I’ve spent a good part of the weekend following the skirmish between Amazon and Macmillan. To sum it up, Macmillan wants more control over the price of eBooks at Amazon, essentially they want the “agency model” which has been worked out with iBooks/Apple.
Amazon who is selling eBooks at a loss, to support Kindle, says no.
Macmillan counters that they would then window the eBook editions of new releases i.e. issue the eBook copy later (I’m unsure if that would be windowed just at Amazon, simultaneously being released for other retailers.)
Amazon proceeded to remove all copies of Macmillan’s books from their site – this being the digital realm this means the “buy” button was removed for both print and Kindle editions of Macmillan titles.
DOH! Out of the negotiation and into the world. It’s an aggressive move. There are six major trade publishers, and Macmillian is one of them, so you have to figure they represent a good percentage of the books sold at Amazon. And I’d further extrapolate that this move both has all the other 5 trade publishers talking and it probably pissed off a number of Amazon customers.
Twitter was tweeting up a storm, and more influential bloggers than I (this is an extraordinary, endlessly, long list) blogged about it and the populace, in and out of the industry, commented on those blogs. It was hard to keep up I tell ya, much less leap into the fray.
Today, Amazon released a statement saying ultimately they will have to capitulate.
I don’t know who really wins the round. Both sides seemed intent on flexing their biggest muscles.
On one hand, does the publisher have the right to dictate a minimum cost for books being sold to readers (consumers) by a third party?
On the other hand, does a single retailer have the right to devalue an emerging product because at the moment they have an enormous market share on hardware that supports that product?
I guess the essential question I’m thinking about is what is an eBook worth in relation to the printed book?
If you were to create a pie chart of the costs in producing a book, the costs associated with printing may end up equaling the new costs associated with digital conversions. The bigger slices of pie are reserved for the creation of the content in any form. In no particular order, these pieces would constitute the costs associated with advances, royalties, editing, marketing, publicity, and sales.
I don’t know what the right cost will be for an eBook but the Verso Advertising study showed 37% of the eBook reading population have not made up their minds. In the study 28% are willing to pay over $20 and 27% won’t entertain prices above $9.99. That tells me the sweet spot is above $9.99.
Publishing has never had very big margins. And sitting from my displaced seat within book publishing, its not like the publishers are currently rolling naked in big piles of cash. A little bit of profit would be nice for everyone working in the book business.