Amazon, Macmillan Fight Over Ebook Prices; After Amazon Removes Macmillan Titles, It Caves To Higher Prices
from the too-bad dept
On Friday, there was a sudden realization that Amazon had removed books published by publishing giant Macmillan, apparently over a dispute concerning ebook pricing. Of course, Amazon wasn't just removing Macmillan ebooks, but the physical books as well. After a bit of back and forth over the weekend, Amazon caved in and accepted the way Macmillan wants to price books, which means that Macmillan sets the retail price, and Amazon gets a cut. Previously, Amazon had paid a wholesale price and then got to set the retail prices itself.I had been under the impression that when manufacturers tell retailers what the end user price is, it's a form of price fixing, but apparently not...
Of course, what may seem odd about this is that it appears Macmillan will make less per ebook under this model. That's because with its old wholesale pricing, Amazon was actually losing money on every ebook sold. As the NY Times notes:
In the model that Amazon prefers, publishers typically collect $12.50 to $17.50 for new e-books. Under the new agency model, publishers will typically make $9 to $10.50 on new digital editions.So why are publishers specifically trying to limit their own profits from ebooks? Because they're afraid of ebooks cannibalizing hardcover book sales, which is why they're also looking to delay ebook releases. In fact, in this case, Amazon was given the choice of either increasing the retail price for consumers on Macmillan ebooks, or getting them many months later. All in all, this looks like publishers hurting themselves, yet again, by going against what consumers want in a misguided effort to preserve the way things used to be. Yet, in an age when users are punishing authors and publishers who don't treat them right, this could backfire in a big way.
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No, price fixing is when manufactures or retailers get together and agree to a price for all similar goods, and agree not to compete on them.
Book publishers each produce unique products, so there is no real price fixing possible, only a contractual agreement for what is an acceptable retail price for the product between the distributor and the retailer.
If Amazon and Walmart got together to set a retail price for a specific book, that would be price fixing.
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But, in my book the only forms of water are:
liquid water
water vapor (clumps of molecules)
gaseous water (1 or more molecules)
ice
snow (form of ice, but distinct enough to warrant its own line)
Yep, I'm pretty sure dirt is not a form of water...
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"
LOL
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I might be a giant
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not only that, whether TAM was right in the first place or not, the comment in question Didn't actually change the validity of his.
If a fool says something wise, it does not make the statement less wise, nor necessarily make the fool less foolish. (though it's a good start on the second part :D )
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What if they get together and decide to never charge less than £20 for a hardback novel? I think that would be price fixing.
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Interesting ... I remember some time ago where the plastic disc people were convicted of something ... what was it again? - Oh yeah, price fixing. And guess what - each one of them produces a unique product! Imagine that.
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No, that is both collusion AND price fixing.
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That was a long time ago. It's perfectly OK in the new Amerika.
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Sleeping it off
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Re:
In the UK the right of publishers to do this was conferred by the Net book Agreement.
http://en.wikipedia.org/wiki/Net_Book_Agreement
Whatever you call it's now illegal in the UK.
(Quote from the wikipedia page linked above)
"In March 1997 the Restrictive Practices Court ruled that the Net Book Agreement was against the public interest. It was therefore ruled illegal."
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Manufacturers can, however, suggest a price.
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Just like hardbacks / Paperbacks ?
This forces people to choose between a price (maybe even a format) to suit them, and the desire to have it now.
Though it can be pretty annoying to be forced to buy an overpriced, oversized hardback just to get it when you want it, it's how the industry has worked for a long time and anyone is free to choose not to buy it.
About the only time when this would be seriously worrying is if the book was named on the national school curriculum and the publisher delayed the paperback until after term start.
If eBooks are cheaper than paper then I'd expect publishers to do exactly the same (ie launch them later). And it's a business decision. They may actually be wrong (overall sales may suffer) but they're free to do it.
If eBooks cost the same, then I'd be more surprised.
There's no difference between believing paperbacks will cannibalise hardbacks, and believing eBooks will cannibalise paper (and DVD's will cannibalise theatres, DVD rentals will cannibalise DVD sales etc).
