Saturday, January 30, 2010

Amazon and Macmillan

Sometime yesterday, Amazon "delisted" a large number -- possibly all -- of the titles published in print by Macmillan, one of the six largest US publishing companies. (Reaction from Macmillan authors was swift, and naturally extremely negative towards Amazon.)

According to a New York Times blog post, this was a deliberate act on Amazon's part in response to an overture by Macmillan over Kindle e-books. Macmillan had offered a two-choice blanket option for their Kindle editions:
  • either sell them on an "agency" model, similar to the new model for Apple's iPad, in which the publisher sets the retail price and Amazon gets 30% of that price for each unit sold
  • or continue on the current, standard book-industry terms, in which Amazon buys books at their current discount rates (likely in the 50-60% range, depending on quantities), but has the right to price at any level they choose -- though, in this case, Macmillan would delay all Kindle editions seven months after the print edition.
Personally, I've never been in favor of "one size fits all" plans, and Macmillan's plan here is a particularly crude and dumb one. (For one thing, it apparently covers even their mass-market originals, where the price competition of a Kindle edition is minimal.) But both parties are well within their legal rights, and this is just another one of those unpleasant negotiations that spill over into the public space -- like the similar fight over revenue wages by Scripps and Cablevision over the TV networks HGTV and Food Network earlier this month. And this scrimmage will be settled -- behind closed doors, as the Scripps/Cablevision fight was -- and then announced to the public in a chummy way, as if Macmillan and Amazon were best buddies all along.

I haven't seen anyone yet note that this is the second time that Amazon has applied the big hammer of delisting an entire publisher; they tried the same thing to Hachette in the UK almost two years ago. In that case, Amazon was the aggressor -- they were attempting to demand higher discounts from Hachette (and their other suppliers) and pursued the delisting to get the publishers to agree to its new, and much more favorable to Amazon, terms. As I recall, Amazon was not particularly successful in that case, and I don't expect they'll see much luck this time, either.

Consumers react badly to choices being taken away from them, and resent the actors who do that. In the Scripps/Cablevision dispute, both sides could semi-reasonably claim the other side had caused the problem, but, in this case, it's clearly and entirely Amazon's action. That won't go over well with engaged bookbuyers...but then, of course, the real question will be what percent of the market are engaged bookbuyers. (Amazon is betting that they are relatively few, and that their memories are short. And they might be right -- how many people actually stopped buying from Amazon entirely after the search issue with gay and sexually-themed books in mid 2009, or Amazon's 1984 clawback fiasco?)

I'm sure Amazon will be looking at their sales closely, and if sales on other publisher's print books -- particularly those in the areas where Macmillan authors are loudly complaining across the 'Net -- they may make a quiet step backward. I wouldn't be surprised if, in that case, they claim that this was some sort of accident or mishap, and that they never intended to stop selling the books of an entire publisher.

And -- who knows? -- it might even be the truth.

But Amazon almost certainly has a large inventory of Macmillan books in its warehouses -- unless it had been planning this action for much longer than appears to be the case, and unless Macmillan got a wave of returns earlier this week -- which they will have to do something with as the days go on. Those books will likely go back on sale before too long, but the real question is: who will blink first?

Update: Macmillan's plan was not as crude and one-size-fits-all as I first thought -- this story has been reported badly everywhere but the e-newsletter Publishers Lunch -- but it's still clearly aimed at reducing Amazon's power in this market. See my later post for further ruminations.
Listening to: Isobel Campbell & Mark Lanegan - The False Husband
via FoxyTunes


SWILUA said...

ooo, the drama. gotta love publishing.

jmnlman said...

art of the question is what do engaged book buyers think of ebook prices? If they don't like them at the $9.99 level they're going to be apoplectic about $15. Amazon if they do the PR right could come out of this looking pretty good. Defending the consumer, taking on the greedy conglomerates etc.

KP said...

Yet another reason to come up with something other than the almighty dollar to which we all strive

dave said...

As one of those engaged book buyers, I would pass on the $15 ebook in all but the most exceptional circumstances. I'd be surprised if the majority of ebook buyers don't share that view.

The Brillig Blogger said...

I'm a little surprised that other e-book retailers haven't tried to take advantage of this. This is where I'd love to see Borders trying to drive some traffic with an instant e-mail blast, be a little scrappy.

Sapience said...

There has been more information coming through on this, from Macmillan's side:

It appears that Macmillan was planning a price point that shifts over time, similar to what they do as books move from hardbacks to trade paper to paperbacks. This would tend to maximize profit over time. So, they won't buy the book at 14.99, then they'll have a chance to do it at 9.99 a few months later, and perhaps even 6.99 a few months after that. Amazon may not come out looking so good after all.

Anonymous said...

John Sargent's post could also be interpreted to mean that all popular books will be $13-$15 in ebook format, in perpetuity or until they're no longer selling.

Which is true? Take a look at current Macmillan ebook list pricing where there has existed a $7-$8 list price paperback for a year, three years, ten years, or even twenty years. The popular ones still have ebook list prices of $13-$15. There's no end to examples that can be found.

Case closed.

Anonymous said...

Amazon blinked. People are watching for their books to come back on the list.

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