Nancy's Notes From Florida

Author Nancy J. Cohen discusses the writing process and life as a Florida resident.

  • Subscribe

  • Warrior Lord

    Warrior Lord

    Paranormal Romance

  • Hanging by a Hair

    Hanging by a Hair, a Bad Hair Day Mystery by Nancy J. Cohen

    A Bad Hair Day Mystery

  • Shear Murder

    Shear Murder

    A Bad Hair Day Mystery

  • Writing the Cozy Mystery

    Writing the Cozy Mystery

    Writing Guide

  • Archives

  • Categories

Amazon vs MacMillan

Posted by Nancy J. Cohen on February 3, 2010

From The Author’s Guild:

Macmillan’s current fight with Amazon over e-book business models is a necessary one for the industry. The stakes are high, particularly for Macmillan authors. In a squabble over e-books, Amazon quickly and pre-emptively escalated matters by removing the buy buttons from all Macmillan titles (with some exceptions for scholarly and educational books), in all editions, including all physical book editions. Thousands of authors and titles are affected; hardest and most unfairly hit are authors with new books published by Macmillan that are in their prime sales period.

Yet if Macmillan prevails, the eventual payoff for its authors (and all authors, if a successful result ripples through the industry) is likely to be significant and lasting.

For those of you who may have missed it, here’s the story so far:

Last Thursday, Macmillan CEO John Sargent informed Amazon that beginning in March, it would offer Amazon access to a full range of e-book titles only if Amazon were willing to sell books on an “agency” model that would pay Amazon 30% of e-book proceeds and allow Macmillan to set its own retail price for e-books. (Currently, Amazon buys e-books as a reseller at a discount of 50% off the retail list price and sells at the price it chooses.) Macmillan’s price under its agency model, in many cases, would be higher than the $9.99 ceiling that Amazon has been seeking to impose on the industry.

If Amazon didn’t find the agency model acceptable, Sargent said Macmillan would expand its “windowing” of e-book editions. “Windowing” is the practice of waiting until a particular edition of a new book has been on the market for a while before making cheaper editions available. Publishers have for decades waited until the hardcover sales window has closed before opening the sales window on paperback editions, for example. This helps protect the sales channels for hardcover books. Windowing e-books is similarly believed to help protect a publisher’s sales channels for physical books. The risk with windowing is that some owners of e-book devices are angered that low-priced e-book editions aren’t available as soon as books are released in hardcover form.

This was a bold move by Macmillan. Amazon has a well-deserved reputation for playing hardball. When it doesn’t get its way with publishers, Amazon tends to start removing “buy buttons” from the publisher’s titles. It’s a harsh tactic, by which Amazon uses its dominance of online bookselling to punish publishers who fail to fall in line with Amazon’s business plans. Collateral damage in these scuffles, of course, are authors and readers. Authors lose their access to millions of readers who shop at Amazon; readers find some of their favorite authors’ works unavailable. Generally, the ending is not a good one for the publisher or its authors — Amazon’s hold on the industry, controlling an estimated 75% of online trade book print sales in the U.S., is too strong for a publisher to withstand. The publisher caves, and yet more industry revenues are diverted to Amazon. This isn’t good for those who care about books. Without a healthy ecosystem in publishing, one in which authors and publishers are fairly compensated for their work, the quality and variety of books available to readers will inevitably suffer.

Macmillan’s move is timely because, at the moment, the e-book market is still far smaller than the physical book market, but the e-book market is growing quickly. The longer Macmillan waited, the more difficult the transition.

Amazon didn’t wait for March, when Macmillan’s new policy is slated to go into effect; it decided to hit Macmillan immediately and comprehensively, removing the buy buttons for nearly all Macmillan titles, in all editions. This is a direct attempt to use its clout in the physical book industry to enforce its business model in the e-book industry. In some ways, it was an unusual exercise of power for Amazon. The company has used the tactic of turning off buy buttons on several occasions before, but, with major publishers it’s usually selective, and doesn’t turn out the lights on nearly all titles. That treatment is reserved for smaller publishers. (Authors receive no advance warning of Amazon’s treatment of their titles, nor can they do anything about it.)

Amazon, it appears, overreached. Macmillan was a bit too big a foe, and Amazon’s bullying tactics were a bit too blatant. (For a flavor of media reaction, see this story in Fast Company.)