The one small flaw in it all is that you are deliberately and explicitly choosing not to give customers what they want in an attempt to extract more money. In any other industry, someone might break ranks and just serve the customer. But if I am publishing a new book by author xx, there is noone else competing with me to publish that actual book.
You could argue that if book xxx is only in hardback then I'll buy book yyy to read on the plane instead because that IS in paperback form.
But if their business model is stupid, that's their funeral. It's the author I feel sorry for.
But they (publishers) should be competing against each other to win the author, surely.
What would bother me is if the publisher told one outlet (Amazon) what to charge and not every other outlet.
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Re: Just like hardbacks / Paperbacks ?
Actually, the one small flaw is assuming the customer is always right, because they are not.
What makes me laugh out of all of this is that what the book sellers are doing is exactly the "artificial scarcity" system that Mike pushes so much. Hardcover books are the equal of the "pre-release box set" or the "autographed hoodie" or what have you, something that is rare by it's nature. If you want to be first to read a new book, you buy the hardcover. If you are just like the masses, you wait and buy the paperback or the digital version.
It really is the same thing, just framed slightly differently. The artificial scarcity is what justifies the price, no different from paying $50 for a hoodie.
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Re: Re: Just like hardbacks / Paperbacks ?
but goods should be worth what they are, not in relation to others. an ebook should be $3-$7, not $15 just because the hardback is $30
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Re: Re: Re: Just like hardbacks / Paperbacks ?
Macmillian could continue to see profits on books that have gone out of print.
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Re: Re: Just like hardbacks / Paperbacks ?
Actually they are. Cause otherwise they just don't buy and the manufacturer can feel right all that he wants, he just won't get any money out of it. Clever choice.
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Re: Re: Just like hardbacks / Paperbacks ?
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Re: Re: Re: Just like hardbacks / Paperbacks ?
There is no shortage of cotton, no shortage of t-shirt plants, and no shortage of printers to make them (cheap too!). The only scarcity is when a human decides to order 50 of something instead of 1000.
Hardcover books are the same sort of thing, the choice is made not to offer a paperback or digital version right away, and the hardcover books are often in limited supply (first printing, second printing, etc... more artificial scarcity). It isn't any different, there is no shortage of paper or printing presses, just a human choice to limit production (artificially creating scarcity).
There are few true actual scarcities, time being one of the very few.
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Re: Re: Re: Re: Just like hardbacks / Paperbacks ?
And intelligence as you keep demonstrating.
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Besides, ALL I got was what I posted 4 posts up which of course you chose to ignore, like you always do when you're running out of comebacks.
Gosh, if you're really the best chill the industry can come up with they will be gone sooner than even I thought. Good riddance.
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Have a nice day troll.
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TAM running on empty, as usual
Well done, you poor little schmuck.
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Re: Re: Re: Re: Just like hardbacks / Paperbacks ?
Things that are for all intents and purposes infinite (digital copies), have an extremely low (if not zero) marginal cost. Companies often try to artificially set prices that defy the pressure created by that low marginal cost. Thus the problem.
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Re: Re: Re: Re: Just like hardbacks / Paperbacks ?
In particular the time of an author. So if he/she takes the time to sign a copy of a book that is a real scarcity not an artificial one.
Copyright in contrast is an artificial scarcity because it is created by the laws of man rather than the laws of nature.
Mike is saying that what you need to do is to find real scarcities (usually based on someone's time which is one of the few - as you admit) rather than artificial ones.
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Re: Re: Re: Re: Just like hardbacks / Paperbacks ?
There is no shortage of cotton, no shortage of t-shirt plants, and no shortage of printers to make them (cheap too!). The only scarcity is when a human decides to order 50 of something instead of 1000."
No but the thing that makes the T shirt scarce (and everything else you mentioned) is it's provenance. There are many early 19th century chairs around - they sell for a few tens of pounds each - however the one that Napoleon sat on whilst planning the campaign at Waterloo....
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Re: Re: Re: Re: Re: Just like hardbacks / Paperbacks ?
All physical goods are scarce because if you give one away you don't have it anymore and makeing another one requires time (and effort and materials).
The only thing scarce about a digital good is its initial creation because it takes someones time. Once it exists you can give away millions of copies without loosing yours.
