54 Responses so far

1. 1. Paolo on Jan 31st, 2010 at 7:18 pm

   genius.

2. 2. Steve Burnap on Jan 31st, 2010 at 7:18 pm

   Question: How do your non-Amazon ebook sales compare with your Amazon ebook sales? I’ve seen sites that claim the Kindle only has a 45% market share.

   I’m curious, because if you read the media you’d think the Kindle was the only game in town and it makes me wonder because I work for a competitor and our readers are constantly on back order.

3. 3. Murphy Jacobs on Jan 31st, 2010 at 7:19 pm

   Hee! Also hell yes!

   You’d think the PR person at Amazon could afford (and use) a dictionary, wouldn’t you? Monopoly isn’t that hard to spell.

4. 4. Joey on Jan 31st, 2010 at 7:22 pm

   Hahahahahahahaha! Love it!

5. 5. CharlesP on Jan 31st, 2010 at 7:23 pm

   While this is partially tongue in cheek… that IS how customers get companies to drop prices. I know $99 is the price point I’ve always said was when I’d consider buying into the Kindle world. For me, I can’t reasonably justify spending $200+ on a device to then be able to pay $10 a book for (because I’d rather spread my book spending money around I generally wait till they’re in paperback so I can afford to buy more books vs newer ones). So yes, the “monopoly on their titles” thing is silly, but customers stating what they’re willing to pay explicitly, or via not buying at a higher price, is how we collectively negotiate pricing with a big company in much the same way two big companies lay it out on the table and, in case of Amazon or NBC, possibly withdraw from negotiations in an effort to further their side.

6. 6. Tobias Buckell on Jan 31st, 2010 at 7:27 pm

   Charles, well yeah. But notice, I don’t own a Kindle b/c I find them expensive, and you’ve never seen me demand they drop it in price or try to attack their livelihood because of the high price.

   I just don’t buy one.

   In other words, I kept shopping at AMZN and using their services. I didn’t throw a snit fit, cancel my amazon business, because I didn’t like their pricing *over there.*

   So yeah, this is tongue in cheek, but it is to show their rhetoric as being really, really awful.

7. 7. Steve Burnap on Jan 31st, 2010 at 7:28 pm

   The root trouble is that no company is going to want to sell something for less than it costs them to make it. (Well, except game console manufacturers.) Amazon certainly can’t build a Kindle for $99, so they’re not going to sell one for that no matter how many people line up for the opportunity.

   There’s no problem with saying you won’t buy unless its cheaper…it is an issue when you start implying that the sellers are bastards are idiots for not doing so.

8. 8. Tobias Buckell on Jan 31st, 2010 at 7:30 pm

   Steve: Hell yeah, you’ve nailed it. I can’t afford an iPad, but I don’t think Apple’s an asshole anymore than Amazon is. I know first gen/early eBook devices are going to be expensive. My iPhone is my eReader unless I see something very, very compelling. Then I’ll buy. But it’s not anything personal!

   Steve: re royalties. honestly, and this is one of those ‘I wish Macmillan will get on board with the future’ sorts of things, I don’t know. My eroyalties just come in lump sum.

9. 9. Matt on Jan 31st, 2010 at 7:36 pm

   Funny stuff.

   I’ve seen a few people deconstructing the Amazon message already. Should be fun to see how many twists and turns it goes through before the end of the week.

   I’d like to see people buy other eReaders such as the Nook, iPad, Sony Reader, etc.

   There are also plenty of places to buy eBooks other than Amazon.

   http://www.drivethruscifi.com
   http://www.fictionwise.com
   http://www.lulu.com
   http://www.horrormall.com

   With a little effort consumers (and authors) could really send a message to Amazon. If the money for eBooks is going elsewhere people are going to notice.

10. 10. Kat Richardson on Jan 31st, 2010 at 7:59 pm

    *dies laughing*

    You’re so mean to that poor little Amazon, you big meanie author you. How dare you? You’re… you’re just MEAN! Nyah!

11. 11. will shetterly on Jan 31st, 2010 at 8:07 pm

    Amazon’s phrasing is curious, but they’re right: you can buy ebooks from Amazon or anyone. However, you can only buy Macmillan books from Macmillan.

    Which isn’t to defend Amazon. We’re talking about a war between corporations. If Macmillan was in publishing for the sake of authors, agents would be entirely unnecessary; If Amazon was in publishing for the sake of readers, laws about monopolies would be unnecessary also.

12. 12. Jackie Kessler on Jan 31st, 2010 at 8:25 pm

    BRILLIANT.

