Monday, February 1, 2010

Amazon-Macmillan Peace Treaty

Well, Amazon ceded the battle but the war was already over. Amazon, after pulling Macmillan titles for a couple of days over ebook prices, graciously relented and agreed to Macmillan's desired ebook prices of up to $14.99. I am surprised it was settled so quickly, but it actually makes sense. Amazon could certainly afford to hold out longer than Macmillan, but Amazon also risked its reputation as the world's top bookstore, a difficult claim to maintain when you don't carry one of the six major publishers in the United States. Macmillan risked almost everything, and I never believed the perceived threat of the Apple iPad carried much weight, because many consumers don't see it as a legitimate ebook reader. Instead, it's a computer you can read books on, just as you can your desktop.

Amazon wins by appearing gracious but it has already established the public perception of the value of an ebook, $9.99. No matter what happens from now on, the core foundation of ebook consumers has been presented the value of ebooks. Amazon gets to continue offering Macmillan products while making it clear they think the price is too high, but allowing consumers to make their own choice. Some consumers will pay the higher price for instant gratification. Others will wait for the ebook price to drop, as it inevitably will, in much the same way a paperback crowd bypasses a hardcover version.

Macmillan wins by getting its preferred price, though surely it is only temporary. When authors see they are getting only a tiny fraction of ebook royalties, and Amazon is waving a 70 percent royalty at them, it's clear that some authors will begin withholding their ebook rights unless the publisher is fairly compensating them overall (i.e., their paper sales are more than enough to offset this lost revenue.) Hopefully Macmillan will use the time it has bought to get a reasonable handle on ebooks and embrace the new market instead of trying to ignore the gorilla in the room.

Independent authors and small presses win because they have virtually no overhead and can offer their ebooks for a couple of bucks and compete for readers among value-minded consumers. True, they don't carry the name clout of major authors, but cumulatively they are a force that won't be ignored, because they have no stake in artificially high prices for ebooks.

Apple wins because it was all about promotion for its iPad. Apple and the publishing industry used the issue to get attention, and people who like Apple products will buy an iPad and all the assorted gimmicks, wireless plans, and other tethers that will keep them hooked to the Apple tree, and they will be happy. I don't think many of them will be reading books when they have so many other toys available. Either way, it expands the reality of ebooks.

And ebooks win, because this has been the single most-talked-about book news of the past few years, and brought ebooks to the mainstream. They undeniably exist now, and are important enough for corporations to war over. That is good news for readers everywhere, whether they go paper or plastic. More books, more diversity, more literacy, more stories, more education, and more joy.

Link to a good analysis by JA Konrath


Dark Intruder said...
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Dark Intruder said...

Although I believe the authors of Macmillan and its subsidiaries may be the losers in this battle. They do not see a cent more in royalties, and may in fact lose readership due to the inflated prices of the ebooks.


author Scott Nicholson said...

I have friends who publish there and I admit it's terrible for them in the short term, especially those with new releases. Overall, though authors stand to benefit in the long run, though I don't know if they will ever make up the difference.