From Usenet:
QuoteTo: All Macmillan authors/illustrators and the literary agent community
From: John Sargent
Re: Missing books on Amazon.com
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.
--end quote--
The post goes on for several paragraphs, explaining why they're right and
Amazon is wrong. The key point is that until further notice none of the
MacMillan imprints, including Tor, will be directly available from Amazon,
either dead tree or ebook.
lolz.
Too bad for MacMillan but when you go to a party and tell them "Agree to our terms or don't sell our books" and they answer "fine, so we won't sell your book" You're screwed.
Summary of the whole thing:
http://whatever.scalzi.com/2010/02/01/all-the-many-ways-amazon-so-very-failed-the-weekend/
With respect, a better summary of the whole thing:
http://arstechnica.com/tech-policy/news/2010/01/books-disappear-from-amazon-as-old-media-battles-new-retail.ars
Boo on Amazon's part to once again backing down.
McMillan's position is kind of hard to grasp, and I wonder whether they understand the nature of the medium.
First of all, as a general matter, if Amazon wants to drive adaptation and volume by taking a loss on themselves, smart publishers should be thrilled. Second, I think its likely that the Amazon recommended pricing (which is really just that) has driven volume increases and will continue to do so. I know for myself that books that I might have wavered or waited on I have purchased for kindle b/c it is "just" 9.99 so why not.
The only logical explanation is that McMillian - which makes a lot of "big" books - is concerned about cannibalization of its hardcover sales which fat profit margins and is trying to apply the brakes to digital distro take up. That would be understandable were it not for the fact that the other industries to attempt such a strategy when confronted by an emerging digital distro model (eg music, movies) are already classic business case studies for self-inflicted damage through luddite incompetence.
The hardware is still a bit rudimentary but the technology is improving quickly - and practically speaking, the business model for distributing textual information that operates by cutting down trees, processing them into paper, stamping ink on them, gluing them together with chemical and composites, and then shlepping them out to thousands of retail stores and wharehouses in heavy pallets doesn't make much sense in the long run. As a publisher, you can either kid yourself about people's emotional attachment to ink and mildew and get run over by technological change, or you can try to get ahead of the curve.
With respect though I can somewhat understand their point of view. I gather that the physical cost of printing a book is almost negligible when compared to the cover price. So when Amazon lists a book for $9.99 that lower price is almost certainly coming out of the publisher's pocket.
Now that being said, why MacMillan should care if Amazon choses to sell the e-books at a loss baffles me.
Quote from: Barrister on February 01, 2010, 06:12:31 PMNow that being said, why MacMillan should care if Amazon choses to sell the e-books at a loss baffles me.
Probably because they expect that Amazon are trying to get to a position where they can sell the e-books at that price without taking a loss by forcing MacMillan to lower their sale price to Amazon. I'm guessing that they're planning to grab a dominant market share by selling at low cost and at high volume.
Meanwhile MacMillan's interest is to get the public to accept a higher price point as being "natural" so they can continue to reap the benefits. Perhaps that's a foolish battle to fight, but if they want to fight it the time to do so is now, not later when Amazon and the low price point is more solidly established.
I can't claim to have studied this in depth, but it seems to me that Amazon's original strength is their ability to sell and distribute physical books in a way that's cheaper than traditional bookstores. I don't reallys see how that strength transfers that much to e-books.
If I was in charge of a big publisher, my strategy would probably be as follows:
1. Try to gain control of the distribution of my e-books in a profitable way. There's not much of a reason why the big publishers can't sell their e-books to consumers directly and cut out the middle man. I mean, if you want to buy the e-books MacMillan publishes it's not that big a deal whether you go to this or that web-site. So if I were MacMillan I'd definitely aim to set up my own site for that sort of thing.
2. To set the "natural" price for e-books in the market as high as possible. If Amazon is fucking with that, they threaten my long term profitability. I think that as e-books become more accepted, the publishers hands have the potential to grow stronger compared to the distributors. I mean, they own the IP that people want, right?