13. 13. Alma Alexander on Jan 31st, 2010 at 8:27 pm

    Yeah. This. I snarked at the letter a little on my own blog (particularly that “monopoly’ line… *headdesk*) but this is MUCH better. [applause]

14. 14. diane on Jan 31st, 2010 at 8:49 pm

    I’m thinking the iPad and Apple’s new digital book store will do to digital readers what the iPod and iTunes did to MP3 Players. I’m sure Jeff Bezos is quaking in his boots right now.

15. 15. CharlesP on Jan 31st, 2010 at 9:12 pm

    TB, yes, the rhetoric is really awful… though I will site again that I think this is one business team making that announcement (vs the Amazon corporate line) to the Kindle customers trying to frame it in such a way that the Kindle customers think Amazon is “fighting the good fight” for them in the same way the Macmillan CEO’s letter/advert was their corporate attempt to frame it so that they appeared to the artists that THEY were the ones “fighting the good fight” for them.

    The basic arguments between the two companies seems to have been:

    Macmillan: “You’re attacking our livelihood because you want to sell the ebooks too cheap and we won’t make enough money.”

    Amazon: “You’re attacking our livelihood because you want to sell the books in a way that will make it easier for our competition to take our market share and we won’t make any money.”

    It’s also pertinent to finish what they said after the dim monopoly line:
    “, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.”

    To me the Macmillan letter seems like it was written as he left negotiations and Amazon had said “if you won’t negotiate with us, we’ll be taking your books off our site for a time to show you how much you need us.” He called up his people, said “prepare a response for this” and sent it out. Amazon followed through on the threat and then waited for the internet to respond. The Kindle team saw this reaction online and put together this response. Macmillan’s PR was pro-active. Amazon’s was re-active.

    Again, I think it’s a poor business decision to negotiate this way, but I also see why they chose to (I don’t think they do this if the iPad is in the wild, but as it’s looming they’re making this sort of desperate move as they run out of leverage). Both sides think they’re doing something that will maximize the profit and position in they’ll make in the long run (I don’t think either is “the good guy” or “the bad guy” and I’m not surprised that a book publisher came out with better rhetoric than a book seller… one has closer access to skilled writers).

    As with political diplomacy and war, some foolish decisions are made along the way. It seems obvious to me that Amazon has never intended to stop carrying Macmillan books long term, just that they were making a statement by this (unlike the LGBT #amazonfail which was, I believe, just a screw up) and it’s a hiccup along the way toward them negotiating what their contract is going to be. This was them rolling out the big missiles from their silos and showing them to the other side of the “battle”. I’m guessing they were hoping Macmillan would come back to the table and re-negotiate more favorable terms… though you WOULD think they’d know the internet well enough by now to expect it to come down on the side of the company not strong-arming.

16. 16. Tobias Buckell on Jan 31st, 2010 at 9:18 pm

    (I don’t think either is “the good guy” or “the bad guy” and I’m not surprised that a book publisher came out with better rhetoric than a book seller… one has closer access to skilled writers).

    Dude, I agree with you totally, and I tried to stress in the initial post I made that Amazon has every right to not carry my books/do this.

    However, acting like this does have consequences. Just as I have the legal right to shout ‘fuck you’ at someone across a negotiating table, I can’t be stunned if everyone thinks its a dick move.

    My fortunes are tied in with Macmillan, ultimately I’d love for Amazon to use its leverage, to, I don’t know, get rid of DRM like Apple did, thus boosting my sales as getting rid of DRM has been proven to do. But no, this isn’t about sales, it’s a control pissing contest.

    And in the pissing contest, Amazon thought it would be okay for me to be acceptable ‘collateral damage.’

    Well, when you go nuclear, you can’t get all shocked by fallout

17. 17. Naomi Johnson on Jan 31st, 2010 at 9:19 pm

    BRAVO!

18. 18. Tom on Jan 31st, 2010 at 9:48 pm

    I have been reading the comments on the Amazon forum.

    My faith in humanity has lessened. Lets hope our future alien overlords are smarter.

    Do they really understand that they are advocating socialism by forcing fixed prices. Let Capitalism rein. If nobody buys it at $15 the price goes down. Simple economics.

19. 19. CharlesP on Jan 31st, 2010 at 10:08 pm

    Yep Tobias, they’ll be dealing with some fallout to be sure. Before I go any further, I want to thank you again for your take on this. You’ve done a great job of engaging in the discussion and seem to be forming your opinions based on the information we actually have. As personal as this is for you, you’ve taken a very good “reporter” stance.

