There is a superlative article at Publisher’s Marketplace about the windowing, agency model, pricing, and the future of digital books. Most of the comments are made by Madeline McIntosh by Random House. She talks in a very thoughtful and meaningful way about the challenges publishers are facing today and how quickly the landscape is changing. Even if you don’t agree with all that she says, it’s clear that she is trying to address everyones concerns: readers, retail partners, and authors. There’s no one answer at this point. She seems to think that windowing isn’t good for authors or readers:
She prefers not to lose a potential sale because an ebook version is not available and also does not want to “create an adversarial relationship” with ebook readers or “train those readers that instead the best way to get that digital copy is to download it for free.”
But she also sees the need to maintain control over pricing but admits that publishers have very little pricing knowledge, primarily because they don’t have a relationship with the end user. Interestingly, the article suggests that publishers will vary price according to perceived demand which means that authors with lesser demand will be priced lower than those with higher demand. This could work to benefit and hurt the author. It will be interesting to see how ebook royalties will be structured given that the list price (usually the basis for the royalty) may fluctuate a good deal. In any event, this was a great article and I know it’s a paid subscription but it’s worth it.
In the comments to that article, Robert Gottlieb of Trident Agency, argued that windowing was important and that maybe agents should sell erights first and then print rights. For big name authors, it’s possible that they would have the power to decouple the digital from the print. After all, would Macmillan really want to lose an author like Janet Evanovich over that issue? For most authors, though, this might not be realistic. Of course, the entire battle is over the big name frontlist sales so it may not matter what “most” authors would be able to negotiate.
Under Amazon’s Kindle publishing platform, Gottlieb could garner his author 70% of the royalty off a $9.99 priced ebook. Or he could go through Rosetta Stone and perhaps have a 50/50 profit sharing deal for the ebook alone. One question is whether the ebook would be windowed before or after the print publication. If it is before, then I would think agents would be contacting NYTimes and USAToday to get all pre-print sales counted toward the bestseller list.
Authors are probably more sensitive to demand and pricing than the publishers are due to the direct contact authors have with readers.
Simon & Schuster has been quietly laying off people for the last few weeks. PW reports that Beth Wareham, director of bookbook and lifestyle, is the latest casualty. Wonder if Amazon is hiring editorial staff yet.
Macmillan penned another open letter to Authors and Illustrators in which John Seargent tells everyone that they are big fans of Amazon and that he suspects results will be coming soon. Macmillan is going to look at their ebook royalties (PW suggests it will go up to a whopping 25% from the industry low of 20%)
A word about Amazon. This has been a very difficult time. Many of you are wondering what has taken so long for Amazon and Macmillan to reach a conclusion. I want to assure you that Amazon has been working very, very hard and always in good faith to find a way forward with us. Though we do not always agree, I remain full of admiration and respect for them. Both of us look forward to being back in business as usual.
As commenter Deb noted, HarperCollins will be negotiating with Amazon to get the agency model in place whereby the publisher sets the price and there is no discounting by the retailer. Again, the reasoning isn’t because ebook prices are too low for ebooks but because the low ebook prices hurt print sales.
"We don't like the Amazon model of selling everything at $9.99," Murdoch said. "They pay us the wholesale price of $14 or whatever we charge," he said. "But I think it really devalues books, and it hurts all the retailers of the hardcover books."
Amazon has purchased Touchco. Via NYTimes.
Touchco uses a technology called interpolating force-sensitive resistance, which it puts into displays that can be completely transparent and could cost as little as $10 a square foot. The capacitive touch screens used in the iPad and iPhone are considerably more expensive. Unlike those screens, the Touchco screens can also detect an unlimited number of simultaneous touch points.
This is pretty interesting. I would not have guessed that Amazon was going to invest heavily in the hardware, but this move signals a serious intent to compete, not only on a platform basis, but an entire delivery system. I think it also signals that Amazon is not likely to open its doors to epub books or go DRM free. AllThingsD says that this might be the end of Amazon as a dominant force in book retailing.
“AllThingsD says that this might be the end of Amazon as a dominant force in book retailing.”
Maybe I’m dense today, but why?
could someone explain in simple terms exactly what the “agency model” is? Somehow I missed this detail in all the sound and fury.
