It’s All About Timing

Question in e-mail from someone who wanted to know why I thought Amazon pulled this stunt at this moment. I’m not privy to Jeff Bezos’ brain (otherwise it’d have my footprint in it at the moment), but again presuming that this is indeed Amazon’s doing (it seems clear it is, but I still don’t think we’ve seen an official comment) I speculate Amazon pulled Macmillan titles on a Friday night for a couple of reasons:

1. As the White House across several administrations knows, Friday is the day to do or say anything you don’t want heavily reported in the traditional media or heavily read by traditional media consumers, including on traditional media Web sites. And even electronic media outlets are sleepy on the weekend, because, hey, it’s the weekend, and people have lives, even the ones who hang out online. So the black eye Amazon will get in the media for this stunt will be relatively smaller for pulling it on a Friday night than, say, on a Tuesday morning.

2. I’m willing to bet Amazon works like the rest of the online world, which is that its traffic is (and commensurately, its sales are) less on the weekend than during the work week. Inasmuch as Amazon is punishing itself sales-wise by pulling an entire publishing company’s inventory off its site, it wants to do it on low traffic days, i.e., the weekend, when people are away from their computers anyway.

Alternately we could just be seeing a monumental and irrational fit of pique in action, with Mr. Bezos tromping down to Amazon’s data servers and screaming “Embargo!” in his best Master Blaster voice. But as fun as that is to picture in one’s mind, I do give the man and his company some credit for tactical thinking. A weekend embargo would be enough for the company to make its point, without overly hurting itself.

The only problem with this is that tactics are not strategy, and delisting an entire publishing house as a bargaining tactic, on a weekend or no, is going to have a long-term effect on Amazon’s relationship with publishers, and not the one Amazon is likely to want, especially now that iBookstore lurks, gravid, on the horizon. But I suppose we will see.

81 thoughts on “It’s All About Timing

  1. Does anyone know for sure that this was all Amazon’s doing? It could well be that Macmillan or its parent company Holtzbrinck asked them to remove the books. Keep in mind that Holtzbrinck pulled a similar stunt with Baen Books several years ago because Baen was selling eBooks without DRM.

  2. GJN@1 it just about has to be Amazon, because I doubt Amazon buys their books directly from Macmillan. They most likely buy their books via a wholesaler like Ingram (probably a variety of them).

    So Macmillan couldn’t actually get Amazon to remove the dead tree listings – they don’t have that control. I’m not sure how ebook distribution works though, that may be more direct.

  3. Oh, and one other point – as for the timing, it makes sense because Amazon’s power right now is at its peak. According to Bezos, while they won’t release actual sales figures, they’ve sold ‘a couple of million’ Kindles. This has to be the vast majority of dedicated readers.

    As a percentage this is only going to go down, with the nook ramping up some, and some fraction of ipad buyers being heavy readers. So if they’re ever going to see if this stunt works, now is the time to do it.

    Now, you could certainly argue that they should never do it, but if they are going to do it, sooner is better than later.

  4. As you, John, and other commenters have probably noted already, it’s also a curious strategy simply because of Amazon’s less than stellar PR record over the past year in regard to the deletion of titles and their Kindle availability. And even if it does turn out to be just a glitch, it highlights the problems of monopolized, non-open-source ebook delivery a lot more than the company ought to want.

    I guess they’re hoping that consumers will just look at the fight and go, “Macmillan wants ebooks to be $15 and Amazon wants them to be $9.99 — go, Amazon!”? I’m not sure enough dumb people are involved in the ebook economy for that to work.

  5. Sorry, but I think this pricing fight is absurd. If Amazon wants to take a loss on bestsellers and sell them at $9.99 and still pay the publishers what they would get whether the book sold for $9.99 or $14.99 I fail to see how the publishers can say anything about it. Why aren’t the publishers going after Walmart/Target/etc for selling new *hardcover* best-sellers for $7.99 !? This is a power-play attempt to keep e-book prices high (where the unit cost per ‘copy’ costs absolutely *nothing* for the publisher – compared to the extensive costs of physical media – printing, shipping, taking back unsold copies from the stores…).

    While I can’t say that Amazon pulling all the titles is the best choice, I for one don’t think MacMillan has any right to try to enforce price controls on the final retail cost of their product. There’s plenty out there to read – if they keep it up, Amazon selling them or not – they’re risking losing the business of at least this customer for life.

  6. Patrick:

    “Why aren’t the publishers going after Walmart/Target/etc for selling new *hardcover* best-sellers for $7.99 !?”

    Well, in fact, they are deeply uneasy about that too, and for the same reason, which is that training readers to expect work at a price which does not reflect its production cost has long-term implications. So this is not perhaps the best example you could make for your argument.

    That said, this comment is probably better suited for the other thread, not here, where the topic is not the pricing but the tactics of pulling the books over a weekend.

  7. FWIW, it’s not the first time that Amazon has bullied a publisher. I seem to recall reading about Amazon going after Penguin, when they started selling their books directly on their website at lower than amazon prices, threatening them that they’d treat that as the new MSRP for contract purposes.

    I don’t recall how that spat came out though.

  8. Patrick @ 7 – It’s a question of impact. I don’t think much of end-price controls either – supposing that’s all there is to it. But Macmillan aren’t exactly an effective bottleneck in my access to books. If they don’t want to sell something I want at a price I like, I will go to somebody else. Amazon, though, seem to be trying a gatekeeper trick – gambling that they can hurt all Macmillan’s sales by cutting them off from their customers, unless Macmillan roll over for their demand-of-the-week in one specialized field.

