As many of you know, the e-book pricing wars came to a head on Friday and Saturday, when Amazon stopped selling Macmillan titles (St. Martin’s, Holt, and Farrar, Straus and Giroux books), though customers could still purchase books on the site from other sellers. Macmillan CEO John Sargent issued an impassioned plea on Saturday night to explain his company’s position, and last night, Amazon gave in, posting a statement to customers on its Kindle page that said, in part, “We want you to know that ultimately, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative. Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!”
As someone who has been following this drama, and reading all the comments on this and many other books blogs, I’m alarmed that so many people seem to see Macmillan as the villain here. It’s not that simple. The book business has never had high profit margins (I believe 3 percent is considered fairly healthy, which ought to give you some idea.) It costs an enormous amount of money to produce a book. The author is paid an advance; the book is edited and copy-edited and often put through a legal check; a jacket is designed; the publisher pays for marketing (ads!) and publicity (sending authors on tour, or, if they’re lucky, paying to bring them to New York so that they can appear on a national TV show). The printing, binding, and shipping of a title are not the real expenses involved in publication. The issue that Macmillan had with Amazon is a very real one: Given the punishing terms that Amazon insists upon (most e-book profits are going to Amazon, not to the publisher or author), publishers literally are often losing money on their e-book ventures with the company. What Macmillan wants to do is what it calls “agency pricing,” that is, offer the e-book for more money when it first comes out, and then decrease the price as time passes — much in the way that a book is first available in hardcover and then in paperback.
This is a gross oversimplification, but what it comes down to is this: Unless all publishers negotiate better e-book pricing deals with Amazon, the number of books being published will decline. You won’t see a book like The Help. It will never see the light of day, because companies just won’t be able to take a chance on unknown authors. And small literary novels and short-story collections will suffer the most. They are often money-losers anyway, subsidized by companies’ bigger commercial successes. As the percentage of e-book sales rises, publishers simply will not be able to continue putting them out unless Amazon agrees to different terms.
As of 8 a.m. today, the “buy” buttons at Amazon have not been reinstated on any Macmillan titles I checked.
Good for Macmillan! As an aspiring author myself, the idea of having to sell my books at a loss is terrifying. The article is absolutely right — if Amazon has its way with the 9.99 pricing structure then new authors will have no shot of getting published. Amazon is essentially setting itself up to destroy the publishing industry single-handedly with this structure. Hopefully the other major publishing houses follow suit. How can anyone complain about paying 15 or 20 dollars for a book when a one ticket at night for a movie is nearly that — and books last longer and can be reread? It makes no sense, and Amazon needs to be stopped!
I completely agree! This is insane! Amazon is literally trying to STEAL business and money from these book publishers. I am not a Luddite but I, for one, do not want my entire life to take place in front of a screen! I want to hold and feel a book and unless publishers get wise and follow MM lead, they are going to be put right out of business. Just wait for Amazon Publishing Co. and their total monopoly to be complete. Think it sounds outrageous? Why? It’s not. It’s right there just out of your view but it’s there. The NYT finally wised up and realized that they needed to start charging for online material and ALL MAGAZINES AND NEWSPAPERS need to follow suit to save the industry. There is no free-ride, why does everyone expect the print industry to be the one SINGLE area where this does not apply?
Are you kidding me? $14.99? I already paid 300 for the kindle for the promise of spend LESS from now on. Macmillian is clearly behind all the other publishers since no one else charges 50%(!!!) more for ebooks and still gets by. I’m with Amazon 200% but I didnt expect the author of this article to agree with me anyway. I suppose writers have to stick together.