@becca: In an agency model, the publisher retains the title to the product being sold and the retailer (AMZN) just facilitates the sale.
It’s like if the book is a house, then the publisher owns that book/house until it is sold to the buyer. The real estate agent (Amazon) just takes a fee in getting the publisher (owner) and reader (buyer) together.
In the agency model, the publisher (owner) sets the price. The retailer does not get to discount.
It’s basically like a consignment shop. Amazon gets a commission on each sale they make for the “person” consigning product.
For what it’s worth, Amazon *still* isn’t offering any of the Macmillan titles I checked, except through third-party sellers.
I have alerted my staff to remove Amazon from their links, since we can no longer trust them to provide accurate and timely information about a title’s availability.
The Publisher’s Marketplace article is behind a paywall, so I can’t read it. Did anyone suggest just charging x% of the cover price? That way, the price of the ebook would depend on the price the publisher has set for the print version, whether it’s hardcover, trade paperback, or mass-market paperback.
(I would, of course, prefer that the ebook be priced lower than the print version, because I can’t share, resell, or donate an ebook.)
@hapax: Why is Amazon not accurate just because they don’t sell the book as a direct retailer? You can still purchase it from the third party vendors just like you said, Amazon has just chosen not to sell it.
@Chicklet: No, there is no concrete information regarding pricing.
Hachette is going to the agency model. I haven’t heard of one publisher NOT moving to the agency model which, I believe, will invariably result in higher prices for ebooks.
The good news to take away from all of the upheaval is that the publishers are now ready to get serious about incorporating digital publishing.
To a certain extent, I think the publishers are just as guilty as a reader, in devaluing the books. The poor quality of the formatting, stripped files (covers, lack of TOC links) devalue the book. On a couple of occasions, I have questioned whether I had received a pirated book (from Amazon, I paid for the book) due to errors,formatting problems, etc. In some cases the formatting was so bad, the file locked up the device. These were in fact from the publishers. Poor quality control = devalued product.
I also wonder if Amazon may feel a little relief from all of this. Taking a significant loss on most sales has got to eat away at the bottom line at some point.
I still wonder how the agency model will affect rebates like those offered by fictionwise. If you are actually paying near full price for an ebook, with the rebate being a credit toward a future purchase, is there any way publishers can legally prevent retailers from offering rebates? Especially if those rebates are a general policy for the retailer and are not directed toward any specific ebook.
If a retailer had a policy of offering a $4.50 rebate on any single ebook purchased for $14.99, the net for the retailer (however they would account for it) would be $10.49. That would even allow them to break even under a 70/30 agency model ($14.99 x 70% = 10.49). Under the old hardback 50/50 model, assuming a $25.00 hardback price, Amazon would have been paying $12.50 to the publisher. Selling the ebook for $9.99 would have resulted in a net loss of $2.51.
Why is Amazon not accurate just because they don't sell the book as a direct retailer?
Because they are lying (let’s not wrap it up in pretty words) about whether or not the title is generally available.
The third party listings are notoriously inaccurate, and always have been. I can think of several titles listed as “available” from third party sellers that I know for a fact have not even been written.
Amazon has long been used by librarians as a quick-n-dirty Books in Print (which has its own accuracy problems.) I’d say that it’s not their fault, except they have in fact promoted themselves to libraries in this fashion.
When I seek information on title availability, I’m looking at thousands of dollars of purchases. Budgets have to be made, purchase orders have to be prepared, entries have to be typed into our acquisition system, etc. I need information I can count on to be true, and to be true next week as well as this minute.
If Amazon going to de-list without warning huge chunks of what is in fact available, based on subject matter, or dick-swinging contests with publishers, or whatever reasoning has gone on in the at least half a dozen times they have pulled this stunt, they cannot be trusted as a reliable supplier or source of information.
I am fortunate that I have access to many other sources of up to date information on title availability and prices (usually at better discount than Amazon.) The search interface isn’t as nice, so it’s easy to fall into the Amazon habit — but I will not anymore, nor allow my staff to.
Unfortunately, most of those resources aren’t available to the average consumer.