    To the extent that doesn’t work, because consumers can and will route around the inconvenience and buy elsewhere instead, this is majorly dumb. To the extent it does, because Amazon is a functional monopoly that has started to get cocky, it is a sign that their customers need to pin their ears back, but good!

    I suspect there’s a measure of truth in both. Therefore, unless all this turns out to be the very mother of misunderstandings, Amazon can whistle for my money and links for a fair long time to come.

  9. I see you, Charlie Stross, and Cory Doctorow all up in arms about this, and from what I’ve read (and there’s plenty of unknowns out there), I can’t really agree with you guys. Now, I don’t make my money from selling books, so bias obviously plays a heck of a big role here, but there is ZERO chance I’d ever buy an ebook for $15. So, from my viewpoint, Amazon is fighting for my ability to keep buying Kindle books.

    Personally, I don’t think that Kindle ebooks (and probably the iBooks version too, even though there’s still a lot of unknowns there as well) are generally worth more than $10, and after they get pushed to paperback, probably no more than $6. Here’s non-physical media (lots cheaper to distribute) that has a DRM wrapper, making it pretty damn unlikely that I’ll be able to read it again 20 years from now unless I break the law, a la DMCA. Also, you can’t resell it on the used book market or give it away to friends, family, kids, charity, whatever. That lowers the value, to me, to a heck of a lot lower than $15. So again, if Apple and Macmillan win this fight, I’m not buying Tor books off the Kindle anymore. So you’re not fighting over my $5. You’re fighting over my $6-10.

    And by the way, I have bought ALL of your Old Man’s War series on the Kindle.

    As I said from the beginning, though, there very well might be more to this than the NY Times is reporting. Perhaps Macmillan gave Apple a much better deal than Amazon? There’s lot of possibilities that do NOT make Amazon the bad guy here. It’s WAY too early to declare boycotts, IMO.

  10. I for one support Amazon. Hard back books are expensive in general, however they can be found discounted down to $15 to $20. Ebooks do not have the cost of printed tied to it so there should be a discount for that format. Also, it is far more secure for the authors because the ebooks cannot passed around by the general public like real book.
    With Apple in the mix I see the prices only rising. Anything Apple related costs more that it should!

  11. I agree with your thoughts on the timing, and would add another: the SEC. Amazon’s not going to substantially affect Macmillan’s stock price by doing this after the markets close on Friday, if things are back to normal at least a bit before Monday 10am ET. If they did this in the middle of the day on Tuesday, the effect it would have on Macmillan’s stock price might cause problems with the SEC.

  12. That’s an interesting breakdown in costs, John. Looking at it I’d argue that, for example, the pre-production costs should be lower. Because they get to be spread out over not just the hardback sales, but the paperback ones as well. And the wholesaler and physical materials line should basically go away. There’s no need for a wholesaler at all for an ebook. I’m sure the only reason that they go through them now is contracts that will surely be renegotiated.

    Now, for an ebook, I’d say marketing costs should actually be a bit higher, because if you want to do tiered pricing in an ebook world you’re going to have to save some marketing dollars for when the price drops. So I’d bump that 10% or so.

    I’ve read that most author royalties are 10% for the first 250k hardbacks, going up from there, peaking at 15%. So I’d guess for most authors the 10% is what they get. That drops that back down to $2.50 for that line.

    So adding it all up, it doesn’t leave a huge profit margin. Is it enough? I don’t know.

  13. What I find peculiar about this whole mess is that, so far as I can tell, neither Amazon nor Macmillan have made any public comment about what is going on. You’d think that in a stand-off of this kind, one organization or the other would try to elicit public support for its position–or, at the very least, attempt to explain it.

    The silence is mysterious. When you fire a warning shot, you don’t usually use a silencer….

  14. Well, this whole situation sucks. I’m glad I got nearly everything before this Happening happened, but I didn’t have Zoe’s Tale because it never even occurred to me that it would go off.

    Thankfully I still have everything in actual-book form, but still. This is not cool.

    However, this has certainly reinforced my sense of “if I really like something, it’s best to have it in multiple.”

    Hopefully this will be resolved without the game of Chicken being turned into Slaughterhouse. :\

  15. Skip:

    “So adding it all up, it doesn’t leave a huge profit margin. Is it enough? I don’t know.”

    Welcome to publishing, 2010. It’s “exciting”!

  16. I don’t have to buy print books from Amazon.

    I don’t have to buy a Kindle to read eBooks.

    Thanks, Amazon. You just made me a bn.com customer for life for online book purchases and more enthusiastic about the iPad.

    There are some companies I refuse to do business with once they’ve screwed me. I don’t fly Delta with my own money (and pitch a fit when someone else won’t let me use my own gas to fly Southwest cheaper), I will never own a Mercedes Benz after they ruined Chrysler, and now I will never buy from Amazon again.

    Good job, dumbasses.

    Remember Rule 1, Mr. Bezos: The customer’s ass in down and in back. Kneel before kissing.

  17. Actually, I’m kind of surprised that Amazon didn’t do two things:

    1. “Cave” to *single* publisher. Put their ebook prices up.

    2. Make books by said publisher stop (or be less common) showing in its automated recomendations systems.

    Then wait a month. I bet the lower sales would have said publisher screaming.

