

Amazon-Macmillan fight heats up: "Available everywhere except Amazon" - cwan
http://www.techflash.com/seattle/2010/02/amazon-macmillan_fight_heats_up.html

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jrockway
I wanted to buy this book, but Amazon didn't have it, so I just bought a
different book instead. Basically, if you want me to buy something, and Amazon
doesn't have it, you will have to make me _really_ want it. Amazon can ship to
my house overnight for $4, and I can buy stuff with one click. (In the case of
e-books, the book is sent directly to my Kindle. Nobody else does that.)
Making me go elsewhere means I have to deal with inconsistent shipping times,
giving someone new my credit card details, etc., etc. Usually, this is way too
much of a hassle, and instead I just pass on your product and settle for
something from Amazon instead.

(And BTW, I'm a published author, and it doesn't matter to me how much Amazon
sells my books for. They can pay people to take them off their hands for all I
care. I get a fixed amount for every book sold. The publisher, not the author,
loses out when Amazon wants the books to be cheaper. But of course, they don't
really lose out -- there are a lot of benefits to being available from
Amazon.)

~~~
padmanabhan01
Really? If I can't find it in Amazon, I would go to Barnes and Nobles or
somewhere else, but I can't imagine buying a different book because it's not
available in Amazon..

But then, none I have wanted have been unavailable there.yet.

~~~
electromagnetic
Several I have wanted have been out of stock, but were in stock on Indigo
online and in their stores. When I want to buy a certain book, I'm buying it
from whomever has it.

I love Amazon, I bought several of my christmas presents off of them and I've
spent a small fortune with Amazon, however if they don't have what I want in
stock I'm going elsewhere. I'm sorry, but if a brick-and-mortar store can have
several copies in stock at several stores, why the hell doesn't Amazon have
it?

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shib71
I think some form of this confrontation was inevitable. It's good to shake up
an industry now and then to shake off outdated practices. Unfortunately for
Macmillan I think it will mostly be their practices that fall short.
Publishing houses don't have exclusive control of supply any more, and tactics
that depend on that control (like price control) won't be as effective.

~~~
electromagnetic
Publishing houses do, in fact, have near exclusive control of supply. The fact
is, the major publishing houses don't cooperate very often, but Amazon has to
be exceptionally careful in the game it's playing.

An industry wide boycott of Amazon for publishing books would devastate the
company, and would be entirely legal. It would also render the kindle
exceptionally useless if people can't buy bestsellers or virtually any genre
titles available. Publishing houses have 100% exclusive control over the
supply of bestsellers, which make up almost 80% of book sales annually.

The publishing industry is a very docile group and pulls none of the shit the
music, movie and television industries pull. Poking a sleeping bear is a bad
idea, and the publishing industry is a $40 billion dollar industry in the US
alone, while Hollywood movies are a ~$50 billion dollar industry _globally_.
The UK alone adds another ~$44 billion dollars to the publishing industries
pocket (yes, Britons buy ~5 times more books than Americans).

Publishing is a gargantuan industry globally. I would seriously hate to see
what would happen to Amazon as book sales attribute ~60% of their bottom line,
meaning industry controlled best sellers likely make ~50% of their revenue and
on $24 billion in sales, they're only posting <$1 billion net income.

