Sunday, January 31, 2010

Amazon v. Macmillan: Authors, Are You Backing The Right Horse?

Herewith, I present an updated and amended version of my original blog post on the Amazon v. Macmillan affair. Let me state up front, I do not agree with Amazon's strongarm tactics, and it is not my intention to defend those actions in this post. Rather, I'm puzzled by authors' nearly universal lack of criticism for Macmillan's part in the matter. I can't help wondering, if Amazon had quietly agreed to Macmillan's requested terms, thereby depriving authors of an easy target and distraction, might they have reacted differently to Macmillan's move?

[Earlier this week], Amazon announced it will cave to Macmillan’s demand that it sell Macmillan Kindle books at up to $14.99 instead of the $9.99 pricetag that’s become standard for Kindle bestsellers. Per a report on Booksquare, Macmillan may have plans to price their Kindle books across a range, anywhere from $4.99-$14.99, and author royalties on those books may be based on an 'agency model' calculation which computes author royalty as a percentage of net, not a percentage of list price. See the linked Booksquare post for more information.

Macmillan authors are rejoicing, and I’m shaking my head.

Would musicians cheer a decision on the part of their labels to raise the price of their music on iTunes by up to 43%? I think not. Yet despite the fact that their books may cost up to 43% more than other Kindle bestsellers, and their royalty on those sales won’t be even one cent higher, the Macmillan author “victory” dance continues apace on the interwebz. The Author's Guild has come out on Macmillan's side too, and I'm completely mystified by that stance since Macmillan's change in terms with Amazon only stands to hurt authors and ebook readers alike.
The only reason I can think of for authors to be on the wrong side of this battle is that they don’t understand it. Let’s look at the facts.

1. Under pre-existing terms Amazon pays big publishers like Macmillan half the hardcover price on each Kindle book they sell: generally, that’s between $12-$17. This means Amazon is taking a loss on the sale of every such Kindle book, but the publisher is still getting its standard share, regardless.

2. Macmillan cut their standard author royalty on ebooks from 25% of the list price to 20% of the list price last October.

3. Amazon announced last week it will grant a royalty of 70% of the list price to U.S. authors and 75% to UK authors who sign Kindle book publication deals with Amazon directly. Ian McEwan, Martin Amis and Stephen Covey are just a few of the authors who’ve already signed on. A data storage/transfer/processing fee of .15 per MB will be deducted from list price prior to the 70% royalty split's calculation, but Amazon states that on average this fee only amounts to .06 per Kindle book sold.

4. The author’s royalty in either case is/was based on the list price of a given book, not the price at which the book is/was ultimately sold. This means Macmillan authors used to get the same royalty on every sale whether the customer paid $14.99 for it, or $9.99 due to Amazon discounts.

5. Last week Macmillan informed Amazon that if Amazon wanted to continue to sell Macmillan books in Kindle format, Amazon would have to raise [or lower] the prices on them to Macmillan's stated prices. If not, Macmillan wanted Amazon to delay release of new Kindle books by 7 months following a hardcover release, and, according to this report, several months following release in Apple's iBook store.

Recent reports have said Macmillan asked Amazon to match the 'agency model' deal it made with Apple's iBook store, which dictates a 30/70 split (70% going to the publisher) and allows the publisher to set the price at which each ebook would be sold. If Amazon did not agree to these terms, Macmillan would allow Amazon to continue to sell Kindle editions of their books under existing terms, but wouldn't allow Amazon to release the Kindle edition of a new book for sale until 7 months after its initial release in hardcover and several months following release in Apple's iBook store. I have yet to hear or read any report as to whether these delays would also hold for books intially released in trade paperback or mass-market paperback editions.

6. Amazon didn’t agree to Macmillan’s terms, and childishly removed the Amazon ‘buy’ links for all Macmillan books from its site in response to Macmillan's demand for new terms.