  18. Meh, I don’t buy books from Amazon. In fact I think I’ve only ever bought one or two items from them and I am unlikely to start again now. Despite liking “the idea” I decided firmly against a Kindle after the mass deletion oopsie thing last year. I’ll continue to own the books I buy thank you very much. I was seriously underwhelmed by the one time I had to deal with their customer service and they just don’t seem very interested in doing the sort of thing that would make me want to be one of their regular customers. Maybe if a few thousand more people like me come out of the woodwork they’ll think differently but who knows?

  19. I read a link on the other discussion that mentioned Amazon was switching to a 70/30 split with publishers in June, much like Apple announced. Assuming this is true, it may explain why Amazon is making this move now. From what I’ve read, Amazon currently pays the manufacturer a flat rate comparable to hardcover prices, and looses money on the sale of each ebook. The publisher makes the same amount of money either way. When the arrangement changes, the publisher will make less money off of the sale of a $10 ebook than the sale of a hardcover, which gives the publisher an incentive to raise the price (depending upon how much control they have on pricing under the new arrangement). This actually makes it in Amazon’s short term interest to take a stand now, before iBooks goes online to ensure that their prices are cheaper. Longer term, they’re just pissing off the publishers who can choose to sell their books anywhere, while Amazon relies on them for content to sell.

    This assumes that my understanding of the pricing agreement change is correct. Please correct me if I am wrong.

  20. The kafuffle has been duly noted on the Amazon boards, but reactions are mixed. Many people are saying Macmillan books are still showing for the Kindle, so I don’t know what the impact is.

    BTW, if I buy an e-book reader, I will probably get an iPad, just because of the versatility for the price. I will, however, wait until next generation so the kinks can be worked out.

  21. I’d been a bit disenchanted with Amazon already after the previous kerfuffle when they excluded all the gay-related titles from sales ranking on the basis that they were ‘adult’ titles. They at least backed down from that particular stupid move, but I’m not so sure they’re going to wise up about this one.

  22. There’s some authority for the proposition that cheaper e-books mean more e-book sales, and therefore more money for us. IOW, we make it up in volume, becuase people are more willing to take a chance on a book form someone they never heard of at 9.99 than they’d be at 15.00. My friend and fellow thriller writer Joe Konrath is a big proponent of this theory, and he makes a pretty persuasive argument over at http://jakonrath.blogspot.com/

    I dunno the answer…but I don’t like the idea of Amazon telling our publishers what they can charge. They’re already too powerful as it is.

  23. Fascinating. I had no idea this was going on.

    I mostly don’t buy e-books; they’re wicked expensive and they don’t smell nice and I can’t loan them out for cool friend points.

    It’s funny how we see movies as events to sit through, and we’re willing to pay for the privilege of sitting through them even when they suck, and we don’t flinch at all over the fact that we gain no ownership of the movie as a result of our ticket price. But books, we think of as things. We want to own them, hold them. We’re not paying for the experience of reading them, we’re paying for the ability to reference the text again and again, in our own home, and dog-ear the pages and scribble notes in the margin. If we want to. I’m not saying I do that, because that would be bad. Ahem.

    As I was saying. We see a movie in the theatre, it’s an Experience. We watch a band in the park, it’s an experience. We buy a DVD, it’s Something We Own. Books are Something We Own, right now – but what if they weren’t? Already blogs are turning the written word into an Experience, not Something We Own; are we getting used to the idea of writing as a fleeting, impermanent thing? What implications does this have for three or four generations from now, and their attitude towards everything from a promise to the legal system?

  24. I seems to me some people think *only* ebooks have been pulled.

    This is not the case.

    Amazon is de-listing printed books from Macmillan. Macmillan holds a long list of presses/publishers, including Tor.

    I note that Amazon is de-listing not only Tor and Farrar, Strauss and Giroux books, but even text books from the Bedford group.

    I hadn’t expected that. St. Martin’s Press, and the Bedford, Freeman & Worth Publishing Group, publish a lot of text books.

  25. I don’t understand why this makes Amazon look like the bad guys. Amazon is taking a strong stand to keep book prices down, which makes me want to support them over everyone else.

    This further leads me to believe that there may be some other reason for their timing than reason #1.

    Maybe I’m in the minority in wanting retailers to offer me lower prices.

  26. It’s natural to look at this situation and say, “Amazon can’t possibly think these are good negotiating strategies.” Then you look at the history of Amazon’s negotiating strategies, and it becomes all too believable.

  27. I am betting that, since they didn’t come out with some kind of self-serving public statement, they are planning to claim on Monday morning that this was a technical error. Y’know: Something to let them and Macmillan both save face if they manage to hammer out an agreement over the weekend, while still letting everyone important know that Amazon is able to play the “We’re crazier than you and willing to shoot ourselves in the foot over this” card.

  28. MyFirstNameIsPaul:

    “Amazon is taking a strong stand to keep book prices down”

    Well, no. It’s taking a strong stand to have book prices at a specific initial level that best suits its needs in selling the Kindle, which is a different thing. There’s no suggestion that this tactic evidences any interest in book prices other than at this price point. And one could very easily argue that if publishers have to eventually support the $10 price point for their bestsellers, that they will decide to make up the revenue in other places, for example, by delaying or deleting any other price cuts (say, to the price level of a paperback).

    So I’m not convinced that the ultimate end games of this will be book prices uniformly lower. It may be book prices coalescing at a single price point, which is in fact higher than the price point at which some books are sold today.

  29. So the question ‘why now?’ has been asked, and pretty well answered, because if Amazon’s ever going to do it, now is the time they’ll have the most leverage. The question that hasn’t been asked is ‘why Macmillan’? People are assuming this is about the $9.99 price point for hardbacks but I don’t think it is, necessarily, at all.

