How to use this Page

Amazon totally muffed this one. It was a PR fail of major proportions. I actually surprised more people aren't upset about it, but then I was a bookseller for years and know many authors, so I'm hearing about it more. These authors? They're maaad.

I don't get it, either. Amazon is very seductive in some ways, but I am still an ardent fan of my local indie. I don't buy books for my school libraries from someone's premade list, I read the books and reviews, and I certainly don't make a decision about what to read based upon price. And I am going with Apple on the iPad when that comes out!

I buy ebooks for the Kindle app on my iPhone so I have something to read on the subway or when I'm in a waiting room. I like that the eBooks on Amazon are really cheap ($4-$8), because I don't want to pay a lot for text only. I'm willing to spend more on physical books that I can hold, flip pages, and enjoy the cover art work, etc. So, I agree with Amazon that eBooks should be priced lower than physical books, because the reading experience is totally different. I would argue that people ARE buying eBooks based on price and perhaps forgoing certain titles because they are over priced.

Perhaps, when full color eBooks become available for the iPad (or other eReaders) and make the eReading experience more like reading a physical book, the higher prices proposed by MacMillan will make more sense to me.

I agree it's curious way of looking at reading habits. I do think, though, that if one has a budget for buying books and can buy two instead of one... well... that makes sense to me. I don't think the culture of e-books will eliminate favorite authors or love of specific titles (and it hasn't in music), but I am also sure there will be some low-priced big sellers largely because of the low risk involved to the buyer.

It's been interesting to watch this fight since for Amazon it's about price and for publishers it's about value. Authors really better be paying attention, though, because this is all about the changing landscape and not about standing up for authors making more money....

It has always been true that when books are cheaper, more of them sell. That is not what is at stake at this moment. This is a historic juncture. EBook sales levels during the next year are irrelevant compared to the need for publishers to take control over the supply chain right now.

That is, the issue from the publishing industry's standpoint right now isn't about short-term profits or sales levels, but about long-term strategy.

History shows that when retailers gain control over manufacturers, manufacturers lose control of their profitability longer term. This is why publishers must win the fight this time.

What is striking is that Apple has persuaded publishers that an eBook sale is not theoretically analogous--from a supply-chain perspective--to a print-book sale. This is because the act of digitally downloading a book-file can be analyzed as coming directly from publisher to reader. Therefore, the company we're used to thinking of as a "retailer" (Amazon.com) isn't actually buying eBooks from the publisher and selling to the end-reader. Rather, the so-called eBook "retailer" Amazon.com is merely a sales representative, promoting the eBook on behalf of the publisher-seller--which publisher is now the true retailer!

So, the companies now being called "retailers" (Amazon.com, BN.com)-- according to Apple's analysis -- should instead now be called an "agent" and should merely be paid by getting a cut of the price charged by the publisher to the end-reader. Apple has offered to act in this way, now that it's appearing on the scene as a purveyor of books. It is stating that it is a sales agent.

And, since the publisher in this analysis has now been renamed as also being the true "retailer" -- the publisher should be allowed to choose what price to sell at.

I think this is a correct analysis. Amazon isn't a "retailer" if it's merely providing a marketing service to the publisher.

So it should be treated by publishers as being merely a sales agent and should get a percentage of the price-point selected by the true "retailer", which happens in this case to be the publisher itself.

In the long run, it is much better for the publisher to retain control over the supply chain, since the publisher's interests are much more closely aligned with authors and authors' are the ones whose interests are most jeopardized by excessive power in the hands of a small number of gigantic retailers. Apple's approach will tend to act against concentration and centralization. It will favor small presses for instance, and self-publishers. This whole fight is very good news for the authors.

No, but a price difference may be the difference between me buying a book or just taking it out of the library. There are many books that I would pay any (reasonable) amount to purchase, because I really want that book and I want to be able to re-read it and reference and have it on hand. (And publishers know this: do you have any idea how flipping expensive cookbooks have gotten? I just bought a not terribly long, not terribly special one for $40!)

