Amazon says 'will have to capitulate and accept Macmillan's terms'

[TallMomof2]

I said in the other Amazon thread that I will be saving a lot of money since I will not pay more than $9.99 for a new release. Also will not buy anymore Apple products (multiple iPods and a MacBook that I already own are the last I will buy).

I can assure you that the $14.99 new releases will be on the darknet the same day they are released if not sooner.

[Guns4Hire]

Originally Posted by Jack Tingle

Jeff Bezos is brilliant. He gets credit for standing up to Macmillan, defending his $9.99 price for ebooks. He can shed the $9.99 price he was losing money on, without looking like a welcher. He's "forced" to cave in to the evil publisher and reluctantly raising prices up to a profitable level. He can wash his hands and say, "We can't control them, they set the price now. We're very sorry."

The publisher will probably wind up with slighly less to about the same profit, while Jeff gets several dollars more per ebook. He gets the ebooks on the first date of publication. And Amazon looks like the hero of the masses. Brilliant.

Admiringly,
Jack Tingle

Yeah pretty brilliant and John Sargent is his stooge.


http://www.businessinsider.com/henry...rew-you-2010-1

[Sydney's Mom]

I have many books on my kindle that I purchased for $9.99 or under. I am going to read those first. If my favorite authors come out the same day in ebook form, I will consider paying $14.99. But I will read my backlog before doing so for every other author. The CPL seems to get most bestsellers in ebook form.

This makes me kinda sad. It shows that consumers are not even in the equation.

[Penforhire]

It appears Apple entering this market is disruptive. Who woulda thunk it?

This is short term pot-stirring. The e-book industry is still changing and no way are we ending up here. Like Mr T said, I predict pain! If many publishers push prices up instantly that should attract government interest. If only MacM does it we can hope (and help make happen) they will lose market share recognize the error of their ways.

[texasnightowl]

Originally Posted by askenase13

Let's be clear about this. MacMillan will NEVER allow its ebooks to be sold at $9.99, even when the paper back is selling for $7.99. That has been their history.

Frankly, this is really an attempt by MacMillan to destroy ebooks. Won't work. But we have to be militant on behalf of lower ebook prices and against these idots

This is what I'm afraid of. There was a Lisa Kleypas book last year that was in paperback for $6 or $7 and they had the ebook listed at $14.99 which was completely ridiculous. And of course, I did not buy it until the price came down. But this is exactly what MacMillan is going to try for...and any other publisher who thinks they can get away with it. I can promise you that I will NEVER pay more for an ebook than the paperback cost unless it is brand new...and there are damn few books that I "must have" when they first come out.

[DD1509]

Originally Posted by JoeD

To be fair, they don't really need to say it. If prices go up, I will stop buying the ebooks with those prices. I'll pay up to $5-6 for a book currently that I fancy reading and at most $9.99 if it's an author I know and love to read.
If all the publishers follow suit, then that'll put an end to my days reading best sellers.

I hope more authors start to sell directly from their websites at reasonable prices and through non exclusive deals with as many online retailers as they can get their hands on. Those are the authors who will be getting my money in the future if ebook pricing isn't sorted out (in fact they're the authors getting my money right now, as most existing ebook prices are outside what I'm willing to pay).

Maybe that is the ideal answer. Buy from the author directly, electronically!

Publishers publish, print, distribute, promote, manage and "handle" the writers, pay advances and deal with all of the eccentricities of the popular authors. They are due something for their work. But they want more than their fair share with electronic publishing. Look at the dramatic reduction in the cost structure with electronic publishing. No printing/binding (huge cost), no distribution and shipping of heavy products (huge savings). No returns, no stock balancing and the rest of the distribution headaches.

Now Macmillan wants a premium price and they get to off-load all of the heavy costs of publishing. They are going to make more money from the electronic versions. I guess they want the eBook buyers to subsidize their expensive publishing for brick and mortar distribution.

I think it just sucks.