    Looking at torforge.com, new releases, here are the first 5 MMPB releases listed there, all prices looked up on bn.com:

    Ender in Exile – Card
    Dead Tree MSRP – 7.99
    Ebook MSRP – 14.00

    Bones of the Dragon – Weis/Hickman
    Dead Tree MSRP – 7.99
    Ebook MSRP – 24.95

    The Expediter – Hagberg
    Dead Tree MSRP – 9.99 (according to tf website, not listed on bn.com)
    Ebook MSRP – 14.00

    Critical Mass – Streiber
    Dead Tree MSRP – 7.99
    Ebook MSRP – 14.00

    The Gods Return – Drake
    Dead Tree MSRP – 7.99
    Ebook MSRP – 14.00

    These aren’t cherrypicked, they’re the first 5 MMPB releases listed on torforge.com as ‘new releases’. In some of those cases, bn.com’s discounted price is greater than the dead tree MSRP. It’s quite plausible to me that Amazon’s content to do the 9.99 loss leader thing on hardbacks and take the loss, but is unwilling to sell the ebooks with an MSRP almost double that of the MMPB dead tree edition. I believe that I read somewhere that Amazon pays its wholesalers 50% of list price, so by doing this jacking up of the ebook price they’re ensuring that Amazon can’t make a profit off of ebooks once they hit MMPB.

    Other publishers have been doing the same thing on selected books, but Tor/Forge seem to be doing it across the board, so I bet that’s a Macmillan thing.

  30. Thank you for the wonderfully turned phrase “lurks, gravid, on the horizon.” You and Lileks of the Frozen North (your onetime AOL employee, as I recall you’d mentioned) both use your blogs – or so I like to think – in part to write something every day, or nearly so, for the simple benefit of keeping up your game.

  31. As much as I hate to admit this (being from the region), I feel that this is following some sort of Northwest Business Model. Look at the history of large corporations in the Northwest. Microsoft and Starbucks have also done similar things in the past. I’m sure the Justice Department is extremely interested as to why they are doing this too.

  32. Skip, Amazon sells thousands (possibly tens of thousands) of books priced well above comparable titles from other publishers. They don’t complain about it, and they certainly don’t de-list them.

    As for the Tor titles you mention: I’m not at Tor’s offices. I don’t know what those books’ contracts say about electronic publication, and I don’t know what other considerations went into setting those prices.

    Neither do you.

  33. Teresa, you’re right. I don’t know what the contracts say about ebooks, or other considerations. When the kerfuffle about pricing last came up, on the Robert Jordan reissues, I was told that it was “complicated”, but as a consumer, no, it’s not complicated at all. If the bits cost more than the physical copy, it’s overpriced, and the publisher really isn’t interested in promoting them.

    Look, I want everyone involved in the chain to make a profit. That’s why I’m a conservative and a capitalist. I want to buy goods at a reasonable price, and I want Amazon, Ingram, Macmillan, the author all to make enough money to keep delivering me those goods. If Macmillan prices things so that Amazon can’t make a profit on them, I lose. If Amazon forces the market down so much that Macmillan can’t make a profit on them, I lose. I see evidence of both sides trying to do exactly that, though.

  34. Skip

    I suggest that you reconsider the use of the word ‘evidence’; at the moment we are in unknown unknowns territory…

  35. stevie@37, we have lots of things properly classified as evidence. We have Amazon’s insistence on a $9.99 price point for bestselling novels currently in hardback. This absolutely squeezes them. We have the publishers (and Tor/Forge is certainly not the only one) setting MSRP on ebooks so high that it squeezes the profitability of the ebooks away almost completely when they’re currently in paperback. Is this sufficient evidence? No, of course not, but it is suggestive.

  36. Okay. NYT Bitz Blog says:

    Macmillian demanded the same deal they had from Apple (30% for the platform holder, they set the price). Or Amazon could eat a long delay before they got the ebook.

    If that’s true, my sympathy for the publisher just vanished. Indeed, if it’s true it’ll likely be years before I’ll buy ANY book they publish new again.

    Yes, I did grow up in a country with the Net Book Agreement, why?

  37. Andrew Crystall:

    Point of nitpickery: The article doesn’t say Macmillan “demanded,” it said it “offered,” which is a word with a slightly different tenor and with slightly different implications.

    Also to the point, unless one is familiar with how these sorts of negotiations go, one is not certain that such positioning by a publisher is not in fact customary, i.e., Macmillan states what they would like to see, Amazon counters, etc. So I’m not entirely in the “Macmillan are dicks too” camp yet; I’d like to know more, and I expect we will.

  38. I would want to point out to the iPad advocates that according to at least one source I read, Apple will be using a special DRM version of ePub for their books. So it’s going to be Amazon’s DRM or Apple’s DRM for most people.

    Until there’s no DRM, I’m not interested. if the publishers (or vendors) insist on renting me the work instead of selling it to me, then the price point needs to be MUCH lower than what we’re talking about in any of these conversations.

  39. Skip

    Amongst a wide array of not-much data you might care to note that Amazon.co.uk doesn’t deal in dollars, and that unless and until publishers start handing out their financials we really don’t know what the ‘cost’ of the ebook is, which in turn means that we don’t know what the ‘profit’ would be on any range of prices.

    Nevertheless, the ‘evidence’ we have is that the cost of physical print is a much smaller slice than editorial costs. Clearly publishers can and do cut corners on the editorial input, but the resulting debacle isn’t pretty, as anyone who has attempted to read one of Laurell K Hamilton’s recent books can testify…

  40. John – With all due respect, a seven month ebook delay as the stick means I stand by my wording.

    I’ve been there when publishers dictated prices, and it did really, really bad things for bookstore selections and prices. It’s no coincidence that sales went up sharply after the end of the Net Book Agreement, even as average book prices actually *rose*.