Sunday evening, Amazon announced that it would have to “capitulate” to Macmillan, “because Macmillan has a monopoly over its own titles.” (By this definition, nearly every company exercises a monopoly over its products.) We’re all still waiting for that capitulation: Macmillan’s books still weren’t available on Amazon on Monday evening.

If Macmillan does indeed prevail, the economics of authorship in the digital age are likely to improve considerably. We may go through some rough stretches to get there, however.

You’ll be hearing more from us on this matter soon.

———
For More information, go to http://tiny.cc/Oxglk

About these ads

8 Responses to “Amazon vs MacMillan”

  1. Thanks for boiling down the facts on a complex issue. I understand that Amazon sells at a discount and that customers want low prices, but authors and publishers deserve to be compensated for their work. I wonder in what other industry would a retailer have the gall to tell a major manufacturer that they would only stock their products at below-the-cost-of-production prices.

  2. Amazon hasn’t capitulated, by the way. Macmillan books are still unavailable.

    I’m a Tor author…and a Baen author and a Daw author and a Harlequin/Luna author. And right now I am thanking my own foresight for not having my eggs in one basket, and the Scheduling Gods for not having a new Tor release out.

    But people who do are getting hosed. WORSE, the folks with paperbacks, whether new releases or not, because to get that free shipping, people often add a PB to the HOT! NEW! HC they are buying.

    I hear a lot of calls for authors to do something else and somehow magically produce and publish, or at least sell, their own books. I do not, however, see a lot of calls for that from writers.

    Anyone wonder why that is? I can tell you, because I may be one of the few people commenting that actually HAS some small business experience. Having had, and failed, in a small business, there are a thousand things you must do that are invisible to the customer to keep a small business going.

    Here is why authors don’t go into the self (e- or real-book) publishing business.

    In order to HAVE a small business you MUST have the following:

    Clearance from where you live to run a small business on your premises. If you do not have this, buy or rent space from which to operate same. ($ to $$$) If the authorities find out you are operating a small business from your home (and they will) without this clearance, Very Bad Things can happen. Like fines ($$$$$)

    Small business insurance. ($$ to $$$$) If you do not have this and someone injuries himself or you have a flood or a fire, your homeowners will NOT cover you ($$$$$$$$$$$$$$$).

    Business licenses. Sometimes three, from city, county and state. ($)

    Business tax number.

    The ability to process credit card payments ($$. Yes, Virginia, they charge you). You can use PayPal, but that comes with its own set of fees and problems.

    Someone to separate your business accounting from your personal accounting. And someone to handle the business tax reporting. If this is you, this is time you won’t be using to write.

    A website ($ to $$$$). If you are setting up and maintaining, this is time you won’t be using to write.

    Someone to handle orders ($ to $$) After all you don’t want to ship product until you find out if the credit card/PayPal account is good. If this is you….yada.

    Someone to think of good ways to promote your books. If this is you….

    The sure and certain knowledge that 4 out of 5 small businesses fail in the first 4 years.

    A day job, because at the end of 4 years, chances are you will need it.

    To sum up, here, to run a small business selling my own books, whether in e- or paper format, I would have to take the odds of 80% failure and the loss of at least 50% of my writing time.

    For the record, when our small (scrapbooking, brick and mortar) business failed, our end result was a loss of over $200k.

    Start a book business myself? That’s the sound of hysterical laughter you hear. Thanks, I think I’ll stab myself in the eye with a fork a few times instead.

  3. Yikes, Mercedes, you present a succinct argument against publishing and selling our own books. I wouldn’t do it anyway because the distribution is better with a publisher. It’s less hassle for the authors even if we’re still expected to do all our own promotion. Thank you for your sobering and thorough analysis.

  4. Andreas said

    I am a big fan of Amazon Kindle, I myself own a. But I think Amazon needs to come up with something to get against the iPad to.

  5. Kristin W. said

    I honestly hadn’t heard much about this fight. Guess works been too crazy and this didn’t spread quite like the Harlequin/ vanity press issue. Thanks for the info.

  6. Luis Vicencio said

    I’m trying to get your RSS feed but i’m getting an error. Please let me know when it’s ready, I love the site. Thank you! :)

  7. Hey! I have been following your blog for 3 days now and i should say i am beginning to like your posts.I guess im subscribing now for not missing anything new.

  8. nancyjcohen.wordpress.com is amazing, bookmarked!

    unlock samsung

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
Follow

Get every new post delivered to your Inbox.

Join 8,627 other followers

%d bloggers like this: