Michael's Blog

Posts Tagged ‘amazon’

One day after the launch of the IPad, Macmillan – one of the major book publishers in the US – announced to Amazon that they would not agree with the Amazon pricing of their content anymore. The following weekend a showdown happened that eventually concluded with Amazon giving in and changing their pricing model. This was the first public locking of horns about ebook pricing and may be symptomatic of future discussions between publishers and digital distributors.

Amazon wanted to sell books for their Kindle ebook reader at 9.95, Macmillan said they want to determine the pricing of books themselves, not undercut their hardcover editions by that much and sell at least some of them at a higher price (14.95), just like they have always done with distributors/booksellers of paper titles. Macmillan stated that they would not allow Amazon to sell their books. This was communicated by their CEO John Sargent via a paid ad in an online newsletter on Saturday.

Amazon promptly withdrew all Macmillan titles – e- and paper books – from their online store (which had the effect that Macmillan titles shot to the top of the other online retailers, like Barns & Noble).

Eventually, Amazon gave in, allowed Macmillan to set their own pricing and re-instated all titles.

In the meantime, other publishers, like the french Hachette Group, have joined Macmillan. Harper Collins have also expressed their dissatisfaction with Amazon’s pricing.

Amazon’s Kindle Team posts a letter to their customers citing a mission for inexpensive ebooks.

So this was to a big part prompted by the introduction of the IPad by Apple, who will open an ibook store in competition to Amazon, so far the dominant ebook distributor.

The Apple IBook store will work according to the “agency model”, in which publishers determine pricing of their titles, proceeds are split 70/30 between publisher and Apple. Amazon, on the other hand, operates on a low cost model, buying books at a big wholesaler’s discount (70%) from the publishers and selling them at bargain pricing.

So the result is that ebook prices are going up. In the short term. In the long term there will be competition, and many more of these battles will be fought. No publisher will price themselves out of a competitive market, and if titles are available on a variety of platforms, from a variety of distributors, this can only be a good thing in the long run.

2010 will be an exciting year in book publishing and distribution. Old business and pricing models will have to be questioned and revised, and even traditional media producers must re-think, ideally before technological advances, market changes and consumer behaviour force them to.

Trying to buy physical paper books in Sydney I was reminded again why local book shops do not compete well with Amazon.

“The Goal” is a business book about constraints and ongoing improvements in manufacturing, it sold more than 3 million copies and last week I needed to get a few copies for our production people

I went to Borders in Bondi Junction and could not find it in the business section. I queried the database and an employee. She said she’d never heard of it, they did not have it in stock and if I really wanted it, my best bet was Amazon

I went to Dymocks in Broadway. They did not have it in stock, found the name in the database, did not let me know whether they had it in another Dymocks store and could not tell me when they could get it in.

I went to Better Read than Dead in Newtown, they were helpful but did not have any copies in stock. However, they could order it in, I could have them in four weeks.

The Co-Op bookstore in Broadway did not have it, but they could tell me that it was in stock in their Uni bookstore, so I went to Sydney Uni and bought four copies at $38 each.

I looked up the price on Amazon and even including shipping they would have cost me half the amount.

I then contacted the publisher in the UK to explain the issue and to offer local production on demand, but they were not interested.