[Kali Yuga]

Originally Posted by DD1509

Maybe that is the ideal answer. Buy from the author directly, electronically!

Sure, if the authors can forsake the idea of advances, hire excellent editors (and actually take their advice), do their own marketing, pay for their own accounting, get the books reviewed, afford their own book tours, get on radio or TV or in front of blogs, push the retailers to get the book promoted via the retailers.

Not many authors are willing and able to really do this. Even James Patterson, who is clearly capable of running his own show, still chooses to work with an actual publisher. Go figure.

And this assumes the public is able to wade through the massive slush pile of self- and unpublished works to find anything worth reading.

Originally Posted by DD1509

(Publishers) want more than their fair share with electronic publishing. Look at the dramatic reduction in the cost structure with electronic publishing....

Yes, let's.

The cost savings of ebooks is actually a lot smaller than most people think -- it's closer to 15%, especially for the big publishers that can leverage the economies of scale. Distributing the books is cheaper, but it's not free; bandwidth, databases, more IT staff, security, credit card fees, 3g costs all add up, and retailers lose shipping and handling fees (formerly a revenue source). Meanwhile, consumers are demanding price cuts of 60% or more.

Most published titles don't break even. And even though ebooks only make up around 5% of the market, it's clear that at least some of the high-margin hardcover sales are cannibalized by ebooks that are 1/3 the list price.

It's unclear whether slashing the price will result in a commensurate increase in sales. For example, if the new book price is set at $10, it's possible ebook readers will spend the same amount on ebooks as they did on paper books. But it's also plausible they will purchase the same number of books and spend the difference on other forms of entertainment, or just keep the savings.

Last but not least, there is absolutely no reason why there needs to be a direct link between the public's perception of the cost of a good (accurate or otherwise), and its final price. The price is merely what the market will bear, and it's way too early in the game to categorically state that $10 is the only price for a new book that can possibly work.

This is not to say that publisher control over pricing is necessarily a good thing; only that it is unclear if $10 is a sustainable or optimal price.

[mcl]

Originally Posted by Kali Yuga

Yes, let's.

The cost savings of ebooks is actually a lot smaller than most people think -- it's closer to 15%, especially for the big publishers that can leverage the economies of scale. Distributing the books is cheaper, but it's not free; bandwidth, databases, more IT staff, security, credit card fees, 3g costs all add up, and retailers lose shipping and handling fees (formerly a revenue source). Meanwhile, consumers are demanding price cuts of 60% or more.

Bandwidth: About 1MB or so per book. Not per copy; per title. 8 million copies of a title are the same as one copy. There are no exorbitant bandwidth costs, because unique copies do not need to be transmitted.

Databases: no extra databases are necessary for ebooks. The existing database infrastructure they have is fine, and is a sunk cost.

IT staff: Likewise a sunk cost.

Security: Again, a sunk cost and none is needed over and above the existing security infrastructure in place.

Credit card fees: huh? We're talking about the publishers, not the retailers.

3g costs: Again, huh? Publishers don't deal with this.

Most published titles don't break even. And even though ebooks only make up around 5% of the market, it's clear that at least some of the high-margin hardcover sales are cannibalized by ebooks that are 1/3 the list price.

Which is irrelevant. They get the vast bulk of their money from wholesale purchasing. Amazon was selling ebooks below wholesale cost, which was 50% of hardcover list. The publishers are not harmed in any way by this -- they got their money from the distributor.

[dkb]

Kindle owners always erroneously blame Amazon when best sellers are more than $9.99 as promised. I think this is Amazon's way of making sure Kindle owners know that they should blame MacMillan, not Amazon, for the increased prices. By pulling the books, Amazon got everyone's attention. There's even a big story in the NYT--"After a weekend of brinksmanship, Amazon.com on Sunday surrendered to a publisher and agreed to raise prices on some electronic books." Plus they could put out a nice little notice saying that unless they charge the price MacMillan demands they can't offer books from MacMillan. So it's really clear who is responsible for higher prices.

