Sunday, January 31, 2010

Macmillan and Amazon War by Morgan Mandel

I've been watching with interest the developments in book price wars. This one is a battle between Macmillan and Amazon. Macmillan's demanded higher prices for kindle, when apparently $9.99 is the highest Amazon would go.

Amazon pulled all the buy buttons from Macmillan books and was only selling books offered by third party vendors, none bought through Amazon itself.

Then, Amazon gave in under strong protest and decided it would agree to offer bestsellers at $12.99 to $14.99, under strong protest, saying Macmillan had a monopology over its own books.

I'm not sure what to think of this. In a way, it's a good idea for Macmillan to decide and stick to a price. That means authors will get compensated for their hard work, as well as other people involved in production and selling of books. Also, it sounds like Apple will be charging more for Ibook material than the going rates at most books at Amazon.

I actually dropped the kindle price for Killer Career to $3.99 to stay competitive in the ebook and kindle market.

Will the insistence on higher prices help or hurt authors? That's the question. In this poor economy, it's a good thing for books to be readily available at affordable prices. Still, these prices have dropped extremely low. Some authors give away their ebooks or kindles, while others offer them at $.99 or $1.99 in the hopes of attracting volume sales.

Will readers buy at the higher prices? Are publishers like Macmillan pricing themselves out of the market?
What's your take?

Morgan Mandel
http://morganmandel.blogspot.com/
Killer Career available at http://digital-bookshop.com/ , at Amazon and other venues.

9 comments:

L. Diane Wolfe said...

It's a mixed bag. I know one author who cut his eBook prices in half and his sales quadrupled. Guess it depends on if you're selling the book yourself or how much your publisher is keeping.

Ann Elle Altman said...

I think right now, Amazon is trying to get readers to switch to Kindle so keeping the prices low is a good idea, even for authors. Especially since authors get a better commission through kindle anyway.

Sun Singer said...

If Amazon wants us to switch to Kindle, it needs to either give it away or sell it much cheaper, and then make its money off of books being sold at a fair price to publishers and authors.

Amazon's use of the word to monopoly when referring to a single publisher is rather self-serving since they (Amazon) are the monopoly, trying to control prices on all books, not to mention what printers the publishers use.

Like other innovations, Kindle will probably continue to evolve. Some of the reticence of buyers comes from the fact that when a new Kindle comes out in 6 months, they're still stuck with the old one.

In the meantime, I'll stick with paper books because I can read them with the same glasses I use for everything else.

Malcolm

Pat Browning said...

MacMillan, like other big publishers, wants to push its own e-book program. As a long time fan of Amazon.com, and a great believer in the future of e-books, I was glad to read an explanation of the Amazon-MacMillan dustup in today's Wall Street Journal. It's at
http://tinyurl.com/yg5khf7

Here's an excerpt:

“The issue came to the forefront after Apple unveiled the iPad last
Wednesday and disclosed that five major publishers, including
Macmillan, will begin selling their own e-books for the device.

Whether consumers will be willing to pay more for their e-books
remains to be seen. After a news conference announcing the iPad, Apple CEO Steve Jobs told a Wall Street Journal columnist that "the prices will be the same" for books on the iPad as on the Kindle."

Jobs is no fool when it comes to marketing. I don't think people will pay high prices for e-books. I think Amazon has the right idea.
Writers will make it on volume sales. Small royalties add up after one format and upload. No travel expense, no constant toll on time and energy.

Pat Browning

BrennaLyons said...

Let me explain it this way. They are both wrong... Since this system doesn't like the length, I'll tell you how each side is wrong separately.

Macmillan is coming into an established market and pricing way too high for comfort, but that's their own lesson to learn and not Amazon's to teach them.

Macmillan will doubtless learn to price their books lower. It's nearly inevitable. You see, they will make X number of sales at $15, but they would probably make double that number at $10 and almost triple at $7. Simple math... 15X is less than 10x2X is less than 7x3X. As they employ variable pricing, they will amass information on this.

If they were paying attention, they'd already know this from watching indie press, but they are new to the market indie forged and have to try for themselves. Let them. Readers are more than capable of voting with the wallet and complaining to let them know they are not conforming to expectations in the e-market. That's free market in action right there. Hack off the paying customers and learn to conform to customer expectations.

