back to weblogWhat Are the Options in the Amazon War?

A friend of mine Facebooked that she was seeing a lot of industry babble about Amazon vs Publishing, or Apple, or Whoever, but that no one was explaining what the agency model is or what the alternatives to it are.  So I'll try to summarize that to the best of my understanding.

Before I do that, let me re-clarify my angst over the situation.  The reason I'm so upset with Amazon is not that I'm head-over-heals in love with the agency model or want to see an iPad on every nightstand.  I'm offended by Amazon's apparent attitude that the book world needs them more than they need it and I'm  upset about Amazon's tactical actions over the last week.  The fact that my opinions on e-book pricing are murky at best only serves to make me more upset at Amazon because they dragged print editions into their temper tantrum, thus making all this nonsense my business even though I was very happy ignoring the existence of the Kindle.  From my point of view, Amazon kicked me in the gut for no reason while the publishing houses haven't done a thing to me.  After my initial post on the matter, my husband asked if I was on Macmillan's side.  I'll repeat what I told him.  “I don't know.  But I'm damned sure not on Amazon's.”

But on to the pricing models...

First off, it's important to realize that Amazon has written agreements with the people who provide them with merchandise.  If I buy a really pretty rock, I can try to resell that rock for whatever price I want unless one of the conditions of my purchase set the resell price.  If the contract states that I can't resell the rock for less than $14.99, then I can't price it at $9.99.  Why would the rock's original seller do that if it doesn't change how much I pay him?  Well, maybe he wants to sell rocks too and doesn't want me undercutting him.  Maybe he wants to be able to sell rocks to other resellers, people who won't buy his rocks if they can't sell them for a profit.  Or maybe he's worried that if I'm selling his rocks too cheaply then no one will buy his crystals, which are what he makes an actual living off of.  A lot of people would say the original seller is being greedy.  He'd say he's just trying to fund his rock hunting and polishing process so he can stay in business (Do you know how much tumbling grit costs?  A lot more than most people think!) and he'd ask if you'd rather live in a world where you can't buy pretty rocks at all.

Anyway...  The previous sales agreements have allowed Amazon to sell e-books at $9.99 regardless of what the publisher charges Amazon.  This is what Amazon wants to keep even though Amazon frequently loses money with it.  Is there a reason that the buying public shouldn't embrace this?  Well, if nothing else, publishers knowing the e-book will be priced at $9.99 is what's led to the practice of releasing the e-book after the hardback.  Publishers are concerned they can't earn back their investment without the higher profits from hardbacks.  They already lose money on most books.  If they were to start losing money on _ all _ books, they'd go out of business.  Which would probably be bad for those of us who enjoy reading new books.

Macmillan's agency model is a more complicated structure wherein consumers are charged between $4.99 and $14.99 per e-book, as determined by the publisher.  Newer books will cost more, but reportedly the price of most books is actually going to go _down_ because older books will be cheaper.  To all those screaming that they refuse to pay an entire fifteen dollars for a mere e-book, I point out the books at the high end of the scale are the books that are new in hardback and it's the higher price tag that will allow the e-book to be released simultaneously with the print edition even when the percentage of e-sales rises.  If you don't want to pay $14.99, wait a few months for it to get cheaper.  You won't actually be getting it any later than if the publisher simply delayed the release and people who are willing to pay more can get the format they want rather than being given the option of print or nothing.

The other significant difference with the agency model is that all retailers will be forced to charge the same amount for e-books.  This is where you remember Apple actually started this fight.  This is why they did it.  It's good for business who wish to compete with Amazon.  It gives a new store the ability to compete with Amazon through service without having to worry about the fact that Amazon is charging readers less than what the new book store can buy copies for.  I'm pretty sure there are a lot of independent bookshops who would love to see this concept spread to print editions.  Whether it's good for consumers sort of depends on where the prices wind up.  It will mean stores can't slash prices to compete with each other, but it may also give publishers an incentive to change prices to encourage sells themselves.

So, those are the big options being debated.  In her post, my friend also mentioned the option of authors retaining e-book rights and releasing e-books on their own.  It's something that was done in the past when e-books were more rare.  However, according to every agent and editor I've ever seen mention the subject, the major publishing houses have stopped being willing to sign new contracts without digital rights over the last few years.  Occasionally I still hear of someone who digitally published and got picked up by a major house, same as occasionally someone with a self-published print edition will manage it, so I assume that occasionally a publisher would want a book enough to let the author keep the e-rights.  However, I get the impression the vast majority of people asking to retain their digital rights in 2010 would be laughed out of their contract negotiations.  Self-publishing is, of course, always an option and it's very possible e-books are going to make it a much better one than it's been in the past, but traditional publishers are aware that e-sales are a rapidly growing sector so they're not going to back out of selling the digital editions of their print offerings.


If anyone's curious about how the war's going, this morning Harper-Collins joined with Macmillan and Hatchette.  This means that three of the Big Six are now openly opposing Amazon.  Amazon still hasn't returned the buy buttons on Macmillan titles, but haven't delisted any Harper-Collins or Hatchette books to my knowledge.  If there's a specific book you're worried about, you can now go to WhoMovedMyBuyButton.com, a new site from the Author's Guild to track whether Amazon has decided to remove a particular title.

UPDATE:

2/5/10 15:20 PT

Publisher's Weekly is now reporting that Amazon has started to replace the buy buttons for Macmillan titles.  One week after they started to remove them.  And, no, of course they haven't issued a statement about it.

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