So there could be decent reasons for this decision.
I have been following this battle in Charles Stross' blog
http://www.antipope.org/charlie/blog-static/
The key aspect seems to be, Macmillan is not fighting 9,99$ because they want higher prices. Macmillan wants a wider range of prices from 5,99$ to 14,99$ but the really vital point is, Macmillan wants to get back the power to decide the price of its own books.
Until now, Amazon was too powerful, but Apple has changed the rules overnight with the i-Pad...
Quote from: Alatriste on February 02, 2010, 02:10:59 AM
I have been following this battle in Charles Stross' blog
http://www.antipope.org/charlie/blog-static/
The key aspect seems to be, Macmillan is not fighting 9,99$ because they want higher prices. Macmillan wants a wider range of prices from 5,99$ to 14,99$ but the really vital point is, Macmillan wants to get back the power to decide the price of its own books.
Until now, Amazon was too powerful, but Apple has changed the rules overnight with the i-Pad...
That makes sense.
Quote from: Barrister on February 01, 2010, 06:12:31 PM
I gather that the physical cost of printing a book is almost negligible when compared to the cover price. So when Amazon lists a book for $9.99 that lower price is almost certainly coming out of the publisher's pocket.
No, not negligible at all, though the margins for the publisher are small (and, given that the seller can remainder unsold copies at any time), not available to the publisher until the distributor actually sells the volume. Publishers should be jumping all over e-distributing, because it solves almost all of their cash-flow problems. The actual cost of writing, editing, and layout is small compared to the cost of printing, binding, and distributing.
Quote from: Alatriste on February 02, 2010, 02:10:59 AM
The key aspect seems to be, Macmillan is not fighting 9,99$ because they want higher prices. Macmillan wants a wider range of prices from 5,99$ to 14,99$ but the really vital point is, Macmillan wants to get back the power to decide the price of its own books.
Not "get back," but "get" the power to determine the prices of its "own" books. Retailers have always, in the past, had the power to decide what the book sold for, and McMillan only controlled what the distributor/retailer paid McMillan for it.
McMillan is interested in maximizing per-unit profit, not maximizing market share. They are being short-sighted about this.
I suspect other publishers are going to punish McMillan pretty heavily for this, and authors are going to go where the volume is high, because they get a per-book royalty, not a piece of the action. In a sense, it is good to see McMillan volunteering to be the tethered goat, rather than leaving that role to chance.
That's completely different over here. This side of the sea usually publishers decide the price of books, not retailers, at least on the continent. I don't know what British publishers do.
Stross backs Macmillan against Amazon (and Google), tough, because Amazon leaves him a tiny per-book royalty, and volume is far too low to compensate. I don't know enough to judge who's right, honestly.
Quote from: Jacob on February 02, 2010, 01:50:24 AM
I can't claim to have studied this in depth, but it seems to me that Amazon's original strength is their ability to sell and distribute physical books in a way that's cheaper than traditional bookstores. I don't reallys see how that strength transfers that much to e-books.
Inertia. People are used to buying books on Amazon.
Quote from: Alatriste on February 02, 2010, 08:05:55 AM
That's completely different over here. This side of the sea usually publishers decide the price of books, not retailers, at least on the continent.
That used to be the case here in the US, but pretty much all the retail chains discount in the US now.
QuoteStross backs Macmillan against Amazon (and Google), tough, because Amazon leaves him a tiny per-book royalty, and volume is far too low to compensate. I don't know enough to judge who's right, honestly.
I fail to understand why Amazon would be paying him any royalties. What books of his have been published by Amazon? I didn't even know Amazon published books.
Quote from: Iormlund on February 02, 2010, 08:21:41 AM
Quote from: Jacob on February 02, 2010, 01:50:24 AM
I can't claim to have studied this in depth, but it seems to me that Amazon's original strength is their ability to sell and distribute physical books in a way that's cheaper than traditional bookstores. I don't reallys see how that strength transfers that much to e-books.