I get why readers like the idea of Amazon bringing the price down, and it does sound good...until you look at how it works out from there for the publishers and authors...and the readers, for that matter.

Brenna

BrennaLyons said...

Now how Amazon is wrong...

Amazon...where to start with Amazon? Let's start with the fact that Amazon knows darned right well that other outlets have the same "shall not sell for less money than here" clause they adopted. They KNOW it, and they are pulling this. By doing that, they not only affect what happens on Amazon but force Macmillan to having to lower their prices at other distribution channels or drop Amazon, which many readers do not understand. They think Amazon will give them a deal, but that's not the way this would have to work. Contracts are not forged in a vacuum. What Amazon does that puts Macmillan in a bad place with other distribution channels does matter, and someone put in such a position must make a choice to fight or cut and walk.

I truly WISH people would stop acting as if every publisher out there is a big conglomerate with greedy, money-mongering boards. This isn't aimed at anyone on this blog, but you have to understand the cross-section of people I've been dealing with for the last two days on this issue. Some really believe that most publishers are conglomerates and have greedy boards and shareholders. NOT. There are 6 "NY conglomerates" (ironically, 4 of them are foreign owned) vs. more than 70,000 small and medium sized presses in the US alone that are sole proprietorship, partnership, or LLC.

Let me explain what this fight means to me...coming from indie press and with several self-published works available on Amazon and elsewhere. What Amazon can do to to Macmillan, they can do to me, and it will hurt me a LOT more than Macmillan. Now, my books are already less than $10...by far, but what if Amazon changed that line to $5 and forced me to cut my price, across the boards at every distribution channel that has that clause to $5? I'll tell you what. I'd tell Amazon to get bent, too. And since I currently make a lot more money off of Amazon than on it, Amazon would lose my business. Of course, I'm not overcharging for my books, but it's the ethics of the thing. I can't afford to sit back and say, "It doesn't affect me today."

Another problem Amazon has created for Macmillan is that, in order to take advantage of the 70/30 (when that takes effect...and Macmillan has already priced themselves out of on new releases), you have to enable text to speech on Kindle. Now, I don't have audio books, and I will state what I did when there was the dust-up about this months ago...e-book text to speech will NOT kill the audio market, but the conglomerates think it might, and they have to make smart choices to protect that audio market.

And one more nit... Amazon doesn't seem to realize that they have come into an established market, built by the indies, pioneer distribution channels like Fictionwise, and self-published authors. You don't just come into an established market, with its own rules and relationships and try to demand something different. The pioneers will tell you to get lost.

Brenna

Rick R Reed said...

For me, the answer to your question is easy: Macmillan is pricing itself out of the market. There are so many good ebooks out there at 6.99 and below that I would have no reason to ever pay that much for an ebook. If Macmillan is pricing their books too high, the market will tell them...and I have my fingers crossed this will happen.

Pauline B Jones said...

Readers are trying to be heard by tagging overpriced kindle editions. I wonder if NY pubs will ever listen to actual ebook readers? They won't get my business. I think 9.99 is too high for ebooks.

Debbi said...

Will readers buy at the higher prices? Are publishers like Macmillan pricing themselves out of the market?

The short answer is no, readers are pissed at MacMillan. (I read one Kindle forum regularly.) They think MacMillan's just being greedy. And it's hard to counter their argument based on the relatively low production costs of e-books. So, yes, MacMillan is pricing itself out of the market.

The confounding factors here are numerous. People can borrow these books for free from libraries, for instance. Why pay too much for an e-book, let alone a hardcover?

But the real crux of these issues are how do you determine the value of content? And how much does it have to do with e-book sales?

I think that until e-book sales completely usurp the print market (and assuming that happens), it'll always be better to keep the price low. When people come to rely completely on e-books, it'll be a different story. That's when publishers can start raising the prices. Right now, e-books are more of a option than a necessity, but this may change in the future. Until then, e-book prices should stay low (compared to print).

Consider what happened to the music and film industry. High prices for downloads led one place--more piracy.

Piracy being a whole different issue, I won't go into all that. An issue for another day, maybe?