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News flash

Still on the road with a Vaio P instead of a full-on computer, so I'll be brief: Amazon.com can kiss my ass. Shorter version: they're engaging in monopolistic practices that damn well ought to be illegal, in an attempt to use their near-monopoly position to fuck over authors and bring publishers to heel. Longer version: google on "Amazon" and "Macmillan". Hint: Tor, who publish my Merchant Princes books, are part of Macmillan. And I've got a new book in that series coming out in six weeks' time.

Srsly. They can fuck right off. As of now, I'm not sending them any more trade. If you follow the 'buy my books' links in the sidebar to the right, you'll notice that they don't go to Amazon any more. This is the third time I've done this in 12 months, and this time it's personal — they've gone too far.

A full, detailed explanation of the story behind the current pissing match will follow on Sunday or Monday, but right now I'm too livid to type and I don't want to break my netbook.

81 Comments

1:

Your UK links still go to amazon.co.uk

Hmm, how to try and break my Amazon habit? I like the convenience of not having to enter my details every time.

2:

Hm, I have a different take on it. But I've sent my take on it to you, so I'm curious to see your view of the situation. (And hopefully I'm willing and able to admit I'm wrong, if I am :).)

3:

John Scalzi's got a decent write-up over at Whatever. You should definitely read it if you haven't already.

And yeah, I'm in your camp. Amazon can go fuck themselves. I hope the iPad destroys the Kindle.

4:

Do you have any evidence Amazon have actually done this?

I reckon this is typical internet bullshit, bluntly, and I suggest everyone holds fire till we find out what is really going on.

5:

I have never done any business with Amazon; they spammed me, back in the 1990s, before I ever might have, and after that, well. One does not do business with spammers.

6:

Doug@4: A large number of Macmillan books -- electronic and physical -- have disappeared. Many of the physical books are available from other resellers, but not directly from Amazon. (This affects pricing, availability, and shipping costs.)

This has been going on for well over 12 hours, with no comment (that I've seen) from either party.

So, yes, it appears to be real. As to what "it" is, that's still up for question.

7:

I dunno about illegal. I do know that I have another arse for them to kiss right here, and that my purchases and recommendations are going elsewhere from here on in.

We know from the last few back-downs that they doubt they can hold onto their firstcomer's quasi-monopoly against a full-on fire-farting consumer backlash. Alas, their arrogance seems to be getting into the habit of running ahead of their prudence. Well - better maybe for the big dust-up to come now, than later when they're stronger.

Still sucks like the Great Grimpen Mire. Best wishes to you, and the Tor mob, and to Macmillan in general. I so hope we get some decent competition in the sequel!

8:

Oddly enough, on amazon.com I still get lots of books published by Macmillan and sold by amazon (not another seller). Was it all books pulled, or just ebooks?

I usually shop at amazon.ca, and will continue to do so. The only other option in Canada is Chapters, which is the Canadian company that destroyed most independent bookshops, then got taken over by Heather Reisman and reinvented as a chic lifestyle chain bookshop* where 2/3 of the 'Science and Nature" books are photobooks of dogs, horses, and kittens. Not to mention Reisman refusing to carry books she disagrees with (she's a staunch supporter of Israel, of the "if you say anything bad about Israel you're anti-Semitic" ilk) and actively donating corporate money there (I'd really rather my purchases didn't support handouts to IDF soldiers).

http://www.penciltrick.com/index.php/retail/chapters-indigo-sucks/


*If you want to see what the "suburban mother" demographic looks like, visit a Chapters. (But not if you have allergies — you have to wade through displays of scented soaps to get into the shops.)

9:

I wonder if this will turn out to be another "glitch" like the delisting of gay/lesbian titles last year?

10:

Doug @4: they did this last year to Hachette, on Amazon.co.uk. Hachette folded, quietly. This time? There's a rival on the horizon.

11:

That would explain why I could find any of the Merchant Princes at Amazon last night when I was trying to preorder "Queens."

12:

Sending them a complaint email to Customer Service might also help. I threatened to take my extensive business elsewhere if they didn't cut it out, but I think I'll just trot on over to Barnes & Noble or some other site.

Looking forward to your newest Merchant Princes book, which I shall not be buying via Amazon.

13:

Doug @4, also notice that Charlie's link is to Theresa Nielsen Hayden, she and husband are editors at Tor, so should have a good idea of what's going on.

I've never been a fan of Jeff Laughs-Like-A-Horse (probably shouldn't say that, but what the hey...). About the only thing I use Amazon for is to look things up. I prefer to support my local bookstores whenever possible, even if it's a chain store (our last independent new bookstore closed a couple years ago). I'd rather lay hands on a book before I buy, have writer's get their fair share, and don't like to pay shipping.

14:

This sort of argument is pretty common in America. I've seen it frequently during renegotiations between cable companies (those providing the signal to the house) and TV content providers; eg between Time Warner Cable and Viacom, or between Cablevision and Food Network/HGTV.

The content providers want to increase the charge to the cableco for provision of the content, the cableco refuses; the provider threatens to turn off the relevant channels (and have, in some cases). Both sides tell the consumer that it's the other's fault (Viacom: "TWC is going to cut off your access! Complain to them!"; TWC: "Viacom is increasing their charges! We don't want to have to make you pay more fees, so complain to them!").

Amazon/Macmillan is just more of the same. It's business as usual in corporateland^WAmerica.

15:

Oho, so you're one of the authors in favour of a new Net Book Agreement, then. Publishers have absolutely no right whatsoever to do more than set a RRP and charge their own wholesale prices according - loss leaders are legal.

S'okay, I can get your books second hand. I don't have any sympathy for Amazon, given their love of DRM (which is a blunt "no" from me), but I have even less for the advocates of publisher-fixed pricing.

It's impossible to say that it was Amazon who are doing this in the first place anyway, given Apple's comments on "the price being the same".

16:

I've not much to add beyond a recommendation for the Book Depository - bookdepository.co.uk - their prices are usually very good and they have free worldwide shipping. I use them for most of my book purchasing since moving to France as the English language books on amazon.fr are usually expensive. Their catalogue seems pretty good, I buy a lot of fibre arts books and have found that they stock most of the books I want.

17:

Heh. Cute as the Vaio P is, I'm not sure it falls into most people's class of 'netbook'.

Given the direction Apple have gone with the iPad (applications), it's unlikely that they're going to be coming out with something that's actually as pleasant to use to read books as any of the eink devices. Backlit screens just aren't as nice. It'll probably be nice for the comic industry, though, and lets them do bad spreadsheet applications on.

Letting publishers cut their own throats by insisting on premium pricing for something consumers are aware area near-zero-marginal cost ephemerial items? We'll see how Apple does with that.

B>

18:

Wait. Copyright is monopoly, isn't it? By definition actually. And aren't publishers who want to set their prices actually living and breathing monopolistic behavior all the time? And when you sign with them, aren't you authorizing their monopoly of your creative work?

Not defending Amazon, but there doesn't seem to be any good guys in the story at all. MacMillan can set whatever damn price they want, just like Amazon should be allowed to decline the offer. Apparently those two monopoly forces didn't agree on a price. How is that Amazon's fault but not MacMillans?

I sincerely hope that this won't offend you, but my point is: maybe you should tell your publisher to "f**k right off" as well (using your words) if you want to be consistent on your objection to monopolistic practices.

Think of this from a reader's perspective (mine). I can't sell or lend the ebooks I buy. Why then should they cost the same as a paper book that I can resell later to recoup some of the "premium" I paid? Or that I can lend to a couple of my friends? As a writer, you won't see any money from those transactions, right?

My wish? That authors ditch their publishers and take their books to the customer directly, like Wil Wheaton did (by the way, he also doesn't do business with Amazon). The publishers are only important for the services they provide (copy editors, marketing, etc), which can be provided by independent companies (or even your biggest fans), a mesh of service providers if you will, gift of the Internet. It may take a while for that ecosystem to evolve, but it will be an improvement.

Then as a writer you can set your own price and sell on any format you wish, with or without DRM, keeping full control of your creations for as long as you wish.

As for the gentleman who said "I hope the iPad destroys the Kindle.", here's one thing he should keep in mind: Apple's walled garden usually has much taller walls, with barbed wire on top and guards with machine guns keeping you in. Careful what you wish for!

19:

Will Pearson @1: It's only Amazon in the US which is playing the silly games.

20:

Emma en France, you might want to look at priceminister.fr for second-hand and new books, comics, bande dessines etc. It's somewhat like Amazon Marketplace based on private sellers but some commerical operations also use it as a sales channel.

21:
It's only Amazon in the US which is playing the silly games

Alternately, it's only Macmillan in the US which is playing the silly games.

22:

Meanwhile Drivethru RPG (a specialised PDF distributor which lets publishers set their own prices) has as of today raised $169,145.00 for the Doctors Without Borders Haiti appeal, by selling PDFs with a nominal value of $1500 that authors / publishers have voluntarily added to a $20 charity bundle. I really doubt that Amazon could raise tuppence on that basis.

23:

As a reader I think the situation is a little more nuanced, here are some observations.

I read the first three books in the princess merchant series on the kindle, but can not get book 4 even though its been in paperback for more than 12 months. Maybe I'l buy the paper version some time.

DRM is publisher mandated. I have plenty of DRM free content on my kindle. I don't have to involve Amazon to get this content, though there is the minor annoyance that I do lose the wireless functionality if I bypass them.

The evidence that exists, seems to indicate that DRM reduces revenue. Pretty much all DRM'd content is available on the net anyway, but I'd much rather buy legitimately if I can.

E-books have low marginal cost, and have less usage flexibility when DRM'd, so I'd expect to see some savings to myself, or higher royalties to the author.

24:

Cory's take on it...

http://www.boingboing.net/2010/01/29/amazon-and-macmillan.html

So Amazon are clearly in the wrong here but i'm still utterly baffled, along with many others, why publishers feel they can justify setting these sort of prices on ebooks.

25:

#14 - and that is exactly the problem with having companies that are too big (Apple and Google, ditto, Big Content - inc. publishers on the other side) - it's a problem for consumers, in a way that a disagreement between Shop A and publisher Z is not when we have plenty of other shops.

#24 - because Cory keeps coming back to the boring point about incremental costs. Everyone knows that the incremental costs have never been relevant to the price of content.

It's grabbing the wrong elementary law of economics - the closer one is, in the absence of competition, the price will be set at the point that maximises profits (i.e. the point where it crosses the line with price / demand).

Yes, OK, people expect digital, and especially DRM'd content to be less.

26:

the princess merchant series

Challenge: Stross/Princess Diaries mashup.

27:

Noyfb; you're one step away from being banned as a troll.

Hint: putting words into my mouth and then arguing with the resultant straw man Irritates Me. People who Irritate Me presistently get their comments deleted and are banned. OK?

28:

Recommended further reading: Why the commercial ebook market is broken, and Why google is not my friend.

(For folks who want to read my fiction, I have two goals: to maximize my audience, and to earn a living (thus enabling me to maximize my writing time). Being paid for writing helps. Being told to pursue a cut-my-own-throat pricing model, or write for free for the good of my soul ... less than helpful.)

To an outsider, I can see why this might appear to be a case of the unspeakable in pursuit of the inedible. Alas, I am a tapeworm in the guts of the inedible, and for better or worse my fate rides with my publishers (in the short-to-medium term).

29:

Charlie@28: That first link doesn't seem to go anywhere.

I think I'm going to have to wait for some more information before I opine further; you know what my thoughts are, and what information I'm awaiting :).

30:

Your first underlined text doesn't have a URL under it.

32:

When you said this was coming, I kind of expected it to take a little more time to actually occur.

Amazon has cut out 3 of my favorite authors from their business (Stross, Scalzi, Brust) overnight. WTF?

33:

here's a working link to the first post Charlie was talking about: Why the commercial ebook market is broken

34:

Charlie, I'm sure you have what appear to be good and sufficient reasons for your views. However, as a reader, I am not sure I can agree with you on this one.

Amazon appears to have taken to the nuclear option with alacrity in its dispute with Macmillan, which is, frankly, reprehensible. However, publishers who insist on pricing ebooks the same as hardbacks - and/or delaying ebook releases - are not striking me as people who are engaged in a sensible way with the potential future of their industry, rather as stick-in-the-muds who will get shafted by the ongoing technological change just like the music industry they are so resolutely refusing to learn from. A pox on both their houses, frankly.

35:

Long essay on how publishing pused to work and etcetera passed 1000 words earlier this evening. It's going to take a day or so of hard work, folks. Meanwhile, I'm off to bed soon.

36:

Charlie, this kind of thing (Amazon vs. Macmillan, DRM, etc.) is why I have absolutely no interest in e-books or e-book readers at this point. As of January 2010, the whole e-book thing looks to me like a whole lot more trouble than it is worth.

I've looked at the different models of e-book readers, but even though I am someone who buys a lot of gadgets, the problems appear to greatly outweigh the advantages for this class of product at the moment. Trust the tech industry to screw up something as simple and nice as reading a book.

Maybe in five or ten years the whole thing will settle down, and e-books will be worth reading and buying -- but with all the problems, I will continue to buy all of my books as paper for the forseeable future.

Ed Sweet

37:

I've got to say, this is six of one and half a dozen of the other. A pox on both their houses.

MacMillan are attempting to raise prices to bail out a business model that still hasn't adapted to the world of today. I know Charlie likes the framework of the editors, marketeers, advances, etc. - but as he realises, its not long for this world and in reality these intermediaries need to become a service industry to the authors. Not an impediment or some kind of overseer.

On the other side, Amazon are a bunch of ****s. DRM on books is unacceptable. 'Licence terms' should be laughed out of court. Strong arming like some supermarket to get a particular price point should be illegal.

This is exactly the type of situation where a truly voter-centric government should step in - banning certain behaviours and shaking up the industry such that it comes down in a viable model that benefits the reader first and foremost. To do this they have the biggest stick of all - removing copyright protection from anyone that doesn't play ball.

Of course, that assumes democracy.....ho hum

38:

This is a side effect of a U.S. Supreme Court decision from 2007 on purses.

Really.

In Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), the Court (by a 5-4 vote) overruled Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911), which had held that resale price maintenance agreements are per se violations of US antitrust law, and held instead that RPMAs are subject to the so-called "rule of reason." Admittedly, the actual agreements in both cases concerned a manufacturer demanding that a retailer maintain a minimum price, not a maximum one; explaining why the direction doesn't matter requires quite a bit of inquiry into the hairy details of antitrust doctrine.

The key point, particularly in practice, is this: A per se analysis means a complainant has a reasonable chance of winning; a rule of reason analysis means a complainant has an honest politician's chance in an election of winning, although it does happen on occasion (if, that is, one can afford to rent the very, very best lawyers... and the opponent cannot).

So, in short, this isn't about copyright, except in the sense that copyright is a monopoly-like, restricted statutory right. It is, instead, about antitrust law, and in particular about RPMAs and the even more confusing quagmire of refusals to deal and tying arrangements.

39:

This is a side effect of a U.S. Supreme Court decision from 2007 on ladies' leather fashion accessories.

Really. But don't get your hopes up for any leather garments...

In Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), the Court (by a 5-4 vote) overruled Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911), which had held that resale price maintenance agreements are per se violations of US antitrust law, and held instead that RPMAs are subject to the so-called "rule of reason." Admittedly, the actual agreements in both cases concerned a manufacturer demanding that a retailer maintain a minimum price, not a maximum one; explaining why the direction doesn't matter requires quite a bit of inquiry into the hairy details of antitrust doctrine.

The key point, particularly in practice, is this: A per se analysis means a complainant has a reasonable chance of winning; a rule of reason analysis means a complainant has an honest politician's chance in an election of winning, although it does happen on occasion (if, that is, one can afford to rent the very, very best lawyers... and the opponent cannot).

So, in short, this isn't about copyright, except in the sense that copyright is a monopoly-like, restricted statutory right. It is, instead, about antitrust law, and in particular about RPMAs and the even more confusing quagmire of refusals to deal and tying arrangements.

40:

I don't think that's it. This is purely conjecture at this point, of course, but, based on the timing... Honestly, I think what happened is that Amazon had gotten buy-in at a certain price point for ebooks, and did moderately well. Not fantastic, but moderately well.

And then Apple got into the game. And Apple, unlike Amazon, makes money via hardware, and any profits from content sales are a benefit. So I think Apple went to the publishers and told them, "We'll let you set your own price, just like on the iPhone App Store. We'll take 30% or 5% (depending on which model -- app store or music store -- they're going with). You can select prices from this set of options, but it's all up to you."

And then the publishers, or Macmillan at least, want Amazon to do the same thing.

But what's sustainable for Apple won't be for Amazon, at least not at this point in their business models.

That's just my interpretation. I think Charlie disagrees strongly with me. And, of course, I could very well be wrong.

41:

As someone who wants to see authors get paid, I see this as a good thing. Publishers need to be brought to heel lest they destroy their own market.

There's an entire generation that sees music as something that you not only don't need to pay for, but actively should not pay for, lest you support terrorism by lawsuit.

I don't particularly mind the idea of music-as-a-business dying in a fire. Musicians can, and in fact largely always have gotten by without the support of the music industry. Authors? Not so much.

People have a multi-millennial strong tradition of sharing books. It'll be a lot easier for the general public to get used to the idea of The Public Library of the Pirate Bay. They've been trained by the publishing industry that the price they should pay for books is based on the quality of the artifact they get to keep; hardcovers are expensive, paperbacks are cheap, and library books are free.

Which do ebooks look most like?

It has to be made clear that ebooks are sold, not rented, and at a price people see as fair. If it doesn't happen before ereaders get cheap enough to be bought at a whim, I don't see any way for the publishing industry to survive.

How long do we have? The entry model Sony is under $200. That's probably not much, if any, more than one halfing from the whim price.

Amazon's behaviour isn't pretty, but it's necessary. The publishing industry wouldn't survive the music industry's mistakes, and they don't seem to have learned from them. They need to be saved from themselves.

42:

Unrelated, but it's plague. "A plague o' both your houses!"

Speaking of mercurial tempers, Amazon's hostage-taking strikes me as terribly immature. "Let me win, or I take my ball and go home," is fine when you're, say, six years old. But Amazon isn't six, it's sixteen. If Amazon didn't want to sign a new agreement with Macmillan, it didn't have to. Instead, it chose to play the dick card. Imagine if it had gone further, and removed all Macmillan titles from Kindle users -- which we already know it can.

43:

I wish this kind of situation surprised me. But I'm a cable company employee and I was there for the brawl sweh @ 14 mentioned. Or the more recent one, over Fox channels. Each company claims hardship, financial needs, and tries to pass the other off as the bad guy. Now the company's laying my entire division off and re-allocating all the customers to other groups, so I'm out a job April 30. But that's a digression.

In regard to ebooks and the ebook market, this has all led me to one place:
Not buying an ebook reader until there's a better situation with the ebooks and the readers in regard to the limitations placed on how I read, what device I read on, and who that device talks to. Many ebook readers hit a couple categories, but I'm patient and can wait to get them all.
I'm not interested in being locked into iTunes, or Amazon, or B&N, or any of their hardware.
The hardcover book vs. ebook issue, plus overall pricing, is definitely tricky for authors. I buy hardcover from my favorite authors, and random authors I give a chance to once in awhile. But if a market model has to shift, the publishers will have to come to grips with it eventually. If you can reach a wider audience through a lower price point, try to find the balance. I think Amazon's got some serious hubris to do this, but I can't feel that Apple/iTunes are much of a 'better' alternative when you consider the iPad, iPhone, and iPods are all exercises in slowly but surely increasing vendor lock-in. And we will see what the actual price points Apple negotiates are.

44:

Amazon's behaviour isn't pretty, but it's necessary.
You've seen Cory's complaints about trying to sell DRM-free (or even DRM-with-publisher's-permission-to-break-it) ebooks for the Kindle? There is lots of blame to go around.

45:

How would Manfred Macx react to this situation?

46:

Mal: run in circles, scream and shout.

(I am not Menfred Macx. If I had his level of voluntary donations I might take a more sanguine view of the de-facto monopolist on ebook sales trying to blackmail a publisher into cutting their prices to below where they feel they can operate comfortably.)

48:

mal @43: Are you asking "What would Manfred Macx do?" ...

49:

Oh good, I was just about to buy the MP5 paperback, too. Are you getting a kickback similar to Amazon's referral from the new place?

50:

I think it's not just the e-book market that's broken, but publishing in general. And I have no idea how it could be fixed. Consider my case: I've got Charlie's stuff in hardcover, because I love physical books. But if I wanted an electronic version to read on a doohickey, I bet I could find one available via Bittorrent faster than I could purchase one from a store. So Charlie's entire income stream from people like me relies on the fact that I like paper.

I don't know whether I'll still like paper in ten years' time and I don't suppose that people who grow up with electronic editions will care to pay a premium for paper. So, if I want to be reading Merchant Princes XXV: Timeslip Boogaloo in ten years' time I had better find a way to pay the author - and this is my problem just as much as it is Charlie's.

51:

Of course I am. As usual.

This is a serious question, though: Why should ebooks, unlike basically every other product in the marketplace - including print books - have prices directly set by their wholesalers rather than a recommended retail price?

Of course, many companies and people these days are choosing to sell direct precisely SO they can exercise the level of pricing control they feel is necessary. Why not in this case?

52:

Based on the information so far both parties seem to be acting like dicks.

From Macmillan CEO John Sergeant's statement:

'Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.'

Seriously how can you expect any retailer in a relatively free market to accept that they have no right to vary their prices at all?

Amazon's reaction is appallingly stupid but so are Macmillan's demands - and if as seems quite likely Apple are willing to accept them as standard then I really don't see a big future for the IPad once the fanboys have bought the first tranche.

Now the adult response from amazon would have just been 'take it or leave it' and carry on selling the books as long as they had stock/download rights - that would then leave Macmillan to decide whether they were going to pull them and force us to take our business to Apple's walled garden.

From Amazon's POV the problem may be that while cable or satellite TV subscribers will accept this kind of dicking around book buyers do not see their objects of desire as mere commodities - to refuse to sell (and presumably if this isn't resolved to vindictively pulp?) physical hard copy BOOKS that you have in stock and that people want to buy just seems WRONG in the sense that refusing to carry a particular TV station isn't.

While I think Macmillan started this, I am still going to find it difficult to keep buying books from Amazon after this.

53:

Charlie: Sometimes the only thing to be done, doesn't generally help, but at least you get some exercise.

54:

The gents at Amazon really do seem to be acting like petulant children. I understand strong-arm negotiations, but aren't they just engaging in spiteful nasal mutilation by cutting their inventory for potential short-term (and in all likelihood temporary) gain?

55:

Well, I decided to give Tor the e-finger when they held back the 12th Wheel of Time book a year for the ebook edition. So this has the effect of keeping me to my vow of not buying from that publisher at all.

I do sympathize with the authors tied up with the publisher, but sometimes you have to make a stand to make a change. Good luck.

56:

I'm asking myself if an ebook publisher actually needs a retailer at all, except for the purposes of adhering to a book-as-object sales model. Tor has a website, and presumably the means to sell downloads from that website. What do they get out of dealing with a third party? Is this what Amazon are actually fighting?

57:

Chris L. @55: Presumably, they get freedom from the hassle of running their own e-book store. (Though they have been trying to get their own e-book store up ever since the Tor Dot Com blog kicked off, with no signs of it actually happening any time soon. See my interview with Pablo Defendini, the guy whose job is is to implement the Tor Dot Com e-book store, for more on that.)

I find Sargent's letter a trifle self-serving and suspicious. On the other hand, Amazon's behavior and motives aren't exactly laudable either.

In the end, what sways me slightly in favor of Amazon regardless is that I feel very icky about publishers or any suppliers having the ability to control retail prices instead of just "suggest" them. It's anticompetitive, and can only lead to higher prices for consumers.

58:

Roger@51: I was right, yay me. That's the iPhone App Store model. Apple will work with it, because Apple isn't trying to make a profit as a middleman. Amazon, on the other hand, is -- so they will either have to win this, or get out of the ebook market.

I don't think I can stress that enough: the reason Amazon is acting this way is because, as a retailer (aka middleman), their corporate life depnds on being able to set their own retail pricing. This means they need to be able to attract customers while still making a sustainable profit.

Chris L@55: for most ebooks, yes. Because of DRM and because of different formats. Baen can sell directly (and does, and I recommend them quite highly) because they don't tie themselves to any single platform.

Now, can this basic plan work? I don't know. Video games work well by having a high initial price and then lowering it over time. Macmillan is trying to force that model on books (and despite what Scalzi, TNH, and others have said, time and price are not the only differences between a hardcover and a paperback). I find it distasteful, and (as I have already indicated) find the prices limiting my purchases.

Amazon is trying to show a very strong hand. Macmillan is in a strong position, because they already have a large potential audience for their pricing. And someone will be folding before they can find out if they're right.

But mark my words: if Amazon folds, then the Kindle is dead. And B&N's Nook will soon follow.

59:


Quote: "I hope the iPad destroys the Kindle"

I hope anybody upset about this buys neither DRM-crippled hardware. But no, that would actually require taking the lead away from the stampede.

Messiah much?

60:

I don't know very clearly who is in the wrong in this, but my primary preocupation is that the Apple DRM model loses. I read exclusively electronic books, for good reasons to me. This means either buying them, OCRing them, or downloading them from TPB and the like. Anything's better than turning pages by hand, so I wouldn't mind buying them or downloading them. However, DRM causes all sorts of trouble that I think are quite obvious: platform dependence, portability problems, if the vendor dies the book is gone, etc. Additionally, DRM almost by design will compell you to read a certain book with a certain application. For reasons of accessibility and usability this is annoying to the point that option 3, or even option 2, starts looking better or more feasible. So whatever happens, I hope Apple comes out of it bleeding.

61:

One thing that completely baffles me about this whole discussion is why everybody seems to be taking it for granted that e-books for the iPad will have DRM. Why? Music on iTunes doesn't have DRM. Books on the iPhone/iPod don't have DRM (unless you buy them that way, but that's nothing to do with Apple). Why on earth is everyone so certain iPad books will be different? I find it hard to see this as anything but mindless Apple bashing.

62:

This is basically about duelling supply chains:

Publishing is made out of pipes. Traditionally the supply chain ran: author -> publisher -> wholesaler -> bookstore -> consumer.

Then the internet came along, a communications medium the main effect of which is to disintermediate indirect relationships, for example by collapsing supply chains with lots of middle-men.

From the point of view of the public, to whom they sell, Amazon is a bookstore.

From the point of view of the publishers, from whom they buy, Amazon is a wholesaler.

From the point of view of Jeff Bezos' bank account, Amazon is the entire supply chain and should take that share of the cake that formerly went to both wholesalers and booksellers. They do this by buying wholesale and selling retail, taking up to a 70% discount from the publishers and selling for whatever they can get.

The agency model Apple proposed -- and that publishers like Macmillan enthusiastically endorse -- collapses the supply chain further, so it looks like: author -> publishert -> fixed-price distributor -> reader.

Amazon are going to fight this one ruthlessly because if the publishers win, it destroys the profitability of their business and pushes prices down.

See? It's the internet crushing middle-men again, except this time the middle-man is Amazon.

(Note that Amazon have been trying to grab a larger share of the cake by dipping into the publishers -- and the authors -- share of what meagre profits there are, even though they've already got the wholesale and retail supply chains stitched up. Their buy wholesale/sell retail model screws publishers' ability to manage their cash flow and tends to induce price wars on the supply side, which is okay if we're talking widgets with a range of competing suppliers, but books are individually unique products and the industry already runs on alarmingly narrow margins: this isn't the music or movie biz.)

Now, as to pricing and DRM -- those issues are entirely irrelevant -- at least at this stage of affairs. They're different battles. For what it's worth, the ePub format Apple are going with doesn't mandate DRM (although it provides an optional vendor-specified DRM layer). The DRM push comes from the board level of the corporations who own both the book publishers and the music vendors, and individual editors and publishers know it's crap. This is a battle that'll be lost or won within the publishers.

Pricing ... we sell books by reverse auction, most expensive editions first, then cheaper editions, then mass market, until we get to the remainder shelves. What any sane publisher would like to do is to get away from the current crude fixed-price points -- a system they can't do anything about right now because it's locked in via the wholesale/retail distribution model -- and get round to flexible pricing on books: start selling high, then drop the price incrementally with much higher granularity than is currently possible. Such a system would allow them to get a lock on the price elasticity of demand, and thus work out the price point at which they can maximize book sales. A fixed-percentage agency model (distributor takes a flat 30 or 35%, whatever the price, while the price is set by the publisher) lets them do that.

Finally, here's an open letter from Macmillan's CEO explaining his side of the picture.

It's interesting to note that unlike the music industry who had to be pushed, the big publishers seem to be willing to grab a passing lifeline.

63:

Erm... @ 1, 14, 19, 24, 37, 38, 51 ....
Two thoughts.

One: This is a US business model, selling, eventually to private individuals, us, the readers.
IT DOES NOT APPLY (much) here.
Why not?
The Sale of Goods Act, and its European children, based on the British model.

The regular run-arounds and outright cheating performed by US retailers and wholesale distributors is ILLEGAL here, I'm glad to say. As Intel found out with, IIRC the "486" - the chips were defective, and produced a divide-by zero under some circs. Intel tried to bullshit their way out, as they had already done in the USA - only to be told: "No that's a $500 fine, per computer, per Trading Standards district - right across Europe. They went on bullshitting, because they were, you know, AMERICAN, and the world runs OUR WAY(TM) for about a week, until the penny finally dropped.
It went very quiet, very quickly, and they modified the chip.

Two: This has happened before, several times, and is still going on, in a closely-related field.
Recorded Music.
The publishers of LP's, back in the 60's had a commercial stranglehold on prices, and ripped everyone off, and repeated this, to start with, for tapes and then CD's when they came along.
They are STILL DOING this regarding "pirate" music recordings, even though most, if not all of the "pirates" are actually in favour of a pile-it-high-and-sell-it-cheap model, rather than a sell-em-expensive-and-few-and-rip-em-off model ....

The levels of shortsighted greed and stupidity displayed are scary to behold.

Looks like Amazon have just joined that club.

I'm sure Charlie's essay will be most enlightening, when it comes ......

64:

I'm sure our Esteemed Host would also be in the pox==bothhouses camp, except for the fact he is, at present and for foreseeable future, a tenant in one of those houses, though he's well cognizant of the future, and is planning accordingly.

And he has promised a treatise on the history of the book publishing and selling biz, but I think I can give something of a preview here.

The single driving factor in the book biz has always been friction, whether it's between the author and the printing press (editing), the printing press and the bookstore (manufacture and distribution), or the bookstore and publisher, and the customer (advertising and promotion).

This has allowed a number of business models to grow, which are completely unsupportable in a frictionless environment.

The first against the wall are the general audience bookstores, and not because of ebooks, or Amazon, or at least not directly because of Amazon. They're dead because sustaining a few thousand feet of inventory on a bewildering variety of subjects is a losing proposition, especially in the internet age, though not directly because of it. The internet and Amazon only magnify the insanity.

The next up against the wall are the infinite fungibles of copyrights. At some point, all concerned are going to have to sort through what exactly constitutes a legitimate demarcation of copyright, and what constitutes rent seeking business model protectionism. In the latter category, expect to see regionalization going up against the wall (note that regionalization is distinct from translation), as there is absolutely no need for regionilization in an ebook economy.

We're going to be stuck with editorial services, though that's no bad thing, and promotion and marketing, well, that will all be the same but different.

