Amazon Fires New Salvo in Ebook Price War

I have a few rules I try to live by: Always read the fine print; if it sounds too good to be true, it is; and never attribute to malice what can be easily explained by stupidity.

So, when on a Friday night, the search engine for Amazon.com suddenly ceased to find books containing homosexual themes, and blamed it on a computer error out of France, I was inclined to believe them.

And when Amazon.com reached down the tether to people’s Kindles and removed a copy of George Orwell’s 1984 because the Good Folks in Seattle thought it was pirated, and then apologized all over the place and said it was a mistake, I was inclined to believe them.  Big corporations make stupid mistakes, and if you give them computers, they make them very quickly.

But this weekend, right after Apple announced a deal with the major US book publishers that guarantees more freedom for creating pricing policies, all books published by MacMillan USA have been pulled from Amazon.com’s website.

The eBook (or iBook) deal was at most a side act in the show that was the unveiling of Apple’s newest appliance this week, but those of us who write books for a living were extremely interested.   Amazon.com and other distributors have been following a WalMart-style eat-the-seedcorn strategy of driving book prices continually downward, both for paper books and ebooks.  For awhile, it looked like the end result of this race to the bottom would be more publishers going out of business and more authors finding they could no longer afford to continue to write.

Enter Steve Jobs with an offer to publishers; more freedom to set prices, an ebook price between $13 and $16 dollars rather than $9.99 or lower AND access to the one distribution network on the planet that rivals Amazon.com; iTunes.

This deal for the first time returns to the publishers a measure of control, because with Apple’s iTunes, they might not need to put up with Amazon’s shenanigans.  In fact, they might be able to threaten to pull their books from Amazon’s site altogether if Amazon would not negotiate price policies.

And last night we saw Amazon’s response: to punish rebellious publishers by yanking the books first.

We don’t know how long the books will be off the virtual shelf.  We don’t at this point know whether Amazon and MacMillan are even talking to each other.  They’re not talking to the New York Times blog, that’s for sure.

Here’s what we do know; as with its proprietary e-book format, its tethered e-reader and its destructive pricing strategies, Amazon is attempting to limit consumer choice and exert control over as much of the market as possible.  It’s the 800 lb. gorilla, and it’s come to sit down.

Of course Amazon has a right to do this.  They are a private business. They have a right not to sell MacMillan books because they don’t like MacMillan’s business practices, just as they have a right not to sell gay-themed literature or, apparently, to remove books from their network, which includes products people have already payed for.

But that doesn’t mean we as readers or as authors have to approve these strong-arm tactics.  If Amazon wants to play games with the availability of books, it’s time for all of us to vote with our dollars, and go elsewhere for our reading material.

Obviously, Book View Cafe will continue to off all our author’s titles for free or for our usual prices.  Print and ebooks by our authors published by MacMillan and its subsidiaries, including Tor.com, remain available at Powell’s Books.  Also, you can find a local, independent bookstore by visiting Indie Bound.

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Amazon Fires New Salvo in Ebook Price War — 8 Comments

  1. Jobs has been quoted as saying that there will be price parity with Amazon, and he’s not exactly known for sympathy with content providers who think their stuff should cost more than Apple believes the market will bear. It’s also worth noting that even with the less flexible price points, publishers currently earn more from Amazon. The biggest advantage to publishers in the (slightly) different deal from Apple is more leverage in negotiations with Amazon– and possibly less risk of cannibalizing paper sales based on price.

    I’m as excited about the iPad as the next geek, but if publishers think Jobs is their knight on a white horse, I suspect they are in for a very rude shock.

    Myself, I think there’s a whole lot of fail to go around in this case, and I find it sensible to withhold judgement until we know who did what to set this off. I can imagine many scenarios how this went, and I’ll wait for more information.

  2. I’m so relieved to have bought an eReader last February: I hardly ever buy physical books now, and since I didn’t buy a Kindle (it’s not as if they sold them in Germany at the time), I’m not bound to them.

    I still bought print books that didn’t come out in e-format from Amazon or some hardcovers to support favourite authors of mine, but there’s luckily bookdepository.com (or co.uk) willing to sell me print books from the UK and US including shipping in the selling price (if a bit higher priced than Amazon.de) – so I won’ t have to miss out on books.

    Neither will have anyone else who has enough money free to buy books, … for the UK and US people there’s also always the library.

  3. Cheryl:

    I appreciate what you’re saying, and you make a number of valid points. I personally don’t look at Jobs as any kind of savior, _but_ I welcome prospect of reintroducing some sort of stabilizing competition into the book market and Apple at the moment is the only outfit with a big enough distribution network to compete directly with Amazon online. As to what exactly happened, it’s true more information will surely be forthcoming, however, it certainly looks fishy, and the story was broken by the New York Times, which is in general a reliable news source.

    Estara: You’re absolutely right, there are other outlets for books, and IMHO, if Amazon is going to continue to pull stunts like this, we should all use them.

  4. I hope Apple and others will give Amazon a run for their money. So far, they haven’t had any real competitors in the ereader game, though when you set devices aside and focus on specific genres, romance ebook reseller All Romance eBooks prospers by offering a fine service and conducting themselves ethically.

