January 31, 2010

Dispatch from Beleaguered Tokyo

First of all, the CEO of Macmillan, John Sargent, has responded to the Amazon brouhaha. (When I see that word "brouhaha", I imagine it spoken with rolled R's and bugged eyes.) So the rumble appears to be on. (More good observations from John Scalzi, Cory Doctorow, the L.A. Times, and Scalzi again.)

For those of you who aren't following this, here's the quick and dirty version. (Not actually all that dirty, sorry.) Along with a number of other houses, Macmillan (whose imprints include Straus & Giroux, Tor, and my publisher, St. Martin's Press) has been pushing for Amazon to change their pricing structure for electronic books from a flat charge of $9.99 (an artificial price point, I believe, intended to drive sales of its electronic reader, the Kindle) to one set by the publishers themselves, giving them the option of charging up to $15. Amazon's response has been along the lines of "Or what? You're going to take your business to some other gigantic, popular company and THEIR ebook reader? Let us know how that works out for you."

This week, you might have heard that Apple released the awkwardly-named but undeniably snazzy iPad, and along with it announced their new iBooks store. In doing so, they signed agreements with a number of the biggest publishing houses, including Macmillan. Those agreements apparently grant these publishers more pricing flexibility. The New York Times picks it up from there:
Macmillan offered Amazon the opportunity to buy Kindle editions on the same “agency” model as it will sell e-books to Apple for the iPad. Under this model, the publisher sets the consumer book price and takes 70 percent of each sale, leaving 30 percent to the retailer. Macmillan said Amazon could continue to buy e-books under its current wholesale model, paying the publisher 50 percent of the hardcover list price while pricing the e-book at any level Amazon chooses, but that Macmillan would delay those e-book editions by seven months after hardcover release. Amazon’s removal of Macmillan titles on Friday appears to be a direct reaction to that.

That's right. On Friday, Amazon pulled every single title published by Macmillan, including mine, from its site. The titles are still listed, but there's no way to buy them except via third party vendors. (This only applies to Amazon's US site, and also doesn't appear to include overstock sales like the one I mentioned the other day.)

As to why Amazon is doing this, especially given the fact that the removal doesn't just affect Kindle editions but all print properties as well, I can only assume that the company is operating under a business model best encapsulated as "No, fuck YOU."

I'm not going to pretend that all has been smooth sailing between St. Martin's Press and myself where ebooks are concerned. A number of you have written to me asking why Schuyler's Monster was only available for the Kindle for a brief time before being removed. Apparently the original scan from the company was fuzzy and it was pulled for quality control. But despite my repeated titty-baby whining, St. Martin's has been slow to replace that scan, and at this time, Schuyler's Monster is unavailable as an electronic book in any format. I've been extremely frustrated by this over the past several months, and so I'm not exactly filled with unconditional love for SMP's digital division at the moment. That's just my anecdotal experience, but it's the only one I have to go on.

But in this clash of the Big Companies, only one of them is intentionally and cynically screwing with the livelihood of authors. Only Amazon has shown such callous disregard for the writers who make their whole industry possible. I've twice visited the offices of St. Martin's Press, and it's not some fancy shining hub of cold, calculated commerce. Up on the top floors of the Flatiron Building in New York, you'll find offices full of manuscripts piled on every available flat surface, and you'll also find creative people (mostly young) who run around frantically, making books happen. And even in the face of the scary-boo economic factors crippling the industry, these folks are giddy about their work. They're book nerds, operating on a very thin margin, and every author I've ever talked to who has been published by them has expressed the same thing, and it's the same thing I've felt as well. Macmillan takes care of its people.

This whole situation just stinks, and I have no idea how long it'll last. Not long, I suspect, hopefully just a few days just to see if Macmillan blinks. I hope they don't. And I hope they're not the only publisher to demand a little free market behavior from Amazon, either. Amazon is a great company and God knows a huge number of the trees I've killed have gone through their warehouses on the way to readers like you. (Eh, trees. Fuck 'em.) But I believe Amazon is acting like a petulant bully in this instance, and the people who are being hurt most directly are consumers and authors. Being both, I don't like it, not one bit.