There are many other books that I don't care so much about, that I'm happy to just read once and discard. I would pay for the convenience of having it zapped right into my fingertips... but only so much. After a certain dollar amount, I'll take the minimal amount of effort it takes to get it from the library. But this is the type of book I'd be more likely to buy in electronic format anyway. The first type of book, that I want to have on hand for always, I'd probably only buy a paper version.

Andy, do you think a case could or should be made that booksellers of paper books could be viewed as "agents," supplying marketing, sales and handling of items whose price is set by their publishers?

I also was struck by the line "Macmillan has a monopoly over their own titles."

Macmillan, the monopolist. Nice try!

Andy L., really appreciated your post. I think that the Apple position on the online bookseller as an "agent," rather than a "retailer," makes sense, given a very different structure of overhead from physical sales. Consider, for example, that a seller of physical books owns the books they sell ... They calculate a number they want to try to move, buy that quantity, etc. ... Whereas Amazon buys the right to sell the book but (in the negotiations I've heard about so far) doesn't pre-purchase a quantity. A copy zaps into existence as needed. This means that you are, in a sense, buying the book from the publisher through the storefront, rather than buying something the store owns. The chunk of money Amazon gets for each sale is basically a transit fee. Correct me if anyone has heard differently about how this is working!

It's analogous to music downloads ... You can buy albums on the Naxos label (a big discount Classical music label) on Amazon for $7.99 ... or you can go to Naxos's own website, classicsonline.com, where they sell their own albums for $6.99. Or, in fact, you can join their on-line library for a subscription fee and get unlimited access to any of their albums, like joining a private library. The electronic format allows for a considerable flexibility in the model of consumption -- and ebooks could follow any of these routes.

So what, to get back to Andy's point, does that extra dollar you pay for the download at Amazon buy you ($7.99 vs. $6.99)? The central location for purchase, really, and the means for comparison between albums. Naxos's own website also sells albums by other independent Classical and Jazz labels -- but they don't have anything like the scope of Amazon's stock, because of licensing agreements. So one goes to Amazon for the ease of choice. You pay for the luxury of selection. Publishers could take a similar stance, and offer ebooks without the middle-man ... Just one way things could go.

No one knows really what model will prevail in the ebook world when everything shakes down ... For the sake of the independent bookseller, I hope that some develop web portals for ebook purchases somehow -- because I'd much rather support my local bookstore, obv. Also, if print-on-demand catches on, it could actually to some extent replicate the ebook model for physical books (because there's no warehousing, no need for the store to buy in advance, etc.). All of these things could help us resist the danger of the mega-retailer engaging in the kind of price-squeezing that other industries have been suffering from since the rise of WalMart and Target -- where buyers will say, "If you want your product sold by us, you need to accept our terms, and you need to incrementally reduce your price every year." Suppliers -- in this case, publishers, and by extension, authors -- end up involved in those tricky questions of whether mass, bulk sales outweigh the slashed prices per unit.

Those rock-bottom prices are good for the consumer, I'm afraid, but damage the industry as a whole. (In the case of other industries, with a much more devastating effect on American industry.)

Anyway, we should all keep our eyes open, because the terms are shifting very quickly, and it doesn't seem like anyone knows exactly how things will fall out in even a few months' time.

mta

John Scalzi's dressing-down of Amazon is definitely worth more than $9.99.

Interesting question, Roger, about whether bookstores should ALSO be considered as merely sales agents. That side is a bit harder to argue since booksellers do have capital tied up in some portion of their on-hand inventories, and are legally liable to pay for the portion they don't actually own outright. (Though it's true booksellers may return overstock for credit...)

I would say, in general, that all players in a market will constantly strive to position themselves for maximum advantage in relation to the other players. That's capitalism. So, there can certainly be an argument made for any set of definitions--and the ones you in particular find yourself favoring, as a market participant will generally be those rules that act in your favor.