The article goes on to say, "Amazon’s decision is also a victory for Apple’s chief executive, Steven P. Jobs, who first pitched the idea of selling e-books under the agency model to book publishers earlier this year. Now Apple, whose iPad tablet is due in March, can compete on fairly equal footing with Amazon."

[fugazied]

Well it looks like the publishers won this one. It makes me wonder if Apple uses the payment model that Macmillan wanted to move to with Amazon?

That might have given them some leverage. Whereas before losing Amazon would have been a big deal, now they have B&N and soon Apple to move to. Both Apple and B&N have highly effective distribution networks that people could easily switch to for Macmillan books.

[Teddman]

Originally Posted by askenase13

Let's be clear about this. MacMillan will NEVER allow its ebooks to be sold at $9.99, even when the paper back is selling for $7.99. That has been their history.

Frankly, this is really an attempt by MacMillan to destroy ebooks. Won't work. But we have to be militant on behalf of lower ebook prices and against these idots

How is it that Barnes & Noble has e-books like The Eye of the World listed for $6.99? Is this MacMillan's policy for their own imprint and not subsidiaries like ToR?

[LDBoblo]

What I wonder is...what price will ebooks have to be before they can be half as well-crafted as even the cheapest paperback versions?

[thinkpad]

Lets wait and see how many books MacMillan will sell for $15. Probably the sales will drop, found a book the other day for $12 and I wasn't eagerly interested to read it so I ended up not buying it.

[readmorenow]

sorry if this is a stupid question but why is there is so many people hating apple for this?

I mean they are not the first store to sell books above $9.99, sony and fictionwise has done it for a while. Not everybody wants to be a loss leader.

From reading the forums, articles and blogs it looked like the publishers were gonna do something like this sooner or later. It sounded like Apple was just used by the publisher in this negotiations.

Granted Steve Jobs may be a arrogant p*** but apple probably agreed to this model just to get the publishers onboard. Apple may had tried to get the 9.99 pricing but i don't think any big publisher wanted come aboard. This is business, it may not be smart business decision but i think a legal one.

Nobody forced Amazon to do what they did. They were given an option to keep the $9.99 pricing but they will not be given first dibs at the books. How is that different to what we are experiencing now, there are books amazon has which no other ebook retailer has and vice versa.

[charleski]

Originally Posted by DawnFalcon

Right. Given under the "new" model the actual total money going to the publisher will be the same, except with a lower "list price", so they need to pay out less to their authorsand are increasing their actual take, at the expense of the author (and of course, charging the public more).

Do you know how much Macmillan was getting from Amazon at the $9.99 price?

No, you don't, and neither do I. The best we can do is guess, and, clearly, the guesses that people have bandied around have been coloured by their opinions.

OTOH, it's no secret that Amazon has been pushing for deeper discounts on titles for a long time now. It's no secret that Amazon's latest profits have jumped 71% on the back of a 42% rise in revenue, and that the previous quarter saw a 62% rise in profit from a 28% rise in sales. With profits rising faster than sales, it doesn't look like they're engaging in selling a great deal of stuff at a loss. And yet Amazon claims that it's selling more books for the Kindle than ever.

Amazon's stubborn refusal to abandon the $9.99 price has hurt it (this petulant little foot-stamping episode is worthy of a six-year-old), and more importantly, it has hurt us. The major publishers have long made it clear that they need more flexibility in ebook pricing to reflect changing sales windows, but Amazon didn't want to co-operate. The only thing Amazon has managed to achieve is to reduce the perceived value of books in the eyes of the public, as has been amply demonstrated here and elsewhere.

But what's worse, we now have an industry that will transform to agency-pricing (you can be sure all the other majors will climb on board ASAP). Wow, THANKS AMAZON! If you're bitching about pricing now, be prepared to bitch much louder in a year's time when the only way to get a discount is through a complicated loyalty scheme.

The threat here is not $14.99 pricing. The threat is the elimination of retail competition.