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Amazon vs. Macmillan, part 3: Amazon Responds

Sunday, January 31st, 2010

And now, breaking news from Amazon. As reported by Publishers Lunch, earlier this evening, January 31, 2010, the Amazon Kindle team posted the following to a forum on their site:

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!

Okay. Let’s take a look at this.

“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.”

This isn’t the whole story, though. As Macmillan’s CEO said yesterday in his open letter:

“Under the agency model, [Macmillan] 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. [Macmillan’s] 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.”

So yes, under the new model, Macmillan would charge between $12.99 and $14.99 when a new book first comes out. And over time, Macmillan would lower the price. This is dynamic pricing, and it’s something consumers are used to in retail, if not in publishing. For more on the pricing involved, please see Tobias Buckell’s terrific post.

Back to the Amazon response:

“We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles.”

Yes, this was expressed much in the same way as a toddler pitching a fit: making a big deal of noise and clamoring for attention.

“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.”

Um…of COURSE Macmillan has a monopoly over its own titles. They are Macmillan books. Um. Duh.

Tobias Buckell tweeted the following:

I love this AMZN quote: http://tr.im/Mjvr “Macmillan has a monopoly on their titles.”

I sense a whole new funny word meme on obvious/clumsy ways to use monopoly. “Tobias Buckell has a monopoly on the name Tobias Buckell”

Orange trees have a monopoly on their oranges

Lights have a monopoly on their light

Lakes have a monopoly on their water.

THE WORD ‘WAS’ HAS A MONOPOLY ON BEING!

Dudes, Amazon TOTALLY HAS A MONOPOLY ON KINDLES. This needs brought to their attention right away!

Okay, I really can’t do this any better. Bravo, Toby!

Back to Amazon…

“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.”

Sorry, I’m still busting a gut over Macmillan having a monopoly over its own titles.

“Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!”

And…as Toby mentioned, Amazon has a monopoly on Kindles! And here‘s one possible response to that.

As of right now (8:26 pm Eastern), Amazon has not yet put back the buy buttons on Macmillan titles, but I’m sure it’s coming.

So it looks like Amazon lost this round. And we didn’t get a chance to see how the other publishers would respond. Damn it, just as I got my popcorn ready…

Well, I’m sure this isn’t the last of the e-book pricing battle…or the e-book/publishing dilemma. Interesting times are ahead.

What would you like to see happen?



Amazon vs. Macmillan, part 2

Sunday, January 31st, 2010

Publishers Lunch sent out a terrific update late yesterday on the Amazon/Macmillan situation, called “The Battle Over the Agency Model Begins, As Amazon Pulls Macmillan Buy Buttons.” I can’t find a version online, so I’m going to be quoting from it.

“As originally reported last night and many readers know by now, sometime yesterday evening the buy buttons for apparently all of Macmillan’s books–including bestsellers and top releases, and Kindle editions–were removed from Amazon’s site. Macmillan books remain listed but can be bought only through third-party Marketplace sellers, while Macmillan Kindle titles all lead to pages that read, “We’re sorry. The Web address you entered is not a functioning page on our site.” It is the first shot across the purchasing bow in big publishers’ efforts to reset ebook pricing above the loss-leader $9.99 price point and retake control over that pricing by moving from the wholesale selling model to an agency selling model (first reported exclusively in Lunch Deluxe on January 19), at least for ebooks published simultaneously with new hardcover releases. Kindle customers further reported on Amazon forums that any Macmillan books that were on their “wish lists” disappeared from those lists with no explanation, as apparently did Macmillan sample chapters that had been downloaded previously.”

Dude. I thought it was bad merely having ALL formats of Macmillan books’ buy buttons removed — print versions as well as ebook version. But removing Macmillan books from customer wish lists? Removing previously downloaded chapters? Ouch. There’s Making A Point, and there’s Being A Jerk About It. In my humble opinion, Amazon swerved into Jerk territory by removing books from customers’ wish lists and removing those downloaded sample chapters.

“Macmillan has commented by way of a paid message to authors, illustrators and agents, reproduced below this story. Amazon has declined to comment thus far, either to the media or directly to their customers.”

We’ll see Macmillan’s response below. And hey, Amazon? Staying mum only hurts you. The whole “innocent until proven guilty” thing works in a courtroom, but not in the court of public opinion.

[Snipped section that talks about some of the affected books, and how those authors’ Amazon rankings are slipping while they are raising at B&N.com. Well, yeah, if you can’t currently buy those books at Amazon, the ranking is going to go down…just as it’s going to go up at etailers where you CAN buy those books.]