    I don’t buy DRM’ed ebooks, so I don’t have a direct stake in this – although I think the next few months are pivotal for the book industry – but frankly I don’t see Baen charging $15 for ebooks other than eARC’s (and yes, I have bought some of those).

    Okay, I’m not a book author, but I do work in RPG’s and I’m quite willing to bet* that our production costs are more in line with technical manuals than novels, and yet $15 is the very upper range I’d consider charging. (And they’re watermarked, not DRMed)

    (*Okay, I lie there – I know, because I’ve asked technical manual editors, and they are)

  41. Andrew Crystall:

    “With all due respect, a seven month ebook delay as the stick means I stand by my wording.”

    I’m not sure why. The difference between “demand” and “offer” is neither here nor there as regards the particulars of the negotiation, it regards the tone and posturing. Nor are you nor I aware of whether, for example, Macmillan offered these options as an opening gambit or as a final offer. We can each make assumptions, but there’s no guarantee either assumption would be correct.

    Likewise, leaving aside that people want what they want when they want it, I’m not entirely sure that there’s a huge problem with platforming electronic books for after the release of the hardcover. It’s not how I would do it, but I don’t see it as a problem in terms of a product chain, any more than I see it being a problem for a movie company to release a film to cable after DVD, or for a game company to release a game to PC after it’s been on consoles (or vice versa). Amazon would be selling a physical version of the next in the meantime.

  42. Jim @ 41 according to at least one source I read, Apple will be using a special DRM version of ePub for their books.

    A understandable (I refuse to say ‘reasonable’) approach in the iBook Store would be to cripple iTunes so you can’t export books from it. This provides the ‘protection’ ‘required’, yes?

    Short term, none of this is going to make more ebooks (officially) available to me here in NZ. Longer term, hopefully it will help shake things around so that my options improve. It’s not improving my view of Amazon, although I understand their timing.

    For context, I strip any DRM from eBooks, which is legal in NZ, and read on Stanza/iPhone via Calibre.

  43. Jim Kosmicki@41

    I’m sure that *Apple* would be happy to sell you iBooks with no DRM. They want you to buy iPads. The question is will the *publishers* demand they have DRM before they allow there books to be sold on the iBookStore.

    With music Apple *always* wanted to sell them without DRM, but the music *publishers* wouldn’t agree to it.

    Several publishers later allowed other places to sell the same music without DRM, but they continued to insist that Apple could only sell it with the DRM, mainly because they wanted to prevent Apple from controlling the market. Eventually all the music publishers saw the folly of their ways in that and now Apple is allowed to sell all music DRM free, but in return they were required to sell the new stuff for $1.29 a track instead of 99 cents a track.

    I suspect this will play out the same with book publishers.

  44. “I’m not entirely sure that there’s a huge problem with platforming electronic books for after the release of the hardcover.”

    John – Yes, there is. A major issue, and one which is going to bite very hard if you let it. And that issue is the Darknets.

    I’ve seen some quite extensive studies done on games relating to this, and everything I’ve seen for ebooks indicates they’ll be no different except they’re far smaller and easier to download.

    If you want a title, and I don’t mean the major bestsellers which will be there day-0 anyway, but the average title, to be on the darknets early? Either make sure there’s no legal digital version, wrap it in DRM or price it higher than the physical copy. Early release worldwide, lower priced and no DRM? Later to the Darknets.

    A long-delayed PC release is both highly prone to early darknet copies *and* tends to sell very poorly (they tend to be cheaper, but PC games are typically cheaper than console ones anyway and this seems not to make a difference).

    As ebooks grow in importance, this issue is only going to get bigger. It’s important now that worldwide releases, at the same time and at reasonable prices get established if you don’t want to follow the path blazed by the RIAA.

    (The DRM thing…not really going there, but it’s going to bite regardless. Neither you or I will buy DRM’ed ebooks, and I buy second hand print books instead. Why might this have an impact, hmm?)

  45. John, I thought I’d check my iPhone’s Kindle app, and sure enough, the books of yours I have on there are still there. Given some previous pulling books off of Kindles, I did wonder.

    Future e-books will no doubt be purchased on an iPad.

    I generally buy my stuff from indie bookstores anyway (go Kepler’s), but I have about a dozen Kindle books.

  46. Andrew Crystall:

    “And that issue is the Darknets.”

    You mean, all the people who were never going to buy work in the first place are still not going to buy work because it’s platformed? Oh noes!

  47. Oh come on John, you’re smarter than that.

    You know fullwell that while, yes, there are people who download everything and sight and won’t pay, many people who use the darknets – and a LOT of people do – buy a good deal of the very same kind of material. It’s a world of greys, not black and white.

    I work in computer games, and in pen and paper RPG’s, and this is an issue which directly affects me too. But the “not a customer” thing is a pure soundbyte which doesn’t help in the slightest unless you want to restrict your market to those who do no wrong in IP terms – and that’s a pretty small market.

    With the rise of legal music services for reasonable prices, streaming music and so on, the music industry has shown that it’s possible to monetise the vast majority of people out there – but it embittered quite a few who won’t pay for music from them ever again.

    Let’s not go there. Why is that path so appealing? I’m entirely pragmatic about this, yes. Cold bloodedly so, even – what matters is not what people did, but what they can contribute in the future.

