Monday, February 1, 2010

A Win for the... Big Guys?

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.


Brian said...

I guess the question is whether people view $15 e-book as being worth 60 pct of a $25 hardcover... even though you don't get the tangible product (to say nothing of the initial $250 investment in the Kindle). Plus, are e-books reader specific? If you switch to an iPad, do you lose all your e-books originally bought for Kindle? I'm not sure.

There's an African proverb that when two elephants fight, it's the grass that suffers. This feels a bit like that. I wonder what the e-book phenomenon will have for bricks and mortar independent book sellers, which are so important in promoting new authors. This win by MacMillan may help the rich get richer, but I'm not sure what impact this is going to have on most writers. It may help the Dan Browns and JK Rowlings pad their bank accounts even further, but I'm not sure it really matters for the Zack Richards and John Briggs of the literary world.

Kay Hafner said...

I have the Kindle app for the iPhone and have downloaded free books, mostly public domain but a few others designed to get you hooked on a series. I can't imagine paying more than $6-$10 for an ebook since, from what I understand, they are nontransferable and it's not like you can share it or donate it to the library when you're done.

I personally think the outrageous cost of hardcovers is going to be their own demise. Some of it might be planned obsolescence on the part of publishers: raise the price high enough and consumers will stampede into the corral with the lowest price for them and the lowest overhead for us.

You're right, Brian. A few dollars here or there on a pricepoint doesn't matter as much to the small fish as the big whales.

However, on the theory that any one of us could some day be a Big Catch, I hope that writers as readers are embracing and exploring all media and formats.

More readers should be the battle cry. More exposure overall is better in the long run, whether someone pays $9 or $12 for electronic media, $10 or $12 for a paperback, $22 or $25 for a hardcover, or $45 or $50 for an audiobook. Or gets one of the above for free at the library...

Brian said...

I'm not rejecting new technology out of hand; heaven knows I'm quite enamored by most of it. =)

But at the same time, $250-500 (not counting the costs of the actual e-books) is quite a bit for me to "experiment."

I do think you're right about the cost of hardbacks. You'd think they'd learn the lesson of the music industry...