Hurrah for MacMillan! Amazon has been bullying small publishers up till now (who don’t have MacMillan’s clout), bit finally they took on someone who has hit authors, and they lost. I think MacMillan is totally in the right — $14.99 for the electronic version of a hardback that’s selling for $26 is perfectly reasonable! And paying Amazon $300 for a Kindle doesn’t mean anyone is now entitled to a huge discount from a publisher (who didn’t share in Amazon’s Kindle profits.) It’s clear to me that Amazon is in violation of anti-trust laws here — there’s a strong conflict of interest here (Amazon profits by keeping ebook prices low now that they sell Kindles) and someone should be looking into it…
Maybe book publishers need to restructure their business model. I can wait a month or two and buy a hardcover at WalMart or Costco for $10-15 less than at Borders. I can wait 6 months to a year to get it for trade paperback prices. So why ask someone buying a paperless copy to pay for the initial hard cover price. It doesn’t make sense. And the movie analogy doesn’t cut it either. I don’t go to movies often. I ususally buy the DVD. Once again, if I download the product, I expect to pay less than if I buy the DVD. The movie people are also trying to figure out how to make money in the digital age.
Punishing customers is not a good business model. Books are not DVDs or dishes. They’ve rarely made big money–until the 80s, publishers made enough to publish next year’s books. It wasn’t until the huge conglomerates ate up the publishers that huge profits were expected. I don’t know how Amazon or the publishers split the money. I do know its crazy to punish readers by charging a full hardcover price for a download. Change the business model and stop punishing us!
Macmillan and the other publishers have every right to demand more profits. And I have every right to refuse to download a copy of their titles until the price drops. Or not at all. Then how much money will they make? Let’s face it, the big-money authors will sell no matter what; what they’re doing is hurting the struggling middle-line authors and those who are just starting out. Short-sighted profit taking as opposed to embracing the format and working within the system will kill more publishers than it saves.
Did you read the explanation above? They aren’t making money at $9 a pop. And this leads to LESS unknown authors getting published. I don’t understand why the consumer expects to get everything for bare bones pricing. This is what is killing newspapers and the book industry is next on the chopping block. If you really are a ‘book lover’ then you should be willing to pay a little more to support the industry.
No, what is killing newspapers across the country is their idea to give every article a liberal slant. However, I do agree that they should charge what they wish…I will decided whether I wish to purchase it or not.
I have to disagree w/ this. I am a kindle user and I have read close to a book a day since getting it. I coudnt afford to buy these books unless they were 9.99 or less. Also, and most importantly, I have discovered many new authors, then went on to buy everything they have ever published on the kindle. Lastly, There are many new authors offering books free to 2.00. Many are part 1 of a series. I have purchased these books and then went on to buy the whole series at full price 9.99. Things change, the publishing houses and creative authors will get it and make money off if it.. The others who play hard to get will lose. with so many new venues to read a book on you need to figure out a way to be profitabe. Just my 2 cents and a reader of over 300 books in the last year. 95% on Kindle.
I agree with you, Lisa. All that you mentioned goes triple if you consider everyone who is on the fence about getting a kindle and just changed their mind. I bet on average kindle-owners buy a lot more books than the average consumer. As for Sarah, “the explanation above” is simply one opinion out of MANY.
I hate to break it to you Lisa, but authors don’t write for the privilege of you paying $9.99 or less to read their books. If you can afford to buy a Kindle, you can afford to fairly compensate writers for their works.
90% of the book industry’s profits comes from 10% of the population. If that 10%, who clearly value books, refuses to use the Kindle because of the damage it does to the industry, then Amazon would be forced to change their ways. You get what you pay for – if you choose to refuse to buy because prices are too high at 15 or 20 dollars then you’re contributing to killing the industry.
You may well be right, on the other hand, why should the publisher make all the sacrifices for Amazon’s effort to monopolize e-publishing. Amazon could just as well pony up here and take out some profit – especially when they stand to be the biggest beneficiary.
True — if profits were shared that might work. Do we really think Amazon is going to give up the profits they are making though? Not likely – increasing prices (which is REASONABLE) seems to make the most sense. I prefer print books anyway….