This would be a much worse situation for me personally if my book had only recently been released, and I recognize that. But still, I can tell you what it feels like, being the author of one of the books that just lost one of its largest outlets for sales, all because two big companies are squabbling over money and the future of the ebook trade.

I feel like a citizen of Tokyo, watching Godzilla and some other monster fighting it out in the streets of my city.

Even if my monster wins, my house still gets squashed.

UPDATE: Blink! My favorite part is this seriously weird quote from Amazon:
"We want you to know that ultimately, however, we will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books."
Um, I believe the word you're looking for is "copyright".



UPDATE CUBED: I'm linking to Scalzi a lot these days; he's been particularly on-target with this issue lately. Today, he looks out for the citizens of my metaphorical Tokyo. Thank you, John. Your fellow authors appreciate it.


UPDATE FINALE: After exactly one week, Amazon has gotten around to restoring the links to Macmillan titles, including Schuyler's Monster. I'm guessing it'll be at least that long before I return the favor. I'll put it on my To Do list. No, really.


Unknown said...

I don't want to derail this thread; obviously, this isn't the focus of your post. But why in the world is St. Martin's publishing e-books from SCANS? Surely someone has your book in the final format in an electronic file; instead of printing that file and then scanning it back into an electronic format (thus degrading the end image) why in the world don't they just use the original electronic file?!

And yes, I also realize that you have absolutely no control over this process, and likely no knowledge of the reasoning behind it. This was just something that made me go ! O.o

I hope Amazon stops being ridiculous. They aren't exactly the only ebook reader/marketplace on the block anymore; they can't expect to maintain what was essentially a monopoly on ebooks (yes, I realize it wasn't a real monopoly, but it was by far the most popular) and use that to promote their Kindle. If they lock out publishers, the publishers will go elsewhere, and Amazon will end up with nothing.

Jess said...

I remember thinking in high school that I would be so glad to graduate and get out into the real world, where people didn't have incredibly stupid, pointless arguments and then go do dramatic things to prove how angry they were.

I was so naive.

Way to screw over everybody, Amazon. Except for Apple. They're probably thanking you right now.


Elizabeth said...

Wow. I had no idea about any of this. I'm a big book buyer and own a Kindle as well. Wow. Like I said, I had no idea. What to do? What to do? Is there anything TO do?

Anonymous said...

Well that makes it personal, Rob. Rotten! Not only for you, but for the potential readers, and their children, of your book. Rotten!


Kaivalya said...

Okay, here's where I risk looking like an asshole or possibly a moron:

As a Kindle user (completely involuntarily - I got the thing for Christmas), I kinda like the $9.99 price point. Of course, being Canadian, it's a $11.99 price point because of the stupid surcharges (and even more with the exchange rate), but still...

I like $9.99 because it seems fair to me. Electronic books have limitations that 'hard copy' ones don't. I can't resell my Kindle books. If I think my sister absolutely MUST read this Robert Rummel-Hudson guy because he's da bomb, I can't loan the book to her.

Here's a question I hope you might be able to answer: How much of the cost of a book is the paper-and-ink? How much of the cost is transporting that paper-and-ink to a warehouse? How much goes to promotion of that book? How much to the publisher? How much to the author?

I want to understand because, as a reader, I definitely want authors and publishers to receive their fair share. They bring the books to me - it's only just.

Rob, in your opinion, realistically how much *should* consumers be charged for eBooks?

Robert Hudson said...

Well, I think there are a lot of issues, not least of which is the restrictive nature of Kindle books, which can ONLY be read on a Kindle. (If you want to read these ten dollar ebooks, you have to buy a Kindle, not another reader. Suddenly there's a not-so-hidden cost.) But strictly speaking, I've read a number of figures, all of which suggest that the actual cost of producing and distributing electronic books is not that much cheaper than print, maybe only a few dollars.

