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Amazon Battles Apple By Arm-Twisting Publishers
bizwriter writes "Apple has upset the e-book pricing cart by agreeing to a so-called agency model, where the publisher sets the price and the seller takes a cut. This goes contrary to the degree of control Amazon likes, so although it apparently gave in to Macmillan back in February, it turns out that Amazon continues twisting arms. The problem publishers face is that Apple has a most-favored-nation clause, so it gets the best deal that the publishers offer. If the publishers give in to Amazon, then they also have to provide the same terms to Apple."
So this has nothing to do with Arm processors? Oh well.
rather than serve a market. This is, in a word, wrong. All the while, the authorities do nothing.
Barnes & Noble's device is fairly decent, although its missing Wikipedia and some of the features could be better done. Why is this is being set up as an Apple vs. Amazon fight when, of the several companies putting out eReaders, Apple is the only one who doesn't actually have a device available for sale right now?
Can you be Even More Awesome?!
Competition from a new contender that is known to be a strong player causes the strongest early market entrant to throw a hissy fit, news at a 11.
Until I can actually BUY an e-book, not rent them for life, the entire market will remain irrelevant to me.
Burn Hollywood Burn
Forcing an "agency model" on any retailer is going contrary to both history and market standards. The general model for booksellers is to buy wholesale, at somewhere around 40%-50% of MSRP, and then sell at some price between that and MSRP. Amazon has discounts of MSRP all the way from 55%, to only a few percentage points. Barnes & Nobles has similar prices (if you become a "B&N Member," for US$25/year, the prices are pretty much the same as Amazon's. A bit lower sometimes, a bit higher sometimes.)
What's really going on here is power: the publishers have decided they don't want retailers undercutting each other -- that leads to a single player having market dominance, which allows them to try to force concessions (lower prices, content changes, etc.) from the publishers. As examples of this, see Amazon and Wal-Mart.
When Apple joined the ebook market, however, they were able to take the same "we don't care about making a profit on content" attitude they have for music, and offer it to the publishers. And the market share Apple can offer with the iPad is probably at least as large as Amazon's current market share with is Kindle. (And unlike Amazon, Apple won't be paying the end-user bandwidth costs.) This gives publishers who are willing to sign up with Apple enormous negotiation power with Amazon -- over ebooks. Amazon's only negotiation power that can counter that is the physical book market.
Personally, I would certainly be offended if someone said, "You will sell this product at a price we dictate, and only take 15%. You cannot charge more to make more money; you cannot try to maximize profits through selling more by offering it for less. And if 15% of an arbitrary price we set isn't enough for you to make profit -- or even enough for you to run your business, tough." And I'd fight it as best I could.
Of course, that's also pretty much Amazon's attitude towards the publishers. So a pox on all of them, really.
Apple Strongarms Publishers: They are not allowed to sell it cheaper anywhere else!
HI O WISE PRINCE. WHT TOOK U SO DAM LONG?
You're really concerned what's going to happen to your ebooks when you're dead? Taking corporate paranoia to the afterlife is a little extreme, no?
One control-freak company wants to sell cheaper books, while another control-freak company wants to sell more expensive books?
I know which weevil/weasel I will go with.
and while this is just one side of the argument, but anyone who thinks Apple's deal with the publishers will work out better for the authors should read this:
http://techcrunch.com/2010/02/07/its-nsfw-because-the-word-fuck-is-in-the-url/
First they ignore you: ""
Then they ridicule you: "Ho ho - tiny little screen; who'd buy one of these toys?"
Then they fight you: "Crap - we better make our own ebook reader and screw around with pricing to protect ourselves. But we're kinda late and our pricing strategies are reactive and ill thought out"
Then they loose: "Double crap - all our best selling authors are now publishing their own book directly on the Kindle and taking 85% of the revenue rather than the 10% we used to give them. Ingrates!"
Feel free to bookmark this post and come back to it in 5 years time to see how it all came true.....
Rich people are eccentric. Poor people are strange. Me, I'd be happy with odd.
While it doesn't always happen, the company that provides the best prices and best selection to the consumers should be the winner. In music Apple unbundled the album and created a reasonable price point. More music is being sold, but music publishers are making less money. Consumer wins. In publishing the total cost of a book should be authors cut + cost of manufacturing + cost of distribution + marketing costs + profit for publisher + profit to distributer = total cost of book. E-books should dramatically reduce the cost of manufacturing and distribution and if things follow the music model, more books will be sold allowing for a reduction in profit margin due to volume. The consumer wins, if Apple and Amazon can strong arm the publishers not to add savings from manufacturing and distribution to their profit margins.
Apple "strongarmed" the publishers by agreeing to their retail model? Clearly you have a different definition of "strongarm" than most people...
Children and grand children inherit books. Enormously beneficial to descendants of literate parents. If people don't realize that, it may be because they have never lived in a house full of books.
Why is this is being set up as an Apple vs. Amazon fight when, of the several companies putting out eReaders, Apple is the only one who doesn't actually have a device available for sale right now?