Amazon doesn’t have to be a monopoly. The Kindle reads open formates like PDF and MOBI. If writers really want to get their books out there, they’ll publish through their own sites, or form collectives to maximize publicity and profit and sell through a single site. Then, you can sell your books for $5 a pop and keep ALL of that money.
Amazon and Sony and Apple are simply providing the means by which writers can be freed from middlemen like publishers and printers.
I’ve read too many books that by-passed publishers. Not a single one was worth the time I spent to skim through it to see that it was crap. The fact is that not every book that’s written deserves to be published, just as every lousy singer that gets up on karaoke night deserves to record a song. Face it, some people are more talented than others, and some people can’t write. And even the best writers know the value of a good editor to make their work even better.
Markup and overhead have nothing to do with e-book pricing. They are digital items and once the digital file is created there are no more costs for the publisher. As an author who is published in both digital and conventional formats I can speak from experience that I would rather sell an ebook version of one of my books and make a profit of $1 on each copy than sell a paperback copy and make (after publishing costs and the publisher’s “fee”) 60 cents or a hardback and make 75 cents.
It all boils down to greed and the Publisher (in this case McMillan) is not willing to pass up PURE PROFIT with no overhead than to build a loyal customer base of e-book readers. Is that their right? Of course. Is it smart? Absolutely not. Will I buy their e-books? Not at those gouged prices.
There is simply no way you’re making more on ebook sales than on paper sales. When Amazon puts the books on the Kindle at 9.99 THEY are getting the majority of the profit, NOT the publishers.
Besides, the first sentence of your second paragraph is so grammatically convoluted (and you spelled Macmillan wrong) that I have to wonder through what channels you were published at all…
And, beyond what Jason is saying, the question isn’t how much the author stands to make (authors make most of the money through the advance payment given by the publishing company- not through royalties on books… unless they are JK Rowling in which case they’ve made a fortune from both) but rather the question is how the publishers will make money off of e-books. And the simple answer is that unless they raise the price or amazon lowers their cut they won’t make money and people have to make money / get paid for their work- that is a fundamental part of a capitalist society.
Gouged prices?! What an outrageous thing to say. $14 for a book. AN ENTIRE BOOK THAT YOU OWN FOREVER. Books change people’s lives. Gutenberg changed the world with books and now you feel gouged if you have to pay $14!! People pay that for 3 cups of coffee! Pathetic.
My entire issue has been summed up in your comment. What guarantees do I have that the $14 I just spent on a book will actually be MINE FOREVER. From what I understand of electronic devices and files, and the degradation of such items, at my age (26 years) the best I could hope for is maybe keeping these files for what… 10 years? If someone can guarantee that the money I spend on these e-books is not going to waste, I will gladly spend the $14. And the $300 to Amazon for the device. And the internet subscription… on second thought, I’m off to the bookstore.
Well, Curt, if that’s how you feel, then put your money where your mouth is.
Tell your publisher that, for your next book, they can just publish it digitally. No print editions. And you’ll forego your advance (or a hefty portion of your advance) in exchange for the increased $1 per book. Heck, since they’re not putting any money into publishing print versions, maybe you can negotiate for more than $1 per book.
You’d better hope just about everyone with an ereader buys your book- that’s about the only way you’ll make anything worth making.
Until then, you have to consider that the publisher still has to put substantial money into print publication- and they deserve to earn something for that.
Boo hoo! You just fear change. Get with the times. Are you still clinging to your eight track?
The fact that you don’t understand how you can make higher margins on digital media than print shows why you will always be poor. You only have to pay for something once and you can reproduce it an infinite number of times.
But you would rather pay every time you produce it?
Since you are so fond of books, go buy a business book or even a math book.
Kill more trees!
Losers.
Are you calling people who love books losers? Are you a high school football jock shoving kids with high averages into lockers? Grow up.
It’s not about change and it’s not about getting with the times.