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and what makes me laugh is that is a complete misunderstanding of what Mike has been saying. It's SO wrong I can't een work out how to start putting it right.
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Also, the other problem with TAM's analogy is that he is comparing the hoodie-vs-music against hardback-vs-softback/ebook. The hoodie ISN'T the music, it's a totally different product. The Hardback IS the product, and a lot of people feel unable or unwilling to cough up that amount, yet have to wait several MONTHS for the main product. Imagine if the Blu-Ray was released 6 months before the DVD - a lot of people would be justifiably miffed, to put it mildly.
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Re: Just like hardbacks / Paperbacks ?
Except thepiratebay and demonoid and such. Jerk your customers around on prices and free starts looking pretty attractive, regardless of legality.
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Deleting Macmillan content from Kindles...
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Re: Deleting Macmillan content from Kindles...
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RE: Just like hardbacks / Paperbacks ?
Because of their pricing policies, I will not now, or ever purchase any book (hard cover, soft cover, e-book, etc.) published by Macmillan.
One other thought .... Where do I go to get a pirated copy of the e-book that Amazon took down?
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For more info on Resale Price Minimums
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Re: For more info on Resale Price Minimums
The Net Book Agreement - which was the relevant one to the current case in the UK was ruled illegal over 10 years ago - and it was the last surviving vestige of Resale Price Maintenance in the UK.
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Expect the publishers to join the RIAA in demanding that if you don't pay full hard-cover price for three e-books you should be cut off from all reading matter ... 8)
The publisher's attitude is, of course, driving people to piracy. The Kindle price for technical books (selling in the $40+ price bracket) is on average about $2 cheaper than the hard-cover version, with the result that many are available for download as free PDFs
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while i doubt either amazon or macmills cares about me specifically, amazon is thinking of me more than macmills is. amazon wants me to buy stuff. lots of stuff and all from amazon. therefor they do everything in their power to make this easy and afforable.
the thing is this, hardcovers could be $50 and i'd still feel ripped off by a $15 ebook. they could be $100 and i'd still not buy a $15 ebook.
with a hardcover i am getting something. i have a book that is well bound, durable, and usually printed nicely.
for the ebook, i am getting a text file. a text file that is only mildly altered from the text file that was already created to make the printed book. it may not even come with a picture of the cover.
i'd rather they delay the ebook and sell it at a reasonable price. the tiered system is flawed, yes, but at least we are used to it. i can wait for a book. macmills is banking on me still being able to afford it. and at $12-$15 an ebook, the answer is no.
(but there is the real danger, no? if i wait for the book, i may not actually buy it. ever.)
i have a nook. so far everything i have read on it has been in the public domain. here is where ebook readers are going to shine. if you have an ebook reader you don't have to pay for public domain books ever again.
but when i start buying books (because i will) i will be very cautious about what I get. amazon had it right. if the ebook is a few cents cheeper than the paperback, why buy it?
especially when i can find a free jules verne book to read.
macmills thinks that it isn't competing with anyone since it alone puts out macmills books. but as much as i love auther X, if his stuff is too expensive, i'll read author Y. or play video games.
this is starting to ramble, but the point is this: amazon was not the bad guy in this. sure it flexed its muscles. it had too. and it a way they did it for us. they lose if we don't buy this stuff.
and macmills doesn't care about us. or the authors.
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Sadly
I think it will become a lot like music, with 2 opposing factions and all the rest of it, and sadly the content creators are the ones who'll lose out.
I think authors may need to find a way to CwF+RtB.
Disclaimer : Blog comments are 95%+ of my interwebs posting total. Definitely no book deals.
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Until
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More..
Nice way to defeat your own logic in the middle sentence by adding the last one. Hardcovers are simply the company's way of providing an earlier version of a product at a higher price. There's no reason the first release method can't be paperback - or digital. Imagine : The first eBook sold in serial form over a year by subscription then sold as e/iBook, then physical copies. I'd pay to be part of that .. but meh.
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Re: More..
In studio speak its a window ... and eventually there will only be one or maybe two windows.
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http://www.boingboing.net/2010/01/29/amazon-and-macmillan.html
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One of these days.....