On the surface, that doesn't seem to make sense, but consider that most of the cost of a book remains the same. An ebook is still the product of editors, copyeditors, typesetters, legal departments, marketers, publicists, and not least of all the authors themselves. When consumers demand books that are ten dollars simply because Amazon has been selling them as a loss-leader and setting a false expectation of how much an ebook should cost, the real cost of publishing gets ignored.

I mean, think for a second exactly how many people are involved with the production of a book, before one tree is ever chopped down and one drop of ink is put to paper.

Imagine a future publishing world in which there are no editors, or copyeditors. Imagine the quality of the books you'll be reading. Go over to lulu.com and take a walk through some of the crap being sold without any editorial filter. For that matter, I would be embarrassed for any of you to read my original manuscript, before the editors at St. Martin's got a hold of it. Yikes.

I also think that for dedicated capitalists, there's something to be said for allowing publishers to set their own prices for their product, even if you feel like that price is too high. Market forces, etc.

Cheryl said...

I put your book into my shopping cart yesterday along w/2 other books for a total of 26.67 (to avoid shipping). Then I went wait! What if there are other macmillian books I could get for cheap. So I looked and the 2 I'd buy are already gone. BUT your book today is 5.98. Too bad I didn't buy it yesterday :( Are the big wigs @ amazon reading your blog?

Robert Hudson said...

I'd say, given the evidence, that the cigar-chomping big wheels at Amazon aren't particularly concerned about what any authors have to say about their decision, much less those of us published by Macmillan.

Anonymous said...

Okay this post has me both upset and confused.

First, why can't SMP simply convert the file you sent them to mobi format? Calibre will do it for free. Runs on Mac, Windows, and Linux.

Second, Amazon's arbitrary $9.99 price has begun to piss me off. Sure it is great for new best seller hardcovers, but more than once I KNOW a book is in the bargain bin or paperback at Barnes and Noble for $5.98 and Amazon still wants $9.99 for it. In my opinion ebooks are leased. I can't sell my copy, loan it out, or use it to line the bird cage when I'm done with it. Amazon can (and has in the past) take it away with no notice and no authorization. In return for these concessions, I get a cheaper price. Not really a great deal if you ask me. The publisher saves big on the production costs, Amazon saves big on the shipping, handling and storage costs. I MIGHT save $5 to $15.00 on the price. I also could pay significantly more if all I wanted was the paperback edition.

Finally, are the publishers as necessary now as they have been in the past? To me, the publisher assumes the risk of manufacturing and selling the book in return for the lion's share of the profits. The question is if the cost of production is dropped to near zero, how much risk is the publisher taking? I don't know the details of the business and there could be significant expense (editing, promotion, etc) that justify this business model. I just think that the cost to "publish" a book is pretty damn close to zero.

In short, Amazon and Macmillan may destroy each other. Consumers will flock to the easiest solution all other factors being roughly equal. If, for example, I could buy Rob's book directly from Rob with a few mouse clicks with no DRM for $10.00 I would do so. My favorite authors make more money and are motivated to create more content. I honestly have no loyalties to any publisher or retailer.

Becca said...

I bought your book (I am one of the new-fangled folks who found your blog through your book, and not the other way around) at my wonderful local neighborhood bookstore that my mom's been taking me too since I was four (Tattered Cover in Denver, a veritable heaven of bookdom). My problem with e-books is that they leave independent booksellers completely at a loss (instead of just at the disadvantage they have compared to big box stores). Books I shall never, ever burn. Kindles? Maybe.

Publishers need to be able to set the prices for their own products, be they digital or tangible. For Amazon to act like they are the Wal-Mart of books (google "Wal-Mart and Vlasic" or "Wal-Mart and Huffy bicycles") is pretty bastardly. Are they specifically trying to run companies out of business? Because if they insist on dictating what they will pay for a product, eventually, that's exactly what will happen.

