Now that the Macmillan books are back on Amazon, a number of sites are coming out with analyses of what Amazon gained or lost over the week-long incident. I’m going over them as I prepare for my panel show podcast on the matter this afternoon.

There is some good discussion going on in recent Making Light threads about the Amazon/Macmillan dispute, particularly this one about the agency pricing model.

Gizmodo has a good piece on how Apple played the same game with the publishers to put pressure on Amazon’s price structure that Amazon played with the record labels to put pressure on Apple to go DRM-free. Matt Buchanan points out that the contrast between iPad’s full color LCD and Amazon’s black-and-white e-ink might have made it particularly attractive to publishers.

With that contrast in mind, all the publishers needed was a little push. All Apple had to whisper was, "Hey, we’ll let you set your own prices for books. You should control your own destiny. We’d love to have you. You know, $12.99 is a really good price for a beautiful color version of your amazing books. BTW, why are you letting Amazon undersell you?" It doesn’t matter that publishers make less absolute money through the agency model used by Apple—Amazon might’ve given them $15 for a book it sold for $10, but under the agency model, the seller takes 30 percent off the top. They wanted to feel in control, and that their books are worth something more. Steve gave them that, even as he’s probably got his fingers crossed behind his back.

He notes that the music industry has historically not been entirely happy after getting in bed with Apple, and suggests the publishing industry may end up feeling the same way.

Over on a Making Light comment thread, Charlie Stross notes, “From Apple’s POV, ebooks are merely a convenient toy with which to bait the hook of hardware sales. From Amazon’s POV, ebooks are their future life-blood.”

On Wired’s Gadget Lab, John C. Abell wonders who gets to decide the “right” price for e-books.

The fundamental question is: Who gets to decide? Consumers will vote with their clicks and pocketbooks and if the e-book format becomes moribund — at a time when e-book prices are higher than many think are defensible, given that there are virtually no production or delivery costs in the traditional sense — we’ll never know what went wrong.

On the other hand, pricing e-books closer to the actual production cost could damage the book publishing ecosystem, and that would be tragic beyond words, unless theorists like Henry Blodget are right that nature will find a way.

As the New York Times notes, nobody is really sure what Amazon got out of the week-long negotiations (though that doesn’t keep people from speculating). What it lost is a lot of goodwill among authors and author-advocacy groups who were hit by the loss of the “buy” button.

And the publishers (and some of the authors associated with them) lost a lot of goodwill from readers, both long-time e-book fans and the newer Kindle-using crowd. I really doubt anyone is going to be happy with the $12.99 and $14.99 price points for new bestsellers, and I’m not happy with the lack of competition this heralds for the e-book market. If every e-book store is going to have the same price, why do we even need more than one anymore?

Looking for a bright side, at least Kindle’s $9.99 price point has forced publishers to come down from their strict hardcover price parity for new books. $14.99 is a 50% bump, but it’s still a lot less than the $20 to $26 or more hardcover price publishers have charged elsewhere all this time. That should at least count as a moral victory for the people who think e-books should cost less than paper books as a matter of principle.

On the other hand, it’s still about the same as what Amazon will sell a discounted regular hardcover for—and you can do things with a physical book you can’t do with a Kindle book, such as re-sell that or lend it to friends. Likewise, a lot of people have noted that Amazon seems to take less care, overall, with conversions of Kindle books than the smaller e-book shops. A lot of people still aren’t happy with paying equal price for a DRM-crippled, possibly mal-formatted book that Amazon claims they don’t really “own”.

And Macmillan claims it will drop prices on older books. I hope Bruce Baugh is right and they really mean it this time—and that it will trickle down to stores like Fictionwise who sell books in the much-less-onerous eReader format. If that’s the case, people will still grumble but the grumbling should eventually fade.

It could even be good for the e-book market, overall, for more reasonably-priced books to be available. That would let readers who want to support their favorite authors but haven’t been able to get those authors’ works in the formats they prefer put their money where their mouth is.

Of course, there’s still a lot to be done—something needs to be done about those obnoxious geographic restrictions on e-book sales, for one thing.


  1. The pricing game is not even getting started. This Amazon-Macmllan whatever-it-was didn’t amount to anything.

    Wait until buyers start buying — or not buying — in the next 6 months. I know I will buy an iPad — but I will pay very few first-edition ebooks for $15.

    And wait until the really big show– there will be more sales venues for ebooks such as Google and Bowker Books-in-Print.

    I think that prices (publishers and re-sellers) will plummet.

  2. Chris, how will this end up in “more reasonably-priced books to be available”? The whole reason Macmillan and other big publishers took on Amazon is because they thought prices were too low and that ebooks were cannibalizing more profitable hardcover sales.

    And if you take a step back and consider the economic structure of the market for books (or content goods in general), the incentives of the various players and the history of the past decade plus of digitalization, you wouldn’t find much basis to be hopeful any time a big content publisher gets more power and control over a market segment. It’s routinely been bad for consumers, bad for diversity and, oftentimes, bad for the creative people who make the content in the first place.

    As someone who has followed and written about business closely for over 20 years (including covering the fights over copyright, antitrust, Internet, and communications policies in DC in the 1990s), I find the degree of misunderstanding about business basics and recent history kind of depressing. Some authors in particular seem to be so confused about what is actually going on and how it will effect them beyond last week (when their Amazon “buy” button disappeared) that I don’t even know what to say to say to them.

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