Wednesday, February 03, 2010

E-book Publishing Wars

There is something very big brewing in the publishing industry, and I feel like I’m missing something. In fact, I’m sure I’m missing something, but I doubt I’m alone. One thing we can be sure of—follow the money! Crime Fiction Writing 101, remember?

We authors are probably the least informed, but I have a strong hunch the publishing honchos don’t know all the stakes yet, either. (Kind of like stock market advisors. Buy this fund! Oops, mortgage securities? Not my fault.) Right now, the eBook market looks to be a jockeying game, positioning, threats, closed door handshakes. The stuff of mystery.

Except our livelihoods are at stake, but let’s ignore that right now. (Honey, can you run out for groceries? No? Do we have enough for beer?)

Kindle sales have been plugging along the last couple of years, and though Amazon won’t release any data on number of units sold, a lot of people I know are getting one. Even my college son wanted one for his birthday, which I take to be an excellent sign. Twenty-two year olds may be screen addicts, but they still read books. Alleluia on that note.

But along comes Apple with the new iPad, and the fur begins to fly. Apple offered publishers a better split of sales proceeds (70 percent vs. Amazon's 50), but these sales ultimately bring the publishers less money. Apple’s iBooks will be capped at $14.99, while right now, Amazon is paying publishers half of a list price that could be $25 to $30. Amazon then charges its customers $9.99 to download a book to Kindle, taking a loss on the book sale (aka “lost leader”) to expand its Kindle customer base.

“The iPad puts Apple on a direct collision course with Amazon.” New York Times, Wednesday, January 27, 2010. See link: (http://topics.nytimes.com/top/reference/timestopics/subjects/i/ipad/index.html?inline=nyt-classifier) The article underscores that though Steve Jobs gave credit to Amazon for pioneering the eBook industry, Jobs said, “We are going to stand on their shoulders and go a little bit farther.”

Peter Ginna, of Bloomsbury Press, found a taped interview between Steve Jobs and Walt Mossberg of the Wall Street Journal (http://www.doctorsyntax.net/2010/01/playing-chicken-publishers-apple-and.html, Friday, Jan 29, 2010). When Mossberg asked about Amazon’s lower prices ($9.99 versus the iBook’s $14.99), Jobs responded, "The prices will be the same...Publishers are actually going to pull their books from Amazon because they're not happy."

Hmm, very interesting, because the next day, the L.A. Times, Saturday, January 30, headline states, “Amazon pulls Macmillan titles in first ebook skirmish.” http://latimesblogs.latimes.com/jacketcopy/2010/01/amazon-pulls-macmillan-titles-in-first-ebook-skirmish.html Five publishers announced that they were working with Apple, and MacMillan was one of them. MacMillan CEO John Sargent then asked Amazon to reset ebook prices ranging from $5.99 and $14.99, starting typically on the high end of the spectrum (between $12.99 and $14.99) and lowering the price over time. Amazon responded to MacMillan by pulling all versions, including paper editions, of Macmillan’s authors’ books from their online store.

One day later, Amazon capitulated. For the first time, five of the six major publishers lined up with Apple (Random House is sitting on a fence, but sounding favorable to Apple’s pricing format.)

This is big business. It looks like Apple has an eye on undermining Kindle’s reader base. Remember, follow the money. The two giants are facing off for long term eBook shares. Naturally, authors are are WAY down the food chain in this kerfuffle. The players on this shifting field are the Big Six publishers (except for Random House, which is still sitting on the fence), Amazon, and Apple.

The positive aspects coming to light are that people want to read, and expanding formats are a good thing. The bad news is that business ethics stink, and shifting allegiances are self-serving and among the few.

Some other interesting blogs on the topic: http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-longer-for-sale-via-amazon/ and http://blog.nathanbransford.com/2010/02/kindle-missile-crisis.html

8 comments:

Rick Blechta said...

Fascinating stuff. And yes, authors and agents had better take note while the big boys duke it out.

Also, may I stand on your shoulders with the series I'm just starting for Type M?

Vicki Delany said...

Thanks Debby. My head is spinning and yours must be to.

Debby (Deborah Turrell) Atkinson said...

My head is spinning, but that's because we don't have all the info. Not many do, I think. Lots of speculation--listen to that interview with the WSJ reporter, who has a sense of humor.

Haha, Rick. Maybe we can just play leapfrog.

Jill said...

Thanks for a very informative post. It will be more than interesting to see what happens over time. Imagine, the irony of price wars going up (italics?)

And the retailiation bit blows my mind and rather scares me. I don't have an LLB, but pulling MacM's books from their inventory because of disagreements over e-books sounds to me like some kind of naughty and illegal business practice. I think the word I'm looking for is extortion...

Jill

Anonymous said...

There's more to the e-book war than Amazon v Apple. I won't be buying either an iPad or Kindle because they both use proprietory formats meaning their books can't be read on other readers. Also they don't seem to be able to handle pdfs (without a lot of fiddling around). Several other e-book readers are available with more in the pipeline this year - I'll wait until I can get one that can handle everything. When I buy books I expect them to be written in English regardless of what shop I buy them in. E-readers need to go the same way.

Debby (Deborah Turrell) Atkinson said...

Hi Jill and Anon,
Thanks for your input. Extortion, yes, with authors lowest on the food chain. And Anon has a good point about proprietary formats. I was thinking of buying a Kindle myself (received an Amazon gift certificate for Christmas), but am going to wait and see how this shakes out. I wouldn't be surprised if Apple comes out with another, more versatile, device in the next year or two.

Rick Blechta said...

I want to keep my powder dry for next week's blog entry, but the proprietary nature of readers is more of the same old garbage we've had to deal with in other technologies (remember beta, 8-track cassettes and whatever it was that recently got beaten out by blu-ray?). It's all about controlling the information, and it's just a way to make even more money.

Trouble is, you're gambling on who will come out on top. Guess wrong, and your device becomes tomorrow's garbage.

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