Publishers Weekly: Will the Agency Model Survive?

[SteveEisenberg]

Originally Posted by jemc

Do you have real information on their shipping practices or is this just more speculation on your part?

Hachette had a net profit margin of 17 percent last year. That's impressive for their industry and hardly would be characteristic of an outfit taking weeks to ship such a perishable item as a hardcover bestseller. And it's not speculation that the company officially says We are satisfying all Amazon’s orders promptly.

As for Amazon's side of the story, I see that they have doubled-down since yesterday, now saying that the hardcover Instinct usually ships in 1 to 2 months! But Amazon makes no statement as to how much of this 1 to 2 months is the shipping time between placing an order with Hachette and receiving it at an Amazon warehouse. Even when a reporter from Jeff Bezos's own newspaper called (see my first link in this post), they refused to be interviewed on such questions.

I believe it because it's consistent with what makes sense. Just as it's consistent with what the parties are, and are not, saying.

How many months does the "usually ship" time frame have to increase to until you would admit that the same dynamic is going on here as when Amazon took away the Macmillan buy buttons?

[tubemonkey]

These battles never affect my reading habits, so they're quite fun to watch

[jemc]

Originally Posted by SteveEisenberg

Hachette had a net profit margin of 17 percent last year. That's impressive for their industry and hardly would be characteristic of an outfit taking weeks to ship such a perishable item as a hardcover bestseller. And it's not speculation that the company officially says We are satisfying all Amazon’s orders promptly.

As for Amazon's side of the story, I see that they have doubled-down since yesterday, now saying that the hardcover Instinct usually ships in 1 to 2 months! But Amazon makes no statement as to how much of this 1 to 2 months is the shipping time between placing an order with Hachette and receiving it at an Amazon warehouse. Even when a reporter from Jeff Bezos's own newspaper called (see my first link in this post), they refused to be interviewed on such questions.

I believe it because it's consistent with what makes sense. Just as it's consistent with what the parties are, and are not, saying.

How many months does the "usually ship" time frame have to increase to until you would admit that the same dynamic is going on here as when Amazon took away the Macmillan buy buttons?

So your speculation on Hatchette's shipping methods are based on profit margins, a company PR release to a newspaper and a lot of hand waving about Amazon but no real knowledge about what Hatchette considers "timely". Thought so. Sorry, you're just not very convincing.

[tubemonkey]

Inside Amazon's Battle With Hachette

In the short run, authors and readers are the innocent bystanders in this war. Hachette authors aren’t reaping the rewards of their work as much as they could during this period and readers who want books like Gladwell’s Outliers right now aren’t getting them in a timely fashion — if they continue to buy through Amazon, that is.

In the short run, authors and readers are the innocent bystanders in this war.

Why? What's stopping readers from buying elsewhere; or for that matter, reading something else?

Of course this always goes back to authors and publishers having a captive customer base; a base that hasn't yet grasped the fact that there's no such thing as a must read. Once readers realize that and start seeking alternatives to hard-to-get or overpriced books, then all this silliness will stop. We'll see ample supplies with reasonable pricing.

Until then, readers only have themselves to blame.

[pwalker8]

Originally Posted by tubemonkey

Inside Amazon's Battle With Hachette



In the short run, authors and readers are the innocent bystanders in this war.

Why? What's stopping readers from buying elsewhere; or for that matter, reading something else?

Of course this always goes back to authors and publishers having a captive customer base; a base that hasn't yet grasped the fact that there's no such thing as a must read. Once readers realize that and start seeking alternatives to hard-to-get or overpriced books, then all this silliness will stop. We'll see ample supplies with reasonable pricing.

Until then, readers only have themselves to blame.

So, Amazon is using their near monopoly position to harm consumers? Isn't that the definition of anti-trust violation?

Some readers will read whatever is cheap or available and don't really care about authors, just like some TV views turn on the TV and watch whatever is on, rather than have a favorite program. However, I suspect that is not the sort of consumer that companies really go after.

[tubemonkey]

Originally Posted by pwalker8

So, Amazon is using their near monopoly position to harm consumers? Isn't that the definition of anti-trust violation?

Uhhh... no! Consumers are free to shop elsewhere.

[DiapDealer]

Originally Posted by tubemonkey

Uhhh... no! Consumers are free to shop elsewhere.

Wait. You mean I don't have to buy my Hachette books from Amazon? I can buy them somewhere else? Like say Barnes and Noble (who pressured Simon & Schuster in 2013 at contract renewal time by drastically reducing the number of titles they ordered from the publisher, thus punishing authors and readers alike [don't you remember being punished by B&N? ]).