7. Macmillan authors stormed the internet, posting angry diatribes against Amazon and drumming up support among their fans and followers for Kindle and Amazon boycotts. Yes, that’s right: they took the side of the party who demanded that Amazon raise the price of their Kindle books, or delay their release by 7 months, or reduce the price of their ebooks below Amazon's $9.99 standard and pay their royalties based on an agency (net profit) model instead of the percentage-of-list-price model they've had on their Kindle books to date.

It was Macmillan which set forces in motion that ultimately resulted in the removal of ‘buy’ links, not Amazon, and while Amazon's actions in this seem excessive, I still see plenty of reasons for authors to be irked with Macmillan. If the report stating that Macmillan intended to withold Kindle editions of their books for a number of months after those books were released in the iBook store is true, is that a move that would've pleased the thousands of readers who own a Kindle, or who use the Kindle reader app on their computers or portable devices? Seems like a rather diabolical move to pressure ebook consumers to buy their ebooks from Apple (at higher prices) instead of Amazon, no? And isn't it very likely that by the time Macmillan books were released in the Kindle store following this Macmillan-imposed delay, Kindle-reading consumers would have forgotten all about those titles and moved on to other, more readily-available ebooks?

I don't own a Kindle, but release delays and pricing impact my book-buying decisions, too. I rarely buy hardcovers because they're so expensive, and there's many a book I intended to buy if/when it came out in softcover or e or audio, but either the book was never released in those formats or---salient in this case---by time it did, I'd forgotten all about it. This same phenomenon among ebook fans is well-documented, and ebook fans have always clamored to have their preferred format released at the same time as any print edition.

Also, recall that Macmillan may be planning to offer Kindle titles in a range from $4.99-$14.99. This isn't good news for their authors either, since Kindle books priced higher than $9.99 will be a tough sell and those priced below $9.99 will net the author a lower royalty. None of Macmillan's intended changes in its Kindle books deal with Amazon stand to benefit Macmillan authors or ebook readers. The intended changes only stand either scare off sales (in the case of Kindle books priced higher than $9.99 or those delayed by 7 months) or reduce author royalties (on Kindle books priced lower than $9.99).

So while I can understand Macmillan authors' anger at Amazon for having their buy links removed, especially in the case of authors of books offered in print editions only (since they don't even have a horse in this race), I still don't understand why Macmillan authors haven't been publicly objecting to Macmillan's actions as well. Macmillan presented Amazon with an ultimatum in which either option hurts authors' and ebook readers' current situation.

8. Macmillan authors will not receive one penny more in royalties on their Kindle books if those books are priced up to 43% higher, because their royalties were always based on the list price for their books, not the price at which Amazon ultimately sold them, in the pre-existing arrangement. Now their royalties will be based on 70% of the ebook retail price, and it’s a safe bet their books will be netting fewer sales if prices go up to $12.99-$14.99.

9. The upshot is a lose-lose-lose. Consumers lose reasonably-priced Macmillan Kindle books, and reasonably-priced Apple iBooks too, since according to this NY Times article:

With Apple, under a formula that tethers the maximum e-book price to the print price on the same book, publishers will be able to charge $12.99 to $14.99 for most general fiction and nonfiction titles — higher than the common $9.99 price that Amazon had effectively set for new releases and best sellers. Apple will keep 30 percent of each sale, and publishers will take 70 percent.

So Macmillan earns the dubious distinction of being the first major publisher to make calculated moves to drive ebook prices higher across all platforms. Thanks to Macmillan's "victory" over Amazon, Macmillan, authors and Amazon all stand to lose sales. Macmillan stands to lose market share. Authors stand to lose readership.

10. Prediction: emboldened by Macmillan’s so-called win, other major publishers will likely follow suit. More “lose” for everyone.

So tell me again: exactly why, and what, are we supposed to be celebrating here? I can already imagine the one objection I hear raised in discussions on this topic again and again: Macmillan is staving off devaluation of the ebook. There’s much hand-wringing over the notions that authors can’t possibly earn their due on low-priced ebooks, and that authors (like me) who sell their ebooks at prices significantly lower than the $9.99 Kindle store standard are somehow doing a great disservice to our fellow authors and trade publishing overall. This is so patently untrue, and such a pointless distraction from more important ebook issues, as to call to mind the Chewbacca Defense.

