Charles Engelke's Blog

January 31, 2010

Macmillan vs. Amazon (vs. Authors and Readers)

Filed under: Uncategorized — Charles Engelke @ 1:55 pm

Amazon.com and Macmillan publishing are playing hardball with each other.  As of right now, Amazon isn’t selling any of Macmillan’s books in any format.  This is very bad for writers and readers, and has drawn a lot of attention.  There have been a several good posts at John Scalzi’s blog, and a great one at Charlie Stross’s blog.  The New York Times Bits blog and Wall Street Journal have also covered this, but not with much clarity or depth.  Macmillan has publicly commented, but so far Amazon has not.

Most of the articles and comments (other than Charlie Stross’s post) say that this about e-b00k prices.  That doesn’t seem to be quite correct.  True, Amazon wants e-books to sell for about $10 and Macmillan wants them to be about $15, but that’s not what has triggered this extreme tactic.  It seems that Macmillan has offered Amazon a choice: sell our e-books as an agent instead of a retailer, or else wait 7 months after hardcover release to sell them at all.  It seems implicit that Macmillan will not allow Amazon to continue paying hardcover wholesale to retail the e-books right away (which is what they do now).

Those are both terrible options for Amazon. If they’re just one of many agents, all selling the exact same product for the exact same price, how do they beat their competition? Smoother payment and delivery systems help, but they’re not enough. And if e-books are delayed for 7 months, they’ll just plain fail as a product.

Amazon’s retaliatory move is extreme and is hurting a lot of bystanders. I don’t support it, but I do support their position that Macmillan’s offer (demand?) is unacceptable. Publisher-fixed pricing or 7 month delays would be bad for Amazon, bad for customers, and (I believe) bad for authors. It might even be bad for the publishers; businesses aren’t always great judges of how future market changes will affect them.

I think Amazon understands the e-book marketplace much better than Macmillan.  I even think they understand the traditional book marketplace better.  Let the market sort this out to see who is right.  Macmillan wants to take the market partly out of the equation: no retailers involved in pricing at all.  There are countries that work that way for physical books, and I think it works poorly there.  It protects incumbent publishers and stifles innovation.  Macmillan’s just wrong here.

Update: Macmillan has now directly posted a statement on Tor.com.  Among many other issues, they state that they are trying to encourage a business model that “encourages healthy competition” and is “is stable and rational”.  Later, it states that the disagreement is about “the long-term viability and stability of the digital book market”.  [Emphasis mine.]

A market with healthy competition is not stable.  A stable market doesn’t have healthy competition.  Macmillan is an incumbent and wants to stay that way, comfortably.  Amazon’s something of an incumbent itself, but it seeks change, not stability, because it has confidence that it can win in a changing world.  I favor Amazon’s point of view.

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