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Amazon Surrenders To Macmillan On eBook Pricing
CuteSteveJobs writes with a followup to news we discussed on Saturday of a disagreement between Amazon and Macmillan Publishers over ebook pricing: "Amazon has thrown in the towel and announced it will now sell books at Macmillan's increased prices; up to $14.99 from $9.99. Said Amazon in a statement: 'We will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.' Macmillan has sensed Apple's iBooks opens the way for higher prices. Perhaps the question should be: do we even need publishers like Macmillian? Publishers have long managed to keep their old business model chugging along nicely despite the Internet; Academics are still forced to give up copyright (PDF) of their work in exchange for publication. Textbook publishers have a history of unethical practices like frequent edition changes, unjustifiable price increases and bribing teachers. For that matter, why do the RIAA's members still control the music business? Why do these dinosaur publishing businesses still manage to thrive despite the Internet?"
"monopoly over their own titles" That word does not mean what you think it means...
$14.99 for a freaking E-BOOK?!?!?!? No. No no no, and no.
Why would I pay twice the cost of a paperback version just so I could have a digital version? I realize there are costs associated with OCR services, but most writers use computers now anyways. What gives with the exorbitant prices?
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Oh that's right, zero.
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Why do the RIAA's members still control the music business? Why do these dinosaur publishing businesses still manage to thrive despite the Internet?
Lawyers..
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"Why do these dinosaur publishing businesses still manage to thrive despite the Internet?"
Because development, editing, and marketing--and even distribution--have value and take skill to do well.
Less than the publishers believe or would like, perhaps, but more than the /. crowd gives them credit.
obviously no deficiencies vs. no obvious deficiencies
The solution is easy: don't buy ebooks from extremely greedy publisher like this one. Even if you can afford it. Just say no. I don't.
--
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Seriously. It's their product. Waah, Coke won't let me make Coca Cola.
Why? If they have a book I want and I think the $14.99 price is worth it, why wouldn't I buy it?
Publishers still exist largely because of their editorial and "filtering" services. Editorially, they help to ensure that the best possible version of a text makes it to market -- that it is as technically (grammar, spelling, etc) correct and engaging as possible. As for filtering, they are meant to ensure that only works that have a reasonable degree of merit actually make it to market -- this is why people tend to believe printed word over that which they find on the internet, and why for those who create content, being accepted by a publisher for print production is highly valued. Anyone can put whatever crap they like on the internet, but the publishing industry exists to make sure that random crap doesn't flood the actual shelves.
For certain types of content, such as text books and works of history, philosophy, and journalism the effect this has can go either way in how people, including myself, are willing to weigh benefits vs detractions. Certainly, it would be better if this content was more democratically available -- however, facts still need to be checked for correctness, copy edited etc. For works of literature, the potentially stifling affect on discourse is much more limited and even though I've almost always been on the losing side of the submission, I'm willing to accept the judgement of poetry and fiction editors as far as to what's actually worth something and what isn't, as they deal in literature every day and see submissions from all kinds of sources -- and when you finally do get a piece accepted then the fact that you had to try so hard to get through the filter makes the joy of it all the greater. That's not really a feeling one can get on the internet where the cost of reproduction approaches zero and so there is no real reason not accept a piece, or when one can stick whatever crap they would like on their own site and eventually someone will see it.
However, for music -- where the bands mostly exist to play live and have fun, where the record itself is really just a form of marketing of their live performance, and where the technical ability to produce recordings of quality and distribute them directly to fans who will then come to their shows is now within the reach of just about everyone, then direct distribution without much filter makes more sense. However, poets and authors tend not make their money from live recitation but from the printed book itself, and the services of the publishers and distributers there are therefor more necessary and valuable. As someone who writes a lot, submits a lot, gets accepted rarely, and who has been in a few bands, played shows and cut a couple of demos I can see the difference, it is what it is, and I'm totally cool with it.
That's right, because nobody markets books, or pays authors, or runs press tours, or edits books...
as in, we want to still offer their products even though we know they are overpriced. We give you the choice, choose correctly.
Honestly, the iPad was designed to bring Apple and their publishing buddies more money. After Steve got us off the 99cent model anything was possible. There was too much money on the table. Books presented a new avenue for increasing revenue as their is no such thing as "per chapter". They can charge you more and make you feel as if your getting something special in the experience.
Kudo's to Amazon for calling it like it is. I understand why they gave in, it really does come down to the public making the choice. Unfortunately far too many will make the wrong choice
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If I am going to waste money paying far too much for a book than I really need to, then I'm going to at least get a version that I can pass on to someone else.
A Pirate and a Puritan look the same on a balance sheet.
In fact, Amazon was the one who was trying to use their market dominance as a tool to set prices, which is what we call monopolistic behavior. Note that what they did was not merely decide not to sell those books that they thought were overpriced-- they attempted to force the publisher by pulling all Macmillan titles from their store, including the physical (paper) ones-- saying "either you accept our prices for e-books, or else we will not sell any of your books." (And, of course, also all the imprints of Macmillan, such as Tor.)
That only works, though, if Amazon were enough of a monopoly that people wouldn't just go elsewhere... and it turns out that Amazon isn't. Yet.