As to whose definitions will make it into common practice, and ultimately survive court challenges....this may depend on public pressure, back-room positioning, and of course legal precedent as all interpret it, on an ongoing basis.

My favorite quote on the subject of capitalist market organization is from Fernand Braudel:

"In the course of this book, the reader will have noticed that reference is often made to the underlying notion of gambling, risk-taking, cheating; the rule of the game was to invent a counter-game, to oppose the regular mechanisms and instruments of the market, in order to make it work differently—if not in the opposite direction. It might be fun to try and write the history of capitalism within the parameters of a special version of games theory. But the apparent simplicity of the word game (gaming, gambling) would quickly turn out to cover a multitude of different and contradictory realities—forward gambling, playing by the rules, legitimate gambling, reverse gambling, playing with loaded dice. It would be far from easy to make these fit a single theory.”—Fernand Braudel, The Wheels of Commerce: Civilization & Capitalism 15th-18th Century, Volume 2 (New York: Harper & Row, 1982): 578.

I especially appreciate Braudel's invocation of "playing with loaded dice"....

As to the question of storefront indie booksellers' positioning in the eBook marketplace, the American Booksellers Association is working with publishers to ensure indies can sell eBooks off of their websites. Apple is using the open-source ePub format for iPad, which means that people who buy eBooks for indie booksellers' websites would be able to read them on iPad. It's true indie booksellers would be competing with Apple to sell those books. But this isn't a problem if indie booksellers engage in some form of book-review based suggestive selling using expert advice, or, joint promotion projects with authors that take place on the indie bookstores' websites (or in person).

I think that as long as people own e-reading devices that use open-source digital files, there are ways for a variety of middlemen to participate in the promotion and distribution of eBooks. What is bad is the Kindle model of proprietary digital file formats that only can be read on proprietary hardware devices.

I very much enjoyed Scalzi's post - thanks for the link! I believe Amazon behaved like a spoiled child in this affair, and that Macmillan behaved professionally, but what I find most disturbing about the situation is that, while most of us involved in some way or another in the world of publishing may feel this way, Amazon's customers do not. In reading the discussion board comments, I kept seeing posts that praised Amazon for protecting low pricing for its customers. Writers of those posts vowed to never buy another e-book if it's price topped $9.99, no matter what it was.

I fear that one result of Amazon's tantrum will be increased pirating of books - it's quite easy to translate text into Amazon's format to read on a Kindle. Sadly, Kindle owners may well settle for something other than the book they wanted to buy if the price is higher than they feel they had been promised when they bought their Kindle - but that doesn't mean they won't search for the book elsewhere online and illegally download it if they feel the publisher has set too high a price for a legitimate sale - a sad outgrowth of the "you owe me!" attitude all too prevalent these days.

I own a Kindle and thoroughly enjoy it as an easy way to carry a library with me, but while Amazon may exclusively govern sales of their Kindles, they do not exclusively govern sales of e-books that I can read on my Kindle. I don't like encouraging tantrums in young businesses any more than in young children so, unlike most Kindle customers, I'll be paying the market price, and buying books that Amazon doesn't want to sell me from other sources.

I am afraid Elaine Marie Alphin is right. In an effort to build a market for their product--the Kindle-- Amazon may have permanently destroyed the market for ebooks. It's pretty clear from readers forums that Amazon has successfully convinced readers that books should be cheaper than dirt and anything else is price gouging. Couple this with a feeling that it can't be stealing if you aren't carrying a physical object out of a store, and I am afraid it will be very difficult for publishers to make money on ebooks if they don't move fast, fast, fast, to make markets. Times are hard and Nimble they have never been.

I checked out a lot of audiobooks when I lived in Seattle, due to the commute. Then the SPL started lending e-versions of the audiobooks, but I couldn't play them on my iPod, which rendered them useless--you had to have a Zune, of all things, to be able to use them on a mobile device.