Johnny, your comments are completely uninformed. Ereaders are fine in theory, but the marketing plan for them has not been established in a way that will ensure books will keep being made. If authors and publishers don’t get compensated there will BE no books to produce. Try making movies with paying the actors, directors and crew — you end up with producers filming nothing or just indie low budget garbage. You want quality, you need to pay those who put the money and time into MAKING the product.
Jason,
You’re just upset because you thought the advent of e-media would mean more profit for authors because of the massive reduction in overhead when the reality is that the publishers are doing the smart thing and cutting the cost for the consumer. Even if you are making less money, wouldn’t you rather sell 100 copies of your work at $10 than 50 copies at $25?
Funny you telling me to grow up. You ripped somebody for poor grammar because he did not share your point of view. If you agreed with that person, there is no way you would have commented on his grammar. The fact is, you are a baby and you probably throw a hissy fit whenever somebody disagrees with you or you do not get your way.
Were you known for temper tantrums as a child?
Do your friends know they have to tip toe around you so your feelings don’t get hurt delicate flower?
Reduce waste! Digitize everything!
Sarah is exactly right. I work in book publishing and can tell you that, at $9 a book, we sometimes lose money. Why should it be only on the publisher to lower prices to make books more affordable? Why isn’t this person complaining about Amazon’s draconian policies that soak up all profits for themselves and leave book publishers to struggle? You are right. This is what leaves us unable to produce and promote less known authors.
I am a sony reader user so I don’t use Amazon for ebooks instead I buy books from various ebook sites like Fictionwise and Books on Board. Now if prices go up on all ebook sites I will not be able to buy as many books as I do now. More likely I will just buy authors I know I like and not be as willing to try new or unknown authors.
This is an issue that we, as a society, will have to deal with at some point. These major sellers (Amazon, Wal-Mart) sell at such low prices, they hurt the producers of the products. And they’re able to bully producers into taking such low prices because they sell in such vast quantities. They force companies to go overseas to make products because it’s too expensive to make them here in the US and sell them at those low prices. Yet if the company chooses not to sell via Amazon or Wal-Mart, they can’t sell to a lot of the public.
Instead of forming monopolies that hurt the consumer (which is what these companies did decades ago, until it was outlawed), these companies are hurting the producers of products and workers. We in the public just don’t see it because we like to take advantage of the low prices, but ultimately, it hurts us too in lost jobs (or if we’re involved in making the product as well).
We have to look at the bigger picture here with these major sellers like Amazon and Wal-Mart and see the long-term damage they do, even when they save individual consumers money in the long run.
Sorry, my last sentence should have said “short run.”
Very true, Kate. Where will the jobs be in this new economy? If no one has a job (because we no longer manufacture anything in this country), then who will have money to buy these overly cheap goods. Things should have a cost. We’ve become such voracious consumers that we think that everything should be free or cheap. Nothing is free or cheap. Everything has a cost, often one that the consumer refiuses to see.
Some people can only afford to shop at Wal-Mart or Amazon. Be happy that you have the luxury of being able to pay more for everything just so that you can be “fair.” Capitalism is about selling a product at a price consumers are willing to pay. It will be interesting to see what consumers are willing to pay for e-books. itunes won when they raised prices to $1.29 per song-maybe Macmillan will too.
PLEASE don’t lecture me on the glory of owning a book for life. I do not need to own half the crap I read for the rest of my life just because the printing press was so revolutionary. It ain’t all fancy literature I’m reading, I assure you. I was buying my books at Half Price books (which I would love to know how any money gets back to the pubs for that) or renting them at the public library (same question) because buying books gets expensive. it’s like music. we were making copies of tapes and cds forever ago and guess what – once they figured out the right way to sell music in a digital world, they did a little better. me, i am irritated that the digi book costs the same as the paper book when there’s no printing, shipping, etc. if i’m irritated at 9.99, do you think you’ll get 14.99 out of me? i’ll still head over the the library…
OMG I love your answer! That is so true if there is NO printing and shipping than WHAT are we paying 15-25 bucks for???? Makes no sence to me. Amazon go get them!!!!
