Tuesday, February 2, 2010

E-Book Wars: The First Major Battle

So this weekend, two huge businesses in the publishing world launched the first offensive in the war that's been simmering over e-book rights, pricing and other e-issues ever since big publishers realized there might be something to this e-book thing. The combatants? Macmillan, one of the Big 6 in New York, and retail giant Amazon, unarguably the largest online bookseller. The issue? Pricing.

One major concern publishers have latched onto regarding e-books is the belief that a low price point will devalue hardcovers, and by extension, their authors' work. Amazon, being a retailer permitted to set their own prices, has consistently refused to set e-book prices higher than $9.99.

On Thursday, the Macmillan president met with Amazon executives to discuss their new policy, effective in March, concurrent with the deal they've already signed with Apple for their new iPad device. Macmillan proposed to set e-book prices for new releases at $12.99 to $14.99, with the caveat that they'll lower the prices over time, and have e-books available at mass market paperback prices when the MMP versions are released. Amazon disagreed.

On Friday, Amazon removed the Buy buttons from all Macmillan titles on their site - including hardcover and paperback versions. There are reports that Amazon also deleted sales information and sample chapters of all Macmillan titles that were downloaded by customers onto Kindle devices.

What does this mean for the future of e-rights? The only thing that's clear at this point: no one really knows.

Here's agent Nathan Bransford's take on the issue.

Pro e-book author J. A. Konrath weighs in here.

And from a reader's perspective: Jane at Dear Author.

My take? I'm confused. Mightily. There's no question that things are going to change, but at this point there are too many possibilities to call the direction. Will the iPad, a device that has most tech-savvy e-book consumers feeling "underwhelmed" (as Sarah at Smart Bitches, Trashy Books spells out here), prove to be true competition for the Kindle? Will the rest of the Big 6 publishers follow Macmillan's lead, and either force Amazon to raise prices or pull their titles from the world's biggest online bookseller?

The only opinion I've truly formed so far is this: I don't believe a lower price point for e-books is going to destroy hardcover sales. I have several reasons for believing this. One: A good portion of hardcover sales are to libraries - and libraries are not going to replace hardcovers with e-versions. Two: Readers who make hardcover purchases do so because they like hardcovers. They want the durability, and even the prestige, of owning a "better" version of a book by their favorite authors.

And three: Those who read a lot of e-books, or almost exclusively e-books, do not buy and have rarely bought hardcovers in the past, and will not start purchasing hardcovers if e-book versions are not available. If you own an e-reader, chances are good that you read a LOT of books. That means you don't habitually spend $15 to $25 per title. Before e-books, you purchased mass market paperbacks. You were never part of the hardcover equation.

So, listen here, New York publishing and Amazon: STOP PANICKING. There's enough ice cream - er, slices of the e-book pie - for everyone here. It's time to embrace the future. Can't we all just get along?


Aaron Paul Lazar said...

Wow, S.W. I had no idea this was going on! You've got your ear to the ground on so many hot issues, thanks for bringing us up to speed on the confusing, but interesting, battle!

I fall into the hardcover crowd - I buy hardcovers (up to $32.00 for favorite authors) because I LOVE holding them in my hand and putting them on my shelf and seeing the author's signature on the flyleaf (when I can get it).

To me, the pure pleasure of being able to pass a great book on to my wife, kids, and eventually grandchildren is a thrill. Also, with a hardcover you can bring it out on a boat or carry in your back pocket to the doctor's office. I buy ebooks only when my fave authors don't have the hardcovers available. I still buy them, but it isn't as lovely an experience as opening the package, running my hands over the glossy cover, and settling down by the fire. I also like the feeling of turning a page - literally. ;o) But I'm all for ebooks in all genres - I think it's a helluva value for those who don't want the more expensive counterparts! Like you said, there's room enough for all of them!

David Ebright said...