~~~
etherael
You sound like you have a good grasp on the economics of publishing; what do
you think are the chances of publishers being cut out by tactics like Amazon's
current 70% royalty for authors selling books through them directly between
2.99 and 9.99?

~~~
electromagnetic
Zero, unless Amazon implements advances. The time inherent in writing a book
is immense, some best selling authors only manage 1 entire book inside 3
years, whilst some are rather prolific with multiple titles inside a year.
You're never going to attract anyone's attention, even paying high royalties,
if you can't pay them for their time in advance.

The real issue is though that self-publishing means self-everything.
Advertising, marketing, cover design, distribution; everything. You're turning
a writer into a contractor, they either have to do everything themselves and
take forever, or they have to sub-contract. As most writers are writers by
choice it seems, quite frankly, moronic why _anyone_ would think they'd want
to be anything else. It took _years_ for most authors to ever get published,
so why would they ever accept a deal that meant they'd only spend 30% of their
time doing what they wanted? They had that when they were doing a real job.

This isn't even concerning the major fact that all the talent is in the
publishing industry already. Authors aren't going to be able to release the
brilliantly edited books that are well marketed, distributed in multiple
countries and often in multiple languages, with artistically designed covers.
Doing all of those to a professional degree is as lucky as shooting yourself
in the head and having no brain damage whatsoever despite a visible hole
through your brain; I believe walking on water is more frequently reported.

Simply put a mass self-publishing route would inevitably end up with
everything been done by the publishing industry, now retitled as the 'self-
publishing' industry that takes an 85%-90% cut of your book sales. Only this
way, you don't get an advance and you'll likely have to pay the 'self-
publishing industry' thousands to get them to cover all the work in advance of
any foreseen profits.

Essentially authors have the choice between the publishing industry where you
can get paid anywhere between ~$5,000 and $2 million to write a book. Or you
can choose 'self-publishing' where you'll likely have to pay a minimum of
~$50,000 to get quality editing, distribution, cover art and most costly of
all marketing.

With $10,000 being an average advance in the industry for a first novel, who's
going to pay $50,000 potentially for nothing? Especially considering that if
you go with the industry, if your book doesn't sell a single copy they're out
$90,000 plus the $10,000 they gave you and you are legally entitled to keep.

Right now the publishing houses don't buy out the first electronic publishing
rights from the author or the electronic republishing rights. It's only going
to be a matter of time before they do, which means authors advances will
increase accordingly. If the publishing industry takes on the similar 70/30 to
the author, then the advances could potentially increase dramatically if
e-book sales really take off. However, again, after editing and marketing,
this would likely be closer to 30/70 to the author.

~~~
etherael
What do you think would be the most tactically sound method of actually
showing the price difference between dead tree format books and their eBook
equivalents? It seems this is the clincher that appears to absolutely terrify
the publishing industry, but if it can't be done it reduces the value
proposition for eBooks substantially.

Sure, there's still corner cases like it's much easier to
store/carry/access/organise an eBook library than a paper book library, and
delivery is intrinsically much faster, but I can't help thinking it's a huge
fail on the part of the eBook market if they can't also push the massive
production price per copy advantage they have.

Oh, and as an addition to that, region locking availability of eBooks is
extremely frustrating as a consumer, but I assume that this is something the
publishers are also forcing on Amazon? I bought Programming the Universe
yesterday via Amazon, it initially wasn't available from Australia, but as I'm
moving to Tallinn in a couple of days I just changed my address on amazon a
little ahead of time and it immediately became available. It's these kind of
tactics that force the market to just circumvent legitimate channels entirely.

~~~
electromagnetic
As far as I've been able to ascertain the author gets royalties anywhere
between 8% and 15% of the cover price of a book (hardback is near universally
accepted at 15% and mass market paperbacks likely hit at 8%). 45%-55% is taken
by the publisher, however this includes the authors royalties and the printing
costs are ~10% of the cover price. So, assuming hardback royalties and
printing costs the publisher could be taking less than 20% for editing,
advertising and marketing. However, it can also easily be as high as ~37%.

Now here's the very crucial part for ebooks. Distribution costs, from what I
have found out, are on average 10% of cover price. A whopping 40% on average
goes to the retailer.

Less printing and distribution costs, a novel should still be selling for 80%
of cover price when brand new (hardback equivalence). Macmillan likely isn't
being greedy here, if people who read on eBooks want novels as soon as they
hit the market, then they should by rights be expected to cover the costs.

The problem with rigid pricing is that a $10 charge for brand new and 2 year
old material is insane. I've picked up mass market paperbacks at $6 without a
discount, but brand new novels genuinely cost $30 and beyond. Even if Amazon
waived 3/4 of their cut, without distribution and publishing costs, (50% off
basically) it should still be selling for between $15 and $20 for a brand new
novel.

An addendum to this is that all books are unique. The prices and costs vary,
for example a cookbook is far more expensive to print than a simple paperback.
Kindle, in my opinion, would hold great promise when a coloured e-ink is
used(/usable) for selling graphic novels and comics on. They have far higher
printing costs than anything else (minor editing of both writing and art), but
already retail at reasonable prices (unless you're grabbing a Frank Miller A-3
sized bastard). Potentially it could take us back to comic books retailing at
$1-$2 instead of like $10.

With the mass potential for region locking and other DRM's I don't believe
eBooks are currently a good thing, and they're certainly not a friend to any
prolific reader. I hand some of my read books out left, right and center to
anyone who wants it. I remember my mum taking entire grocery bags full of
books to her work (in a hospital) where the staff used to swap books. Where's
the potential for this in eBooks?

With the Kindle being constantly connected to the internet, you would expect
that a single eBook could be sent between Kindles without restriction quite
easily. This would mean the only hurdle left for paper-like eBook usage would
be the region locking, which again sounds like an exclusively Amazon made
problem. I really don't see why a US publisher would care about region
locking, electronic publication rights are handled as though the internet is
one entity (so it isn't to enforce the authors rights to sell it in another
country or anything), where as regular publication rights are exclusive to one
territory (with the US and Canada being joint). I suppose there's potential in
it to prevent it damaging paper book sales in foreign countries, however
eBooks are currently tailing the market by many, many months so again, I have
a hard time believing this is the publishing industries idea.

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foobar2k
I find it amusing that they took out a full page ad in a print newspaper.