    Anyway – http://www.publishersmarketplace.com/lunch/free/

    It’s quite clear to me who pulled the trigger now. And, bluntly, I’m not sure why they feel entitled to set prices when there’s a reason every other manufacturer sets a *Recommended* Retail Price.

  48. John, I’m one of those people who “were never going to buy anyway” if I can’t buy it, but my fictionwise account turnover seems awfully high to count me as someone who “will never buy if I can download”.

    For me it really does come down to “I want to read this. Can I buy it? Bugger. Hmm, can I find it online? Oh, great”. The one caveat here is that I’m rarely interested in scanning through every single collection available and buying it if it has author X in it. So short stories can be a bit of an issue, but at least Fictionwise offer a lot of short stories directly. Now, if they just had a “buy everything by this author”: button :)

  49. Scalzi: Amazon’s probably with the delay window is clearly that such a window would not apply to Apple. If Macmillan’s position was “give us the deal Apple is giving us, or else we’ll punish you and reward them,” then I can very much see how Amazon would respond with “Oh yeah? You try it, and we’ll punish YOU.”

    It’s silly brinksmanship that ends up hurting both parties, but if they both believe this issue is of critical importance, then one can understand why they’d both push so hard on it.

  50. Macmillan’s demands threaten Amazon’s business model which is to buy wholesale and sell as they want rather than act as agent and Amazon is not only right but I think obligated to act the way they did.

    And for the record it is not true that you cannot buy Macmillan books at Amazon; a check 5 minutes ago show 106 copies of Old Man’s War available there.

    I do not want to get into the pricing and all here because it is not the place on a Macmillan part-time “employee” (contractor…) website who would be insane not to defend his paymasters, but I would suggest running a poll on who is right here and see the vox populi

  51. I emailed Amazon about this and here’s the response I received:

    “We are working with the publisher to make their titles available as soon as possible and at the lowest possible prices for our customers. We will e-mail you when these titles are available, which we hope will be soon.”

  52. Andrew Crystall:

    “Oh come on John, you’re smarter than that.”

    Oh, Andrew. Smug condescension really works so well for me.

    I stopped reading your comment after that line. But thanks for sharing.

  53. I am gleefully waiting for Amazon and the big publishers to rip each other apart in the attempt to corner the ebook market in ways that it’s not possible to corner physical book markets. (Nor the ebook market, but they’re doing a *great* ostrich impression for the time being.)

    I’m annoyed that authors I like are being squished in the conflict between the immovable object & unstoppable force. (Applying identities to those is left as an exercise to the reader.)

    In aftermath, I’d like to see a dozen more publishers come out with a system like Baen’s, having noticed that hey, selling ebooks cheaply & DRM-free *works*, and everything else is a monstrous headache with unproven results.

  54. It’s not smug. It was perfectly 100% serious. I’m sorry you want a problem rather than trying to work towards a solution, though, so I’ll go and work with the authors who are trying to solve the issues involved.

    Shame, I liked your books. As life goes, though.

  55. Skip @36 – there’s something – Um, may I quote you -

    “Look, I want everyone involved in the chain to make a profit. That’s why I’m a conservative and a capitalist. I want to buy goods at a reasonable price, and I want Amazon, Ingram, Macmillan, the author all to make enough money to keep delivering me those goods. If Macmillan prices things so that Amazon can’t make a profit on them, I lose. If Amazon forces the market down so much that Macmillan can’t make a profit on them, I lose. I see evidence of both sides trying to do exactly that, though.”

    You say you want everyone – Amazon, Ingram, Macmillan, THE AUTHOR – to make a profit on this. And then you go on to list two situations which directly impact YOUR OWN level of comfort and expectations – one involves Amazon, one involves Macmillan, and both involve, as I say, your own level of comfort and expectations.

    You say in the piece that I quoted earlier that you might also like THE AUTHOR to make something out of this.

    Funny how the author gets left out of your equation at the end. It’s Macmillan vs. Amazon – you specifically use the words “both sides” as though they were only two.

    With respect to conservatism and capitalism, that’s precisely what’s wrong with them. When everything gets taken down to the lowest common denominator of what the profit line is – for the BIG CORPORATIONS – well, the rest of us don’t get to play in that sandpit, then, do we?

    Might I point out that the basic commodity over which the kefuffle is presently being fought – leaving the MEDIUM in which that commodity is being offered entirely out of it – is the book, is the intellectual creation of some human mind out there. Some human being. Currently those human beings whose work has the misfortune to bear the Macmillan brand are MAKING NO MONEY AT ALL, let alone profit.

    While the giants fight over what’s to be in the lunchbox, they’re trampling heedlessly on the brown-bag lunches of everyone else.

    There’s a difference of opinion? Deal with it like the big boys they’re supposed to be. Between themselves. Without throwing hissy fits when things aren’t handed to them on a silver platter.

    Like I said on my own blog earlier, I’m waiting for certain clarifications before I’ll have a more detailed opinion – but for now, and for the record, I think they’re BOTH behaving badly – and a bunch of my friends and colleagues are getting screwed while they duke it out. That much, I do know right now – I’m kind of afraid, if the future holds more of the same.

  56. Alma Alexander@60, it’s pretty simple why I listed two sides – there are only two sides fighting right now. The other parties in the chain, the author and the consumer, aren’t fighting. They’re both getting screwed by the fight. I’m not actually sure how the wholesaler fares in this, so I’m leaving them out for now.

    “When everything gets taken down to the lowest common denominator of what the profit line is – for the BIG CORPORATIONS – well, the rest of us don’t get to play in that sandpit, then, do we?”