    I’m curious how these negotiations went down, and who was involved. I’d love to have been a fly on the wall for them. Trying to read through two corporate spins is an interesting bit of puzzling. CEO of Macmillan seems to have been involved, and at least somebody from the Kindle team was involved, but I wonder if Bezos was directly involved at all or if it was negotiated at a different level of Amazon. I’m not sure how much money Macmillan makes, but Amazon and Apple both just came off of 9.5-10.5 Billion dollar quarters… one wonders how the power is actually balanced.

    Two side points/thoughts:
    1) I find internet time amusing as this has all transpired in the last 48 hours or so… If the books are back by Monday all of this will have been about Amazon not selling certain stuff for a couple of days.

    2) Incidentally I think it wasn’t Apple who used leverage to drop DRM in music… the labels dropped DRM on everybody else selling digital music, including Amazon HA!, as a means of taking away some of Apple’s control before eventually letting/having them drop DRM too. I believe there were a few bands caught in these sort of pissing matches between Apple and the Labels for a while as well.

20. 20. Rebecca Herman on Jan 31st, 2010 at 10:17 pm

    How dare they! I demand they give me a Kindle for FREE. Yes, for free! I deserve it, and I don’t want to pay. Plus, I really, really need a shiny new paperweight.

21. 21. amysue on Jan 31st, 2010 at 10:26 pm

    I find all of this really weird. I like my Kindle, it serves a (limited) purpose and it’s price point was right in that when they first came out I received one for free. I get that Macmillan wants the e-books priced higher. I get that Amazon wants them lower. What I don’t understand is does Amazon pay the same amount for them regardless of how much they are sold for and do the authors make the same amount?

    What I do think I know is that pulling all of these titles, even for a couple of days really screws the authors most and I’m not sure why Amazon is so comfortable with that.

22. 22. Jess on Jan 31st, 2010 at 10:33 pm

    *snerk*

    This is very similar to what I thought when I read that asinine statement. Except, you know, yours is funnier.

    =)

    Thanks for the laugh-and also for your breakdown post earlier.

    Jess

23. 23. Mike Brendan on Jan 31st, 2010 at 11:14 pm

    Sir, if you’re at the next Context I will buy you a beverage of your choice. Brilliant!

24. 24. Tom on Jan 31st, 2010 at 11:25 pm

    Hmm just thought of something.

    Was this all PR stunt?

    Starts Friday ends Sunday?

    If they were really sticking to their guns it would of lasted longer. 2 days is not a protest, its a whine.

    I bet it was just an excuse to let the kindle owners know the prices were going up since reports already showed Amazon was losing moolah at the $9.99 price point.

25. 25. CharlesP on Jan 31st, 2010 at 11:29 pm

    Just to throw more gas on the fire, somebody on the Kindle forums is advocating a boycott of Macmillan books: http://bit.ly/bMPPuW with the apparent reason being that one of the concessions the big 6 got from Apple was to have a minimum price on eBooks and that would make it harder for the indies to compete with the big boys by offering discounted ebooks. Supposedly this was part of what Amazon was “negotiating” against and not just the agency model. Do I buy it? Not sure… it’s plausible, should make for more internet speculation.

26. 26. Thiago on Feb 1st, 2010 at 12:05 am

    Great, Amazon folded! Good for authors, publishers and apparently, in the long run, for readers.

    Now, the question is: Will Macmillan follow through with variable pricing? If they can actually get away with 14.99 (though I don’t think they can), why should they?

    And now they get to charge 14.99 for an ebook will they please get rid of the damn DRM?

    TB: Amazon doesn’t want them to get rid of DRM. See Jeffrey Carver’s comment, added to the post.

27. 27. Mel on Feb 1st, 2010 at 12:32 am

    Well said. This is the best response I’ve seen to Amazon’s statement.

28. 28. Thiago on Feb 1st, 2010 at 1:21 am

    “TB: Amazon doesn’t want them to get rid of DRM. See Jeffrey Carver’s comment, added to the post.”

    Well, Amazon didn’t want Macmillan to set the price to their own ebooks. That seems to have changed. If publishers like Macmillan and others don’t work towards getting rid of DRM, sellers like Amazon and iBooks probably won’t either.

29. 29. CharlesP on Feb 1st, 2010 at 5:25 am

    And the NYT has something up on it now that implies the whole “agency model” was Jobs’ idea (and points out the irony): http://www.nytimes.com/2010/02/01/technology/companies/01amazonweb.html?src=twt&twt=nytimesbooks

    If true this doesn’t paint a pretty picture of the publishers business acumen (the nuclear option negotiation has already reflected poorly on Amazon). Though the drama of Steve jobs being the guy smart enough to tell the publishers how to keep from getting locked into a relationship with Amazon like the record industry had with Apple is pretty amusing.

