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

[tompe]

Originally Posted by charleski

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.

Exactly. I am surprised that so many people here seems to miss these points.

[EowynCarter]

Amazon customers will at that point decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling e-book.

Exactly.
Let's vote with our $

Personally, if only the hardback is available at 15$ I don't mind paying 15$ for e-book.
Paying 15$ for e-book when paperback is available for less, i'll go get the paperback if I really want the book.

[HarryT]

Originally Posted by charleski

But what's worse, we now have an industry that will transform to agency-pricing

Could you explain what "agency pricing" is, and why it's bad?

[LDBoblo]

Originally Posted by EowynCarter

Exactly.
Let's vote with our $

Personally, if only the hardback is available at 15$ I don't mind paying 15$ for e-book.
Paying 15$ for e-book when paperback is available for less, i'll go get the paperback if I really want the book.

I feel more or less the same way, though I'm more reluctant to pay the HB price for the ebook, which is basically an unfinished product.

If I have to take up the proofreading, design, and typesetting jobs that the publisher decided are no longer their problems, I do not want to spend the same amount of money for what is basically nothing but a revised manuscript.

[EowynCarter]

Originally Posted by LDBoblo

I feel more or less the same way, though I'm more reluctant to pay the HB price for the ebook, which is basically an unfinished product.

If I have to take up the proofreading, design, and typesetting jobs that the publisher decided are no longer their problems, I do not want to spend the same amount of money for what is basically nothing but a revised manuscript.

Quite true. Publishers need to pay more attention with proofreading / formating their e-books.

[kilron]

who's the bad guy here? amazon or macmillian? i'm sorry, but its amazon.

i think macmillian's stance against amazon is a very good thing and what apple has done is also a very good thing. apple is giving publishers a fair shake and a fair cut of profit from the sale of e-books which is something amazon pretty much never did. they have been undercutting everyone with the hopes of driving everyone else out of the market, at which point they would then drive back up prices. all the while they've been screwing publishers and authors. this is why i definitely won't buy a kindle. i like to save a few bucks here and there just like the next guy, but what i care about are books and books are created by authors and publishers, not amazon. so then if i buy an e-book from amazon for $10, why should amazon get $7 and the author and publisher get only $3? that's completely backwards.

at this point, the more publishers that do JUST like macmillian and turn their back on amazon, the better.

[kilron]

sorry... accidental double post...

[kilron]

here's an excellent blog post to explain what's going on with the whole Amazon-Macmillan fight:

Amazon, Macmillan: an outsider's guide to the fight.

i highly recommend giving it a read.

[Pardoz]

Originally Posted by Teddman

How is it that Barnes & Noble has e-books like The Eye of the World listed for $6.99?

Because they're selling them for less than half of Macmillan/Tor's suggested retail price of $15, meaning they're probably either taking a loss on them or selling them at cost, in an effort to draw custom to their store.

[Pardoz]

Originally Posted by fugazied

It makes me wonder if Apple uses the payment model that Macmillan wanted to move to with Amazon?

Short answer: Yes. In fact the plan was Apple's idea, and they've been flogging it to the Big Six publishing houses.

[Kali Yuga]

Originally Posted by mcl

Bandwidth: About 1MB or so per book...

Retailer's costs are part of the package, and that's going to figure into whether or not a specific price is sustainable. As to just the publishers, of course ebooks will increase the IT infrastructure costs. But my primary points are that 1) ebooks are not 60% cheaper to make and sell than paper books, and 2) price does not, nor should it have to be, inextricably set at, say, 5% above the cost to produce the item.

Originally Posted by mcl

Which is irrelevant. They get the vast bulk of their money from wholesale purchasing.

Wait, it's irrelevant that publishers don't make money on most of their titles to begin with? Or that their margins could be destroyed by ebooks?

Originally Posted by mcl

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.

The common assumption is that Amazon (and other retailers) were going to pressure publishers to lower the wholesale cost.

In addition, publishers are facing the erosion of the value (perceived and actual) of their product. In the short term this will lead to a cannibalization of higher-margin hardcover sales (you don't really think it costs 3x as much to make a hardcover as it does a paperback, do you?). In the long term it could lock them into an unsustainable price for years, regardless of the effects of inflation for example.

And again, I'm not definitively or categorically stating that this is a bad thing -- as lower prices could result in lower sales. The problem is it might not, or that the redistribution could favor the retailer far more than the publisher. While the retailers have valid reasons to want control over the price, the publishers also have a valid cause for concern, and for not rolling over and letting retailers gut the value of their product for the retailer's own ends.

[Hellmark]

Well, I'll not buy from Macmillan if they want $15 for their ebooks. Just is too much.

[EowynCarter]

Originally Posted by Hellmark

Well, I'll not buy from Macmillan if they want $15 for their ebooks. Just is too much.

Well that relative.
I mean, that's 10 Euros. Hardback in france are 20/30 Euros
Paperbacks are 7-10 Euros.
So 10 euros for an e-book, well.

[Pardoz]

Originally Posted by HarryT

Could you explain what "agency pricing" is, and why it's bad?

Short answer: it's the Net Book Agreement risen from the dead and coming to eat your braaaaaaains. Or at least your waaaaaaaallet.

Longer answer: Under the current model, (most) e-bookstores are retail outlets. They buy books from a wholesale source (could be the publisher, could be an intermediate distributor), generally paying around half the publisher's suggested retail price. Having bought the book, they then turn around and offer to sell it to the public for whatever price they like. One retailer may decide to sell the book at a low mark-up, counting on volume of sales to make a profit; another may opt to sell fewer books at a higher mark-up; a third may even decide to sell the books below cost, in order to attract custom to their store, hoping people who come for the $2 Steven King novel will add a bunch of other, higher-profit, items to their shopping cart.

Under an agency model the bookstore is no longer a retail outlet - they're an 'agent', paid to distribute the publisher's product. The publisher decides what the retail price is going to be, instructs its agents to sell the book for that price, then pays them a percentage of that price (in the agreement at hand 30%) for each book sold.

Basically it's a pissing match about who gets to control prices - Amazon or Macmillan. Whether or not it's a bad thing depends on how you feel about paying $20 for an electronic copy of a book that's been available for sale as a $7 paperback for ten years.

[EowynCarter]

Whether or not it's a bad thing depends on how you feel about paying $20 for an electronic copy of a book that's been available for sale as a $7 paperback for ten years.

I go buy the paperback.
I'm ready to pay 1 or 2 dollars more for the comfort e-book brings, but that's all.