Your thoughts here pretty much mirror my thoughts about the audiobook problem. I preferred to just reserve the physical cds (which were harder and harder to find because they were investing all their audio money in these books that no one could access conveniently--who has a Zune?).

I'm not sure that publishers *should* open up the library licensing for multiple checkouts, though--unless they were to charge similarly to the way that publishers charge libraries for subscriptions to periodicals, depending on patronage size. That way, publishers wouldn't feel like they just gave away 1000 or more possible sales because those who would normally have bought the book instead of waiting in line at the library could now get it for free. That's not sustainable for publishers.

One librarian quoted in the article said she supported a per-read payment system for ebooks but publishers don't think this works for them. (Librarians aren't the only ones trying to fit new models into old molds, or however that metaphor should go.)

"libraries are trying too hard to fit ebooks into a circulation model designed for physical media." Bingo. This applies to more than just ebooks, I suspect.

Exactly. I think something like that would work, though we'd of course have to implement some sort of system to track it. (I imagine libraries already have plenty of circ tools at their disposal that would show such things.)

This whole ebook thing doesn't work so well with the classics. If a library has several editions of a translated classic, I like to be able to flip through each one to figure out which translation I want to read. And sometimes my choice is based on something that's more tangible than anything -- HC vs. PB, type size, font, or a pretty front cover.

And ... how high exactly DO your eyebrows go, Roger? Didn't raising them that high hurt a little?

Melinda--until the world decides to conform to my expectations, I am content to live in pain. It's the R.C. in me.

Well, let's remember that $15 is more to some people than it is to others. Not everyone who wants to read the latest Dan Brown can whip out his wallet and buy it at a discounted price. The nice thing about having more money than the next guy, I guess, is that it makes all kinds of lines disappear. But libraries have to think of all their patrons, not just the ones who wonder why they can't get the library ebook on their iPods or Kindles. I agree that providing audio ebooks only to "Zunes" users is pretty silly (who has even heard of a Zune, much less bought one?) but my heart goes out to the library directors trying to stay ahead of the curve on technology and still serve the patron who thinks $15 could buy the workbook his son's teacher is asking him to buy for school. That guy stands in line behind 1000 other people (that's the wait list for a copy of The Lost Symbol at Seattle Public Library) and would be happy if the line for the ebook were shorter even if the format were less than state of the art, no?

From a librarian. The whole thing about having to wait in line for an ebook it not the libraries fault. That's a licensing requirement from the publisher. Why on earth would we want to enforce that? It's a total drag.


We have an okay ebook system. The better on out there, mentioned in the article, is OverDrive. My memories of our committee discussion of OverDrive was that our discounted offer for the platform--just the software platform--was $20,000 a year. Books, about $30 each...per year. To start a collection of 1000 titles then--which is a dinky little collection--would cost $50,000 a year, which is the entire budget of the Main Library Children's Room here, or a medium-sized branch in my library system.

So the major difficultly is that we have to find something to DROP in order to make it fit. Can we scale back our print collection that significantly?

Now, the same thing happened when we had to start acquiring DVDs on top of our Video budget. Or squeeze in online databases along with print magazines. But our budgets aren't going up these days, they're going down. When we start adding formats, there's an overlap with the "old" format as both are still in high demand. Where do we find the money? I ask myself this every day at work.

I actually love the idea of per use costs for ebooks...when it's no longer used, we'll stop paying for it and drop the title. That's a whole different model of acquisition for libraries, and has significantly lower back-end costs... no weeding! No Nicholson Baker skulking in our discard bins! Woo hoo!

I understand why the publishing industry has concerns. I just hope we can move to a different pricing model. I just don't see library circulation of ebooks cutting into the ebook market anymore that library circulation of print books cuts into the print book market. It cuts--but we know by how much. When you check out an ebook from the library, you only get it for the loan period, and then it disappears (another licensing requirment). I know that that compels many library users to go buy a print copy when they have to return their print book before they've finished--won't it with ebooks too?