Under the pre-existing deal between Amazon and Macmillan, Macmillan authors earn a royalty of about $3.19 on their Kindle store standard-bestseller-priced books, whether those books are sold at $9.99 or $15.99. Under the new deal, which is the same in both Apple's iBook store and the Kindle store, authors would earn a royalty of just $2.10 on an ebook priced at $14.99: 20% of 70% of the book's $14.99 list price, and about $1 less in royalties per copy sold than what they have earned on their standard-priced Kindle books to date.

At a 70% royalty, I can earn $3.50 per copy sold of my self-published Kindle novels if I price them at just $4.99. The higher retail price does not add value for the author or the consumer, and at this point, it doesn’t even increase Macmillan’s profit since they’ve always gotten half the hardcover price on all their Kindle books from Amazon.

It's quite clear that Macmillan's take on each Kindle book sale under the new deal will be less than what they've received to date on those sales (since they used to get 1/2 the hardcover price and will now only get 70% of the ebook list price, which appears to have an upper limit of $14.99 for the foreseeable future), but I guess they decided they were willing to take that financial hit in exchange for the freedom to set their own ebook retail prices. Of course, Macmillan was under no legal obligation to include authors in their decision-making process, even though their decision stands to reduce their authors' Kindle book royalties by up to 33%; I'm just saying it's mind-boggling to me that Macmillan authors don't seem to be the least bit peeved at this outcome. In fact, they don't seem to have noticed it at all.

Publishers claim they need to wrest pricing control back from Amazon for the sake of what Amazon might do someday if it becomes too dominant in the ebook space. What if Amazon eventually decides to tell publishers it will no longer pay them half the hardcover price for their Kindle books, for example?

First of all, that’s a bridge to be crossed if, and when, someday arrives. Second, perhaps the correct answer in the event of that scenario is for publishers to lower their wholesale ebook prices. They claim it costs them just as much—or nearly so—to bring an ebook to market as it does to bring a hard copy, and they are therefore justified in their current pricing demands. But if it really takes a small platoon of publishing professionals and tens of thousands of dollars to bring a Kindle book to market, how is it possible that authors like me, JA Konrath, Piers Anthony, and countless others are doing it by ourselves, in our homes, from our consumer-grade computers, in a matter of hours?

“Your Kindle books lack the professional layout and design a publisher can bring to their Kindle books,” some of you are no doubt answering. This is true. But the thousands of readers who buy Kindle books from me, Konrath and the many other self-publishing Kindle book authors don’t seem to care all that much. I suspect that if you asked them, they would tell you they’d rather have a minimally-formatted Kindle book that costs $4.99 (or less) than an exquisitely-formatted Kindle book that costs $14.99.

As I’ve stated before, publishers arguing in favor of higher priced ebooks are ignoring the customer’s priorities in favor of their own, self-imposed priorities. This is because the ugly truth is this: the only parties being hurt by low-priced ebooks are big, mainstream publishers. Their overheads cannot be sustained by $4.99 ebooks, but that doesn’t mean their costs to bring ebooks to market should be forcibly subsidized by authors or consumers. To quote Konrath, “It would have really sucked to have been a buggy whip manufacturer when Henry Ford introduced the Model T. But technology changes things, and it isn't always fair.”

In the end, all the arguments I’ve heard and read about the devaluation of the ebook are toothless. There seems to be this notion floating around that books must be expensive in order to inspire readers to value literature, but that’s ridiculous. If I’m earning more on my $4.99 Kindle books than a Macmillan author earns on a $15.99 Kindle book, both on a per-sale and volume basis, how is my book’s low pricetag hurting me, the author? And if low-priced ebooks bring more literature and ereaders within reach of more consumers, how are the books’ low prices hurting literature and literacy? If anything, low-priced ebooks stand to benefit authors and consumers alike, and advance the cause of literacy overall.

