Archive for the ‘amazon vs macmillan’ tag
Harper Collins Next Publisher to Renegotiate with Amazon? no comments
During News Corporation’s earnings call on Tuesday, Rupert Murdoch had the following to say when asked about his perspective on the controversy over Apple vs Amazon ebook pricing:
We don’t like the Amazon model of selling everything at $9.99. They don’t pay us that. They pay us the full wholesale price of $14 or whatever we charge. We think it really devalues books and it hurts all the retailers of the hard cover books. We are not against [inaudible] books. On the contrary we like them very much indeed. It is low cost to us and so on. But we want some room to maneuver in it. Amazon, sorry Apple in its agreement with us which has not been disclosed in detail does allow for a variety of slightly higher prices.
There will be prices very much less than the printed copies of books but still will not be fixed in a way that Amazon has been doing it. It appears that Amazon is now ready to sit down with us again and renegotiate pricing.
News Corporation owns Harper Collins. It’s probably just a matter of time before the other major publishers follow Macmillan’s lead after the events of the past weekend. It’s too early to judge what the full impact will be, but most likely we will have to pay more to read newly released titles on our ereaders.
You can read the full transcript of the News Corp earnings call at Seeking Alpha.
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Amazon Statement on Macmillan Books Removal no comments
Amazon just released a statement on the Kindle boards regarding their dispute with Macmillan.
The Amazon Kindle team says:
Dear Customers:
Macmillan, one of the "big six" publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.
Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!Thank you for being a customer.
This sounds as though you will end up having to pay more if you choose to read an ebook from Macmillan or one of its imprints.
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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.
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Amazon Stops Selling Macmillan’s Books no comments
The NYT is reporting that books published by Macmillan, which is one of the largest publishers in the U.S., have been disappeared from Amazon’s shelves. You can still purchase these titles from third party sellers through the Amazon marketplace.
Most likely Amazon has stopped selling the books of MacMillan and its various imprints as part of an ongoing dispute over ebook pricing. Publishers are not at all happy about Amazon’s policy of pricing most bestselling books at $9.99 in the Kindle store, which is cheaper than the paper versions. Publishers like Macmillan seem to think that there should be little or no price differentiation between pbooks and ebooks.
Bestsellers on the Apple iPad will apparently sell for $14.99, and perhaps Macmillan thinks that they can use whatever threat the iPad represents to the Kindle ereaders as leverage to get Amazon to change its pricing policy. It is hard to see how higher pricing on the iPad will be of much benefit to publishers though. I am going to make a wild guess here that for every ebook that a typical iPad owner will download and read the typical Kindle ereader owner probably reads around 20 or so. eBooks on the iPad will probably generate nothing close to the sales the Kindle store does, but Apple is letting the publishers control the prices. Prices at Amazon are not controlled by publishers, but rather by Amazon.
The publishing industry is in crisis, and many in the industry seem to regard ebooks as another threat against their business rather than as an opportunity to revitalize it. Some publishers seem to wish ebooks would just go away – which is not going to happen.
eBook sales, even if more profitable than hardcover sales once the initial production costs have been covered, would generate less overall revenue for publishers because the selling price is less. Publishers, like any other business have their fixed expenses which they need to cover by generating enough revenue. I would think that in time ebooks could make up for the lower overall revenue generated by their lower selling price with increased sales volume. Anecdotal evidence suggests, and studies are starting to confirm that when people buy ereaders they start reading more books; in many cases a lot more.
Reading as a pastime faces competition from an ever-growing array of increasingly sophisticated technologies that also vie for our leisure time such as HD television, DVD’s and video games, etc. Now the paper book industry has the chance to actually go digital and capitalize on the advantages (mainly conveniences: downloading vs going shopping, carrying many ebooks on one ereader, adjustable fonts, built-in dictionary and search, etc. Plus there is also the coolness factor of ereaders) that portable digital reading devices offer. As ereader sales grow over the next few years reading could actually become a popular pastime again.
Some publishers today seem unable or unwilling to adapt to the new technology, but hopefully this will change. In the meantime, it is we readers who are caught in the crossfire between Amazon and Macmillan.
History is littered with the corpses of companies and whole industries that, when faced with disruptive technology, dragged their feet in a futile attempt to slow down or stop the new tech rather than embracing it and trying to adapt to and grow with it. Publishers are not just purveyors of physical paper books; they are also the distributers and sellers of the stories, knowledge, ideas and content contained within those books. Perhaps they will need to concentrate less on the paper container and more on selling the actual content in order to survive and thrive in the future.