@brooksse: I’ve wondered that myself. I would think that Amazon could employ a loyalty program if it really wanted to preserve the 9.99 price point. I just don’t know, obviously, what the terms of the “agency” contract will be (and will probably never be privy to such terms).
@hapax: I think its perfectly reasonable to no longer use Amazon as a go to service for new book data if it isn’t reliable for you. I think it’s also interesting that Amazon had the easiest interface for the most up to date information before this episode.
I’ve often wondered why publishers don’t provide xml catalogs of all its backlist and frontlist and future titles to make it easier for libraries and independent booksellers to get this information instead of allowing Amazon to supply this service.
@GrowlyCub:
Read this for a perspective *grin*:
People not interested in eReaders threaten to not buy eReaders
@Deb:
Deb, I’ve had the same kind of thing happen – text overlapping itself (css errors), horrible formatting, copy errors. One of my pet peeves is graphics that should have been broken up to be put in an ebook, ANY ebook, instead of just a scan of a whole page in a mmpb or hb format. Lazy!
@Jane:
YES. I’ve wondered that too – and not only for libraries and booksellers, but readers who like to budget out their expenses and want to know when new books are coming out.
Considering how uninformed the publishers appear to be with regards to technology, do you honestly think they know what xml is?
@Deb: Well, if they are going to start serving ebooks up maybe they should?
Anyhew, Macmillan apparently wants to throw oil on the fire. It took out a full page ad saying “available everywhere but Amazon.”
@Jane: If the agency model does turn out to be the end of rebates & the occasional deep discounts from fictionwise & BoB, I’ll be sorry to see them go. I use rebates & discounts as an excuse to buy ebooks I’m on the fence about and to try new-to-me authors. Without them, I’ll probably buy less and/or start borrowing ebooks from the library. That would be good for me and my pocketbook; not so good for the authors, retailers & publishers.
@Deb
I don’t think it’s entirely fair to brand publishers as Luddites who don’t understand technology. They’ve been slow really getting behind ebooks, but I don’t think it takes a genius to see why they’re hesitant.
Their current model has been refined over many years, and while it may not be perfect, it’s worked for them. I think that moving to a agent model for ebooks is actually smart. Traditionally, profits have been divided between the publisher, wholesaler, and retailer. With ebooks, the wholesaler/jobber gets cut out of the picture. The question is, does that piece of the pie fall to the retailer or the publisher? Under the agent model, it stays with the publisher.
Currently, they’re still playing it pretty safe, and being very cautious about doing anything that might endanger hardback sales. They don’t want to cook the golden goose, and who can blame them.
I suspect, however, that they’ll be more willing to play with price points and shorter windows under the agent model. After all, they want to maximize profits, and increasingly that means actually SELLING ebooks. And to sell them, the price has to be attractive. Eventually, the hardcover must pass the torch to the e-book, and I think the publishers see that. They’re just trying to stay profitable during what may be a long transition.
Wow, this has turned into a rant. I think publishers are moving in the right direction.. .slowly Too slowly for those of us accustomed to instant gratification and the compressed time-frame of the internet. But isn’t there a saying about “Fools rush in where wise men fear to tread” or some such? The future is uncertain, and these are large corporations with millions of dollars and many employees futures at stake. If they were willing to bet it all on the toss of a dice they’d be the banking industry!
@Mike Briggs
I think you’ve hit it spot on, Mike. I think the entire book industry is convulsing. How it will all turn out is anyone’s guess, but I certainly understand the publisher attempting to control the price of the books they produce–considering that they are the ones incurring the costs to produce them. As is so often said, “Do the math.”
I just wish I had a crystal ball and could see where the dust settles in..say…two years.
Mike,
The readers have review blogs, author websites, newsletters from vendors, browsing book stores, etc. to keep up. Getting the info to the Libraries and resellers in a quick, and reliable method seems to be the challenge.
Utilizing the latest technology has the potential to increase sales. If the Libraries and resellers find it easier to rely on Amazon for availability, the publisher’s got problems. Amazon then has more influence on the sales.
@Jane and @Deb: Yes, actually, we have heard of XML (incorporating XML into the production process has been a discussion topic in the university press world for years), and those files exist. It’s called ONIX (www.editeur.org for more information). It’s been around for six or seven years (maybe longer; I’d have to check the date of my first ONIX feed) and the Big 6 are most definitely using it. The small publishers — that’s where use varies.