Hasn’t it been wonderful to find short fiction and poetry collections—species on the verge of extinction in trade publishing—coming back into their own in the Kindle store? It seems readers are only too happy to take a chance on these supposedly ‘fringe’ books if the price is reasonable. Midlist authors are earning new royalties and new readers by bringing their backlists back into print on the Kindle as well. Most importantly, in my view anyway, the current indie author movement wouldn’t be possible at all without Amazon’s equal treatment of indie and mainstream authors.

So authors, indie authors especially: if you’re backing Macmillan in this flap, why? Has Amazon's overreaction distracted your attention from the long term ramifications of Macmillan's move, and the likely damage to be done to you and your readership? To put it another way, see if you can answer this question: what part, if any, of Macmillan's revised agreement with Amazon stands to benefit you?

23 comments:

Joe Konrath said...

Nicely put. :)

April L. Hamilton said...

Thanks, Joe. I think we're of like mind on this one.

Joe Konrath said...

You need to tweak a few facts. Macmillan didn't say they'd pull their Kindle titles, just delay them for 7 months. And I thought the price they want to set is $12.99-$14.99.

But your overall conclusions are correct. It will mean less ebooks sold, and I don't believe those sales will be made up by more hardcover sales. If all publishers force Amazon to raise prices, it won't stave off the ebook revolution. It will just create more piracy.

April L. Hamilton said...

Thanks for the clarifications. I read on Booksquare Macmillan may price some Kindle books even lower than $9.99. But if they do, that'll just mean lower royalties for their authors, right?

I think a lot of this stuff is still in flux, and I may be incorrect on this or that detail due to conflicting reports I've read, but the broad strokes are the same - a bad move on Macmillan's part and lots of "lose" to go around.

Sara Winters said...

You made some good points, but I thought Amazon pulled all Macmillan books in all formats from the site, not just the kindle books.

zoewinters said...

One thing you're forgetting is that Amazon removed the buy now button from ALL Macmillan books including their print books.

But either way I'm still on Amazon's side in this one. And I think you've hit the nail on the head in the issue of publishers trying to subsidize their overhead at the expense of the readers.

To get KEPT on Amazon Kindle it cost me maybe $70 tops. That's including the images I used to make the cover design and some editing software I got to help me in addition to the other people who helped me edit it. I laid out my own interior and I packaged it for the Kindle myself. I didn't even have to buy an ISBN number for it.

This cracks me up because when I first suggested going indie someone from the trad publishing side of the fence tried to scare me with stories of just how "expensive' it would be to bring something "worthy' to market. But come on... the average small press book sells 500-3000 copies. So they CANNOT have that high overhead or they can't stay in business. It's just common sense that there are ways to keep costs down.

Also I'm as baffled as you by author reactions. The real trouble for these authors is they sold their ebook rights in the first place. E is something you don't need a publisher for. In fact a publisher will both hinder your distribution options and your ability to make money.

April L. Hamilton said...

If Amazon *did* remove all Macmillan links, the links for print books are back now. At least the first 6 I checked. And even though such a move would've been pretty boneheaded on Amazon's part, it would've been a move prompted by Macmillan's demands.

Don't get me wrong, Macmillan is within its rights to try and negotiate more favorable terms with any bookseller. But the bookseller is within *its* rights to refuse to carry Macmillan's products, too. Definitely some cutting off of noses to spite faces here.

I'm still seeing conflicting info on this on various news sites I've checked. Some say Macmillan was willing to let Amazon keep buying its books at 50% of the hardcover list price for release in Kindle editions at whatever price Amazon wants to sell them but Macmillan wouldn't let Amazon sell its Kindle editions till 7 mos. after the hardcover release. But if that's true, then why was there a fracas at all? Plenty of publishers already delay the release of various editions till after the hardcover release has had its share of sales. Other sites say the higher price point was non-negotiable on Macmillan's part.