I'd be interested to hear how you think about corporates vs independents and buy local and all that (not to start a fight/discussion, but just that I'm genuinely curious. I won't even comment on the response). I know you & Julie worked for the Noble Barn for years, and obviously you owe a lot of your success as an author to a large publishing house that lists your title on a large bookseller's website. But you also spend so much of your time sticking up for the little guy, and you seem to value having positive interactions with individual folks (plus you live like two hours away from Book People). It just seems like a disparity, and makes me curious.

I'll go back to my own corner of cyberspace now and rant there. Thanks for your thoughts, as always.

Robert Hudson said...

I don't know the details of the business and there could be significant expense (editing, promotion, etc) that justify this business model. I just think that the cost to "publish" a book is pretty damn close to zero.

I think you just gave part of the answer. The costs affiliated with editing, copyediting, legally vetting (in the case of non-fiction) and marketing a book are not small.

The acquisition of authors' work factors into cost as well, especially since there's a bit of a gamble in doing so. And in a perfect world, authors would get decently paid for our talents and hard work. (And we'd get a unicorn and a helicopter, while we're at it.)


I'd be interested to hear how you think about corporates vs independents and buy local and all that...

I'm not sure why there has to be a "versus" at all. I shop at my local independent (Legacy Books in Plano, go check them out), as well as Barnes & Noble and Amazon. I think that's true of most people.

Robert Hudson said...

For more on the actual costs of book production, go read this essay by Tobias Buckell. It's long, but it addresses a lot of good points.

Lorraine said...

Keep in mind that perspective is useful in any situation. MacMillan told Amazon to "sell our books at this price, or you won't have permission to sell them". In my opinion, MacMillan pulled their books with that ultimatum, not Amazon. While Amazon shouldn't be telling MacMillan how much to sell their books for, the reverse is the same in a true Free market. When Apple launched Itunes, they stated that all songs would be 99 cents. Amazon in that case came along and allowed flexibility in the price.

Also, what about Digital Rights? Will Apple secure the digital rights for their books on the Ipad? Conjecture currently stands at No. So if Apple doesn't protect those rights, is it worth more money to have your books out there for anyone to copy and share (much more easily than photocopying a paperback...)
Amazon will protect your work on the Kindle.

It's a complicated issue for sure Rob, but I think that there are certainly two sides to the story. As for Amazon "screwing everyone over" as Jess stated, I think that MacMillan has control over what they pay their artists, regardless of what Amazon requires.

Robert Hudson said...

In my opinion, MacMillan pulled their books with that ultimatum, not Amazon.

I'm not sure how you arrive at that conclusion, since Amazon pulled the print editions of Macmillan books, simply out of spite. How does that have anything to do with the negotiations over ebook pricing? The answer: Not a damn thing.

Also, price points are negotiated between publishers and vendors all the time. There's a huge difference between a negotiation and an ultimatum.

It's a complicated issue for sure Rob, but I think that there are certainly two sides to the story.

I don't think it's complicated at all. My physical, printed, made-of-dead-trees book and the printed books of hundreds of other authors are unavailable on Amazon because of an issue that has nothing to do with those printed products. If there's another side to that issue, beyond "we're big and we don't mind screwing over authors in order to strong-arm a publisher", I'd love to hear it. So far, Amazon's not talking. And really, what could they say?

Abbie Normal said...

I'm with Lorraine on this one. Keeping in mind that like most everyone else I only know what I've read on the internet, I'd say that Macmillan decided to get tough with Amazon, and Amazon decided to get tough right back. Is it surprising that Amazon fought back when Macmillan said they were going to delay e-books to Amazon by seven months unless Amazon agrees to their terms? Assuming Macmillan followed through on this, where would that leave Amazon? It's unfortunate that authors are getting caught in the middle, but to label Macmillan's tactics negotiating and Amazon's response spiteful seems one sided.

Stacy said...

Amazon blinks. http://www.amazon.com/tag/kindle/forum/ref=cm_cd_tfp_ef_tft_tp?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdThread=Tx2MEGQWTNGIMHV&displayType=tagsDetail

My favorite phrase is ". . . because MacMillan has a monopoly over their own titles."

Here's the link as a tiny url: http://tiny.cc/ZkuTT

Hopfully one or the other will work.