Inertia. People are used to buying books on Amazon.
Also, Amazon has the books, has the reviews, has the customer feedback, has the methodology for collecting money, has high consumer satisfaction and confidence, and has the relationships with all of the publishers. I really don't see any strength anyone could have in distributing e-publishing that Amazon lacks.
Quote from: Jacob on February 02, 2010, 01:50:24 AM
I can't claim to have studied this in depth, but it seems to me that Amazon's original strength is their ability to sell and distribute physical books in a way that's cheaper than traditional bookstores. I don't reallys see how that strength transfers that much to e-books.
They offer the most titles, and they still (for the time being) control the most popular hardware platform.
I don't think that Amazon conceives of their principal capability as being in warehouse operation and shipping; but rather as optimizing customer experience. To the extent the latter can be achieved by making shipping faster and cheaper, they invest in that. To the extent it can be achieved by building a superior digital distribution platform they invest in that.
Quote from: grumbler on February 02, 2010, 07:43:05 AM
Quote from: Barrister on February 01, 2010, 06:12:31 PM
I gather that the physical cost of printing a book is almost negligible when compared to the cover price. So when Amazon lists a book for $9.99 that lower price is almost certainly coming out of the publisher's pocket.
No, not negligible at all, though the margins for the publisher are small (and, given that the seller can remainder unsold copies at any time), not available to the publisher until the distributor actually sells the volume. Publishers should be jumping all over e-distributing, because it solves almost all of their cash-flow problems. The actual cost of writing, editing, and layout is small compared to the cost of printing, binding, and distributing.
I tried to find hard numbers (but couldn't) but I still have my doubts grumbler. I know I've read several times that the cost of physically printing and shipping a book are very marginal in modern publishing, and that the savings to the publisher of e-books are quite low. The significant costs aren't editing and layout, but rather marketing (and royalties to the few mega-authors who sell so many books).
Edit: I understand you are involved in a publishing project yourself, and from what I know of it I you're emphasizing high-quality printing and productin. That, plus the niche nature of your product, probably does mean that the costs of physical production are substantial. However I doubt the economics are at all similar to the latest Dan Brown or JK Rowling blockbuster.
Quote from: Barrister on February 02, 2010, 12:32:53 PM
I tried to find hard numbers (but couldn't) but I still have my doubts grumbler. I know I've read several times that the cost of physically printing and shipping a book are very marginal in modern publishing, and that the savings to the publisher of e-books are quite low. The significant costs aren't editing and layout, but rather marketing (and royalties to the few mega-authors who sell so many books).
You seem set and happy in your belief, so I will leave you to it, then.
Quote from: Barrister on February 02, 2010, 12:32:53 PM
I tried to find hard numbers (but couldn't) but I still have my doubts grumbler. I know I've read several times that the cost of physically printing and shipping a book are very marginal in modern publishing, and that the savings to the publisher of e-books are quite low. The significant costs aren't editing and layout, but rather marketing (and royalties to the few mega-authors who sell so many books).
Printing -> 3-10% of price.
Shipping -> often 0%, paid by the distributor/retailer.
Sources: authors and a small press operator.
http://blog.laptopmag.com/ebook-price-war
http://scottwesterfeld.com/blog/?p=2138
Quote from: ulmont on February 02, 2010, 01:17:03 PM
Printing -> 3-10% of price.
Shipping -> often 0%, paid by the distributor/retailer.
So printing (10% of cover price) is not significant? Given that the total cut by the publisher (after paying royalty) is likely to be 35%, we are talking about printing being something like a 1/4 to 1/3 of the publisher's share of the total take. Add warehousing and distribution (another 10% or so) and the costs of the physical edition to the publisher dominate the financial side of publishing.