I don't see where Macmillan was wrong - they are the publisher. If their sales falter because the price is perceived as too high - oh well. Amazon has no skin in the game - there's nothing to inventory & no shipping costs for e-book sales. I also agree that hardcover buyers will be loyal.

Amazon played shenanigans with buy button threats & removals when they insisted on offering POD books only through their affiliate Create Space. Some PODs went into panic mode & caved, Booklocker took them on & won. (writersweekly.com)

The whole business is crazy & the majority of authors (the ones that sacrifice, create & invest their hard work) get the crumbs.

I think e-books will be the game-changer. Authors & readers will probably reap some great early benefits. POD & small presses will continue taking a greater market share from the big guys. Efficiency will win out & with improved efficiency comes profitability.

Kim Smith said...

Ahhh... the ever changing world of ebooks... amazing to me that we haven't gotten here before now. I blame iPad and Apple for being the catalyst to the pricing point. Apple has always been a very expensive, proprietary business. Nothing new there.

I am worried about the future of ebooks though. I can get no more than 5.99 at my publishers site on sales but I get a bigger hunk of that amount for myself than I do anywhere else.

Congusted over here, SW. (confused and disgusted)

Marta Stephens said...

Makes ya wanna say, "Play nice, now." This rates up there with what Amazon did to small presses a year or so ago when they (Amazon) bought Booksource and tried to force everyone to use it. How many small presses went belly up as the result of that one?

This is a great article that needs to be shared. Thanks so much for keeping in the know.

s.w. vaughn said...

As of today, all Macmillan titles remain de-listed on Amazon. And the WTF head-scratching continues...

Here's a great post from John Scalzi (a Macmillan-published author) on the matter: http://whatever.scalzi.com/2010/02/01/all-the-many-ways-amazon-so-very-failed-the-weekend/

And a very interesting little factoid buried in all those links I included - had Amazon taken the deal Macmillan proposed in the first place, they would be making MORE money from each Macmillan title sold.

The old pricing model: Amazon paid Macmillan half the hardcover retail price for each ebook they sold, or around $12.50. Which they turned around and sold at a loss, for $9.99, presumably in order to sell more Kindles.

The new pricing model: Macmillan offered a 70-30 split - that's 70 percent to Amazon, 30 to them - which would give Amazon a little over $10 per title for those e-books priced at $14.99...

Amazon said no, we don't want to make more money, we want to charge $9.99 for e-books.


s.w. vaughn said...

And a much better explanation / breakdown of my comment here from Nathan Bransford:


Cheryl said...

Great post and insights S.W. I've read a bit about this issue on other sites. I think it's kind of funny that Amazon supposedly accused Macmillion of trying to take over the market when Amazon is the largest monopoly out there, but maybe that's just me.

While my Kindle has definitely changed my opinion of eBooks, I believe you're right that pricing isn't going to necessarily change the buying habits of book buyers. People who like printed books are going to keep buying them. Those who like eBooks will keep buying those. Now that Amazon is offering higher royalties on Kindle versions, there might be some crossover authors like me, but overall I don't think people are going to be encouraged to change their preferences.

On another note, the iPad sure looks cool to me and I don't even like gadgets.


A. F. Stewart said...

Surprisingly, I agree with Amazon's stance with lower prices for e-books, (I'm generally against Amazon's heavy-handed policies). I wouldn't buy any e-book priced 12-14 dollars. If I'm going to pay that much I'd rather a print version.

However, Amazon isn't doing this out of any altruistic motives; it's trying to give Kindle the edge over the growing e-book reader competition.

Marta Stephens said...

Good point, Anita. I certainly agree with you on the $12-$14 too.

A. F. Stewart said...

Round Two has started in Amazon vs. Macmillan: http://www.guardian.co.uk/books/2010/feb/04/authors-fight-macmillan-battle-amazon

And for the record, while I do support lower prices for e-books, I don't like Amazon's tactics of removing Buy Buttons.