Macmillan Books V. Amazon Kindle

Here is an update from Publisher's Lunch (a publishing industry newsletter) that details some of the dispute between Macmillan and Kindle.   This is an urgent issue for anyone who cares about books.   What happens when those who publish and those who sell books clash?   How will this be resolved?   No answers, but we all should be keeping an alert and questioning stance here because the future of the humanities is bound up with all of these issues of production, distribution, and consumption.   As I've said so many times in this blog, you cannot change one part of the equatio without disrupting the other parts as well.    

 

reblogged from PUBLISHER'S LUNCH, Saturday, January 30, 2010

  
    Saturday Update
   
    The Battle Over the Agency Model Begins, As Amazon Pulls Macmillan Buy Buttons
    As originally reported last night and many readers know by now, sometime yesterday evening the buy buttons for apparently all of Macmillan's books--including bestsellers and top releases, and Kindle editions--were removed from Amazon's site. Macmillan books remain listed but can be bought only through third-party Marketplace sellers, while Macmillan Kindle titles all lead to pages that read, "We're sorry. The Web address you entered is not a functioning page on our site." It is the first shot across the purchasing bow in big publishers' efforts to reset ebook pricing above the loss-leader $9.99 price point and retake control over that pricing by moving from the wholesale selling model to an agency selling model (first reported exclusively in Lunch Deluxe on January 19), at least for ebooks published simultaneously with new hardcover releases. Kindle customers further reported on Amazon forums that any Macmillan books that were on their "wish lists" disappeared from those lists with no explanation, as apparently did Macmillan sample chapters that had been downloaded previously.

Macmillan has commented by way of a paid message to authors, illustrators and agents, reproduced below this story. Amazon has declined to comment thus far, either to the media or directly to their customers.

Among the books subject to the greatest potential short-term effect of Amazon's buy-button removal is Andrew Young's just-released THE POLITICIAN, which curiously still ranks at No. 9 on Amazon's bestseller list (and has been between No. 4 and No. 6 today at Barnes and Noble.com). Hilary Mantel's WOLF HALL was at 69 on Amazon last night, falling steadily today and now at No. 128. Atul Gawande's THE CHECKLIST MANIFESTO: How to Get Things Right was at 34 last night on Amazon, now at No. 66,--and has risen from 112 up to 86 at BN.com in the same time period. (These numbers change slightly every hour we've been checking them.)

We were able to reach a couple of agents for some of Macmillan's current bestselling authors. Co-head of the William Morris Endeavor books department Eric Simonoff, whose clients include Douglas Preston (author of the January Tor release Impact), told us: "The current model of Amazon selling Kindle editions as a loss-leader is fair for publishers and authors in the short-term but as we have told Amazon we don't believe it is sustainable in the long term. Something had to give to prevent the ongoing devaluation of e-books. Macmillan is the first to draw a line in the sand but we expect not the last."

Tina Bennett at Janklow & Nesbit, agent for Atul Gawande's new bestseller, comments: "This development is very unfortunate for my author, but it's also troubling for public health. The checklist approach that Gawande describes in his book is a major life-saving advance. It has been demonstrated to reduce harm to surgical patients by more than a third, but has yet to be widely adopted in US hospitals. To make THE CHECKLIST MANIFESTO unavailable for sale is the equivalent of blocking the distribution of a book announcing the discovery of penicillin."

Agent Robert Gottlieb at Trident Media Group offered this view: "The agents I know feel the $9.99 price for new releases is not good for the business. They want the publishers to work with all the retailers in a peaceful manner. I don't think it is in any book retailer's interest both short and long term not to do business with companies like Macmillan and at the same time Macmillan needs Amazon. What will Amazon do if S&S moves in this direction or Hachette? If consumers can't get the books they want from Amazon they will move to other retail sites for what they want."

One senior publishing executive called the move by Amazon "fairly draconian" but added that their company had not received any threats of similar action from Amazon. As we've said before--though consumers have not yet gotten the message--the agency model that publishers are trying to implement with Apple and across their customer base actually lowers the publishers' proceeds from each ebook sale and gives more profit to sellers versus the current loss-leading model behind the $9.99 price point.

Another senior publishing executive said that "Amazon may 'spin' that the consumer is at the heart of the decision, but really their goal is a monopoly position in books. Publishers don't want a monopoly - they want consumers to have choice through a number of partners and channels. They want digital pricing which allows bricks and mortar retailers to survive and thrive alongside a growing digital market." That person added, "This reaction proves what Amazon's true motives are. It is a signal to any other publishers not to change the model and weaken Amazon's pathway to a monopoly. I hope authors, agents and publishers see what these motives are and stand by Macmillan."

Among remarks from Macmillan authors posting online, perhaps one of the most curious came from Sherrilyn Kenyon, who posted to Facebook and then later in the day removed her entry, which read in part: "All of you asking why you can't find my books on Amazon Kindle? It seems that Amazon is the one to blame. They are in a disagreement with my publisher and to prove a point, they have removed Macmillan books from their Kindles.

"You know, as a Kindle owner, I have problems with this. They're not cheap and I bought it so that I could download the books I wanted to read. I don't like a store taking something from me like this without warning. It's just like when Amazon removed books from my Kindle that I'd paid for because they didn't have permission to sell them."

In comments over at John Scalzi's blog, bestselling Simon & Schuster author Scott Westerfeld writes, "The real power we authors have is removing links to Amazon from our websites and such.... Random blackouts do not make customers happy."