65:

Ross Smith,

iTunes music does have DRM, afaik. It certainly did at the start, and as far as I know, at this point some of it does and some of it doesn't. The reason to believe books on the iPad and similar apple devices would have DRM is that the whole premise of the iPad is a closed platform with signed code all over the place. It could be that Apple will be selling books in unencrypted plaintext, but I, for one, will be extremely surprised.

Another reason why Apple would want DRMed books is that books are not its business, its business is selling hardware. Hardware is easier to sell when it can do something unique, like read ebooks from Apple's store.

I hope I'm wrong, and I think DMR in books is ultimately harder to uphold than with music, given that, at the end of the day, sufficiently motivated people can copy ithem by hand, as a last resort, but I've my doubts. The reason I brought up DRM is that it seems to me Amazon is not quite so wedded to that notion.

66:

LafinJack @49: Sometime in the next 24 hours, the links will all change to Powell's ones, and Charlie will indeed be getting a kickback. In the short term, until the affiliate account is sorted, we've linked to IndieBound, which is an alliance of independent bookshops. He isn't an affiliate there, so gets no kickback from them, but there are warm fuzzies with knowing that your order will be shipped from a local independent bookshop.

67:

Roger @52: In that set-up, the retailer and the publisher are one and the same, and is indeed varying prices in response to market conditions. The other company involved is just an agent, like an Avon Lady.

68:

I still don`t understand what should prevent me from downloading this torrent


for free?

Unless ebooks will costs literally pennies, I don`t see why I should bother buying them.

It quite saddens me, actually, because I wanted to write a book myself someday. And I still want - I just don`t expect to get any profit from it anymore.

69:

Am I missing something? I went to Amazon, searched for Kindle books put out by TOR, and there they were. From the article I found using Google, it sounded like they'd already been pulled. Has the bad press forced them to restore them, or what?

70:

Anatoly: I can't stop you, but writing books is what pays my rent. If everybody downloads my books from [wherever], and nobody buys them, I won't make any money. So then I'll have to get a boring job like everybody else. And I won't have time to write those books -- it's time-consuming, hard work and I'll be busy earning a living.

Unlike musicians, authors don't get to go on tour and perform at sell-out live events to which they can shift hundreds or thousands of tickets.

(You might want to ponder the implications.)

Heather: You can still find Tor or Macmillan books on Amazon -- but if you look, you'll see they're from affiliates only, or second-hand; they're not selling them direct from Amazon's own warehouse/logistics operation.

(Note that you can also find them on amazon.co.uk, amazon.de, amazon.jp, and so on. It's only the US store that's involved in this, just as it was only the UK store that was involved in the Hachette boycott last year.)

71:

Charlie@70:

I understand the implications, but with your books available for free, choosing to buy them is exactly the same as choosing to donate money to you.

Can you still pay rent with your business based on donations?

72:

I'm guessing you didn't read "FAQ: Why is there no tipjar?"

73:

Vito@72:

The point I was trying to get across, in a world where books are free, buying them is the same as donating.

74:

#include <information_wants_to_be_free_does_not_mean_what_you_think_it_means.h>;

That's a topic for another blog entry, I think. (Let's just say that in the sentence "information wants to be free" there are no less than three sub-clauses or words with ambiguous, multiple meanings, and I really need to read Jaron Lanier's new book.)

75:

I`m not sure if information, not being a person, can want anything.

76:

Indeed. So why is that slogan so popular? And with whom?

77:

I think it is popular with people who don`t want to pay for information, but can`t silence their conscience without an excuse. Hypocrites, in other words.

I don`t like being a hypocrite, so I just call myself a thief. I`m immoral, but at least I`m honest with myself. 8-)

78:

and get round to flexible pricing on books: start selling high, then drop the price incrementally with much higher granularity than is currently possible.

As is done at department stores for bed linens, for example. As items age, the seller reduces their prices.

79:

I have every book of yours I can find here - in paper, in hard cover wherever possible. Not one was bought from Amazon: I support my local small bookshops relentlessly to the extent of waiting for them to order a title that is on the shelf at Chapters. Not much else I can do but I try. I think I've made maybe two purchases (a CD & a DVD) from Amazon in my life. I know I don't represent much of a loss of business to them but lost I am.

80:

I'm not sure if readers get updates on your comments, Mr. Stross, but Tobias Buckell did a long, lucid, deeply awesome post about the cost of producing ebooks and why MacMillan's model makes sense to him:
http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-longer-for-sale-via-amazon/

And thanks for all you've written about this.


Jess

81:

I prefer reading your books on a Kindle to a backlit screen. Sorry, but the experience is better, and it makes me want to buy more of your books. Without the Kindle, I'll go to the library.

Specials

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This page contains a single entry by Charlie Stross published on January 30, 2010 4:01 PM.

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