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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?"
$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?
Living With a Nerd
"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
Yeah that sounds a little bit stupid. Of course they have "monopoly" over their own titles. Duh.
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?"
Because they
1) Provide money and pay the big costs while artists are producing their album
2) Provide marketing
3) Find the promising artists and writers
4) Have the distribution channels
You can say anything you want about the internet as a marketing channel and cheap personal computers being capable of producing albums, but they really aren't. You need a good studio. I'm not going to listen to something that sound like demo tracks. They're horrible if you've ever listened to any other than your favorite band's. They also filter out the crap.
This might be a little bit different with books, but you still need those distribution channels and marketing. Books don't just magically show up in book stores, libraries or have articles in magazines, nor do people just accidentally hear about it. And eBooks aren't going to replace paperback books yet.
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.
Agreed about decent production values on an album and the need for a studio. *BUT* let's face it
the compression that happens in post-production these days makes modern music just as unlistenable
as if it were recorded in a truck stop bathroom. As a volunteer front of the house (read: live music)
and studio (broadcast) board monkey, I can't claim to have experience cranking out studio albums.
But the theory's widely known, and despite the black art elements of getting all the performers and instruments
properly mic'd and isolated in a studio setting, maybe it's time for StudioWiki? Great things have come out
of the collective wisdom and efforts of those passionate enough to contribute their time and knowledge.
You won't see a major label backing things cranked out in someone's garage studio, but it's about the music
and not about the money, I think your average band is just fine with Myspace, iTunes and the other internet-based
distribution channels. And frankly I'd rather listen a McGyvered album with no COMPRESSION FUCKING UP ALL THE MUSIC
taped in a stupid garage than a perfectly recorded / mastered / mixed AND THEN COMPRESSED TO FUCKING SHIT ANYWAY
taped at Abbey Road. Wouldn't you?
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?"
Because they
1) Provide money and pay the big costs while artists are producing their album
2) Provide marketing
3) Find the promising artists and writers
4) Have the distribution channels
Actually, from what I hear of the music business, they don't really do any of these for new artists (unless, maybe, you just won American Idol or something).
The reason RIAA is still thriving is because they have a huge backlist of stuff that people still listen to, from artists who had signed contracts back when big studios really were the only way you could get airplay or distribution.
http://www.geoffreylandis.com
This kind of vertical price setting was illegal in the U.S. for about 100 years, considered a form of price-fixing under the Sherman Act. Macmillan was free to choose whatever wholesale price they wanted to sell books and ebooks to Amazon for, but once they sold them, they had no control over what retail price Amazon set. Unfortunately, that was overturned in 2007 in a 5-4 U.S. Supreme Court decision.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
The marginal cost of printing a book is pretty close to zero too. That isn't why they cost as much as they do.
I've worked in publishing as an accountant and this statement is completely wrong. The marginal cost of production of even the highest volume books or newspapers is no where near zero. It's not the dominant cost (those would be marketing and distribution in most cases) but the marginal cost isn't zero or anywhere near zero.
Yeah, cause that can't be done by a widely accessable moderation system. Just imagine the anarchy that would happen if anyone could create anything and the only way people would know if it was any good is to look at how other people just like them ranked the work. Terrible.
You seem to be confusing data compression with audio compression. For years now, going back to the analogue days but increasingly over the past decade, audio has been "dynanic-range compressed" to increase the loudness of the song. Imagine you have a song which goes from "0" to "10" in loudness over the track. In aggregate the song's going to be about 5. That's no good at turning heads on a jukebox or on the radio, so you bump up the quiet parts so the song goes from "4" to "10" in loudness. That means that the song, as a whole, is now about "7". It's louder, it's more noticable, it sells the brand more.*
However it has nowhere to go from there before it hits the loudness limit of the audio format. If you turn down the dial so that thequiet parts are at their original, low level of "0", then the loud parts of the song are actually down at "6", far quieter than it was before you compressed it.
*The technique is widely used by advertisers to make their particular ad louder without breaking volume level regulations or normalisation.
No kidding!!! What do you say at this point?
(I work for Macmillan, so I am not a disinterested party)
Macmillan's president held our annual company meeting just the other day (before the Amazon dispute) and he explained that the pricing for e-books was probably about to get a little rough. Apple had been courting the publishers for several weeks. Apple carries a lot of clout, and was offering terms that were very attractive to publishers, as it lets them set their own prices, within a flexible window. Amazon, on the other hand, was pushing publishers to sell books at a flat rate: $9.99.