30. 30. Jamie Grove on Feb 1st, 2010 at 7:11 am

    Brilliant!

    Frankly, this is the ONLY way to fight Amazon. Several years ago I negotiated a fairly hefty contract with Amazon in a different vertical. They are evil… how do I know this? Their own attorney told me so.

    Basically, a contract with Amazon means what Amazon says it means when they say they mean it (which often they don’t say, they just do).

    Those aren’t my words either. They were the words of the Amazon attorney while he was apologizing for wiping out five months of negotiated contract language and then trying to sneak it past me.

    Terrifying.

31. 31. Scott Marlowe on Feb 1st, 2010 at 9:00 am

    TB: “And in the pissing contest, Amazon thought it would be okay for me to be acceptable ‘collateral damage.’”

    We all have the potential to be collateral damage. It doesn’t matter what industry you work in. We’re all beholden to someone.

32. 32. Glenn Fleishman on Feb 1st, 2010 at 11:13 am

    Amazon did speak truth: Macmillan has a monopoly over its own titles — it’s a constitutional monopoly of copyright. You see the subversive idea Amazon has here from its specious standpoint: they see Macmillan as a blockade in its relationship with authors. Macmillan is the “monopoly” holding Macmillan’s authors rights ransom. Or something.

33. 33. CharlesP on Feb 1st, 2010 at 12:02 pm

    Well, I went hunting to see what other perspectives were out there (because let’s face it, MOST of the people writing about this are authors, many with a personal stake in things) and found: http://www.businessinsider.com/henry-blodget-hey-john-sargent-ceo-of-macmillan-books-screw-you-2010-1

    TB: Blodget. You mean the guy that agreed to say Amazon’s price was going to hit $400 so he could get a job analyzing and cheerleading the stock? And then got in trouble for it. You mean the disgraced former analyst. Wow, he’s not biased or anything.

    and: http://www.tbiresearch.com/amazon-caving-will-mean-short-term-profits-but-could-put-its-e-book-stronghold-at-risk-2010-2 from the technology business perspective.

    TB: Of course, as I keep saying, this is about Amazon wanting to keep its eBook dominance any way it can. I didn’t disagree with that anywhere. I just said that granting it a de facto monopoly (which its smart to try for) is most likely not good. And the way its going about it (temper tantrum), is dickish. And penalizing me for that, well, I’ll speak up about it…

34. 34. CharlesP on Feb 1st, 2010 at 12:08 pm

    Interesting side note as I checked the stock market news. Amazon’s stock is falling today, but almost all the reports are saying it’s because the caved, NOT because they pulled the books.

    TB: right, that’s a spin. If I had money I’d actually buy AMZN stock right now. I’m sure this will be adjusted, annd that Amazon will be a big player in the field for a long time to come. It’s a nice dip to buy on, and AMZN’s essentially a sound company.

35. 35. CharlesP on Feb 1st, 2010 at 1:36 pm

    I hope I wasn’t sounding like I was saying those were unbiased sources (I had forgotten much of Blodget’s history though). I was just trying to keep the discussion going with other perspectives (felt it was beneficial to see how other industries/etc are viewing it). I’m certainly not posting those because I think you’ve missed huge swaths of analysis with your bias (because I think you’ve been doing the best job of compensating for any bias when analyzing it), but more to help the rest of us onlookers keep an eye on how this is being viewed from outside the book industry.

    I guess in the interest of ‘full disclosure’ I should note I worked in an Amazon warehouse ten years ago, and even though they shut it down and layed me off (yah bubble!), I’m still a bit of a fan (I have fond memories of walking through the shelves in an 800K sq ft warehouse, ohhh the books). That said I’m a much bigger fan of books than I am of Amazon. At some points I’ve been an aspiring author (now with my productivity as it is I’d say it’s more aspiring to being an aspiring author), with friends who are authors, so my interest in this debacle is somewhat personal, and a lot of it my general curiosity at how the world does/can work.

    TB: I understand, I just thought Blodget’s article wasn’t a good ‘other side’ one considering his history (and the tone from the get go, it’s no a thoughtful comeback, it’s a hatchet piece). I’ve seen some other passing bits that are good. As I’ve tried to maintain, and people always miss this, I have nothing against Amazon trying to negotiate or even play hardball, but lashing out at the authors (with the print book delisting) is not behavior we’ve ever seen, from say B&N. According to Ed Campion, bookstores have never lashed out against the authors behind publishers like this. Which is why it’s a dick move on Amazon’s part.