“We were able to reach a couple of agents for some of Macmillan’s current bestselling authors. Co-head of the William Morris Endeavor books department Eric Simonoff, whose clients include Douglas Preston (author of the January Tor release Impact), told us: “The current model of Amazon selling Kindle editions as a loss-leader is fair for publishers and authors in the short-term but as we have told Amazon we don’t believe it is sustainable in the long term. Something had to give to prevent the ongoing devaluation of e-books. Macmillan is the first to draw a line in the sand but we expect not the last.””

Author Tobias Buckell has a fabulous blog post about this very subject, which I highly recommend that everyone interested in this battle take 20 minutes to read. It’s long, and it’s worth it. The post is here: Why my books are no longer for sale via Amazon NOTE: If that link doesn’t work, try this one.

“Tina Bennett at Janklow & Nesbit, agent for Atul Gawande’s new bestseller, comments: “This development is very unfortunate for my author, but it’s also troubling for public health. The checklist approach that Gawande describes in his book is a major life-saving advance. It has been demonstrated to reduce harm to surgical patients by more than a third, but has yet to be widely adopted in US hospitals. To make THE CHECKLIST MANIFESTO unavailable for sale is the equivalent of blocking the distribution of a book announcing the discovery of penicillin.””

Hmm. A bit of hyperbole never hurt anyone, I suppose. Back to the matter at hand…

“Agent Robert Gottlieb at Trident Media Group offered this view: “The agents I know feel the $9.99 price for new releases is not good for the business. They want the publishers to work with all the retailers in a peaceful manner. I don’t think it is in any book retailer’s interest both short and long term not to do business with companies like Macmillan and at the same time Macmillan needs Amazon. What will Amazon do if S&S moves in this direction or Hachette? If consumers can’t get the books they want from Amazon they will move to other retail sites for what they want.””

I’m not convinced that Macmillan needs Amazon. Seems to me that there are plenty of other online retail outlets. Right now, Amazon is the strongest. But does that make Amazon mandatory to publishers rather than an option? I doubt it. I think this is the perception that Amazon has, and that many people — publishers, readers and authors — have bought into. I don’t think that makes this true.

And what if other publishers decide to push back on the e-book price cap? Well, it’s possible that Amazon wouldn’t sell books anymore. I hardly think that Amazon would go out of business. Publishers would take their ebooks elsewhere. (iBook, anyone?)

“One senior publishing executive called the move by Amazon “fairly draconian” but added that their company had not received any threats of similar action from Amazon. As we’ve said before–though consumers have not yet gotten the message–the agency model that publishers are trying to implement with Apple and across their customer base actually lowers the publishers’ proceeds from each ebook sale and gives more profit to sellers versus the current loss-leading model behind the $9.99 price point.”

According to John Sargent of Macmillan, from the time it took him to leave a meeting in Seattle with Amazon to return to NY late Friday afternoon, Amazon informed him that it was taking all Macmillan books off of Amazon. So Macmillan didn’t receive any threat, either. Amazon just went and did it. For more on the pricing breakdown, I again refer you to Tobias Buckell’s article, linked above.

“Another senior publishing executive said that “Amazon may ’spin’ that the consumer is at the heart of the decision, but really their goal is a monopoly position in books. Publishers don’t want a monopoly – they want consumers to have choice through a number of partners and channels. They want digital pricing which allows bricks and mortar retailers to survive and thrive alongside a growing digital market.” That person added, “This reaction proves what Amazon’s true motives are. It is a signal to any other publishers not to change the model and weaken Amazon’s pathway to a monopoly. I hope authors, agents and publishers see what these motives are and stand by Macmillan.””

Yeah, I don’t buy the “Customer is at the heart of the decision” argument for a second. Guys, they took away books from readers’ wish lists. They took away previously downloaded content. How is this being considerate of the consumer? How is taking away books that consumers want to purchase considerate of the consumer? Simple: it’s not.

“Among remarks from Macmillan authors posting online, perhaps one of the most curious came from Sherrilyn Kenyon, who posted to Facebook and then later in the day removed her entry, which read in part: “All of you asking why you can’t find my books on Amazon Kindle? It seems that Amazon is the one to blame. They are in a disagreement with my publisher and to prove a point, they have removed Macmillan books from their Kindles.

“You know, as a Kindle owner, I have problems with this. They’re not cheap and I bought it so that I could download the books I wanted to read. I don’t like a store taking something from me like this without warning. It’s just like when Amazon removed books from my Kindle that I’d paid for because they didn’t have permission to sell them.””

I don’t like a store taking something away from me without warning, either. Of course, the store has the right to do that. And we have the right to shop elsewhere.

“In comments over at John Scalzi’s blog, bestselling Simon & Schuster author Scott Westerfeld writes, “The real power we authors have is removing links to Amazon from our websites and such…. Random blackouts do not make customers happy.””