Because B&N device is still just getting started - meanwhile iPads are already selling at a good clip, and it's pretty obvious they are going to be a major player from the outset. I don't think the B&N reader is going to hold out very well long term, although I'd list them as a possible dark horse... but they have to do something drastic.
They don't even have an SDK out, the Kindle and the iPad both do.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I actually think it's perfect for us consumers that the various selling-points force the price downwards. It means that I as a consumer will get my goodies for a cheaper price.
"Rune Kristian Viken" - http://www.nwo.no - arca
The headline makes it sound like Amazon is doing something bad. But Amazon is twisting publishers' arms to sell their books for less than they would otherwise. Publishers have wanted to charge excessively high prices for their books. And Apple has been trying to lure them by letting them get away with it.
...the most favored nation clause.
As someone who has been involved in negotiating a contract for the buyer with a most favored nation clause, they do seem wrong. You are either asking your supplier to lie to you, or to reveal the lowest price they charge anyone. Some contracts say this can't be revealed, though it is generally assumed it can't be revealed only when identifying the involved parties also.
It completely eliminates the equality of negotiating positions. The saving grace for suppliers is they can claim clauses that vary between contracts constitute a different level of service, causing their cost model to be different, and therefore is a different product.
In the music business Apple was happy to have companies sell at different prices, they had a lock on the market via the iPod so people would pay $0.99 for 128Kb songs while others (e.g. Yahoo) were charging $0.79 for the same song encoded at 178Kb (in WMA format).
Books will be different: they won't be able to force consumers to pay their inflated prices because they can't stop people from buying from their competitors. The solution - prevent competition by working with the publishers to force everyone to sell at the same, higher, price.
Either way, prevent competition - previously via lock-in, now via forcing every to adopt their high prices.
Personally, I would certainly be offended if someone said, "You will sell this product at a price we dictate, and only take 15%. You cannot charge more to make more money; you cannot try to maximize profits through selling more by offering it for less. And if 15% of an arbitrary price we set isn't enough for you to make profit -- or even enough for you to run your business, tough." And I'd fight it as best I could.
What the hell are you referring to? The publisher *is* allowed to set the price - and so clearly they *are* able to vary their profit per unit.
Is this a rhetorical question?
Doesn't this mean that if you have an ipad, which runs iphone apps, that you will be able to buy from apple, or Amazon or B&N? What am I missing here?
at ANY cost, and won't ever be prosecuted for it ( taking established evidence as projecting validly into the future ).
Barnes & Noble isn't a monopoly, so therefore it doesn't deserve the headline treatment.
As for Nook, it won't allow access to ANY Xiph codec.
"nice"...
When unlicensed access to a codec becomes a felony ( ACTA? or the one after? ), enforcement against FLOSS users can begin...
"control" they call it...
( does ANYone make a big screen reader with Xiph codec support? )
You can actually inherit paper books.
eBooks, over my dead body... what do you mean "okay"?
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Yeah that's what Apple allows on the App Store TODAY. Tomorrow, you may not be able to get the Amazon & BarnesNoble apps. The day after, there may be a system update that breaks the old version still lingering on your iDevice.
Your Palm Pilot might not even be able to sync anymore, anything can go wrong with software updates. If they're done right.
The saving grace for suppliers is they can claim clauses that vary between contracts constitute a different level of service, causing their cost model to be different, and therefore is a different product.
Yeah, retailers have been successful for years at getting suppliers to help them play that game by making up retailer-unique part numbers so that the retailer never has to actually live up to the price-match clauses the retailers claim to offer in their sales contracts.
The Palm Pilot not syncing is entirely Palm's fault. They used to write an app that allowed syncing on Mac, but then they stopped. A third party stepped in (The Missing Sync) and the rest is history.
Don't blame Apple for sync problems with third party software - the sync APIs are all there, documented, from release to release of the OS.
As far as apps on the iPad, you are correct - Apple controls what is on the store, just as Amazon controls the Kindle. If this doesn't suit you, then the iPad is not for you. Buy an Android based tablet (when they arrive).
Forcing an "agency model" on any retailer is going contrary to both history and market standards. The general model for booksellers is to buy wholesale, at somewhere around 40%-50% of MSRP, and then sell at some price between that and MSRP.
This is another example of people clinging to an historical model. The same way MPAA/RIAA get blamed for trying to apply their old models to digital media.
There is no history or market standard for ebooks. The general model for booksellers does not apply to e-booksellers.
I fully agree. I should have made it clear that Amazon's "life" includes their business model. It may be that the publishers can change the business model to the one they prefer; it may be they cannot. Or it may be that some other model will appear. Amazon can try to fight it, can go with the change being pushed by the publishers, or can try to come up with a new model.
My point, however, was that right now, Amazon appears to consider this a life-or-death situation, and are reacting thus.