Whatever the finer points may be, it appears to me the bottom line is this: Macmillan wants revenues from its Kindle book sales on Amazon to match its anticipated revenues from sales through Apple's new iBook store, which offers publishers a 30/70 split on list price (70% going to the publisher). But any way you slice it, authors and consumers are still the losers here if ebook prices for bestsellers go up.

Also see this interesting "agency agreement" info on the matter at Booksquare:
http://booksquare.com/amazon-macmillan-agency-models-and-quality-oh-my/

Hard Boiled Mysti said...

April,

the hardback and paperback versions of at least some Macmillan books are NOT back. If you try to buy them, say City of Dragons or A Trace of Smoke, only 3rd party vendors have them.

which titles were you able to buy?

I know Macmillan authors whose books are debuting this week. They have been totally victimized by Amazon's high-handed tactic, and it's clearly retaliatory, not fair play.

I agree that different pricing models are needed, but I don't think commodity pricing during hardback release is going to hurt authors (higher prices after that sweet spot will).

I also have read folks who say kindle books pay royalties based on sale price, not list price. But I don't know which is correct...

April L. Hamilton said...

Hard boiled:
My Kindle royalties have always been based on the price I set. Even when Amazon reduced the prices, my royalty was based on the price I originally set.

I spot-checked Macmillan books by doing an Advanced search on Amazon and selecting Macmillan for the publisher search field. Removing links to Macmillan hard copy books is a childish and bullying thing to do, and I'm glad the links are back (or coming back), but in the final analysis Amazon is within its rights anytime it wants to cease doing business with any given vendor. I mean, vendors can't walk into my husband's pond maintenance business and demand that he stock their products, and at a price *they* set. The fact that Amazon is huge and powerful doesn't make it subject to different rules.

The whole thing was initiated by *Macmillan*, not Amazon. And regardless of how the links thing was handled, in the final analysis Macmillan's move is bad for authors and consumers. I'm not defending Amazon because I think they're a Good Guy in this scenario. Neither party is a Good Guy in this scenario. I'm just flabbergasted by authors' (and their fans') outpouring of support for Macmillan, and vendettas against Amazon, when it's clear that Macmillan's move is not in those authors' best interest.

Teresa Nielsen Hayden said...
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Teresa Nielsen Hayden said...
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Teresa Nielsen Hayden said...
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April L. Hamilton said...

Teresa -
Even though you removed your comments, I want to respond.

RE: Kindle publishing, authors who publish via the DTP set their own prices, and THEY determine their royalty in so doing, Amazon does not "choose how much to pay you".

Also, anyone already self-pubbing through the DTP has already agreed to make Amazon the publisher of record for the DTP edition only, and has already agreed not to offer the same edition elsewhere for a lower price. These are not onerous terms. Macmillan authors are willing to allow Macmillan to be the publisher of record on their ebooks, and for a much lower royalty, so why is Amazon's deal so much worse in your eyes?

And the 70% royalty is real. Amazon will deduct a data storage/transfer fee that amounts to about .06 per Kindle book on average (for text-only books, which is all Kindle books at this point), but once that's been deducted from the list price, the author gets 70% of each sale's proceeds (beginning 6/30/10). Self-pubbing authors are already getting a 35% royalty on their Kindle books, which is still more than the typical mainstream-pubbed author gets on her Kindle books.

RE: Amazon's recent (and past) removal of buy links due to various fights and missteps are things of which I'm well aware. I didn't mention them all here because past incidents are not relevant to this specific case and the point I'm trying to make. And I already stated (in the comments above) that Amazon's move was boneheaded and childish, and I'm not saying Amazon is a good guy here. Just that the whole thing was initiated by Macmillan.

And as I also said in the comments above, Amazon is within its rights to stock or stop stocking any product it wishes. Doing so in this Macmillan case would be a stupid move, which eventually Amazon came to see, but it's not as if they did anything illegal.

You said my "description of Macmillan's authors is vulgar, shallow, cliched, inaccurate, and offensive." How so? All I did was state the facts: that many Macmillan authors angrily took to the internet when their buy links were removed, that many Macmillan authors encouraged their fans and followers to boycott Amazon and Kindle, and that many Macmillan authors wrote celebratory posts, tweets and Facebook status updates when Amazon caved. None of this is untrue, and I didn't use exaggerated or emotionally charged language to describe their actions.