    Now we all, even as corporations, occasionally make dick moves. Getting called on it, that’s part of growing up. Hopefully Amazon puts books back up for sale and business goes on. As I said, I’m an Amazon Prime member and live in the boonies. I really, really don’t want to be forced into a position where I feel obligated to not use it if they continue pulling dick moves.

36. 36. Al Jigen Billings on Feb 1st, 2010 at 2:36 pm

    You know, this kind of snark makes me want to buy your books a little less.

37. 37. James D. Macdonald on Feb 1st, 2010 at 3:03 pm

    That’s okay. This kind of snark makes me want to buy your books a little more.

    Meanwhile, I’ll get back to cleansing all links to Amazon off of all my web pages.

38. 38. Al Jigen Billings on Feb 1st, 2010 at 3:17 pm

    Whereas I’m going to go buy five books on Amazon to make up for it (oh wait, I just did).

    When someone offers books that will show up at my porch in two days or less with a decent price and also offers ebooks, I’ll consider switching away.

39. 39. CharlesP on Feb 1st, 2010 at 4:01 pm

    Fair enough TB, the Blodget piece was a bit of a hatchet job (especially when I reread it just now), thanks for calling it what it was.

    I’ve now got the image in my head, and can’t get it out, of Steve Jobs sitting in a lair stroking a white cat as he reads all these goings on… there may be a maniacal laugh once in a while as well.

    Prior to all of this I expected Apple to horn in on Amazon’s action and end up with each having about 35% of the eBook market, Nook about 10-15%, and everybody else picking up the scraps. Now I’m not sure… I figured Amazon would have more books sold per unit, but Apple would sell more units (their device does other things)… now I’m not sure.

    Of course, if: http://www.tbiresearch.com/amazon-selling-90-of-all-e-books-2010-1 is to be believed then Amazon would be even more understandable to freak out over only keeping 35% of the market, even if it is growing.

    I also think that whoever manages to negotiate a legit deal for textbooks that doesn’t just re-hash the current textbook pricing is going to own the space (because every college kid will end up with that device).

    TB: Your image of Jobs sitting in a lair stroking a white cat is cracking me up. Thank you for that. Yeah, as I said, I understand Amazon is freaking out about losing market dominance, that’s why they’re behaving so dickishly and going to the nuclear option. However, trying to *force* this, when you’re probably going to have to accept competition, is not going to engender a good response.

    Again, I really do understand Amazon’s feelings and position.

    But what they did was not cool

40. 40. Alaranth on Feb 1st, 2010 at 8:13 pm

    I live outside USA. So recently when I compared ebook readers available I chose NOT to buy a newly available international Kindle. Amazon adds $2USD to every kindle ebook (even the free ones) to deliver to the Kindle. Now I’m sure there is a reason for this, and their deal with AT&T international – but it encouraged me exercise my consumer right not to form an ongoing lengthy relationship controlled by Amazon.

    BTW I read paper books, listen to them & buy ebook – but boycott hardcover

41. 41. CharlesP on Feb 2nd, 2010 at 10:06 am

    Am I the only one noticing that Amazon only said “ultimately, however, we will have to capitulate and accept Macmillan’s terms”… meaning they WILL capitulate, and not that they HAVE capitulated and accepted their terms… cause those books are still not “Buy”-able on Amazon. They may have blinked, but I don’t think they’re done negotiating with Macmillan just yet.

    Writer Beware has a nice round-up of the action thusfar:
    http://accrispin.blogspot.com/2010/02/dispatches-from-ebook-wars-macmillan-vs.html

    (and an interesting link at the end of that to another take on it BTW)

42. 42. Chris on Feb 2nd, 2010 at 1:10 pm

    You are my hero!

    Pure genius at work here.

43. 43. KingTaco on Feb 2nd, 2010 at 1:12 pm

    Now the main ‘Amazon is a dick’ argument seems to center around how they pulled all Macmillan titles, physical and digital. ‘Traditional booksellers never did that!’. However, Amazon isn’t a traditional book seller, it’s a massive internet distribution business. Books are a commodity to them, same as any other. In business big middle-men will ’suspend’ sales of items from manufactures as short-lived negotiation tactics. I’ve seen it first-hand from my time in sales with companies like Grangier, Uline, etc. There’s an attitude, much from the blogging authors, that somehow books are ‘different’, and are owed some set of different rules. Amazon didn’t set out to personally screw any authors, they have a supplier playing hard-ball with them so they temporarily de-listed their (Macmillan’s) products.