The overall profits would be less, but with fewer hands in the pie, the authors share should be greater.
If someone decides to run with this, & do the Audio books please hire one of the great female voices out there, I've seldom heard a great male narrator. The absolute best is; one of each (Male and Female) in which case it becomes more like a radio play.
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That being said ebooks are simply not worth $15 apeice. This on top of the puchase price of the device really is a big strike in the cost benefit analysis.
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Not quite
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Re: Not quite
http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html
He says that the Macmillan terms of the agreement were to retain their rights as publisher, something Amazon was pushing them to cede.
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iPad rumor
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Resale Value
In the case of a kindle, an e-book has zero resale value because you are unable to sell the e-book after you are done reading it. This can have a huge impact on the value of a good.
I'm not sure if there is a (legal) resale market for non-drm'd e-books yet, but this would certainly increase their value.
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HUH
it costs you more then 12.50 amazon?
Anyone have a issue with this?
DAMN if this were the case then whats the dal with pirated ebooks
if they all cost 12.5 to reproduce then wtf is going on
LIES AND MORE LIES
back to my 95GB of rpg ebooks and 200,000 novels
screw you and your price lying
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Didn't work for music.
This saddens me.
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ANTI MIKE is dense
I am not dense"
everyone stopped right there and agreed that you are dense
AS WOOD which btw does contain trace amounts of water
too bad this isnt like the cbc website where you can give thums up or down cause i'll be 99.9% will thumbs up this
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TAM the amazing TAMHOLE
It really is the same thing, just framed slightly differently. The artificial scarcity is what justifies the price, no different from paying $50 for a hoodie."
Wow....just...wow. You have now officially gone off the plot. Your lies and misrepresentation of things is so far beyond what everyone else's is, that you have now completely and utterly undermined your credibility to an absolute. You stand revealed for the paid shill you are.
You SHOULD know by now that Mike does NOT advocate either "give everything away free" or "artificial scarcity" through things like windowed releases. It has now become abundantly clear that you will stoop to any level to try to twist the themes of this site and these viewpoints to try to discredit them, even if it means complete misrepresentation and outright fabrication.
Pre-release/windowed forcing of scarcity IS NOT what Mike advocates here. His entire econ 101 here is: USE FREE to help ALSO SELL scarcities. You, of course, only hear one of 2 things: "FREE", as in, give EVERYTHING AWAY, and "Scarcities" which you interpret as selling t-shirts. Mike has been a strong opponent AGAINST this EXACT scenario: forcing people to buy the more expensive item by WITHHOLDING any other, especially a free or low cost option. You, on the other hand, swing in like a retarded CEO and go "See! see! Mike is the same!" as if you've just "gotten" him in some kind of moral inconsistency, when in reality, you lie and misrepresent, build a straw man, then go "gotcha!!"
You now, officially, have nothing to add to any of these conversations except bile, invective, lies, strawmen, and corporate stoogery.
Mike, is there any way to filter out comments by a particular poster, so they never show on my screen when I view them?
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Re: TAM the amazing TAMHOLE
However, as my second post above demonstrates, I honestly think that part of the problem is a very odd view of economics on his (or her) part. I finally understand one of the major area of disagreements between TAM and the rest--I believe he completely misunderstands the economic concept of scarcity and its contribution to marginal cost.
That's a pretty fundamental concept and until our understandings converge, there will never be much common ground.
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Re: Re: TAM the amazing TAMHOLE
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Re: Re: TAM the amazing TAMHOLE
Actually, scarcity has absolutely nothing to do with marginal cost (the cost to create one more unit), but rather it has to do with supply and demand. Scarcity is what limits supply, and the price is created as a result of the demand, particularly when demand is in excess of supply.
Artificial scarcity is to specifically limit supply where no real supply limit exists. "limited edition" anything where the limit is created only by choice means that supply is constrained only by choice, not by any true shortage.
A music business example would be putting a major "stadium" act on a small night club tour. Those tickets are exceedingly scarce compared to demand, but that scarcity is artificial, because the band could just as easily play a larger room. The true scarcity is their time, not the number of seats. The seat scarcity would be artificially created.