I never said it was unnatural for those authors to be angry about having their buy links removed, just that I didn't understand why ALL of that anger was directed toward Amazon, not ANY toward Macmillan.

All I said was that I do not understand why they should be so quick to back a publisher which intends to raise the prices on their books while still paying them the same royalty. More recently I've learned Macmillan seems to intend to offer a range of prices on Kindle books, from $4.99 - $14.99, but this is hardly good news for the authors since those whose Kindle book prices are reduced from Amazon's $9.99 standard will have their royalties reduced.

You say that my claim that it was Macmillan which set forces in motion which resulted in Amazon's removal of buy links is completely false. How so? Do you maintain that Amazon execs woke up Friday morning and decided to remove Macmillan books' buy links on a whim? No, they did it as a (bullying) show of power in response to Macmillan's demands that Amazon more or less match Apple's iBook profit split terms. Was it the right thing for Amazon to do? No. But it was done in response to Macmillan's actions and demands.

Again, I'M NOT SAYING AMAZON IS THE GOOD GUY HERE. I'm saying I don't understand why Macmillan authors are backing Macmillan in moves that can only stand to hurt those authors in the long run.

FP said...

I think your posts are exactly right. I also think both sides are bullies in this case. Yesterday someone somewhere reminded me that Macmillan recently cut back on their eroyalty percentage. They did that and now they want to raise ebook prices--I mean, the handwriting's on the wall there w.r.t. who they care about the most.

I'm no fan of Amazon for various reasons, but they're right in lowering prices. Lots of people are really suffering now economically. But even if they weren't suffering, in general, the lower the cost of a book, the bigger the potential audience pool, the bigger the number of people who can afford to buy the book. This should be common sense, but it seems to escape some people.

The cheaper reading is, the more people can read, in both the overall number of people reading and the amount each could read. Writers should always aim for maximizing the world's reading amount.

I've had to unfollow some stuff from twitter because this whole Amazon/Macmillan thing has upset me. At some point, writers must think of reader comfort, but too many writers aren't thinking of that at all.

Steffan Piper said...

Great article, great responses and thorough follow ups. Nicely done, April. This should be required reading for anyone with a serious mind following their dream or career into print.

I was 'very bothered' when Amazon caved. They should've just held out on principle. Now that precedent has been established, I'm sure every fish on the hook is going to wiggle.

Steffan

jaylake said...

You are missing a lot of the author's viewpoint here, actually. And most of us aren't celebrating Macmillan's "win". Most of us are rather baffled about the merits of the nuts and bolts of the competing models, I suspect. I know I am, and I'm pretty well informed. It was Amazon's pulling of the print titles that caused us to storm the Internet. In my case, that's 90%+ of my unit sales, now missing from the dominant online bookseller because of a dispute in a completely separate product line, under completely separate contracts, distribution and terms.

So you're asking the wrong question, I think. I've addressed this exhaustively on my blog, which has been linked to from many dozens of other sources. If you're curious, there's a round up here:

http://www.jlake.com/2010/02/03/publishing-a-summation-of-my-posts-on-amazon-vs-macmillan/

Alan said...

I also think that the fundamental issue is that authors were suffering for an argument between MacMillan and Amazon. It was Amazon that directly affected authors and therefore Amazon that authors stood up against. Sure, they should also be questioning MacMillan's ideas, but in the first instance it was author's shouting for their income stream to be returned.

Cheryl Anne Gardner said...

Wonderful April. Just wonderful. I have been discussing this over on Podpeep.blogspot.com and over on Ditchwalk.com.

Both companies are guilty of attempted price fixing, but Amazon as the retailer has the right to discount at will and to stock or not stock a product. Yes, they have the right to discount even though they pay Macmillan the wholesales price already.