[rcentros]

Originally Posted by pwalker8

I guess this is where I could start comments about Amazon fan boys who think it's great when Amazon uses it's near monopoly to punish suppliers who object to Amazon dictating price to customers, but think it's evil, evil, evil when other companies offer those suppliers an option. It's not the first time that Amazon has used it's market share to retaliate against a supplier who wouldn't cave to Amazon's wishes.

Frankly, if the government would simply stay out of it and stop trying to dictate winners and losers, then the market would resolve all this in time.

So Amazon is "evil" for discounting books to their customers? And Apple, Barnes & Noble and the Colluding Six are "good" for a scheme that artificially ramped up the price of eBooks? How were the publishers getting hurt? They were selling their books for the standard wholesale price and the authors were getting full commission.

And another question no one seems to be answering. Why does Apple, Barnes & Noble and the Colluding Six think that eBooks need to cost as much as printed books? There is almost no cost in the actual publishing or distributing of an eBook -- and an eBook doesn't have the same value as a hardback or paperback. When I'm done with my printed-on-paper book, I can sell it, or hand it off, or donate it to the library. I can't do that with my eBook. The library (or my friends) will have to buy another copy. So, almost inevitably, an eBook is going to sell to more readers because there are more restrictions on how it can be passed around. It's the nature of the beast -- so why don't publishers factor that into their prices? Pure greed?

As for the government "staying out of it" -- it's the government's mandate and duty to deal with anti-trust cases. This is a perfect example of collusion, how far are you willing to "allow the market to resolve their issues?" Because this is really "the market" artificially price-gouging, EXACTLY why the Justice Department should step in.

[tubemonkey]

Originally Posted by DiapDealer

Wait. You mean I don't have to buy my Hachette books from Amazon? I can buy them somewhere else? Like say Barnes and Noble (who pressured Simon & Schuster in 2013 at contract renewal time by drastically reducing the number of titles they ordered from the publisher, thus punishing authors and readers alike [don't you remember being punished by B&N? ]).

Incredible; ain't it?! It's one of those "why didn't I think of that" thingies

And monkey is never punished. When big companies play games, monkey shops elsewhere

[fjtorres]

One problem with that Forbes article: the 2010 fight between Amazon and MacMillan isn't a proper antecedent to the new cat fight because back in 2010 neither MacMillan nor Amazon were actually negotiating. MacMillan was actually delivering a ultimatum backed the rest of the conspirators and Amazon was grandstanding before their customers (and, as it turned out, the Feds) to make it plain and clear they wanted nothing to do with the price fix conspiracy. (Of which they were fully informed thanks to RH turning informer back in Oct 2009.) Which is where the whole "price set by the publisher" tag came in.

So, unless Hachette has another collusion deal in their back pocket--doubtful--2010 offers no guidance for 2014. Or 2015.

I know the folks in Manhattan publishing like to pretend the conspiracy never happened but the ruling alone has 180 pages worth of insider details, all retroactively made public. We know exactly who said what to whom and when. And the 2010 fight was just posturing on both sides, not a real fight.

[rcentros]

Originally Posted by pwalker8

Some readers will read whatever is cheap or available and don't really care about authors, just like some TV views turn on the TV and watch whatever is on, rather than have a favorite program. However, I suspect that is not the sort of consumer that companies really go after.

Let's see how this worked. Books were always sold wholesale and retailers were allowed to discount to their heart's content. How do you think Barnes & Noble ran out all the Mom & Pop bookstores all over the country? (Or have we forgotten that already?) The author's royalty was factored in per unit (remember, Amazon was not paying less for the book) so the harm to the author is in the "hypothetical" "only if you fall for the BS" argument that -- somehow -- selling more eBooks would harm authors. Then Apple appeared. Apple, who's been unsuccessfully suing Android since its inception because it wanted a monopoly on smartphones and tablets (who successfully patented "rectangles with corners"), that paragon of that virtue and promoter of the "open market," wanted to get a big chunk of the eBook sales (like they had gotten in MP3 sales). The scheme they pitched to the publishers is -- "make us your go-to retailer (instead of Amazon) and we'll collude to get the prices up on eBooks, so you can -- theoretically -- sell more paperbacks and hardbacks." The Colluding Six, none too happy with some of Amazon's moves -- including starting their own publishing wing, where more authors could get work (ahem!) -- were all too happy to join in on the scheme, figuring Apple was big enough to fend off the Justice Department. Well, alas, it was just too transparent of anti-trust move and it didn't work. Boo hoo for the Colluders. Finally the Justice Department worked for the people. It must have been a freak accident.

So this is good news -- unless you equate price gouging with an "open and fair market." I don't but, hey, I'm weird that way.