    You can certainly argue the PR success (or lack of) of that move, but it is not some unheard of business maneuver. It’s just something most people don’t see if they don’t work in a distribution-centered environment. That get’s to the heart of what this post, like other author sentiments, seem to be displaying. What Amazon is doing is ‘personal’, while what Macmillan, Apple, and authors are doing is ‘just business’. That Macmillan wants to play hard-ball to keep it’s traditional spot in the business model (which is most favorable to authors in the current climate) is ‘just business’. That Apple, who are old hands at seeking market control, seeks to team up with a supplier/producer to hurt their biggest distribution competitor, is ‘just business’. That authors want to take to the blog and whip up their fanbase with de-linking and talk of Monopolies, DRM, etc., is ‘just business’. That Amazon takes a hard-line in defending it’s business model, well shoot, now that’s ‘personal’.

    As said before, if I was a Macmillan/Tor author I darn well would be on Macmillan’s boat too. However, I do think some author arguments are based on more than a little self-interested-ness as to what’s ‘just business’ and what’s ‘a dick move’ here. As a customer, I’d like it if the ‘winning’ business model was a great shake for authors and customers, but admittedly self-interestedly I’ll settle for what’s good for my wallet. I’d expect authors to do the same. In this case, I’d be more happy as an author than a customer with Macmillan-Apples win. Macmillan represents the traditional book-selling model, and it’s not like that was aces before e-boooks came along. Apple doesn’t even need a great showing in e-books to ‘win’, from a company perspective. Apple has many forms of entertainment for sale, Amazon’s Kindle is dedicated to books. If Apple can peel (no pun intended) a big enough % of business away from Amazon’s ebook model, Amazon may pull it to focus on their core business. Apple doesn’t need to be a great ebook seller to do that, just god enough to wreck Amazon’s planned margins. Then Apple has the field. I’m not sure where any of that relates to better pricing options for the customer.

44. 44. Gene Callahan on Feb 2nd, 2010 at 4:45 pm

    “Macmillan has a monopoly on their own titles? That’s like saying Amazon has a monopoly on Kindles.

    “Of fucking course. They make Kindles.”

    Do you really not understand that there is a huge difference between having a “monopoly” on selling a hammer you made, and having a special, legally backed monopoly saying that you have an exclusive right to sell hammers?

    TB: Do you really not understand what the word monopoly means? I bet you haven’t. Here’s the wikipedia definition:

    In economics, a monopoly (from Greek monos / μονος (alone or single) + polein / πωλειν (to sell)) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.[1][clarification needed] Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.[2] The verb “monopolize” refers to the process by which a firm gains persistently greater market share than what is expected under perfect competition.

45. 45. Gene Callahan on Feb 2nd, 2010 at 4:52 pm

    Oh, and the other other thing represented very inaccurately here is that Amazon did not try to tell Macmillan how much to charge for their product. They were resisting having Macmillan tell Amazon how much it could charge, after Macmillan had charged Amazon whatever it wanted to. You can charge me anything you want for a hammer you make — say $10. But then I can sell it to someone else for $8, and that’s none of your business.

    TB: Incorrect, Amazon says Macmillan can not charge higher than $9.99 if Amazon goes to using the agency system, which Amazon would prefer (more profit in it for Amazon), and that Macmillan could also not sell anything electronic anywhere else for higher than $9.99. Macmillan says $14.99, or stick with the old system where Amazon chooses any price, but doesn’t get access to new titles.

    In your example, this would be like Amazon telling me I could sell a hammer via their store, but only if I didn’t sell it for higher than $5, and I couldn’t sell it anywhere else in the world for above $5.

46. 46. Gene Callahan on Feb 2nd, 2010 at 5:03 pm

    “Do you really not understand what the word monopoly means?”

    Yes, my friend, I’ve published a book on economics and a dozen or so academic papers in the subject, and now teach it at the university level. If I make a hammer, I have a “monopoly” over selling that hammer because it is a physical good I clearly own. But copyright law — whether just or unjust is beside the point here — creates a new and very different sort of property exclusion. Basically, by putting certain words on paper you (or your publisher) own with ink you (or your publisher) own, you know get a legal injunction to stop me from putting the same words on my paper with my ink. Copyright gives authors (publishers) a right to control what other people can print (record, etc.) on their own property (at least if they intend to later sell it).

    Now, there are arguments for and against the justice of intellectual property laws, but it is absolutely clear that there had to be special laws made to create this special and quite different sort of property (which didn’t exist for most of human history — anyone who wanted to could make his own copy of Aristotle’s Politics or Dante’s Inferno, even the day it was published, and sell it), and it is just a confusion to equate it with the right to sell an Oreo you made.