Quote from: Iormlund on February 02, 2010, 08:21:41 AMInertia. People are used to buying books on Amazon.
I don't think inertia is an unassailable strength.
Quote from: ulmont on February 02, 2010, 01:17:03 PM
Shipping -> often 0%, paid by the distributor/retailer.
Even if the publisher doesn't pick up shipping costs directly, it doesn't follow that 0 percent of the incidence falls on the publisher.
Quote from: Jacob on February 02, 2010, 02:37:33 PM
Quote from: Iormlund on February 02, 2010, 08:21:41 AMInertia. People are used to buying books on Amazon.
I don't think inertia is an unassailable strength.
I can't think of any business that has an unassailable strength. That is why successful businesses have to keep innovating and executing better than competitors.
Quote from: grumbler on February 02, 2010, 09:57:35 AMAlso, Amazon has the books, has the reviews, has the customer feedback, has the methodology for collecting money, has high consumer satisfaction and confidence, and has the relationships with all of the publishers. I really don't see any strength anyone could have in distributing e-publishing that Amazon lacks.
I'm imagining a model where if you want to buy an e-book, you go directly to the publishers portal. Because it's online, it's not like it's particularly strenuous to get there compared to having to go to a different store. Perhaps I'm underestimating the strength of online-customer loyalty, but I don't think it's an impossible challenge to overcome.
I mean, if there's a book you're interested in it's not like you won't purchase it just because it's not on Amazon, is it? Assuming you're made aware of it's existence.
But it doesn't look like anyone's doing what I'm imagining, so there may be some real obstacles in the way. Perhaps designing and operating an e-book sale site is prohibitively expensive for even big publishers? Or perhaps there's some sort of legislation that forbids it? Or maybe Amazon really drives sales enough that it would be a big risk to forego those sales as you try to redirect e-book customers to the publisher's site? I don't know.
Quote from: grumbler on February 02, 2010, 02:36:22 PM
So printing (10% of cover price) is not significant?
Barrister asked for hard numbers, I offered the numbers I had recently seen. Significance or lack thereof was not at issue.
Quote from: The Minsky Moment on February 02, 2010, 11:18:10 AMThey offer the most titles, and they still (for the time being) control the most popular hardware platform.
Interesting. If I was a publisher, I'd still be gunning for them; especially as competing hardware platforms come up.
QuoteI don't think that Amazon conceives of their principal capability as being in warehouse operation and shipping; but rather as optimizing customer experience. To the extent the latter can be achieved by making shipping faster and cheaper, they invest in that. To the extent it can be achieved by building a superior digital distribution platform they invest in that.
That makes sense, but that certainly a setup that's open to challenge.
Quote from: Jacob on February 02, 2010, 02:47:04 PM
But it doesn't look like anyone's doing what I'm imagining
I think Baen is.
My problem with the model is I don't want to have to have 6 different e-readers. Right now, I have 3 different ones on my iPod - Kindle, Stanza (for Baen or general pdfs etc.), and Barnes and Noble (have yet to use this one).
The great part about the Kindle bit is that practically all my books can go there. If I have to start searching 6 different publisher sites and then looking at 6 different e-readers, it's annoying.
Now, Amazon v. Apple is doable, but more than that is bleah.
Wait until Google decides to show up. Now, that's going to be a clusterfuck.
Quote from: ulmont on February 02, 2010, 02:47:11 PM
Barrister asked for hard numbers, I offered the numbers I had recently seen. Significance or lack thereof was not at issue.
Sorry, delete my comment.
Quote from: Jacob on February 02, 2010, 02:47:04 PM
Quote from: grumbler on February 02, 2010, 09:57:35 AMAlso, Amazon has the books, has the reviews, has the customer feedback, has the methodology for collecting money, has high consumer satisfaction and confidence, and has the relationships with all of the publishers. I really don't see any strength anyone could have in distributing e-publishing that Amazon lacks.