    Absolutely we do. You have a choice, buy or don’t buy, at the offered price. That’s the only only way the consumer ever gets to play in it. If Amazon, as the last person in the chain before the consumer, doesn’t charge a price the consumer is willing to pay, well, then it won’t sell, and that judgement will flow back up the line.

    Amazon’s the biggest retailer out there right now for books. The Macmillan guy in the blog posting said “The agency model would allow Amazon to make more money selling our books, not less.” Amazon has a whole lot more data than the publisher on exactly what sales are at different price points, and I pretty much guarantee you that if this were truly the case, you would not see Amazon fighting. Successful businesses don’t cut their own throats that way.

    Based on published reports, here’s the way Macmillan envisions the ebook sales should be divided.

    20% author
    30% retailer
    50% publisher

    They can’t seriously expect that division to stick, so obviously this is just an opening negotiating gambit.

  57. I will try not to be smug, but I will point out that there were two cases where tiered delivery was shown to effect piracy rates. Battlestar Galactica aired in the US three months after the UK and during that period, it was massively pirated, more than any subsequent season. The exact same thing happened in reverse, when Doctor Who was shown in the US before the UK.

    You can’t assume there are only two classes, the “pirate everything” and the “buy everything” groups. There a lot of people in the middle who will buy if they can but steal if that’s the only way they can get it.

    I am convinced this is one reason why DVD releases have been pulled in closer to the theater showings.

    (Games aren’t a good analogy as there’s really no way to “pirate” a game to play on PS3 if it is only released on PC. Games can’t be copied between devices for purely technical reasons.)

  58. Steve Burnap:

    I’d note you’re comparing TV to books, and in my experience they don’t have the same dynamics.

    “You can’t assume there are only two classes, the ‘pirate everything’ and the ‘buy everything’ groups. There a lot of people in the middle who will buy if they can but steal if that’s the only way they can get it.”

    In the case of the books, however, it’s not that they can’t get it, it’s that they can’t get it exactly the way they want it. In this instance they’re not entirely different than the people who want a book when it comes out in hardcover but they don’t want to pay hardcover price.

    Why I’m not entirely worried about it, personally, is that people who want a book but don’t to pay hardcover price already find ways to access the information before they pay for it (i.e., borrow from a friend, check out from the library, stand around in a bookstore, reading) and yet will still pay for it when the price point drops to something they’re willing to pay (for example, when it comes out in paperback).

    I do suspect there will be a similar dynamic emerging in the eBook world. I suspect it because I know anecdotally it’s happening to me: People find stuff of mine out there on the Internet and then later buy it in one form or another. I mean, shit. I’m selling scads of Agent to the Stars in trade paperback, and it’s been online for ten years.

    That said, as I noted to Andrew, the people most committed to the “darknet” aren’t the ones who are planning to pay anyway, which is why I don’t really waste a whole lot of time worrying about them.

  59. This final line from the most recent NYT update (“Amazon refused to comment”) reinforces John’s original point: Amazon seems to have done this on a Friday afternoon because they want to show Macmillan their willingness to put the boot in, but are trying to minimize the negative publicity with consumers.

  60. John @13:

    What nobody who brings up these figures about how books cost so much to make ever addresses is, if e-books cost so much to make, how is Baen able to sell them at $6 each and make a profit on the e-book side of things?

    Eric Flint has made it very clear in several places that the Baen Webscriptions e-book market does make a profit, and does pay its writers decent royalties compared to other e-book markets.

    Baen is smaller than the major publishing houses under discussion, so it can’t be economy of scale.

  61. Chris@65, Baen is able to precisely because they’re small, and they have a community that’s dedicated to them, that buys virtually everything they publish. I know, I’m one of them. I buy the webscription at least 8 months out of the year, at least for the last few years. My rule is I buy it if there are two books I’m really interested in, regardless of the other 4, no matter what, and if there’s one book I’m really interested in and a couple I have moderate interest in, I’ll buy it.

    This lets me get books I want, at a reasonable price, gives me several books I wouldn’t have bought otherwise to be in my pile to read eventually. And it’s not uncommon when I read one of the ones I got more or less as an ‘extra’ to end up adding an author to my list that I actively buy for.

    But that’s precisely it – Baen sees the webscriptions as a marketing tool, not as a primary delivery mechanism. If ebooks become a primary delivery mechanism I suspect the price will go up. Not sharply, probably up from $15 to $20 or $22 or so. But I understand that they make most of their profits off of the hardbacks I’m not buying.

  62. Macmillan’s CEO has a statement here, which describes the exchange with Amazon thus:

    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.

    Which is somewhat oddly worded — he starts out by calling the new arrangement a “proposal”, but “will become effective in early March” doesn’t sound like he was offering Amazon much of a choice (beyond the two offered options of “agency model” — on terms dictated by Macmillan — or “deep windowing”).

  63. The game markets and the book markets are completely different from each other. There is not, for instance, a vast system of game public libraries where you can borrow a game once it comes out (though some libraries try to stock a few in their video collections.)

    People who steal download are not reliable buyers, even if they do occasionally buy stuff too. (Of course they buy stuff — they are the folk who also have discretionary income and buy gadgets and software that allow them to illegally download.) They do it because they like to do it and they don’t care who else it hurts. Therefore, there is no reason to design the entire market to cater to them, as it will not change their behavior. If you have simultaneous releases — which we will eventually have and which I think are a good idea — the “grey” buyers will still illegally download, and not just from a publisher who done them wrong with delays but from anybody they feel like stealing from. Because they have already established the ethic that if they are inconvenienced or bored, it’s okay to steal.