Amazon's own forums have been quite busy with postings today, with customers expressing a wide range of everything from support to dismay with the etailer's move. The most damaging aspect of their action in the short-term may be the removal of Kindle "wish lists" and sample chapters. For some posters that action has echoes of the incident last summer when Amazon deleted copies of certain books from Kindle owner's libraries, in violation of the site's own terms of use. As one person writes, "we do feel vulnerable, even if Amazon is right to fight. Wishlists disappeared, with no backup of what the titles were. Sample books we chose to download lead to links that say Error. It reminds us that we do not have control over the situation, even if we backup, since what is offered today may not be available tomorrow." (Amazon apologized for that earlier incident, provided refunds to customers, and eventually settled a customer lawsuit.)

While many customers support Amazon's efforts to provide low prices, one "open letter" suggests that the company let customers decide for themselves what is the right price. "Here's a thought Jeff: You list them and I will decide if I want to buy them or not. How's that sound? I agree with you they should not cost more than $10, but I can enforce that with my pocketbook. I don't need you to make a big hairy freakin deal out of it on my behalf and I certainly don't need you to limit my choices based on this principle."

To listen in, and help explain by posting, check out these two Amazon customer forums, and look at the bottom of each page for the names of other recently-posted forums worth following.

Comment here at PublishersMarketplace, or e-mail us.

   

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To: All Macmillan authors/illustrators and the literary agent community
From: John Sargent

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.

I regret that we have reached this impasse. Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come.

It is those decades that concern me now, as I am sure they concern you. In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.

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 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. I hope you agree with us.

You are a vast and wonderful crew. It is impossible to reach you all in the very limited timeframe we are working under, so I have sent this message in unorthodox form. I hope it reaches you all, and quickly. Monday morning I will fully brief all of our editors, and they will be able to answer your questions. I hope to speak to many of you over the coming days.

Thanks for all the support you have shown in the last few hours; it is much appreciated.

All best,
John
   

Cathy Davidson

Does Amazon Hate You?

This is a reblog from FAST COMPANY that argues that, given every aspect of the Amazon-Macmillan face-off, it is clear that Amazon hates us.  It hates readers, it hates publishers, it hates books.  I'm not sure if I agree but take a look at this screed and let us know what you think!

Amazon Revealed: It Hates You, and It Hates Publishers

BY Kit EatonMon Feb 1, 2010

AmazonThere's one clear conclusion falling out of the ridiculous Amazon versus Macmillan books debacle that played out this weekend: Amazon really doesn't care about you, in fact it kinda hates you--pretty much whoever you are.

If you're still playing catch-up on the news, this is what happened. Amazon and Macmillan books entered into discussions about the prices Amazon charges for e-books from the publisher, with Macmillan pressuring for a higher price--perhaps around $15, which is much more than Amazon's strict $9.99 limit. It's clear the move was inspired by Apple's iPad and simultaneous iBooks launch event, which promises a fairer share, more favorable terms and conditions than Amazon, and higher price points. (It's also akin to iTunes takeover of the music industry, a similarity Fast Company's Adam Penenberg called out back in our June '09 issue.) Amazon, of course, operates something like a supermarket giant does in the food industry--leveraging its huge size to force suppliers to sell to it at wholesale prices. This tactic has caused issues in the food market, and now its doing the same in the books market: Amazon refused, and without warning pulled all Macmillan books from its store. That's one of the "big six" U.S. publishers, mind you. Macmillan's CEO stood his ground, and explained his thinking in an open letter, and Amazon was forced to "capitulate" and return Macmillan books to the store.

Simple, eh? Cut-throat business politics played out in public, and swiftly concluded? Yes. But reading into the matter, it's clear that Amazon really cares nothing about the publishing industry, about authors, about the book-buying public and about any other book seller it knocks out of business.

This much is clear from the way Amazon comported itself during the last several days. Firstly it refused to see eye to eye with a key publisher--one of its major suppliers--and preferred to stick to its bullying tactic that eats into the revenue of the publisher, and subsequently authors themselves, by basically insisting that it decide how much to pay them for their product. Then it petulantly pulled stock from the Amazon store without warning--meaning the book-buying public was denied access to around one-sixth of titles published in the U.S., with no explanation.

Then, when Amazon reversed its decision, it announced the news with a blog posting from anonymous Amazon spokespersons that contains some extremely twisty language. Firstly it paints itself as the victim, having to "capitulate" to demands that it clearly wishes the public to think of as unreasonable. Then it explains that it has to capitulate because Macmillan has a monopoly over its titles. Finally it suggests that Macmillan's prices are unreasonably high for e-books, and it believes other publishers will think differently to Macmillan.

Hmmm. A "monopoly over their own titles" is the absolute key phrase here, because it's plain dumb. It's like complaining that Van Gogh has a monopoly over paintings painted by Van Gogh. Amazon here is revealing that it doesn't care how publishers actually work (a vast and complex system that's evolved over time, and which really seems to function pretty well) and only cares about getting the right price it wants--which will then earn it huge profits from the average consumer who sees merely a lower store price. It doesn't care about the fleet of editors that a publisher has to maintain to shepherd books from author's minds into reality, about reviewers who sample thousands of submitted manuscripts from wannabe authors, about artwork, marketing, and the designers involved in creating a final finished copy of a book--whether paper or digital.

Perhaps worst of all, Amazon clearly doesn't care what its customers think (despite thanking them in the blog post) because it acted to axe Macmillan's texts without explaining why or giving any warning. And though it tries to portray itself as championing customer rights, what its actually doing is trying to manipulate an entire industry to working how it wants everything to work, squeezing everybody from authors to other booksellers.

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And the final, most fascinating twist of all this, is that there's likely to be one main beneficiary of Amazon's shenanigans, and it's one Amazon will deeply resent over the next year or so: Apple, with its new iPad.

[Via Amazon, TechCrunch]