In the long run, it benefits consumers that Amazon backed down-- it's never good for one vendor to have the power to set prices, even if (initially) they claim that they are only using that power to lower prices to the consumer.
As Charlie Stoss commented, Amazon was fighting this one because if the publisher wins, it hurts their profitability because it pushes prices down.
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The question should really be 'what function that publishers perform do we still need and how should those functions be provided?'
One function of a publisher, as opposed to a vanity press, is to have a reputation for checking the facts in what it publishes. There's a perception that works self-published through a vanity press can't be counted on as reliable sources of information.
Is that your definition of "marginal cost of production"?
Ok very important, price to produce has very little to do with final price to consumer, it will influence the minimum price the publisher will accept but that is about it. Books are valuable and thus can be sold as if they are valuable because well they are. With low barrier to entry costs more publishers should enter the market but that is a slightly different issue. If the publisher has no right to unreasonable profit from his work why do you? Imagine a book is free to produce, no cost what so ever, does that mean the publisher should give you the book? Even if you gain say $20 from the book either directly or indirectly your enjoyment etc? If he should then you are making $20 with no effort and if the book is sold for $20 you make no profit and the publisher makes $20 of profit you get the book for what you valued it at. The real problem here is that amazon is a nationwide retailer allowing for everyone to go there and get the book for bare minimum price lowering the price and profit to publisher, who does do some work and same goes for movie and music industry, and in the end more people buy the product for less than what they value it at.
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That's right, because nobody markets books, or pays authors, or runs press tours, or edits books...
... and none of that has any bearing on the marginal cost of production of an ebook. The fixed costs are just that, fixed. The marginal cost associated with selling an ebook is *zero* (Amazon covers the cost of sending you the ones and zeroes)
The meme is dead, long live the meme!
That is rather unfortunate (I wasn't even aware of that decision) because the way you describe is the way it should work. Amazon should pay a publisher whatever they ask as the wholesale price. But they should, in turn, be free to turn around and sell the books at whatever price they wish. Prices would be kept in check by market competition. And Amazon should also be able to sell at a loss if they wish. It might seem nuts to do that, but one place where it makes sense is if they want to subsidize lower priced e-books to spur growth of the Kindle.
If you are going to sell your books more expensive than everyone else, what do I as a consumer get out of the deal?
Honestly I would be willing to pay the same as a paperback as long as it was DRM free. Even though an EBook costs way less than a Paperback (because in theory a paperback should include binding/printing charges as should a hard cover), there is a convenience to not filling up a library.
But I'll be damned if I'm going to pay 14.99 every time I switch e-readers for the same book.
Some publishers are holding e-books back long after release. First they release the hard cover, then a few months later they release the e-book with the paperback. For me that's stupid and it would be better to charge more for the e-book. But still I would expect some savings over a full hardcover, after all there are no binding/printing/additional costs. I would expect those savings to be passed onto me. Also if you are going to charge me $20 for a book where the paperback is $10 and the hardcover is $30 then it damn well better be DRM free.
The reality is many of the DRM formats have been cracked and people often buy e-readers expecting to use the DRM cracks to export the title to however they want. But this is stupid because it just keeps funding the companies so they can constantly create new DRM and new nuisances for the customer. It's time to stop rewarding DRM makers. I don't want to have to be a "criminal" (see DMCA) in order to shift books to whatever format I want. I want that as part of the deal. Why people are such idiots and open to being ripped off I have no idea.
And on the e-book prices, if the price is too high then people won't buy. I'm surprised apple is letting publishers set prices. I guess they aren't going to fight the fight to eliminate DRM from books for us like they did on music.
You're doing something wrong if you're buying an eBook/game/whatever for it's bits. I'm buying it for the value it gives me - be that information, entertainment or something else.
If Macmillan want to charge $14.99 for ebooks, fine. If I decide $14.99 is too expensive, I'll just tell them to fsck themselves. Free Market.
Slow down, cowboy! It has been 4 hours since you last posted. You must wait another few hours.
They're allowing Macmillan (and apparently only Macmillan, for now) to set their prices on their own books. This allows Macmillan to do things like release new books for $15 and slowly drop the price over time until the best price point is found. You know, just like every other consumer good. Amazon also agreed to reduce their outrageous 70% markup to 30%, the standard for a retail distributor.
This is a *good* thing. It allows more market flexibility and keeps Macmillan from going bankrupt or screwing their authors.
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Perhaps I am unusual (I suspect not), but I often chase authors, not genres, and therefore the book market is not one controlled by substitution, and we see that in it's price inelasticity. I do not see how this would be different if we had even a significantly larger number of publishers with smaller pieces of the pie.
Piracy provides the elasticity. I'll give you the old college student/anime example. As a low-income college student, it was worth my time to track down episodes on emule. You had many people doing encodes, variable quality, and it was pretty laborious to find everything and burn CD's. And hard drive capacities were not as insane as today. If a series costs $200, it's worth my time. But when you can get a full season for $20 or $30, depending on the show, who has the time to muck with downloading? Especially as disposable income rises as disposable time decreases, people want to maximize their enjoyment. If there's ten hours a week for goofing off, people want to be watching the show, not trying to watch it.
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