Amazon vs Macmillan – More Details no comments
Macmillan’s CEO John Sargent published an open letter in PublishersLunch yesterday in which he makes it clear that the deletion of Macmillan’s books from Amazon was a direct result of the publisher trying to force the same terms on Amazon as were negotiated for the Apple iPad.
This past Thursday I met with Amazon in Seattle. I gave them our proposal for new terms of sale for e books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles. By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon. The books will continue to be available on Amazon.com through third parties.
The “deep windowing” of titles refers to the practice of delaying the release of a new title in ebook format, just as paperback releases are windowed or delayed until sometime after the hardcover release. Apparently if Amazon didn’t choose to accept Macmillan’s new terms Amazon (and Kindle owners) would be punished by having the release of Kindle editions of new titles significantly delayed.
Sargent goes on to say
I regret that we have reached this impasse. Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come.
It is those decades that concern me now, as I am sure they concern you. In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.
The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market.
If Amazon agreed to these terms most bestsellers would probably go up 50% to $14.99. The reference to Amazon making more money under these terms refers to the way in which Amazon currently buys titles wholesale and then sells them for $9.99, which is sometimes below their wholesale cost.
So are we going to see an antitrust lawsuit, or perhaps if more publishers join Macmillan will they be guilty of collusion to set prices? Or is this a case of Macmillan merely attempting legal retail price maintenance? Dearauthor has a great article about some of the legal ramifications of Macmillan’s attempt to set prices – be sure to check out the comments as well.
And what about authors? There are some interesting posts from their perspective. Check out the blogs of Charles Stross, John Scalzi, Bob Mayer and Cory Doctorow’s post at Boingboing.
