Amazon, Macmillan & Apple Wag the Dog

Stop reading & take me for a walk!

It’s Saturday. I’m snowed in. The perfect time to give my opinion on the  Amazon / Macmillan showdown – as a mostly disinterested party.  How so?  Well, I’m not an author, not a publisher, not an Amazon or Apple exec, and have no relationship with any of the above other than through reading.  I do own a Kindle – but would be just as happy with a Nook, Sony or iPad, if it met my requirements.

(Disclaimer: some of this is recycled from comments I’ve already posted on forums at Bookninja, Biblibio & Fighting Monsters with Rubber Swords).

A quick rundown of events so far…

1/27/2010 – Apple launches iPad, which everyone mistakenly hails as Apple’s long awaited entry into the e-book reader market (more on that later).

Date unknown – Macmillan informs Amazon that the $9.99 price structure is no longer acceptable and dictates new terms based on those that 5 of the “Big 6” publishers set with Apple’s iBookstore.

1/30/2010 – Amazon stops selling Macmillan titles from Amazon.com.  They are still available on the site through 3rd party sellers.

1/30/2010Macmillan sends out a letter rallying the troops

1/31/2010Amazon responds with this (frankly, embarrassing) post on its Kindle forums – basically amounting to a “blink”.

2/4/2010 Macmillan takes out ads in the NY Times (which are kinda funny).

2/6/2010 –  Amazon finally concedes and resumes selling Macmillan books on Amazon.com. Here’s another link, just cuz I love the NY Times.

2/6/2010Amazon is universally mocked (ok, so this link is actually from 2/1, but it pretty much summarizes the gist of what’s been going around).

_____________________________


First, I find it surprising that no one is talking about the fact that the Amazon $9.99 model is based on the iPod 99-cent model originated by Apple. Or that $9.99 is not a pricing structure that exclusively benefits the Kindle.  (A quick peek on the Nook store shows e-book editions also priced at $9.99).  Which leads me to conclude that the whole point of this “loss leader” is not just to establish Amazon market dominance – it’s to clearly establish the benefit in the cost/benefit  analysis consumers go through when deciding whether or not to shell out the money for an e-reader.  E-books need to be cheaper than paper books. It’s how Apple was able to convince the world to switch from CD’s to iTunes.

The other connection no one seems to be making is that Apple doesn’t care how much they have to charge for e-books.  Why?   Bullet time!

  • Apple already has a large share in digital media market.  In fact, losing the $9.99 price point will hurt other e-readers much more than having it would help the iPad.  Why?  Glad you asked….

Ultimately,  I don’t think Amazon is being any more ridiculous (or sinister) in wanting to charge $9.99 for e-books than Apple was with it’s 99-cent iTunes pricing. I don’t think publishers are embracing technology.  I don’t think that  Apple really gives a damn about the e-book market, because according to Jobs publishing is already an industry on the wane.   And while I love the convenience of my e-reader – I don’t want to pay $15.99 for digital content that is usable on only one platform, that I can’t re-sell or lend to friends.  Especially when I can buy the physical book, which allows that, for the same amount or less.

(But what about the publishers’ costs, you ask?  I’m still a bit fuzzy on that.  A quick look at B&N reveals that I can buy James Patterson’s new release in hardcover for $16.79 and a paperback copy of The Book Thief, a NY Times Bestseller, for $8.63 – AND have both shipped to me for free.  How is that possible, and profitable, if they’re losing money on a $9.99 e-book?  If someone can explain that, please leave a comment below).

With the release of the iPad Macmillan saw an opportunity to push.  Amazon tried to push back.  Ultimately Apple, book publishers and Amazon are all just doing what businesses do – protecting their pocket of the market.  I do not fault them for it.  Just like the music industry a decade ago, the publishing industry is in flux. Everyone is adjusting.  But we knew this was coming, so why is everyone suddenly acting disingenuous?

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