Anyway, what the publishers have done for a long time is create an artificial shortage of books. Essentially, they could very easily print new books are lower priced paperbacks right away, and satisfy the market demand in that manner. However, they manage supply, first putting the book out as a higher price (and quality) hardcover book, and then releasing it over time as a lower cost paperback.
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Re: Re: Re: TAM the amazing TAMHOLE
Heh. The above statement is basically "Hi, I'm The Anti-Mike and I don't understand economics *at all* and I am now going to show off how willfully ignorant I am."
I have suggested in the past that a refresher course on basic economics might be in order for you. That you have chosen to continually misstate the most basic economic concepts is amusing in that it shows that you are not here to engage in any sort of informed debate.
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Re: Re: Re: Re: TAM the amazing TAMHOLE
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But, Amazon are totally the bad guys here. They are trying to lock down control of a new market, and are not afraid to leverage their position with physical books to do it.
Worst of all is their attempt to get "most favored nation" provisions in their contracts, where publishers cannot allow any of Amazon's competitors to underprice them.
Who is really going against the customer here: the company that is seeking to lock down its control over content it merely resells, or the publishers, who want the flexibility to deal with multiple resellers on different terms? I'll take a competitive market any day, over an Amazon bottleneck.
The "agency" model that Macmillan wants is stupid, as it prevents the resellers from differentiating themselves. But it's not as though Amazon is some hero company here. They're the ones that are the threat to the viability of ebooks.
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Comments
Sarah Zettel
Andrew Wheeler
Charles Stross
Cherie Priest
Louise Marley
Jay Lake
Brenda Cooper
Kathryn Cramer
John Scalzi
Cory Doctorow
MacMillan's letter to authors
New York Times
LA Times
Amazon's surrender letter
This time I tend to believe McMillan. Now I'll admit that part of the reason I tend to believe McMillan is Amazon's insistence on use of Kindle DRM EVEN WHEN THE PUBLISHER/AUTHOR DOESN"T WANT IT. The only reason to use DRM is lock in. Amazon wants lock in, and I don't like anyone who likes lock in.
But that's me. I have no doubt there are masochists out there who love being tied to the ceiling and whipped. If that's what they want, well, they can have it.
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.... ok....now what?
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Things not spelled out?
But I think where the turn of the brain takes place is now in the digital realm? am I correct? Because the publishers can create their scarcity by just publishing 100 books the first time, but one person can buy that book and digitize it and turn it into a infinite good?
Meaning before the digital age this was a possible type of raping the customer, but now the shoes on the other foot because we can make the scarce good infinite now?
Am I getting the gist of the argument here? And I would never pay more than $2-$3 for something I can't resell, that isn't a piece of art, and that I can't lend out to friends. I'd like to know these people who need to take a whole library w/ them on vacation. Where are they going for so long and how much time do they have to read?
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Re: Things not spelled out?
That's not an artificial scarcity, but a real scarcity. The determination of whether or not something is scarce or not has to do with the marginal cost to produce another one. If it's zero, the good is not scarce. If it's above zero, it's a scarce product. So the book publishers are creating real, not artificial scarcity. TAM's discussion is trying to redefine well accepted terms in economics because he never wants to be proven wrong.
Meaning before the digital age this was a possible type of raping the customer, but now the shoes on the other foot because we can make the scarce good infinite now?
More or less. Once a scarce good has become infinite, then the supply shoots up, and thus price in a competitive market gets pushed way way down.
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Contribution margin question
But it seems to me that once variable costs are figured in, the publisher should know what the contribution margin is for any given book in every possible format. And--this is the key point--shouldn't the publisher be indifferent to format if it is receiving the same contribution margin?
For some reason publishers don't seem to be--and I can't figure out why.
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Price fixing?
If Amazon is a retailer who buys wholesale then the wholesaler has no authority to tell them what to do with/how to sale their property (in NZ, where I live, that's an illegal attempt to restrict competition).
But if you've convinced everyone that what you're doing is moving licenses about then Amazon becomes an agent for other peoples licenses and starts getting a cut of the deal rather than an owner of the property at any time.
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Barnes and Noble
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