Robert Hudson said...

I'm with Lorraine on this one.

Well then, I'm afraid you're both wrong. Because again, WHAT DO PRINT PRODUCTS HAVE TO DO WITH THE EBOOK NEGOTIATIONS?

Robert Hudson said...

Amazon blinks.

I saw that. Amazon accusing anyone of holding a monopoly is pretty rich, in my opinion.

So start selling our damn books again already, Amazon! I'm not sure how much longer authors need to be punished.

Jim Howard said...

Congratulations Rob, even billionaire Jeff Bezos couldn't withstand the wrath of your slobbering minions:


Robert Hudson said...

We are a mighty band...

Stacy said...

Amazon accusing anyone of holding a monopoly is pretty rich, in my opinion.

It is rich. It just cracked me up because it's like complaining you have a 'monopoly' on your blog because it's your blog. Or that I have a 'monopoly' on the music I write.

Jeanine said...

Um, I believe the word you're looking for is "copyright".

While I'm not a copyright attorney, I do go out drinking with some, and I think it's not always as straightforward as that.

Macmillan may hold the (limited and temporary) rights to your work, but they may very well publish other works while allowing the authors to continue to hold the copyright. The "monopoly" description in terms of distribution of those titles is apt.

Not that I don't think Amazon is being turd-ish here, cause they certainly are, but the digital copyright thing is a huge cluster that no one has figured out yet. I don't think Amazon pulling the Macmillan titles is any more and less out-of-bounds than what has, or will continue to, go on as these battles rage.

All's fair, and all that. But for your sake, and for the other authors, I hope it gets figured out soon.

Stacy said...

Copyright aside, MacMillan holds the publishing rights to the books it sells. Saying it holds a 'monopoly' on those titles is like saying Apple holds a monopoly on its iMacs. It implies an unfair advantage where there is none.

Rob makes a really good point regarding printed MacMillan books. If Amazon wanted to keep $15 e-books off their Kindles, fine. But they pulled ALL books from their shelves. That's not cool. And I feel sorry for the authors who will suffer because of all the people who want to now ban MacMillan. The authors have no control over this.

How much of this is hullaboo over nothing? It's my understanding that MacMillan is treating e-books in a similar fashion to the pricing of their printed books: they'll release e-books at $15 and then bring down the price over time. If you don't want to pay $15, all you have to do is wait until the price drops.

All of this makes me want the iPad more.

Jeanine said...

Copyright aside, MacMillan holds the publishing rights to the books it sells. Saying it holds a 'monopoly' on those titles is like saying Apple holds a monopoly on its iMacs. It implies an unfair advantage where there is none.

It's nothing like that at all.

iMacs are the intellectual creations of Apple Inc.
The books in Macmillian's catalog are the intellectual creations of their authors -- regardless of who holds publishing rights. Patent (object-type stuff like iMacs) vs. copyright (written stuff) are treated quite differently under U.S. law.

And there is no "unfair advantage" -- you're right -- unless you're Amazon :). Amazon can't go around Macmillan to get the "content" of those titles, so in their view that constitutes a monopoly.

It makes no sense from the traditional publishing view; it does make some sense in the newer models.

I don't argue with anyone at all who thinks Amazon's actions are obnoxious -- they are. But I think it helps authors, consumers, everyone to be a bit more realistic and about what is happening in the marketplace.

Big companies don't do anything "out of spite" or because they want to hurt authors. They do it out of some financial self-interest.

Stacy said...

I understand what you're saying, Jeanine, but copyright and intellectual property are kind of a moot point - chiefly because the people who presumably hold the copyright to the work MacMillan publishes (the authors, that is) are completely powerless to change anything in this situation. And I'm sorry, but no matter how you cut it, it's also kind of a moot point to say that a publisher has a monopoly on its own products. I was simply pointing out that Amazon was stating the obvious and implying that there is an unfair advantage where there is none.

Anonymous said...

"I can only assume that the company is operating under a business model best encapsulated as 'No, fuck YOU.'"