I'm imagining a model where if you want to buy an e-book, you go directly to the publishers portal. Because it's online, it's not like it's particularly strenuous to get there compared to having to go to a different store. Perhaps I'm underestimating the strength of online-customer loyalty, but I don't think it's an impossible challenge to overcome.
I mean, if there's a book you're interested in it's not like you won't purchase it just because it's not on Amazon, is it? Assuming you're made aware of it's existence.
But it doesn't look like anyone's doing what I'm imagining, so there may be some real obstacles in the way. Perhaps designing and operating an e-book sale site is prohibitively expensive for even big publishers? Or perhaps there's some sort of legislation that forbids it? Or maybe Amazon really drives sales enough that it would be a big risk to forego those sales as you try to redirect e-book customers to the publisher's site? I don't know.
But I don't think you are giving enough credit to what Amazon has created with their customer experience.
Sure, if you know exactly what you want, maybe you go to the publisher...but who in the hell knows who publishes what book? I certainly don't. I suppose I could go to Amazon to find out though....and then I might as well just buy it there.
Plus, maybe I won't like the book. Maybe I want to see some reviews first. Could the publisher host reviews? Of course! But will I trust them? After all, tehya re the publisher - they might censor bad reviews. But I know Amazons reviews are credible, so I am going to go check theirs out first....hmmm, might as well buy it from them since I am there already.
Of course, most of the time I don't really know what book I want to buy. I want something, maybe I have several options I want to choose between. Where could I go to see what I might like? Where can I go to see what other people who like the kinds of books I like like? Oh look! Amazon.com!
I can go on of course - Amazon is successful because they have created a customer experience, not because they have some books that you can buy for some small discount.
Hell, the other day I was browsing the New Releases at the local library, saw a book I thought might be interesting, went to the library public PC, looked it up on Amazon to see some reviews, and then decided I would actually check it out from the library and read it. (Stephen Kings new book about the town that gets stuck under a dome, forget what it was called since my wife ended up reading it first, then it had to be returned before i got a chance to actually read it).
Quote from: Jacob on February 02, 2010, 02:50:26 PM
Interesting. If I was a publisher, I'd still be gunning for them; especially as competing hardware platforms come up.
But publishers are vulnerable to getting underbid, themselves. Amazon already offers a 70% royalty on net to authors that give them "print-ready" ebooks for the Kindle. No publisher can pay that kind of royalty under the current business model - right now they pay about 10% (sometimes less).
Quote from: grumbler on February 02, 2010, 03:04:50 PM
Quote from: Jacob on February 02, 2010, 02:50:26 PM
Interesting. If I was a publisher, I'd still be gunning for them; especially as competing hardware platforms come up.
But publishers are vulnerable to getting underbid, themselves. Amazon already offers a 70% royalty on net to authors that give them "print-ready" ebooks for the Kindle. No publisher can pay that kind of royalty under the current business model - right now they pay about 10% (sometimes less).
Yeah, that's an interesting point.
I guess however it shakes out, there's the potential for convergence between publishing and e-sales.
Quote from: Berkut on February 02, 2010, 02:55:56 PMBut I don't think you are giving enough credit to what Amazon has created with their customer experience.
Sure, if you know exactly what you want, maybe you go to the publisher...but who in the hell knows who publishes what book? I certainly don't. I suppose I could go to Amazon to find out though....and then I might as well just buy it there.
Plus, maybe I won't like the book. Maybe I want to see some reviews first. Could the publisher host reviews? Of course! But will I trust them? After all, tehya re the publisher - they might censor bad reviews. But I know Amazons reviews are credible, so I am going to go check theirs out first....hmmm, might as well buy it from them since I am there already.
Of course, most of the time I don't really know what book I want to buy. I want something, maybe I have several options I want to choose between. Where could I go to see what I might like? Where can I go to see what other people who like the kinds of books I like like? Oh look! Amazon.com!
I can go on of course - Amazon is successful because they have created a customer experience, not because they have some books that you can buy for some small discount.
