otherwise present a competitive challenge (e.g. iPhone, iPad etc). That could change, but so far it seems to still be the case.

In comparison:



In Q4 2009, Apple generated approximately $9 billion on iPhones and iPods, but only $1 billion on all iTunes store sales. iTunes revenues have been flat for years, while iPhone revenues in particular have expanded dramatically. And note that is revenues, not profits; i.e. they don't have to fork over 70% of their hardware revenues to 3rd party content providers.

Again, I don't think Apple is going to treat all that content as loss leaders, but I have little doubt they view selling the iPad itself as a much higher priority than selling ebooks. To Apple, ebooks are just one of many things you can buy for your iPad, and by setting up their own store they gain a higher level of control over the experience. (I'm mildly surprised they even set up their own ebook store.) At a minimum, they aren't worried about beating the ebook content competition on price.

It's pretty well understood that at its core, Apple is a hardware company, and it views software and content as a means to drive hardware sales. The revenue figures and trends should make that very clear. That's a primary reason why they didn't turn into a software company like Microsoft; why Jobs put the brakes on "Macintosh clones;" why they go for vendor lock-in; why they aren't likely to produce a netbook or a cheap desktop (it would cannibalize higher-margin sales) and so forth.

Originally Posted by Pardoz

Apple saw that synergy with music but dropped the ball completely on books. Amazon picked it up and ran with it, and now Apple's moving to intercept before they get completely shut out of the game.

...?

The ebook market it still small, and "first-mover advantage" is largely superfluous -- as Sony, who entered the ebook reader market years before Amazon, can attest. Apple doesn't care about dominating the ebook market, if they did they would never have let a competitor have a 50% price advantage over them.

[BWhite]

Originally Posted by Kali Yuga

The key is that Apple is fundamentally a hardware company; selling ebooks and other digital content is primarily (though not exclusively) a means to drive iPad / iPhone / iPod sales. IMO they're not that concerned with selling ebooks; it's just a convenient "hey, look at this cool thing we can do with our snazzy hardware" approach. In contrast, selling music was the whole reason for the original iTunes Music Store, so at that time price was far more critical.

Originally Posted by Pardoz

With no content, your hardware is just a paperweight, and if you sell somebody the hardware you've probably got them as a customer for content. Apple saw that synergy with music but dropped the ball completely on books. Amazon picked it up and ran with it, and now Apple's moving to intercept before they get completely shut out of the game.

I am going to go with Kali Yuga's logic on this one.

The difference with the iPad is that it is not strictly a situation of 'no content'. Apple could just release the iPad and go with the Kobobooks Reader or the B&N Reader or the Stanza Reader for those who are knowledgeable.

iBooks exists, in my opinion, to offer one-stop-shopping, a 'smooth purchase process'. eBook formats and DRM are a complete mess right now and Apple recognizes what Amazon has done to smooth out the kinks for its own customers. In fact it could be argued iBooks exists to lower costs to Apple's iPad Customer Service Department - because without iBooks Apple was looking at having to foot the bill for educating the public on how to load eBooks onto their iPads using a process that Apple did not control.

Now all Apple has to do is create a web page of instructions for how to purchase with iBooks and tell the customer to wait for their favorite novel to come out on iBooks, not explain how to get the customer's favorite eNovel over at Sony onto their iPad.

[phenomshel]

Originally Posted by Barcey

Personally I'm not concerned about an Amazon monopoly. They can't have one selling a virtual product. The retail price needs to be reasonable and something the consumer is willing to pay or it will be nothing. I can go to the library, buy from an indie author or read classics for the rest of my life. Other consumers will choose alternate forms of entertainment. Other potential consumers will file share.

Consumers will compare the price of the virtual book to the price of an equivalent physical book and expect the virtual book to be much cheaper.

Amazon has demonstrated an understanding of this. The publishers haven't.

I'm far on the side of Amazon on this one.

Oh yes, they can. As mentioned in my previous post, some of the titles that are now missing from my wishlist are from authors that are not available in ebook ANYWHERE else. Not on the darknet, either. What is this if not a monopoly?

Originally Posted by Pardoz

That's the killer irony here. Of the major publishers, Macmillan (at least the Tor imprint, and I don't have any reason to believe their other imprints fare any differently) has by leagues the worst track record around in terms of actually publishing e-books. Price point is pretty much irrelevant if you're not actually offering to sell any products.

I can't help but laugh when I see Charles Stross hailing Macmillan as the author's economic saviour in e-publishing when none of his work from Tor/Macmillan is for sale in electronic format. I have no real way of knowing just how much he makes from electronic sales of his e-books published by Ace/Penguin under the onerous shackles of the current regime and price structure, but I have to assume it's a sum greater than the $0.00 he's getting from Tor/Macmillan.

Very true. I had Hank Phillippi Ryan ask Donna Andrews (MacMillan Minotaur) why only a few of her books were in Kindle format, and not anywhere else at a writer's conference they both attended. Her answer was that it was a problem on Amazon's end, but with this development, I tend to think that she has been misinformed by her publisher. Authors really have no idea what's in their contracts, most of the time, as ludicrous as that sounds.

Originally Posted by Nate the great

It's been a while since I checked, but all the Macmillan-US publishers were pretty bad at releasing ebooks.

See above. From my limited research on this - they're one of the very worst offenders about this. That's what scares me. They really do not care about ebooks and people who choose to read ebooks. So they aren't going to be in any hurry to get those books back on Amazon or anywhere else.

[kjk]

Originally Posted by Kali Yuga

Not really. The key is that Apple is fundamentally a hardware company; selling ebooks and other digital content is primarily (though not exclusively) a means to drive iPad / iPhone / iPod sales.

As Apple CFO Peter Oppenheimer said in last weeks earnings call:

"Regarding the App Store and iTunes stores, we are running those a bit over break even, and that hasn't changed," Oppenheimer said during a conference call following Monday's quarterly earnings report. "We are very excited to be providing our developers with a fabulous opportunity and we think that is helping us a lot with the iPhone and iPod touch platform."

[Grandma Aubbie]

For years I have waited for the paperback edition of most books - or checked the hardcovers out of the library. Only a few books that I KNEW I wanted to keep were worth the extra cost.

So now, some of my favorite authors have some "hardcover" books out. They aren't New York Times bestsellers yet, but they ARE about 1/2 of the hardcover price in electronic format, so they are tempting.

At the moment, I'm simply waiting for the price to drop to $9.99 to add them to my Sony. Previously, I would have simply waited until they were available in paperback format, or even waited till I could pick them up at a used book store.

My point is that I have a price limit that I use in buying books. I won't buy it until it's in a reasonable price range for me. When it is a reasonable price I will buy it. It's that simple.