    While I deplore Amazon’s bullying move — essentially they’re making MacMillan (and those of us publishing with them) stand in the corner until further notice — I can’t let MacMillan off the hook in this scenario either.

    Sure they have the right to set their prices as they see fit. I understand that principle. But it does nothing to alleviate the fact that charging consumers more than ten bucks for an ebook is completely out of touch with the market. 9.99 is overpriced for a digital book, and readers won’t have it. The only reason you’d charge more than that is if you wanted to make sure no one bought the digital edition.

    What’s tragic here (apart from authors like myself getting squashed as the behemoths blunder against one another blindly), is the missed opportunity for the revival of a real mass market for books.

    Low overhead reverses the margin of profitability on ebooks and makes them a cash cow for publishers, but no one’s going to buy them at $10 a pop. Digital publishers in the erotic romance genre grasp this. They pay 35 percent royalties and up, price their books at about $6 and still maintain a profit margin in the high double digits.

    A low price point opens the door for impulse buying, something we havent’s seen much of in publishing in recent years. Just think what it could do for everyone’s business if books were affordable again.

    MacMillan and the other big NY publishers need to stop clinging to their old business model, get over themselves and pay attention to what the erotic romance epublishers are doing. And yeah, we need more players like Apple taking Amazon to school. That too.

  5. Price points have too many factors involved to argue one price across the board. Yes, it ought to be cheap to create an e-book. And if e-books are all that are being sold, then $9.99 might be a lovely figure for everyone involved. But right now, the market is divided up in too many ways from hardcover to mass market to trade, from large publisher to small, that we can’t expect all e-books to have the same price point without destroying the market for other books. That’s the point MacMillan is making.

    Eventually, this will all shake out. But it’s amusing–and frustrating–to watch every little wave in the curve as cyberspace comes to term with earthbound reality.

  6. I’ve become so disappointed with authors over the past weekend. Put aside the issue of new, hardcover books and their ebook version prices, which can be debated. What people who support Macmillan are saying is that I, as an ebook reader, must pay $13-$15 to read a novel that’s out in paperback for $8.

    Yes, that’s what it means, regardless of what people think Macmillan intends. Go look at the list prices for their ebooks at Mobipocket.com. They’re nearly all in the fifteen dollar range, even if the paperbacks have been out for a decade or two. THAT’S what Macmillan wants. It’s objective fact.

    Will they change now that they’ve gotten their way? Why should they? Macmillan clearly does not think fifteen bucks for an ebook, while the paperback is eight, is the wrong price point. They’ve been setting ebooks at that price for YEARS.

    Thanks a lot. I’ll be remembering the authors who decided it was a great thing to screw ebook readers. (Yeah, I’m pissed right now. Really.)

  7. While I’m sure some authors agree with Macmillan that high ebook prices are the way to go, I think most of the reason authors were somewhat more sympathetic to Macmillan in this fight was the feeling that Amazon is trying to control the whole world’s book business.

    There’s a certain amount of cost to publishing a book in any format, starting with paying writers, editors, proofreaders, designers, typesetters (you may not have to type in the text from scratch, but believe me, somebody has to make it fit properly), and marketing people. With ebooks, you don’t need printing equipment and staff, warehouses, paper, outside sales staff, delivery trucks and the like (we won’t get into how this is changing the economy, at least not into a comment on one blog post). So ebooks cost less to produce, and much less to distrubute, but they are by no means free.

    However, I suspect Macmillan wants to charge higher prices for ebooks because they’re trying to recoup some of the expenses of being a large print publisher. And Amazon wants to keep the lid on because they’re selling vast quantities of books and a few pennies a book adds up quick when you sell lots of books (plus ebooks don’t require warehouses and shipping).

    I’m not sure what the reasonable price will turn out to be. Is length the issue? Is the popularity of the author the issue? I might be willing to pay more for an ebook by a UK or Australian author, since getting the print edition in the US might be ridiculously expensive. I’d be less likely to pay a lot for something I could get in mass market paperback. OTOH, I have way too many books already; one of the reasons I want easy access to ebooks is so I can have lots and lots of books to read without having them take up space. Once the e-reader wars shake out, I might prefer buying ebooks to paperbacks, and therefore willing to pay more.

  8. Ted:

    And you are not the only one to have expressed that opinion.

    I’m posting here something I wrote to my fellow BVC authors on a similar question:

    I”t’s a question of publically encouraging best industry practices
    during a time of major change, and taking a stance against
    monopolistic practices within the emerging ebook industry, which I
    think can be agreed are in the long term objectively harmful for us as authors and readers in that they mean less money for us as writers and fewer choices and poorer quality for us as consumers.”

    Amazon’s move is an attempt to cut off MacMillan’s — and by extension the other “Big 6” publishers — ability to negotiate for terms as suppliers of a product Amazon would like to sell. Far from it being the authors who want to fix the prices (you will notice that on Book View Cafe the majority of our titles are $4.99 or lower), this move is an attempt by Amazon to retain _its_ ability to fix prices in such a way that will maximize Amazon’s profits and control consumer options, regardless of what this might do to consumer choice, product availability or the long-term ability of the professional publishing industry, whether print or electronic to thrive.