Charles Pillsbury III

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Amazon causing the internets to rage again…

without comments

Edit: Keep going to Tobias’s blog for the best updates on this. Writer’s Beware has a nice summary post too.

Amazon’s “side” : Macmillan’s “side”

I was going to write up something about how the iPad may or may not change the game on the ebook market, but then Amazon apparently already has decided that Apple will change the game and is trying to hold on to their lead before the iPad comes out. Though we’ve not heard anything from Amazon at this point, the CEO of Macmillan (and entirely unbiased party I’m sure) has said that when negotiations on ebook pricing broke down with Amazon, that as retaliation Amazon pulled all Macmillan books from its catalog (ebook and dead-tree style). Sure enough you can’t buy a Macmillan book from Amazon this weekend, there has been much ranting and raving on the internets about this as a horrible negotiating tactic (the metaphor I’ve heard most is that amazon is throwing a tantrum and taking its toys and going home). I’m willing to wait for more complete information before I pass judgement.

When I finally found somebody who seemed to be writing about the subject and not their rage, or using the situation as a platform for their ideology, I posted a response on their blog. This piece by Tobias Buckell (edit, new link as Tobias’s host was crushed under the weight of internet traffic) was the one I posted to, and I’m going to post most of my response here.

For as much as I respect him, Cory (Doctorow) has an anti-DRM/license drum he’ll beat till it kills a horse and then he’ll use it to beat the horse… and though there are MANY points I agree with him on, his quasi-religious fervor for the subject makes it hard to take anything he says on the subject without a heavy dose of salt.

I know I’m a bit of an Amazon apologist (I worked there 10 years ago and even though they shut down our building and we all got layed-off, I still generally like them), but I have found it depressing/amusing/interesting that all of the commentary I’ve seen thus far, has been made without Amazon making a peep. I know a lot of people think this silence speaks volumes, internet time, blah blah. For me, I think I’ll at least give them a weekend to say something considering most of the information we have on the subject (aside from the Macmillan titles not being listed) comes from an open letter from the Macmillan CEO… which I don’t count as an exactly unbiased source.

All that said, IF this is just a negotiating tactic from Amazon, I totally understand it. I don’t particularly LIKE it, but if I were facing the media distribution juggernaut of Apple marching into my market space in 60 days, I’d be tempted to use the nuclear option sooner than later to make sure the contracts were as good as possible while I still had SOME leverage. Apple had the benefit of that leverage with music for quite a while before there was serious competition in that market. Amazon was probably another year or two away from having significant enough market for eBooks to not have to worry too much about Apple moving into its space.

I’m trying to look at what the three companies involved (because Apple IS involved in this, even if they’re not mentioned in the stories anywhere) are looking to accomplish. The short versions are:

Amazon: Wants to sell books. Selling Kindles is nice, but it’s only a means to an end for selling ebooks and having a significant portion of that market. They want leverage to charge what they want to charge, and generally what they want to charge is going to be something they think will encourage the use of their service/device over others in the market place.

Macmillan: Wants to sell books. They’re trying to adapt to a new world and new market and maintain their business and control. They are probably looking at the very real concerns to their business brought up in a digital distribution world where content creators can go directly to an audience (I don’t think this is their primary concern, but I do think they’re keeping it in mind lest Amazon or somebody similar create a means for bypassing the publishers that actually works and chewing into their business). They don’t want to be tied to any distributor like Amazon or Apple, and are hoping to use the leverage of their content to keep their level of control in the market.

Apple: Wants to sell iPads. I’ve read agents on twitter say that Amazon wants to keep the prices on the books low to make money selling Kindles. That is, in my mind, rather obviously wrong. But Apple has, almost from inception, been about selling the hardware. Apple makes a comparative pittance on iTunes songs, but they make a ton on each of us buying a new iPod every couple years… and they make a pretty penny on iPhone apps and such. Apple right now needs content for its new device (same as Amazon did/does), and as they’re not the big kid on the playground in the book space, they’ve GOT to be willing to negotiate on terms that are favorable to the publishers. They need publisher buy-in for the iBook store just like Amazon needed publisher buy-in for the Kindle a couple years back. As far as books go, for Apple (and I’m an Apple fanboy too I guess), they’re primarily another bullet point on the list of features for the iPad (though I’d be surprised if Steve isn’t smart enough to be negotiating Apple sweetheart deals from publishers to allow the publishers pricing control to use as leverage against Amazon).

All three players have their strengths in this “battle”, and all have their weaknesses. Apple has the benefit of being 2 months removed from really being involved. Amazon & Macmillan have the benefit of ebooks being a relatively small percentage of their income. The main people who are talking about it are the ones who are potential collateral damage, the artists. I suspect this will be a few days blip on the historical radar of the book publishing industry soon… In the short term it seems Amazon has played its hand poorly, but I think we won’t know the big picture for a little while.

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January 31st, 2010 at 9:35 am

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