In my opinion, this isn't as much Amazon's business model as its motto. I have been writing books for about 20 years. In that time I have seen Amazon selling books at greater and greater discounts, squeezing profit margins for publishers, lowering authors' incomes, and putting independent booksellers out of business.

I would love to see this new Apple device or something else come along to challenge Amazon. They really are something like a monopoly.

--Peter Weverka

C. said...

Great post; thank you for the insight; I have been lamenting the draw of going electronic and figure I will eventually go that route. If I do, I will do so from a much more informed position. FYI - awfully glad that I bought your ACTUAL book 2 weeks ago; only sorry that I bought it on Amazon.

Unknown said...

This annoys me personally because Amazon is one of the best sources of American books to people who live outside the United States (and Canada, to some extent - a lot of US retailers will sell to Canada, but by no means all). Since Borders closed down in the UK, Amazon has become the only convenient retailer for American books that aren't published in the UK that I know of. Of course I'd like to deal with local, independent bookshops - but the few independent bookshops that we have left in the UK are mostly unable to order stock from the US, and it's difficult to find out about good independent bookshops that are not local to you, and indeed in a totally different continent! Besides, how many independent bookshops can afford to ship worldwide at a reasonable speed? Many of them are small and/or family-owned, and simply do not have the resources to be able to post international orders promptly.

The whole book industry in the UK is completely messed up now, which is partly Amazon's fault but also due to supermarkets undercutting the publishers' recommended retail prices. An independent bookshop simply cannot sell a £16.99 Harry Potter book for £5 and expect to be able to absorb the loss. Even our chain bookshops are suffering - we only have one nationwide chain of bookshops now, all the others closed down or amalgamated.

It's all quite worrying for people who love books.

Anonymous said...

I don't see it mentioned, but I might have missed it. I don't own a Kindle, but I can read Kindle-format books on my iTouch. I can also read the non-Kindle formatted books on my iTouch using eReader. I've been using eReader forever, and the company that created it recently sold out to Barnes & Noble.
I don't agree with what Amazon has done, but I also don't agree that a electronic book should cost the same (or more, because they don't usually drop the price when a paperback comes out)as a paper book. Surely there is a happy medium somewhere? For those of us who have no more room for bookshelves, I certainly hope so!

Fizzlemed said...

I <3 Bullying bureaucracies. And monopolies. I really hope Sony Reader and iPad pick up half as well as the Kindle. Then some stiff competition (for consumer prices as well as for author compensation) will bite Amazon square in the ass.

Anonymous said...

I hate to be the bad guy in this comment stream, but I feel the need to point out that the Amazon $9.99 model is based on the iPod 99-cent model originated by Apple. The reasons Apple is objecting/not going along with it is because a. it will hurt Amazons market position to lose that and b. the iPad is not an e-book reader, so what do they care? (its a small laptop - no digital ink folks). Back in the early 90's Barnes & Nobles came to NYC and marked all their bestsellers 40%... just long enough to drive out most of the indie competition. Then the pricing when right back up again. This reminds me of that whole debacle quite a bit.

So, personally, I don't think Amazon is being any more ridiculous than Apple was with it's 99-cent iPod pricing. I, love my kindle - but I won't be paying $15.99 for e-books/digital content that is only really usable on one platform. And I'm not sure how raising prices will benefit authors either. According to studies I've read people who have an e-reader buy just as many regular books as before. So I would think e-book sales are increasing book sales.

Robert Hudson said...

I don't think you're the bad guy. I just don't think I agree with your assessment. $9.99 is a loss leader, nothing more, designed to sell Kindles and help Amazon establish market domination. It's an unsustainable model; print production costs only account from between ten and twenty percent of the overall cost of a book. Macmillan and the other publishers understand that Amazon is creating an unrealistic expectation in the minds of consumers, one that says that the $9.99 price point is a realistic and sustainable expectation.

Ask yourself one thing. Once Amazon has established the Kindle as the iPod of ebook readers, how long do you think they'll continue losing money on ebook prices? Loss leaders will break your heart.