    TB: Amazon has 70-85% of the eBook market.

    Through subsidizing the cost of the eBooks.

    Is that, or is that, not a monopoly? Yes/no?

47. 47. KingTaco on Feb 2nd, 2010 at 5:29 pm

    “TB: Incorrect, Amazon says Macmillan can not charge higher than $9.99 if Amazon goes to using the agency system, which Amazon would prefer (more profit in it for Amazon), and that Macmillan could also not sell anything electronic anywhere else for higher than $9.99. Macmillan says $14.99, or stick with the old system where Amazon chooses any price, but doesn’t get access to new titles.”

    Hang on for a hot minute here. Not rooting for either side, but there’s a bit of slant to this. From how the story is being reported (http://paidcontent.org/article/419-in-amazon-vs.-macmillan-amazon-is-the-winner/), Macmillan, acting first, made the demand to Amazon that they wanted to go to agency-style pricing and dictate retail price. Amazon could stick with it’s current wholesale rate, but Macmillan would impose lengthy ‘windowing’ on it’s new releases for ebooks. Amazon fought that, and lost. In what I’ve quoted you’re almost making it seem as if Amazon came up with the scheme, and asked for agency fees plus control from Macmillan first.

    It’s not exactly kosher to blame Amazon for first resisting ‘dynamic pricing’ as you state in your earlier post, and now also blame them for secretly wanted agency-style fees to increase their profitability (which is a more iffy argument to make, seeing as how Amazon publicly fought it). They (Amazon) can’t have backed two mutually exclusive pricing schemes. Did Amazon want to simply continue their existing wholesale discount/$9.99 loss-leader(with 6 month ‘windows’ on new releases being a ‘nuclear option’ put over them by Macmillan), or did they want the agency-fee’s. It can’t have been both.

48. 48. Gene Callahan on Feb 2nd, 2010 at 5:45 pm

    “Is that, or is that, not a monopoly? Yes/no?”

    Surely, Amazon has a Kindle monopoly of the very same kind Macmillan has over its titles, one due to intellectual property laws. (Otherwise, people would just reverse engineer the Kindle and sell and equivalent device for less.) My beef was not with that contention, but with the “Of fucking course. They make Kindles.”

    That is not what gives them the monopoly. It is IP. The fact that Joe makes matches will not give him a match monopoly, because anyone else can produce an identical product. No one is allowed to produce something identical to the Kindle (using all of their own property!) and sell it. Creating a match does not give you ownership of the match market, by creating Ulysses gives you ownership of the Ulysses market.

    That’s a special circumstance created by IP law, and should be recognized for what it is

49. 49. Tobias Buckell on Feb 2nd, 2010 at 5:52 pm

    Gene, oh, I understand your confusion. This blog post up there, was a parody, in other words use of humor, of Amazon’s statement that ‘Macmillan has a monopoly on the books it makes.’ And my reply was that ‘well yeah.’ You’re very right, Amazon.com has a monopoly on Kindles, it’s a legal monopoly because it has the patent. I understand that.

    But in its PR statement, Amazon claimed that “Macmillan has a monopoly on the books it produces” and says it in a way that implies that Macmillan is wrong for having a monopoly on something it creates. Which is a ridiculous statement. Of course you have a monopoly on something you make. Both Amazon.com and Macmillan, by defenition, have monopolies of their manufactured products.

    So for Amazon to say “Macmillan has a monopoly on Macmillan books, and we’re trying to break that for the customer” is as ridiculous as me saying “Amazon has a monopoly on Amazon Kindles.”

    This blog post was parody.

    I could just as easily start a campaign: Toyota has a monopoly on Prius’.

    You understand where that blog post is coming from now?

50. 50. Gene Callahan on Feb 2nd, 2010 at 6:08 pm

    Yes, Tobias, but understand where my objection was coming from: I have quite a few friends who are fierce opponents of IP, and while they haven’t totally sold me on their position (I do think current patent law is way overdone), they have made me aware that IP is quite a different bird than ordinary property, and that owning an Oreo because you made it is very different than owning the market for Kindles because you made one of them.

51. 51. Tobias Buckell on Feb 2nd, 2010 at 6:19 pm

    Gene, and I agree with you, which is why I apologize for misreading you and responding the way I did upstream in a blog post. In this case, I understand what you were saying, and you are thinking I don’t understand the different between IP and between physical monopoly, when I do, and you did it in a lecturing tone. Normally that wouldn’t frag me, I’d just say, easy, but with 100 other people jumping down my throat and calling me an idiot, I’m a bit oversensitive and tired today.

