[LINK] Fwd: Publishers Lunch Special: Amazon Removes Macmillan Buy Buttons In eBook Price Dispute

Jan Whitaker jwhit at janwhitaker.com
Sun Jan 31 10:17:21 AEDT 2010

Saturday, January 30, 2010

Saturday Update

The Battle Over the Agency Model Begins, As Amazon Pulls Macmillan Buy Buttons
As originally reported last night and many readers know by now, 
sometime yesterday evening the buy buttons for apparently all of 
Macmillan's books--including bestsellers and top releases, and Kindle 
editions--were removed from Amazon's site. Macmillan books remain 
listed but can be bought only through third-party Marketplace 
sellers, while Macmillan Kindle titles all lead to pages that read, 
"We're sorry. The Web address you entered is not a functioning page 
on our site." It is the first shot across the purchasing bow in big 
publishers' efforts to reset ebook pricing above the loss-leader 
$9.99 price point and retake control over that pricing by moving from 
the wholesale selling model to an agency selling model (first 
reported exclusively in Lunch Deluxe on January 19), at least for 
ebooks published simultaneously with new hardcover releases. Kindle 
customers further reported on Amazon forums that any Macmillan books 
that were on their "wish lists" disappeared from those lists with no 
explanation, as apparently did Macmillan sample chapters that had 
been downloaded previously.

Macmillan has commented by way of a paid message to authors, 
illustrators and agents, reproduced below this story. Amazon has 
declined to comment thus far, either to the media or directly to 
their customers.

Among the books subject to the greatest potential short-term effect 
of Amazon's buy-button removal is Andrew Young's just-released THE 
POLITICIAN, which curiously still ranks at No. 9 on Amazon's 
bestseller list (and has been between No. 4 and No. 6 today at Barnes 
and Noble.com). Hilary Mantel's WOLF HALL was at 69 on Amazon last 
night, falling steadily today and now at No. 128. Atul Gawande's THE 
CHECKLIST MANIFESTO: How to Get Things Right was at 34 last night on 
Amazon, now at No. 66,--and has risen from 112 up to 86 at BN.com in 
the same time period. (These numbers change slightly every hour we've 
been checking them.)

We were able to reach a couple of agents for some of Macmillan's 
current bestselling authors. Co-head of the William Morris Endeavor 
books department Eric Simonoff, whose clients include Douglas Preston 
(author of the January Tor release Impact), told us: "The current 
model of Amazon selling Kindle editions as a loss-leader is fair for 
publishers and authors in the short-term but as we have told Amazon 
we don't believe it is sustainable in the long term. Something had to 
give to prevent the ongoing devaluation of e-books. Macmillan is the 
first to draw a line in the sand but we expect not the last."

Tina Bennett at Janklow & Nesbit, agent for Atul Gawande's new 
bestseller, comments: "This development is very unfortunate for my 
author, but it's also troubling for public health. The checklist 
approach that Gawande describes in his book is a major life-saving 
advance. It has been demonstrated to reduce harm to surgical patients 
by more than a third, but has yet to be widely adopted in US 
hospitals. To make THE CHECKLIST MANIFESTO unavailable for sale is 
the equivalent of blocking the distribution of a book announcing the 
discovery of penicillin."

Agent Robert Gottlieb at Trident Media Group offered this view: "The 
agents I know feel the $9.99 price for new releases is not good for 
the business. They want the publishers to work with all the retailers 
in a peaceful manner. I don't think it is in any book retailer's 
interest both short and long term not to do business with companies 
like Macmillan and at the same time Macmillan needs Amazon. What will 
Amazon do if S&S moves in this direction or Hachette? If consumers 
can't get the books they want from Amazon they will move to other 
retail sites for what they want."

One senior publishing executive called the move by Amazon "fairly 
draconian" but added that their company had not received any threats 
of similar action from Amazon. As we've said before--though consumers 
have not yet gotten the message--the agency model that publishers are 
trying to implement with Apple and across their customer base 
actually lowers the publishers' proceeds from each ebook sale and 
gives more profit to sellers versus the current loss-leading model 
behind the $9.99 price point.

Another senior publishing executive said that "Amazon may 'spin' that 
the consumer is at the heart of the decision, but really their goal 
is a monopoly position in books. Publishers don't want a monopoly - 
they want consumers to have choice through a number of partners and 
channels. They want digital pricing which allows bricks and mortar 
retailers to survive and thrive alongside a growing digital market." 
That person added, "This reaction proves what Amazon's true motives 
are. It is a signal to any other publishers not to change the model 
and weaken Amazon's pathway to a monopoly. I hope authors, agents and 
publishers see what these motives are and stand by Macmillan."

Among remarks from Macmillan authors posting online, perhaps one of 
the most curious came from Sherrilyn Kenyon, who posted to Facebook 
and then later in the day removed her entry, which read in part: "All 
of you asking why you can't find my books on Amazon Kindle? It seems 
that Amazon is the one to blame. They are in a disagreement with my 
publisher and to prove a point, they have removed Macmillan books 
from their Kindles.