[fjtorres]

Originally Posted by rcentros

So Amazon is "evil" for discounting books to their customers? And Apple, Barnes & Noble and the Colluding Six are "good" for a scheme that artificially ramped up the price of eBooks? How were the publishers getting hurt? They were selling their books for the standard wholesale price and the authors were getting full commission.

And another question no one seems to be answering. Why does Apple, Barnes & Noble and the Colluding Six think that eBooks need to cost as much as printed books? There is almost no cost in the actual publishing or distributing of an eBook -- and an eBook doesn't have the same value as a hardback or paperback. When I'm done with my printed-on-paper book, I can sell it, or hand it off, or donate it to the library. I can't do that with my eBook. The library (or my friends) will have to buy another copy. So, almost inevitably, an eBook is going to sell to more readers because there are more restrictions on how it can be passed around. It's the nature of the beast -- so why don't publishers factor that into their prices? Pure greed?

It is documented that in moving to Agency the BPHs were getting less money and the authors were getting less royalties. They really wanted a $15 price on ebooks but Apple insisted on a uniform $13 for bestsellers.

As for why they desperately want high ebook prices, it is also publicly documented: Carolyn Reedy explained it clearly in one of the email exchanges with the other CEOs that "never occured". The reason is that getting pbooks into B&M bookstores was the primary lever they had to get authors to sign the "industry standard" contract and ebooks, instead of remaining a hobbyist niche product, were exploding into the mainstream and cannibalizing print sales. She was at the time seriously concerned that if they lost the readers they would lose the bookstores and, more importantly, lose the authors. (Just ask Harlequin how fast that can play out.)

I know there's a certain midsize publisher exec who swears indie publishers don't compete with him "because bookstores can't carry POD" books, but by now we all know that Ingram and Baker & Taylor do in fact distribute POD titles to bookstores and that both the chains and the independents do carry them, so Reedy's fears were not only well-founded but also fell short of what really has happened.

So, the publishers want high ebook prices to protect pbook sales volume because access to bookstores is their stock in trade. Without that, authors getting $4000 advances might start questioning why they should sign away 100 years of copyright control on an "industry standard" contract. And the BPHs can't have that...

Again, I know the ruling of the antitrust trial is long (180 pages or so) but it makes for very educational reading. Highly recommended and very quote-worthy.

Edit: here's the download link, check it out:

http://www.nysd.uscourts.gov/cases/s...special&id=306

[rcentros]

Originally Posted by fjtorres

Edit: here's the download link, check it out:

http://www.nysd.uscourts.gov/cases/s...special&id=306

Thanks. I've downloaded it and will read it.

[SteveEisenberg]

Originally Posted by rcentros

So Amazon is "evil" for discounting books to their customers?

Do you have a citation for the word you put in quotes? I can't recall it being said here. And if I ever came close to thinking it, it has nothing to do with pricing, but rather with how they were treating low-wage workers.

Amazon's lowest wage labor pool is made up of Kindle Direct Publishing authors. A bit sad, yes, but evil, no.

Originally Posted by rcentros

Why does Apple, Barnes & Noble and the Colluding Six think that eBooks need to cost as much as printed books?

If a publishing executive was aware of MobileRead, he or she might reasonably believe that the eBook format is preferred by readers. However, I don't think they go by such anecdotal evidence as much as facts and figures from marketing surveys. And based on those they set the prices.

But is it really true that the publishers want to set the price of eBooks and paper books at the same level? To find out, check web sites of publishers that sell their books directly. If you check out a few titles here, you might be surprised at the eBook to paper price ratio a publisher chose when it was totally under their control:

http://books.simonandschuster.com/bestsellers

Originally Posted by rcentros

It's the nature of the beast -- so why don't publishers factor that into their prices? Pure greed?

Why don't readers pay a penny more than the price on a book label? Is that greed? Why should a publisher leave any more more on the table than I do?

If Hachette made life-saving drugs, or food staples, I would see some moral responsibility to keep down prices. But I do not need books to survive. This is especially true because I have freedom to read any book I want through library borrowing, including inter-library loan. So the harm to the public of high book prices is, it seems to me, no more than a transient feeling of impatience. It seems to me they have much more responsibility to their employees, authors, and maybe even some stockholders (like pension funds) than to their customers.

Average publisher profits margins are much lower than for Microsoft or Apple, but I don't see people asking why Apple needs to sell an iPad for so much. The answer, I think, is that Apple has no more or less moral right to its money than do its customers.

[eschwartz]

I ask why does an iPad need to cost so much.

There is no real baseline against which iPads should be measured.

Conversely, ebooks can be compared to pbooks; then we can say, if x is a fair price for pbooks then why does the same product as an ebook cost about the same when there is less cost in producing?

iPads are considered to be a fair markup because they established the price first, and there were no comparable products that had a lower margin.