Damn straight.

“Amazon’s own forums have been quite busy with postings today, with customers expressing a wide range of everything from support to dismay with the etailer’s move. The most damaging aspect of their action in the short-term may be the removal of Kindle “wish lists” and sample chapters. For some posters that action has echoes of the incident last summer when Amazon deleted copies of certain books from Kindle owner’s libraries, in violation of the site’s own terms of use. As one person writes, “we do feel vulnerable, even if Amazon is right to fight. Wishlists disappeared, with no backup of what the titles were. Sample books we chose to download lead to links that say Error. It reminds us that we do not have control over the situation, even if we backup, since what is offered today may not be available tomorrow.” (Amazon apologized for that earlier incident, provided refunds to customers, and eventually settled a customer lawsuit.)”

That’s right. The consumer is **not** in control here; rather, the consumer is caught in the crossfire. And that’s a terrible place to be.

“While many customers support Amazon’s efforts to provide low prices, one “open letter” suggests that the company let customers decide for themselves what is the right price. “Here’s a thought Jeff: You list them and I will decide if I want to buy them or not. How’s that sound? I agree with you they should not cost more than $10, but I can enforce that with my pocketbook. I don’t need you to make a big hairy freakin deal out of it on my behalf and I certainly don’t need you to limit my choices based on this principle.””

Well put indeed.

Okay, and here is John Sargent’s response, from Macmillan, which also appears in full at Publishers Lunch in the Jan. 30, 2010 edition:

“To: All Macmillan authors/illustrators and the literary agent community
Editors’ note: This message ran as a paid advertisement in a special Saturday edition of Publishers Lunch

“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.

“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.

“Amazon and Macmillan both want a healthy and vibrant future for books. We clearly do not agree on how to get there. Meanwhile, the action they chose to take last night clearly defines the importance they attribute to their view. We hold our view equally strongly. I hope you agree with us.

“You are a vast and wonderful crew. It is impossible to reach you all in the very limited timeframe we are working under, so I have sent this message in unorthodox form. I hope it reaches you all, and quickly. Monday morning I will fully brief all of our editors, and they will be able to answer your questions. I hope to speak to many of you over the coming days.

“Thanks for all the support you have shown in the last few hours; it is much appreciated.

All best,
John”

So there you go: Macmillan’s side of the story.

How about it, Amazon? What do you have to say for yourself? When do we get to read an open letter from Jeff Bezos? Or was that letter already removed from our wish lists?



Who’s the bully here?

Saturday, January 30th, 2010

So you guys may not have heard the latest publishing kerfuffle, which was reported here: Amazon Pulls Macmillan Books Over E-Book Price Disagreement

Cory Doctorow commented pretty extensively on what this means, here: Amazon and Macmillan go to war: readers and writers are the civilian casualties

John Scalzi comments, here:
A Quick Note On eBook Pricing and Amazon Hijinx

Writers and readers discuss this over at Making Light: http://nielsenhayden.com/makinglight/archives/012148.html#012148

And author Jay Lake gives a very personal perspective on what this is doing to Macmillan authors, here: Bug off, Bezos. And take your damned bookstore with you.

Over my first cup of caffeine, I’ve been thinking about this. And here’s what I think:

Amazon is messing around with authors and consumers. And that’s not cool.

Sure, I get that Amazon and Macmillan — one of the publishers who signed onto Apple’s iBook, which allows publishers to set their own prices — are negotiating ebook prices. They’re allowed to do that. Macmillan, the content provider, is allowed to tell Amazon what price it should set Macmillan ebooks. Amazon, the hardware provider, is allowed to tell Macmillan “no way.” They can do this. They can fight it out. This is business. Got it.

But by Amazon removing all Macmillan books (that is, not allowing the titles to be purchased via Amazon) — not just the ebooks but print versions as well — Amazon is acting like a schoolyard bully.

Now, I don’t like that Macmillan is demanding that Amazon raise its ebook prices. I think it’s ridiculous for an ebook to cost the same as a print-version trade paperback. But you know what? I bet consumers would come to that **same** conclusion and either (A) buy their ebook editions elsewhere or, if they can’t do that, (B) they would buy the print edition, or even (C) take it out of the library. And if none of those options worked and consumers chose (D) not buying the ebook at all, Macmillan would lower the price to something more reasonable.

But there’s no excuse for Amazon to remove all Macmillan books, print and electronic editions. That’s messing around with authors and readers. This impacts the livelihoods of many of my author friends. And this shows readers that Amazon is not concerned about the consumer.

Save the bullying tactics for the boardroom. Huge BOO to Amazon.