Mary, your answer applies IF the publisher only did a digital version of the book from the outset. A lot of people on this blog seem to be commenting under the assumption that publishers are switching over to digital publishing exclusively, thus negating all of the production costs associated with print.
At this point in time, the overwhelming majority of the books that Amazon posts on Kindle are books that were initially print (incidentally, printing is one of a multitude of production costs associated with publishing a book; there’s advance/royalties for the author, copyediting, cover design, typesetting/layout, sometimes indexing….the list goes on). So right now, the publisher does in fact still have to pay both printing AND shipping costs for the books that you are reading on the Kindle. Another point: While the Kindle is a popular device and e-book use is growing rapidly (and will continue to do so), THE MAJORITY OF BOOK SALES ARE STILL PRINT NOT DIGITAL. So, at this point, publishers are not going to shift to electronic publishing exclusively when the demand for print is still high. Small publishing houses with smaller budgets are going to suffer from this pricing structure, period. Not every publisher is huge and profitable like Macmillan – people should remember that. Why should Amazon be allowed to get such a huge portion of the profits when they paid NONE of the production costs associated with the book?
lins-
so if I buy an e-book I have to pay more so that someone else can buy a “real” copy? That makes no sense. People who have to hold a book in their hands can pay the extra cost. There should be a discount when all you are buying is a digital file. As far as who gets the profit on the book, that is a different story. MacMillan should have demanded a higher cut from Amazon instead of taking it out on consumers.
Lins,
I agree with C. I don’t think that the ebook and hardcover or paperback should be the same price. I don’t think that the ebook customers should have to SUBSIDIZE the print side of things. Also, for what it’s worth, Kindle version books outsold print versions on Amazon last Christmas season for the 1st time ever. This isn’t a “trend”…it is the new normal. Publishers have to figure out a way to make it FAIR for consumers or ebooks and consumers of printed books. I bought a Kindle about 5 months ago and have started reading and buying about 5x’s more books than I did before. I can read them on my Kindle and iPhone. If the prices go up to that of print, I’ll just start buying the USED versions for less than half of the original price…sometimes for pennies.
Johnny: It has nothing to do with not being fond of trees. It’s about the fact that digital books are NOT yet widespread enough to forego print publications.
When it gets to the point that ereaders are commonplace and most people buy their books digitally, then by all means, lower the prices, because publishers won’t have to put money into print.
Right now they still DO. Try getting your head out of the sand, Johnny, and see that MOST people don’t/can’t AFFORD to do things like pay $260 for an ereader to read a book!
And publishers shouldn’t just forget about them to sell to the elite who can afford things like ereaders!
Transitions to new media or new technology are tough for every industry. If publishes and resellers want to complete the transition in a timely fashion, the best method is to provide incentives like reduced pricing, etc. Whether or not all e-books should be sold for $10, $15 or $20 is of no difference to me because I’ll pay what I feel is appropriate for any given item. Are some books worth more than others, sure. Should all books be the same price, not always. Yet if publishers want to reduce costs on printing, shipping, etc. by consolidating formats, their best way forward is to accept lower profits, maybe not at the prices demanded by Amazon, but still lower prices than printed items to help push people towards digital distribution.
Publishers are accepting lower profits. Ebooks DO cost less than hardcovers ($12.99 – $14.99), just not as low as Amazon prices them. As has been said above, the $9.99 price doesn’t reduce profits, it ELIMINATES them, which is a big difference.
Especially when you consider that people with ereaders are likely to be the same ones who would’ve shelled out for a hardcover.
Amazon is KILLING the book industry. You want to pay next to nothing? Then soon, you’ll get nothing. If the publishers can’t make money to stay in business, the books you so love will cease to be made. It’s that simple. Furthermore, an electronic file may cost nothing to reproduce, but that doesn’t mean there are no costs associated to producing it. Any good author will tell you the value of a competent editor. Any good editor will tell you the value of a competent designer.