Personally, as a consumer, I like being able to find deals -- either lower prices, or package deals (e.g., buy all three books in a trilogy for less than the combined prices). As a member of the society, I dislike retailers pushing prices so low that the producers (e.g., manufacturers, publishers, or writers) suffer. As I said, a pox on all of them.
(And I would say that both Macmillan and Amazon are acting as stubbornly and as self-damagingly as the record labels did.)
I support Amazon's position here, and I have titles for sale on their site. Unless Amazon intends to become a wholly-owned subsidiary of Big Publishing, they've got to stand up for this now. If they are the World's Biggest Bookstore, then they have leverage and they should use it.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Actually Apple has had a device for portable eBook reading available for sale for the last year. The Kindle reader for iPhone/iPod Touch has been a free app for months now, and other eBook readers have existed for these platforms as well. What Apple hasn't had is their own eBook store to profit from.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
This is just another demonstration of the fact that Apple is smart (but evil) and publishers (in any medium) are stupid. If publishers had a *clue* about how to properly participate in this whole electronic and online thing, we wouldn't be seeing any of these big battles.
Portable versions of Firefox, GIMP, LibreOffice, etc
Actually, Android beat Apple to market. The Nook by Barnes and Noble, which is arguably the best tablet on the market is built on Android. And it has real e-ink (nice for extended reading and over a week of battery life) compared to the iPad's LCD (bad for extended reading and under 10 hours battery life), making it a much better ereader.
Portable versions of Firefox, GIMP, LibreOffice, etc
ePub (nook's default format, basically a zip'd up xhtml web site) is good enough for project gutenberg..
Can you be Even More Awesome?!
mod needs to have their ability to mod revoked. you are not funny, unique, cool, or anything other than a prick on a fucking power trip.
Because when B&N's Nook came out, nobody talked about changing e-book prices. They sold at $9.99 everywhere, mostly because that's what Amazon said e-books should sell at. Publishers got the same cut they always do with this pricing, and Amazon took a bigger loss than on print books. But Amazon liked this pricing because it's a loss leader for them to sell Kindles.
Macmillan (along with other publishers) was concerned that $9.99 was unsustainable in the long run, yet would become the "normal" price for e-books if unchecked. They wanted a deal where publishers chose e-book prices (usually in a range from $5.99-$14.99), and the sellers (Amazon, Apple, etc.) got a larger cut. Apple said, "Sure." Amazon said, "No way," and just to show Macmillan who was boss, Amazon pulled the Buy buttons off of all Macmillan products, digital and print. That was 1.5 months ago.
Amazon eventually caved and said they would put the Buy buttons back (which they did, but very slowly; I'm not even sure they've put them all back yet). But now a bunch of other major publishers are saying they want the same deal, and Amazon is threatening to pull the Buy buttons on them.
Really, this is a struggle between Amazon and publishers. Apple is just a battlefield, chosen because the iPad is the only e-reader that can strongly compete with the Kindle. If publishers tried to do this fight with the Nook, Amazon would've just laughed at them.
I don't know where Amazon makes a profit, but I doubt it is on 9.99 eBooks. What Amazon has done with books is what Walmart has done with so many other products. Sell some items at a loss, or demand other products be sold wholesale at a price that causes the manufacturer takes a loss, or only cover fixed costs. Even if it is Walmart or Amazon that is taking a loss, eventually consumer expect that product to be sold at the unsustainable low price and the model of the manufacturer is disrupted. This is not a bad thing, but we can't expect a manufacturer to go gladly to their demise.
The problem with Amazon, and Apple, is that they are both trying to tie publishers to exclusive contracts that meet their needs. Amazon wants to be a book seller so they can use books as, I suppose, a loss leader. Get people used to buying at Amazon, and join Amazon Prime. Apple want to be an agent so it can just take a cut of sales without having to worry about owning anything. I believe this is sort of what blockbuster did in the late 90's to drive out competition.
I don't know what a eBook should cost to keep everyone happy. I suspect it is around $15. At Apple that is what you will pay, but Amazon wants to discount, which means that Apple as an agent will sell very few books, as Apple products already have a Kindle reader. Unless the publishers add value to the book. The problem is ebook readers is that they are just books. People might pay more for added content. $15 or $25 for a book that is professionally read with images won't be so out of line.
The problem is that Apple and Amazon are not giving publishers a choice. Both want exclusivity with a model that benefits them. I don't think either are dictated wholesale price. It is the publishers that want to dictate retail price, and that has been, and should continue to be, illegal, at least in the US. I know Apple does dictate price for electronics in a sneaky way, but it is not like they are colluding with Dell to keep price high. They add value so that some people perceive the equipment is worth the cost.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Please quit confusing the future of ebook readers and ebook publishing. Readers are unimportant. Single-function readers are doomed, once multi-function devices incorporate their functionality. Does anyone still own a dedicated wordprocessor?
Once ebooks actually have enough market share to matter, there will be convergence around a format that everyone will use on their devices. That side, the publishing side, is what's interesting.
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I'd like to pay paper back prices for eBooks.
I drank what? -- Socrates