"You know, as a Kindle owner, I have problems with this. They're not 
cheap and I bought it so that I could download the books I wanted to 
read. I don't like a store taking something from me like this without 
warning. It's just like when Amazon removed books from my Kindle that 
I'd paid for because they didn't have permission to sell them."

In comments over at John Scalzi's blog, bestselling Simon & Schuster 
author Scott Westerfeld writes, "The real power we authors have is 
removing links to Amazon from our websites and such.... Random 
blackouts do not make customers happy."

Amazon's own forums have been quite busy with postings today, with 
customers expressing a wide range of everything from support to 
dismay with the etailer's move. The most damaging aspect of their 
action in the short-term may be the removal of Kindle "wish lists" 
and sample chapters. For some posters that action has echoes of the 
incident last summer when Amazon deleted copies of certain books from 
Kindle owner's libraries, in violation of the site's own terms of 
use. As one person writes, "we do feel vulnerable, even if Amazon is 
right to fight. Wishlists disappeared, with no backup of what the 
titles were. Sample books we chose to download lead to links that say 
Error. It reminds us that we do not have control over the situation, 
even if we backup, since what is offered today may not be available 
tomorrow." (Amazon apologized for that earlier incident, provided 
refunds to customers, and eventually settled a customer lawsuit.)

While many customers support Amazon's efforts to provide low prices, 
one "open letter" suggests that the company let customers decide for 
themselves what is the right price. "Here's a thought Jeff: You list 
them and I will decide if I want to buy them or not. How's that 
sound? I agree with you they should not cost more than $10, but I can 
enforce that with my pocketbook. I don't need you to make a big hairy 
freakin deal out of it on my behalf and I certainly don't need you to 
limit my choices based on this principle."

To listen in, and help explain by posting, check out 
two Amazon customer 
and look at the bottom of each page for the names of other 
recently-posted forums worth following.

at PublishersMarketplace, or e-mail us.


To: All Macmillan authors/illustrators and the literary agent community
From: John Sargent

This past Thursday I met with Amazon in Seattle. I gave them our 
proposal for new terms of sale for e books under the agency model 
which will become effective in early March. In addition, I told them 
they could stay with their old terms of sale, but that this would 
involve extensive and deep windowing of titles. By the time I arrived 
back in New York late yesterday afternoon they informed me that they 
were taking all our books off the Kindle site, and off Amazon. The 
books will continue to be available on Amazon.com through third parties.

I regret that we have reached this impasse. Amazon has been a 
valuable customer for a long time, and it is my great hope that they 
will continue to be in the very near future. They have been a great 
innovator in our industry, and I suspect they will continue to be for 
decades to come.

It is those decades that concern me now, as I am sure they concern 
you. In the ink-on-paper world we sell books to retailers far and 
wide on a business model that provides a level playing field, and 
allows all retailers the possibility of selling books profitably. 
Looking to the future and to a growing digital business, we need to 
establish the same sort of business model, one that encourages new 
devices and new stores. One that encourages healthy competition. One 
that is stable and rational. It also needs to insure that 
intellectual property can be widely available digitally at a price 
that is both fair to the consumer and allows those who create it and 
publish it to be fairly compensated.

Under the agency model, we will sell the digital editions of our 
books to consumers through our retailers. Our retailers will act as 
our agents and will take a 30% commission (the standard split today 
for many digital media businesses). The price will be set for each 
book individually. Our plan is to price the digital edition of most 
adult trade books in a price range from $14.99 to $5.99. At first 
release, concurrent with a hardcover, most titles will be priced 
between $14.99 and $12.99. E books will almost always appear day on 
date with the physical edition. Pricing will be dynamic over time.

The agency model would allow Amazon to make more money selling our 
books, not less. We would make less money in our dealings with Amazon 
under the new model. Our disagreement is not about short-term 
profitability but rather about the long-term viability and stability 
of the digital book market.

Amazon and Macmillan both want a healthy and vibrant future for 
books. We clearly do not agree on how to get there. Meanwhile, the 
action they chose to take last night clearly defines the importance 
they attribute to their view. We hold our view equally strongly. I 
hope you agree with us.

You are a vast and wonderful crew. It is impossible to reach you all 
in the very limited timeframe we are working under, so I have sent 
this message in unorthodox form. I hope it reaches you all, and 
quickly. Monday morning I will fully brief all of our editors, and 
they will be able to answer your questions. I hope to speak to many 
of you over the coming days.

Thanks for all the support you have shown in the last few hours; it 
is much appreciated.

All best,

Melbourne, Victoria, Australia
jwhit at janwhitaker.com
blog: http://janwhitaker.com/jansblog/
business: http://www.janwhitaker.com

Our truest response to the irrationality of the world is to paint or 
sing or write, for only in such response do we find truth.
~Madeline L'Engle, writer

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