Amazon has been angling to set themselves up as the "Wal-Mart of the web", and with that comes a lot of what Wal-Mart is know for: good and bad. Steep discounts are good for the customer, but generally, not so good for the manufacturer. Now, as someone who writes software to help ensure the quality of our books, I am a bit biased, but books are not the same things as widgets. You can't just churn them out. Even good, reputable authors give you something that needs a lot of polishing. We publish textbooks in my division, so this means that in addition to the standard copy-editing, you also need to do fact-checking, course integration, and lots of design work. It is a labor-intensive process, and each book requires the attention of dozens of people, and tens of thousands of man-hours. Often, these books also come with software. I don't think I need to explain to people here how hard it is to write good software.
Amazon is hard to say no to, because they move a lot of books. But they are cutting profit margins dangerously low for us. At what point do you say no? People like to do their work, but they also like to be paid. Macmillan, so far, has balked at Amazon's price-fixing, and (if I understand correctly) Amazon has been selling e-book versions of Macmillan titles at a loss. Amazon, however, sees the iPad terms as very dangerous, because publishers can sell some books higher, but more importantly, they can sell some lower. Apple can do this, because they're not taking as big a cut as Amazon does. Unlike Amazon, Apple's goal is to sell the platform; Amazon wants to sell the books. So Amazon makes a ton on books, but loses a little on hardware. Apple makes money on hardware, but not much else.
I don't know exactly how it will shake out, but it looks like the Macmillan deal will probably be a turning point for e-books. Amazon is now a sub-licensor of those books, and that means that the quality and success of those books is going to be important to them. We'll see how this turns out. For more on this, I recommend this and this.
I hear that Amazon's customers are "boycotting" books priced higher than $9.99. Ok, I hate "teh big bad corp" as much as anyone else, but come on-- it's not like we find these things laying around and just dust them off and hand them to you. There's no magic. Get real. We have to make these things, and that takes time and money, and hey, we like to get paid, too. I suspect the "$9.99 boycott" is Amazon astroturfing.
FWIW, Macmillan is a privately-held company, so that's why you see them taking a stand, and not one of our competitors. I'm fortunate to work for a private company, because we can actually focus on doing a good job. From my perspective, working here has been far from being a cog in some evil empire.
I owned a small self-publishing company for 3 years and sold it. When I started the company I made a firm decision that the company would NOT obtain or transfer copyright ownership from anyone we published for. I knew there were a few publishers that we competed against that had "questionable" contracts that appeared to transfer copyright ownership and/or enforcement from the creator of the work. I thought that by using a more honorable business model we could attract writers and offer another method to get works distributed.
Oh, wow, let me tell you how this industry is...
My company started almost from day one to be hit with a series of slanders and false statements from a number of "anonomous" sources. I was put through the grinder, but did manage to build a good reputation with the people we published and distributed for. I talked to a lot of other people who used various other companies, and got the chance to see some of the contracts that the competition used. I can tell you that most, if not all, either outright transferred the majority of ownership from the original creator or had terms that were so vague that it would take a team of lawyers to figure it out.
My biggest wakeup call was when we had to stop printing a series of art books because the artist signed a contract with another company, not for the works WE printed, but for another totally unrelated work. He didn't see the little part of the contract which gave the company he signed up with TOTAL rights to ALL his works, even those that they had never printed or were never planning to print, created since the day he was born. WOW!
When you control the distribution of a product, you can write your own terms to those who need their product sold. It's as simple as that. For years the publishing companies controlled all the methods to get books into the stores, and it continues to this day. Writers often find that they have to either sign on the dotted line or simply forget about ever having their works seen by the public. I also discovered that a lot of writers and creators had no idea that they had signed away their rights until I pointed out the terms in their contracts.
I once thought that companies such as Amazon could change the landscape for the independant writer/creator. But what I have been noticing is that even with Amazon most people are "locked" in to some sort of system that simply will not let go. A year or so ago I think that even Amazon tried (and may have succeded) into having all works printed through their own company, thereby eliminating small printing companies out of the loop. It's interesting to see that even Amazon must bend to the will of another company when it comes to distribution pricing.
And lets not even begin to think about what Google's book scanning system is doing to the copyright landscape. "Do no evil"? Bite me on that one.
I am glad to be out of the publishing business, and feel greatly sorry for the future generations that will have content locked, forced upon them, distributed through systems they have to participate in, and prices dictated not my market forces but by lack of competition.
Nuff said.
Eric Freyhart