Macmillan isn't doing it's authors any favors here, and the consumer will not be strong armed. There is less "packaging" involved with an ebook and it's price should reflect that. Consumers are not stupid. I price my print books at 7.99 and my ebooks at 1.99. I make the same profit on each because there is less packaging with the ebook, and I can pass that cost savings along to the customer and still make what I need to make. Not to mention, sell more because the price is attractive.

So thank you April. I was feeling a bit alone backing my horse. I don't agree with Amazon's tactics here. They should have just let the consumer decide not to pay.

The old business model is on the way out, as the music industry discovered. Time for the publishing industry to take heed of that history.

BillSmithBooks said...

April:

I largely agree with your analysis.

I think major publishing houses realize that they are in deep trouble when it comes to ebooks. There is nothing to prevent a massive splintering of the market, where small presses and independent publishers can finally compete on a level playing field--let the best product win, regardless of who publishes it.

Authors are effectively able to market via social media and other affordable online efforts. They can make a modest but sustainable living off higher ebook royalties, even though they are selling fairly low quantities of their titles.

Major publishers will most likely continue to dominate printed book publishing because of the economics of massive print runs, paying for placement in stores and dealing with returns. Small companies simply cannot compete with the big boys at that game.

However, small and independent presses can build their presence dramatically with inexpensive ebooks and use them to create a very viable online and direct order printed book business.

Personally, having done the big publisher shuffle earlier in my career, I vastly prefer the independence and freedom of being an independent author. The Outlaw Galaxy series is not for everyone, it is a niche market, but it's what I enjoy writing and I don't need to have a huge audience to make this a viable business.

M.R.J. Le Blanc said...

The way I've come to understand it, trying to find out which end is up in all this kerfuffle, is that there is a TINY difference between producing a physical product and an ebook. The majority of costs goes to all the stuff that happens BEFORE the content is sent to become either a physical book or an ebook. Macmillan is simply trying to raise the value of the ebook version of the content to an acceptable amount, something that's fair to the author. And if you read Macmillan's CEO's comments, ebook prices will gradually drop just like physical books do. So if you want the ebook right away, pay the $14.99 or whatever it is. If you don't want to pay it, wait a few months when the price drops and then buy it. I fail to see what's wrong with that.

April L. Hamilton said...

Thanks for the comments and discussion, all.

MRJ - let me copy something I just posted to another blog in response to you:

"Well, let me be the first to address the elephant in the room. Macmillan’s ebook prices don’t have to go up because the costs to produce an ebook are high and fixed. Their ebook prices have to go up because Macmillan’s overheads (like those of any big, mainstream publisher) are high and fixed, and the bills have to be paid regardless of whether Macmillan is selling ebooks or hard copies."

Where I, working as an indie author, can begin from an ebook price I think will be attractive to consumers and work backward, big publishers have to begin with with their sunk costs and work backward. To quote myself again:

"Right now ebooks only represent 3-5% of the total trade book market, but big publishers are terrified that ebooks are the wave of the future, destined to supplant paper as surely as DVD supplanted VHS. And this is an outcome they want to prevent, or delay as long as possible, because they know they cannot survive on $10 ebooks."

"Maybe big publishers simply can’t afford to be in the ebooks business, and smaller, nimbler companies need to step into that particular fray."

And regarding the possibility that Macmillan will make good on its stated intention to lower ebook prices over time, they've shown no indication of keeping their word on that front to date:
http://www.teleread.org/2010/01/30/macmillan-ceo-tells-his-side-of-amazon-spat/#comment-1154950

I think it's far more likely that this is just the latest in a series of moves on the part of big publishers to kill, or at least delay, ebooks' growth in the marketplace. See this article for more info on that front:
http://www.publetariat.com/think/real-agenda-apple%E2%80%99s-ebook-partners-death-ebooks

April L. Hamilton said...

Jay Lake -
I commented on your blog.

Robert P. French said...

A great analysis April.

Coincidentally, I just posted an article "Publishing's dead... long live publishing." I will add a link to your post.

http://www.robertpfrench.com/2011/06/18/publishings-dead-long-live-publishing/