    The grey and the black thieves have a big effect on games because the games market is about having the cool new thing on the block first. But that’s not how people buy books. The people who are reliable book buyers, who don’t steal (a bigger group,) don’t decide not to buy a book just because other people illegally downloaded it. In fact, they are more likely to buy a book after it’s been out for several months and buzz has built about it. (Whereas games build buzz before they are released.) And whereas people tend to forget games a year or so after they come out, people will buy books decades after they came out, including e-books. Whatever factors are going to be involved in e-book pricing and e-book releases, the thieving assholes are not going to be one of them.

  64. Well, this kerfuffle has inspired me to go and place my first order with the Book Depository. Free international shipping, and the Book Depository carries Macmillan books by Neal Asher that Amazon didn’t stock even before the current unpleasantness. This is the first time in years that I have bought a book online from anywhere other than Amazon.

  65. I wish I could take back the 2k I spent with Amazon yesterday(new TV), as a protest to this. The publisher has a right to set what they want for their product. If people do not want to pay, then the publisher will have to adjust the price.

    It sucks because I order a lot from Amazon, and an average of at least 2 books a week. The UPS mans hates me. He comes to my door and says “another one from Amazon”

    But I will not buy anything from them until this is resolved.

  66. @Harry Connolly

    Am I the only one who thinks the term “darknets” is concentrated dorkiness?

    No. No, you’re not. :)

  67. Amazon has been operating in a delusional state ever since launching the mediocre Kindle (one notes that this week–all these years later–was the first time they ever felt a need to say, sort of, how many units they’d sold). It took Steve Jobs to snap them out of their reverie, briefly, and then their big idea was to delist Macmillan. “Press their advantage?” Sure–for a couple of days, just as you say, John. Then they’re going to be on the defensive, and let’s hope they stay there. Before this skirmish ends, Amazon will undoubtedly try to appeal to those who imagine that all intellectual property gravitates to “free,” pretending that they’re the champions of Everyman (the Republican champions of Everyman . . .). The problem is that when Amazon sells books at loss-leader prices, authors stop eating–or they stop writing and do something else. Culture deflates in the name of “democracy.” All of which is one more reason to shop at your friendly neighborhood indie bookstore–or, if you don’t have one anymore, from indies that compete with Amazon online.

  68. It’s long irked me that the Kindle has come to represent eReaders in the public mind when there are many other eInk based models that are entirely competitive. (Again…I work for a competitor but…)

  69. I pirate books. I have 15k books downloaded, though it is unlikely I will ever read them all.

    When I find an author I like or am interested in, I try to find all their works. I find the series that sounds coolest and then start reading it.

    If it is an ongoing work, after I catch up to live, I buy all the new releases to support the author and try to ensure that more works are available. I know it shouldn’t be up to me to pick and choose which books I buy, if I consume it I should be obligated to pay. I never said I was a nice guy…err..lol. BTW I also find the pirate version of the book I just bought so I can avoid DRM issues…so it really is a “support” thing. I did buy one paper book because I couldn’t find the pirate version, but that was after reading the first 10 books in the series and not wanting a hole.

    I can say that personally, I bought a maximum of 2-3 books a year in the 15 years prior to getting an ereader. I have bought closer to 20 books a year with my new system. I am not saying it is right or wrong, just that the amount of money spent by me went up by at least 10 times.

    I can also say that if the prices got crazy or the books were not available at the paper release…I wouldn’t bother. I know it is just one data point, but I have to think there are others who do the same.

  70. I think there is a problem when dealing with privatly held companies. Some of them would rather sqeeze their authors than take less for themselves. If they were answering to share holders they could almost justify this. Greedists.

  71. Music and books are apples and oranges. People decided that their experience of MP3′s on their portables or in their car was the same as their experience of CD’s except more conventient. Listening to music is more passive and for most people it’s something they do while doing something else. Not so for reading a book, so the interface is more important than it is for music. Books also have a much older and deeper cultural significance than do shiny silver discs or handheld gadgets, for that matter. It seems like ebooks are seen as less valuable than ‘real’ books which isn’t exactly what happened with recorded music.

    I could see a lower ebook price if people are willing to wait for eighteen months or so to let the book make money, and they could pay a lower price for less durable goods of a lower quality. If the paperback has had time to sell, even five dollars is not an unreasonable price given that it has the potential to be ‘in print’ indefinitely.

    Has anyone ever heard anyone really complain about waiting for a paperback? I always thought the wait was kind of exciting, if I noticed it. What is it that stops people from accepting the wait for a *piece of entertainment* that even in hardback costs less than a delivery from the pizza place? TANSTAAFL.

    As for the current situation with Macmillian, maybe it’s time for Hachette or another major publisher to pull their books from Amazon, if they can do it without any legal issues cropping up. It would only take one big house, and it would only be about an hour and a half before Bezos rethought the whole situation.

  72. Speaking of timing, I haven’t seen anything about this dispute on the Huffington Post. I thought it would be just their cup of tea, especially as they have a new books section. Perhaps they’ve been drinking whiskey tea and are blurry-eyed as a result.

    (I should note that I love huffpost, though the people who write the headlines are creative with the facts.)

  73. I don’t pretend to be a great expert on the law of antitrust (Hey, I got an “A” in the course in law school–in 1977). But it seems to me that Amazon’s actions are obviously an antitrust violation–an attempt to use market control in one market to force a better price in another market

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