Thursday Midday Links: More on Amazon and Macmillan
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."
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.