Booklover said it best! Yup, they have the right to be greedy, and I have the right to REFUSE to add one cent to their coffers! You cannot sell an e-book, you cannot trade it, it does not have the value of a hard copy book, it is just for the reader, and is NO WAY worth paperback prices. They are going to kill off the up and coming authors. I have DISCOVERED several authors and gone on to purchase their works at full prices, I would never have discovered them had their e-book been overpriced!
Yeah, I love my Kindle, but I hate not being able to borrow/lend or resell books. It’s a different type of product from a paper and ink book, and it should be priced accordingly.
The Kindle is another revenue stream for publishers. Sadly they don’t see things the way “digital” people see them. If I am not buying a physical copy of the book, then I don’t feel I should pay the price of a book. Sorry, but I am not falling for their explanation that the printing, distribution is a minor expense.
Another thing publishers do not understand is that some people would have never bought the physical book. Burying it cheaper in a digital format does lead to increase sales. Take me for example. I simply won’t cart a book around with me, too cumbersome and hence I didn’t spend much time reading. Then I got the kindle and it has enabled me to cart it around wherever I go, make notes in it etc. I bought ZERO books last year. I received the kindle for Christmas, and in the past five weeks I have purchased 7 books for the kindle. Seven books I would have never bought from a store. There is a book I want that is not available on Kindle yet. I won’t buy the physical one, I am waiting until it is available, and if it never becomes available, I won’t read it.
I also don’t buy CD’s, but I do buy songs from itunes all the time. It is the way of the future, embrace it or die.
Clearly a great example of our free enterprise system. I don’t really care who is correct…I didn’t buy the Kindle to have access to only select publishers because they want more for the books they produce. It is obvious that other publishers are profiting at the current pricing. Maybe McMillan should look at their own structure. Everyone in business is having a tough time and having to cut expenses. Please, don’t play me with the issues (not publishing new authors).
None of you seem to understand this beef. McMillan wants to stop Amazon from selling books at 9.99. They are ALREADY paid list price by Amazon. 50% of what the MSRP is. So that’s roughly 12.50 for a hardback book they would sell for the Kindle at 9.99. That is a LOSS for Amazon, only insomuch as selling books at that price point moves their key product — the Kindle. What MM wants to do is stop Amazon from selling at a loss, to drive their ebook business. This all has to do with the sweetheart deal they cut with Apple…thing is, the iPad will not be a great device for reading on. It would be like a computer screen, and completely misses the point and popularity reasons of why e-readers are good to read on. E-Ink
Regardless what you think about pricing and profits, why should one company (Amazon) be allowed to dictate prices at other companies (publishers)?
My understanding has also been that Amazon is the one operating at a loss to move their ebooks, but my understanding is also that they are doing this to control a huge chunk of the eBook/eReader market the way iTunes/iPod controls a huge majority digital music sales. (I learned this by reading a hard-copy version of the NY Times.) This is an investment on the part of Amazon, not an act of benevolence.
I understand you Ryan, but I’m surprised it took so long to get down to a comment that knows what’s going on, since clearly the author of the article doesn’t get it. AFAIK, Macmillan isn’t making any more or less now with this deal, but is forcing Amazon to charge AMAZON’S customers more money. Yes, Amazon will now make a profit but they will probably sell far less, and sell fewer Kindles since it’s not such a good deal if you have to pay $15 per book on top of the cost of the reader.
Seems like a bunch of whining to me. When your profits are that small, you probably need to change your business model. ITunes has been around for however long, but I still see CDs in stores. And i expect to pay less for an ITunes album than an actual CD. However, I also know if i buy a CD I can put it on my IPod and resell it. Virtual goods should not cost as much as a physical item. They should have the right to charge more and bad luck to them.
Screw the publishers, books are too expensive these days.
Yeah, everything should be free. Who cares if no one has a job to buy anything.