~~~
patio11
Doomed industries have to stick together.

OK, that's totally snark. Let me try again: the traditional media industries
are very incestuous in both intellectual and business senses. For example, the
publishers' pretty much sole marketing resource is trying to get books
approved by tastemakers like the NYT reviewers or to get them into the best
sellers lists maintained by, again, the NYT. In return, they spend most of
their advertising budgets doing big media buys at the same tastemakers.

Both sides think this is totally above board and would never influence
reviewing decisions. Everyone knows that crass lucre only affects massive
multinational companies in bad industries like pharma or cigarettes rather
than good industries like journalism or media, after all.

Relatedly, both publishers and traditional media are mostly missing the boat
with their online strategies, because they're wedded to the physical
distribution model, the cost structure they've built to support it, and the
revenue models dictated by that cost structure. They're largely resistant to
disruptive innovation on top of that, despite the fact that it would present
absurdly huge advantages to their business. (For example, upwards of 80% of
sales of most books happen within a 3 month release window. That's insane for
content that does not rot, but the publishing industry puts out so many books
that it is impossible to physically stock them all, and the large channels
rotate at a dizzying speed. If they were to embrace online distribution,
aggressive crosspromotion, etc, they could still be selling appreciable
amounts of books written in 1986. That is pretty close to free money --
they've already got the rights to the book and have long since paid their sunk
costs on the book. There is just a massive organizational and cultural failure
to take bold steps like this.

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ssp
The problem for Amazon is that they don't have much unique value to provide
besides their brand and scale. The good experience, the Kindle etc., can all
be replicated.

If Amazon starts squeezing the publishers, some of them might leave and open
the door for niche competitors selling things at high prices that you can't
get elsewhere. Once _that_ happens, Amazon loses something important: That you
don't ever have to go elsewhere.

So the fact that Amazon is so dominant and needs to stay dominant can be used
against them. This gives publishers somewhat more leverage than you'd think.

~~~
ebrenes
Amazon also has the Amazon Marketplace, which allows third-parties to sell
goods through the Amazon website. A third-party could just sell those
Macmillan books. And there would be nothing Macmillan can do about it since
certain jurisdictions protect the rights of third-parties to resell items,
like books.

So a savvy Marketplace user would realize the potential of stocking Macmillan
books and selling them through Amazon to cater exactly to those users who want
them but can't get them through Amazon.

Amazon would be more limited on the digital front, since that's a much
trickier area, legally.

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gte910h
I am an avid amazon prime user.

If it's not at amazon, I doubt I'll buy it anymore.