Having done data feeds in the pre- and post-ONIX world, I adore ONIX with a deep passion; instead of having to do one file format for Amazon, another for Ingram, yet another for Baker & Taylor, still another for B&N, one more for Bowker, etc., I can simply generate one file to use for everyone and just slap a different header on it for the vendor it’s going to. (Except that one big vendor processes its file in a non-standard fashion, so I have to do an extra bit of data wrangling. That vendor? Amazon.)
In theory, an ONIX file could be made available to a general reader; in practice, I don’t think anyone makes a parser that’s aimed at a general reader.
@Castiron I was thinking of this White Paper on what indies want from publishers. Doesn’t LibraryThing and other organizations use Amazon to populate its datafields? I guess why is Amazon the easiest thing for people to use. As Deb says, doesn’t that build reliance on Amazon?
Jane:
You’re doubtless right that various organizations use Amazon as a data source, but I think that’s simply a question of convenience. Amazon carries virtually everything, and has historically had good data. Because the publishing information is in a block, it’s pretty easy to scrape the data.
Now, I don’t actually know diddly about what information publishers make available, or in what format. I suspect it varies among publishers. In order to have a “master list” of publications in XML,all publishers would have to make a list of their publications available.
A client would need to connect to the XML list from EACH publisher, extract the information, and make it available. The hardest part of the task would be getting the publishers to agree on a single schema (or programming a client to deal with the various proprietary schemas they adopt), and actually keep the document updated. You’d always have some little press somewhere who didn’t get the memo,or didn’t have anyone who knew XML, or forgot to update their records this month.
Rather than trying to get all the publishers to work together, I suspect that enterprising folks just decided to data-scrape Amazon. It’s a vastly simpler solution, as long as Amazon is reliable. Now it may be necessary to find a new data-source. This sort of thing happens all the time. For example, the post office (and census data) used to get data-scraped all the time for zip-code data. Then the post office made that much harder to do, and started selling that information. It’s certainly not Amazon’s job to be an information clearing-house, and those who used them as such were doing it for convenience.
@Jane: Amazon has two big advantages over other options for populating data.
First, it’s free. You could use information from Bowker/Books in Print to fill your data, but that’d require a subscription; I don’t know how much one costs (and noodling on Bowker’s website, they don’t give any pricing information online), but I wouldn’t be surprised if LibraryThing looked at it and decided they couldn’t afford it.
Second, if you look for a book at Amazon, chances are that you’ll find it — maybe not available for sale, but at least the title and author and usually the publisher are listed. Most publishers sell through Amazon, so Amazon has data on a huge percentage of books in print, as well as a large quantity of OP books due to their Marketplace sales. Other online booksellers don’t have that breadth. Bowker does, but you have to pay for it.
Google Book Search is getting to be comparable to Amazon as far as finding out whether the book exists (and probably does better for really old books), but it doesn’t tell you whether the book’s in print, and if I want a cover image for a long OP book, I’m much more likely to find it at Amazon.
Above the Trees is doing an electronic catalog project called Edelweiss; I don’t know much about it yet, but it sounds like it might provide a lot of the items the booksellers request in that white paper, and it’s free to retailers and other users. However, since publishers have to pay to be in it, Edelweiss still won’t give you information about all books in print, and I don’t know whether they’ll have any information about long out-of-print titles.
Why is the publishers banding together to keep prices higher not illegal price fixing?
Isn’t this collusion?
@Mike Briggs: The XML standard already exists, but yep, the hard part is getting ALL the publishers to submit data, and there’s many small publishers who aren’t using ONIX yet (and, I would guess, quite a few self-publishers who don’t know it exists).
@Castiron:
Thanks for the clarification. You mentioned that earlier, but I was too lazy to go look it up. I appreciate the information! :-)
This is kind of critical because e-books are not yet old news to consumers. They need to continue to be unaware that some of these titles can be downloaded without cost. Patch up the differences; the whole of the e-book market is mildly at stack; don’t risk it over business differences. Stick with Amazon.