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The Fight That Fizzled This past weekend saw the heralding, hosting, and ending of a major boxing match all within three days. Gloves weren’t needed, though the participants certainly got their jabs in before one backed down. That one has not, however, conceded victory. The snarling began a couple of years ago when Amazon decided that e-books should be priced at $9.99. Low-cost books would help to sell their $359 Kindle. Publishers were unhappy, but there wasn’t much in the way of movement, at least not to those not invested in the fight, until just this past Friday, January 29, when Apple showed off its much anticipated iPad. One of the most important considerations about the iPad for publishers, and one that made them happy, was that Apple would allow them to set their own e-book prices with Apple taking 30 percent of the sales price. There are variations in the pricing, but most publishers want to ask between $12.99 and $14.99 for their e-books, a price that Amazon considers too high. So when one such publisher, Macmillan, took a hard stand Amazon retaliated in a big way. First, about Macmillan Publishers Ltd. They are a huge corporation. Huge. More than 7,000 people work for them in more than eighty countries. They publish “high-quality academic and scholarly, educational, fiction and non-fiction publishing in many forms; from STM [scientific, medical, and technical] and social science journals to serious non-fiction and literary fiction; from educational course materials and dictionaries to college textbooks, academic monographs and reference with supporting online resource sites” according to their About Us page. As for the other contender, well, let’s say that no one needs reminding how powerful Amazon has become. On Saturday, January 30, the New York Times reported that Amazon had pulled Macmillan books from its virtual shelves though you could still buy them from third parties. All of their books, regardless of format. Since Macmillan is one of the world’s largest publishers that meant a lot of books had disappeared. Most of the arguments for advocating that e-books should be lower than the paperbacks do not take into account (or conveniently forget) that the costs are the same for much of the publication process. There’s the costs of acquiring the manuscript; the author’s advance, the salaries and benefits of a publisher’s staff including editorial, design, promotion and publicity, marketing, sales, accounting, human resources, and all other required staff, overhead, and more. And of course all of it comes into play long before one book, regardless of the format, is available to the public. I guess the question is a matter of dollars. When do e-books become profitable enough to support their industry so it can keep producing them? At $9.99 like Amazon says? Or at $12.99-$14.99 as the publishers want? John Sargent of Macmillan posted a letter in Saturday’s Publishers Lunch, a trade industry journal, in which he addressed their pricing strategy. 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. It’s important to remember that while Amazon certainly has its costs as does any retail outfit, it does not have the cost of producing the product. So demanding that they determine what the publishers need to stay in business is a bit . . . um, out of their writ. And why does Amazon feel that in this battle it is their right to unilaterally withdraw books for sale? How is that supporting the readers who may wish to buy Wolf Hall or Sarah’s Key from them? No, this is not about readers but it is going to affect readers. Or at least it was. At 2:22 p.m. [PST] on Sunday, January 31, Amazon released a statement, conceding its position. 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. Amazon is right in one respect. Readers will decide for themselves if $14.99 is reasonable for an e-book. If not, prices will probably come down. And I can’t see readers flocking to self-published books simply because they are cheaper. What we have here is a stand-off that represents the difficulties technology can wreak on industries that have for decades operated on a workable if not entirely efficient system. The goal has always been to get books into the hands of readers. And that has not changed. The rest is up for grabs. What will happen? No one knows. This boxing match isn’t over yet. Upcoming Book Festivals: The Inland Empire in southern California is east of Los Angeles, a rather dry region that encompasses the city of Riverside. It may seem an odd place for Charles Dickens to land, but land he does—and in a way that I think he would approve. From February 5-7, the Riverside Dickens Festival, which takes place in the historic downtown area, will have as its theme “A Visit to the Old Curiosity Shop.” The three days will be filled with a continual array of entertainment including plays, musical performances, pageants, living history presentations, workshops, lectures, exhibits, and a street bazaar with free entertainment, vendors, and costumed characters. Unfortunately, Fezziwig’s Ball, a superb event, has sold out but tickets for the observation gallery are still available. What is still available is Pub Night, where attendees have the opportunity to join host Mr. Pickwick for dinner and a post-dinner performance. It’s truly a stunning weekend event and if you are anywhere near southern California I recommend you try to attend this. Also on February 5-7, 2010, Georgia will be hosting the Savannah Book Festival with Vince Flynn as the keynote speaker who will open the festival on Friday evening. Saturday is devoted to workshops, panel presentations, speakers, authors, and book signings from 10:00 am to 3:00 pm. In Telfair Square. Then on Saturday night, a “Celebrating Eudora Concert,” a ticketed event will be held. On Sunday, there is a special “Brunch Talk” with Julia Reed, author of Queen of the Turtle Derby and Other Southern Phenomena. The Pub House: Of Interest: This Week . . . Until next week, read well, read often and read on!
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