I'm no legal scholar, and I'm not sure how I feel about this settlement. My gut tells me to root for the publisher, but my head, like much of the publishing world, is not so sure.
Amazon conceded to MacMillan's demand that it charge more for e-books on Kindle. Amazon has been charging a flat fee of $9.99 per book, with the publisher's getting half that. That's way less than the make for new books on shelves, but both Amazon and MacMillan have less overhead. Amazon kept the price low to sell more Kindles; MacMillan figures if people are willing to spend $25 for a new hardcover, they'll drop $12 or $15 for an e-book.
In a nutshell, Amazon blinked. They pulled MacMillan's books from Kindle, but one of the advantages to being one of the six biggest publishers in the world is that people start asking for your books. Amazon again made them available, with the new prices to go into effect March 1.
If you think the rest of the publishing world is jumping for joy at the prospect of earning an extra dollar or five per book, think again. Although they cut the same deal MacMillan cut with Amazon over at Mac and its iPad, they're not so sure this is a good deal for them. Like the music world suddenly enslaved by 99-cent iTunes, they think readers will eventually balk at the high prices and demand a flat $9.99 from everybody. Many of them think that MacMillan's short-term win is a long-term loss. A Pyrrhic victory perhaps.
The upside is that maybe they sell more books at $9.99 than they would at $29.99, even with the $259 Kindle price. Don't know. At some point, people are going to have to realize that things cost money. A book takes several years to write, publish, market, etc. and a $5-dollar cut to a publisher and 75 cents to an author isn't going to work. Amazon is consciously taking money out of their pockets to sell its big-ticket item. Now, if by miracle of miracles, Kindle helps authors sell a few thousand more books and reduces overhead (publishing costs, storage, etc.), and gives books a longer shelf life than they enjoy the hardcover world, more money could be made by all. But that's a lot of books to move when publishers are alreday complaining of a public that doesn't read (more on this in a future post). Will they be enticed by cost or are they generally lost forever to other opportunities, flash-in-the-pan fiction, and repetitive, unoriginal genres?
In the end, I somehow suspect it's the authors first , and then the publishers, who will get the short end of the Kindle-ing. But for now, congratulations MacMillan, on getting Amazon to bend, even if you did it for yourselves and not the authors. They will benefit, for a little while anyway, by your actions.
***Addendum*** Feb. 2nd -- Rupert Murdoch, who owns HarperCollins, also one of the big six, has criticized Amazon's $9.99 deal and wants to renegotiate. He wants to model a new agreement after their iPad contract. If HC goes the way of MacMillan, expect the rest to follow in short order. Now we know which way the publishing world is going, which is at least potentially good for authors.
In the interest of full disclosure, I have a ms sitting with Balzer+Bray, an imprint of HC.