Hell, the other day I was browsing the New Releases at the local library, saw a book I thought might be interesting, went to the library public PC, looked it up on Amazon to see some reviews, and then decided I would actually check it out from the library and read it. (Stephen Kings new book about the town that gets stuck under a dome, forget what it was called since my wife ended up reading it first, then it had to be returned before i got a chance to actually read it).
Those are all really good points Berkut, that I likely missed because I'm not an Amazon customer and I don't use their reviews. But obviously they do a good job of what they do, and have their strengths.
Certainly, for the a publisher portal to work they'd have to market it a certain amount. Perhaps rather than do it on a publisher level, do it on an imprint - you know, market Tor as the leading purveyor of science fiction. They'd have to strengthen their brands, but that's a marketing challenge that I think could be overcome.
As for the reviews, that's a really good point. That's a bit harder, because of the trust deficit with a publisher supported review site, and it's perhaps unlikely that a pure-user-reviews site could survive independently without the revenue that comes from sales.
But yeah, I probably underestimated Amazon's strengths. I still think there's potential there, for cutting out one middleman in the chain, but perhaps it's better realized by Amazon buying (or becoming) a publisher.
But if I were a publisher I'd definitely look at ways to expand my scope beyond managing writers, printing physical books and selling IP to third parties. Amazon is the market leader in their niche, but I'd still be eyeing them.
Quote from: Jacob on February 02, 2010, 04:03:37 PM
But if I were a publisher I'd definitely look at ways to expand my scope beyond managing writers, printing physical books and selling IP to third parties. Amazon is the market leader in their niche, but I'd still be eyeing them.
As a publisher, I can say that this is definitely true. The Amazon model isn't perfect for publishers, that is for sure (my company tried a title through Amazon, and got pretty much crushed by the overall costs to us, plus the remainder policy). Right now we focus on direct sales to people we know want our kinds of books (only about 20% of our sales go through book stores, and all of them are stores whose owners we know).
e-publishing is definitely something we are eying, but format wars are still an issue.
Quote from: grumbler on February 02, 2010, 04:56:20 PMAs a publisher, I can say that this is definitely true. The Amazon model isn't perfect for publishers, that is for sure (my company tried a title through Amazon, and got pretty much crushed by the overall costs to us, plus the remainder policy). Right now we focus on direct sales to people we know want our kinds of books (only about 20% of our sales go through book stores, and all of them are stores whose owners we know).
e-publishing is definitely something we are eying, but format wars are still an issue.
Interesting. When I was speculating about taking on Amazon, I was thinking more from the perspective of a big publisher like MacMillan. Challenging Amazon would require some serious cash, I imagine.
If I was a niche publisher, I'd probably look at what you're doing and maybe seeing if I could band together with other publishers in the same field for a genre or niche site (wargames and military history, if I recall correctly). If you had a number of reputable niche publishers in the same genre, the reviews would probably start accumulating and be more credible and if you hook up your direct and e-sales there that could give you a bigger cut of the profits? I mean, I don't know what the cost would be (or the energy required), but on the face of it it doesn't seem ludicrous.
Quote from: Jacob on February 02, 2010, 05:02:45 PM
If I was a niche publisher, I'd probably look at what you're doing and maybe seeing if I could band together with other publishers in the same field for a genre or niche site (wargames and military history, if I recall correctly). If you had a number of reputable niche publishers in the same genre, the reviews would probably start accumulating and be more credible and if you hook up your direct and e-sales there that could give you a bigger cut of the profits? I mean, I don't know what the cost would be (or the energy required), but on the face of it it doesn't seem ludicrous.
That is the direction we are going. We have already taken on board one "e-publishing" (rally meaning flash printing and e-publishing, because people tend to like to have those paper copies) guy and as of this spring will be taking on another. Most of the history publishing industry around our size, though, doesn't think the new trends will effect them at all.