Amazon “caves”

From the amazon web site:

….ultimately, however, 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…..

(Source. Hat tip)

For some back ground and discussion, see this earlier post and links among the comments that describe the situation.


I gave the specific quote because I love how Amazon notes that Macmillan has “a monopoly” over their own titles. This absurd statement and the overall situation tells me something: The decisions being made … first to cut out Macmillan titles then to end the standoff with this particular announcement … are coming some guy who seems to act like a teenager who got mad at his teacher or something. Not a major corporation with lawyers and a marketing department and brand management and stuff.

I’m not saying that’s a bad thing. I’m just sayin’

So, Amazon tried to control pricing on a major product in two ways: 1) Keep it low to be nice to the user (I assume) and 2) keep a higher percentage of the proffit. Now, they have benen forced to let publishers, who are providing the product, set the wholesale price. So Amazon is screaming “They are forcing us to have a free market! They are forcing us to have a free market!”

I for one will pick a non Macmillan title over a Macmillan title next time I decide to buy a new best seller novel or something, just to show solidarity with lower priced books. But this whole event has reified, in my mind, the original proposition (see link above) that Amazon is indeed something different, even when it comes to just selling books.

Comments

  1. #1 Stephanie Z
    February 1, 2010

    Must read Scalzi on this one. The teenager analogy is even better than you may think.

    http://whatever.scalzi.com/2010/02/01/all-the-many-ways-amazon-so-very-failed-the-weekend/

    Also, understand that if you’re boycotting Macmillan over holding prices higher, you’re also boycotting Macmillan over keeping author royalties higher. A pretty standard ebook royalty clause gives the author a straight percent of the retail sale price. In this case, that would be before Amazon discounts it.

  2. #2 Greg Laden
    February 1, 2010

    Yeah, I just read that (saw your tweet). I guess the foot stomping tantrum approach is kind of obvious.

    My comment about not buying Macmillan is actually snark. I don’t think I’ve ever bought a best selling book retail and with any currency in my life. I own more books than any human being that I personally know, but that is not how I got any of them!

  3. #3 Deen
    February 1, 2010

    So, Amazon tried to control pricing on a major product in two ways: 1) Keep it low to be nice to the user (I assume) and 2) keep a higher percentage of the proffit.

    According to Macmillan, though, Amazon will be making more money on the new pricing policy, not less. They also claim that they themselves as well as the authors would make less on the new policy as well.

    Of course, this doesn’t make much sense – why would a publisher go head-to-head with a behemoth like Amazon and lose money on it as well? Turns out that this is the same pricing policy that Apple wants to put in place for their new iBook store. And suddenly it all makes sense again.

  4. #4 Jared
    February 1, 2010

    I wonder how they worked out that Amazon would be making more money with this particular price setup… I mean, would they be making the same amount of money per item and selling as many items, or would they be selling fewer items at higher profit margins?

  5. #5 Stephanie Z
    February 1, 2010

    Jared, Amazon is currently selling these at a discount, at the price they wanted Macmillan to conform to. So they’d be selling the same number of books at the same price and paying less to the publisher (and, thus, the author).

  6. #6 Deen
    February 1, 2010

    @Jared: according to the WSJ, Amazon actually makes a loss on new releases, because their fixed price is lower than what the publisher would charge for a new release. I don’t think Amazon is stupid, so I imagine they more than make up for that by the fact that they charge the same fixed price for older e-books too.

    I’m personally not completely convinced that the new prcing policy will really give more money to Amazon (it certainly doesn’t seem to be the purpose of the new pricing policy). Amazon will earn more on new realeases, but less on older books. That could also mean they might sell fewer expensive books, and more cheap books. I have no clue how all these effects will add up.

    I have even less of an idea about how this new pricing scheme could be good for the consumers, though.

  7. #7 chezjake
    February 1, 2010

    I for one will find a source other than Amazon (and a non-Kindle format) for any and all e-book purchases, just as I buy all hard copy books from my local independent bookseller.

  8. #8 Andrew
    February 1, 2010

    The kindle is not yet available in the UK, hence the row over E rights at Amazon is irrelevent. A question, does anyone know what Amazons market share is? Specifically is Amazon UK’s market share over 30%?
    UK readers may realise the importance of 30%: the OFT and Competition Commission do

  9. #9 MadScientist
    February 2, 2010

    I don’t even see it as a “let’s teach MacMillan a lesson”. It’s a simple question of economics and personal preferences – do you want to pay that much for an ‘ebook’ which you can only read on 1 device, etc. etc. or would you rather get a normal book which comes with other rights? What the authors get is never a consideration in buying any books; people don’t buy books because they want to feed a poor starving author. Personally I don’t got for *any* ebooks; they’re simply not worth the money and hassle for me. The other thing with an ebook is that you don’t have all the expenses of a print run or any issues with stock control – you can sell as many ebooks as you please. So ebooks are pure profit (well, of course there’s the author’s advance and the work of editors etc to recover). Anyway, given the restrictions on ebooks, their very low cost of distribution and the fact that there is no need for physical reproduction, they *should* be much cheaper than they are. As a consumer I have no interest in boosting the profits of the people I buy goods from.