    Do you think Macmillan shouldn’t have a ‘monopoly on their own titles?’

52. 52. CharlesP on Feb 3rd, 2010 at 8:31 am

    Tobias,

    I was debating which thread to post this in… but I’d love to hear your take (maybe in that ebook numbers piece you’re working on?) on Konrath’s post on this:
    http://jakonrath.blogspot.com/2010/01/selling-paper.html

    If you haven’t read it, I think it’s worth it, but my take-away was basically: “Ignoring the dick move by Amazon, Macmillan is making a fundamental business decision that isn’t going to work long term. They’re trying to bring a paper pricing structure/logic to a digital world and it’s, eventually, not going to work.” Granted, I think the main piece of the equation Konrath is leaving out is the trouble in integrating the business models of paper and digital.

    I like this sort of analysis because, at this point, and with our level of “power”, it makes as much sense to think about what is a better strategy for both players (or the industry as a whole) as it does to continue to discuss/think about the ethical implications of their decisions.

    I may have gotten some numbers wrong here, so correct me if I’m making any incorrect assumptions (let’s face it everybody has been throwing numbers around so much the last few days it’s easy for a not-so-bright-as-all-that guy like myself to get confusedededed). If Amazon is paying 50% of HC list price for eBook and selling it at a loss… isn’t the publisher making about the same amount on that book as they would if it was a HC sale? (I’m forgetting some of my publishing 101 info, but I thought the HC wholesale price was approximately 1/2 the list price). I understand there is some concern that the $9.99 Kindle editions will cannibalize the HC sales, but if the publisher is making the same amount either way it would seem the big part of the publisher’s concern is is either that A) they don’t have as favorable deals with the authors on e-versions? or B) that they’re going to be less and less able to accurately judge what the print runs will need to be as those are fixed costs once they’re done.

    I don’t see how it would just be a “we want to set our prices” thing when they don’t do that with dead-tree books now because it is a rare time when a retailer doesn’t shave out of their profit-above-wholesale to offer at least a subset of their items at a discount (that’s why it’s an MSRP, not an MRP right?). Or did Evil Mr Jobs convince them of this plan in an effort to wrest control from Amazon and then put himself in position to have authors go direct to Apple like programmers are doing with the app store? (I’m not going to let this Evil Steve Jobs concept die… and there MUST be a cat!)

    Bit of a digression here (and a lot of parentheticals), but there is a point. One of the things I’ve suggested in the past is something like the movie industry is doing with Blu-Ray discs that come with a DVD disc and a digital copy… basically selling to the customer, at a small premium, access to the media in whatever format they want to consume it. I don’t own an HDTV, but when my old DVD player died and I found a cheap Blu-Ray player I bought it and hooked it up to my old standard def TV… and gradually have added Blu-Ray discs to our family collection of movies. I will spend the few bucks extra to have a Blu-Ray/Dvd/Digital copy of something like Up & Coraline so when we DO upgrade to an HDTV we’ll have content that we can appreciate on the new hardware (but still take the DVD and play it in the car on a long road trip, or maybe on an iPod for the kids to watch in the Dr’s office). To that end, if Amazon/B&N/Somebody started selling Special Edition hard cover books for a $3-4 premium that had a digital copy available (maybe that I could read on my computer screen right away and use on a Kindle when I got one) I would be inclined to start buying those instead (hell I think I already did that with something I bought last year for research and paid an extra $2 for an onscreen version).

    Amazon is trying to hold on to their dominance in the market.
    Macmillan is trying to hold on to their control in the market.
    Authors just want to have readers and be able to feed the cat (their cat, or a metaphorical one that might be a kid… not Steve Jobs’ cat).
    Steve Jobs just expects you to die Mr. Bond.

53. 53. houseboatonstyx on Feb 3rd, 2010 at 11:59 am

    Imo the most serious misbehavior is Amazon’s being ‘economical with the truth’ — giving the impression that Macmillan wants to ‘raise prices.’ In fact Macmillan wants a sliding scale with the low end at $5.99. Only the most recent books would be higher than $9.99.

    If Macmillan applies this to their whole backlist, it might mean overall a reduction in average price.

54. 54. Thiago on Feb 3rd, 2010 at 2:24 pm

    @ 53

    While I agree Amazon was “economical with the truth” in its message, the fact is Macmillan’s track record in lowering ebook prices is pretty bad. Fictionwise, which works with an agency model similar to the one Macmillan is trying to get Amazon to work with, has several ebooks priced higher than their respective paperback editions

    I don’t mean Macmillan will never drop ebook prices over time, but so far they haven’t been very concerned about it.

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