“In a fight over the price of electronic books, Amazon.com has blinked,” Brad Stone and Motoko Rich report for The New York Times.
“On Friday, Amazon.com shocked the publishing world when it pulled both the digital and physical books of Macmillan, the large international publisher, after Macmillan said it planned to begin setting higher prices for its e-books,” Stone and Rich report. “Until now, Amazon has been setting e-book prices itself, and has established $9.99 as the common price for new releases and best-sellers.”
Stone and Rich report, “But in a message to its customers posted to its Web site on Sunday afternoon, Amazon said that while it strongly disagreed with Macmillan’s stance, it would concede to the publisher.”
Full article here.
[Thanks to MacDailyNews Reader “dd for the heads up.]
I bet “contract law” and customer complains had something to do with that.
Let’s hope this means a bigger cut for the author, not just the publisher.
Only a matter of time before other publishers follow like dominoes.
Thanks a lot, Steve. Gave Macmillan just the leverage they needed. You’ve raised the price of ebooks from $9.99 to $14.99.
It was a mixup on the name. They thought “Macmillan” was owned by Apple.
@R2 and @BlackWolf, as an author, who gets paid based on wholesale pricing (ie the price distributors pay the publisher), this is good news: making prices lower means authors get less too. So while most of this markup will go to publishers, us authors will be helped out too, which is a good thing (at least from my perspective!)
I’m sad that we will see wbook prices rise also, but many of the cooler heads and rational minds here showed me the error in my thinking. I just hope authors see additional money and that it all doesn’t go to publishers and Apple.
Yup, this time Steve screwed us over. It’s a reminder: we love their products, but they’re still a corporation and nothing more. It was easy to love them when they were the underdog, but not any more.
@ John
What percent of the retail price does the author receive ?
WTF?!! $15 for a non-physical product with no manufacturing or packaging overhead? I’ll pass!
One wonders if R2 ever tires, due to his irrational hatred of Steve Jobs, of being wrong?
Only time (and dozens of ridiculous posts, I’m certain) will tell!
I have to say, one of the things I like about MDN is its intellectual honesty. Sure it loves Apple products, but when Apple does something not it keeping with the brand promise, it calls it our, e.g., crazy App Store approval process.
So, let’s be honest here. When Apple flexed its muscle in resisting the music / movie industry’s desire to take away choice and raise prices, we all cheered. We railed against those media houses as greedy and not customer-centric.
Now, because Amazon is the industry leader in e-books and Apple has entered the market, we should not throw our principles into the trash heap.
Amazon was putting downward pressure on e-book pricing and that was a good thing for consumers. With a bit of solidarity on this point Amazon and Apple could still have healthy competition, but also could have forced some concessions from the industry, such as deeply discounted e-book versions when a physical book is purchased. Also, for everyone’s clamoring to climb aboard the green biodiesel driven bandwagon, it seems insane to charge the same price for a clean zero C02 footprint product that has no packaging and little distribution overhead as one does for a physical book.
You know…books…made out of paper, from trees, that consume C02 and shelter cute little rain forest creatures. Well, it’s not like they are cut down by petro-driven heavy equipment or anything…oh wait….never mind.
Hey, iMaki — do us a favor and do just that . . . PASS! Please!!!
Man, all these posts on the web about this issue, and I’d be willing to wager that 95 out of every 100 of them are from NON-CREATIVES!
In other words, idiot douchebag fools who’ve grown up in the last 10-15 years expecting anything that can be “downloaded” to be attainable for free or next to nothing.
Who the hell cares what you think? If you don’t like the price, then DON’T BUY IT! Jagoffs who think that something like a book should be priced based only on pagecount (“Well, uhhh, gee, if dat over dere is a 700 page book and dis over heer is a 200 page book, uhhh, how comes dis 200 pager is a couple dollars more?”) make me puke. Gee, maybe you ever stop to think that the 200 page book HAS MORE VALUE or is BETTER WRITTEN or is from a MORE RESPECTED AUTHOR or is simply VALUED MORE HIGHLY BY MORE PEOPLE and THAT’S why it might cost more?
In other words, for all you dolts out there who’ve NEVER CREATED A THING but only CONSUME STUFF, there’s actually this concept called WORK that goes into CREATING something out of thin air — something that DIDN’T EXIST BEFORE!!! Just because it can be translated to 1’s and 0’s doesn’t mean it should be free or priced only according to size or pagecount.
Authors get screwed by publishers, and Amazon was, in turn, screwing the publishers — which washes down to SCREW the authors. Why is it a bad thing for different ebooks to be priced differently depending on their perceived value? And yes, sometimes an ebook could EASILY be a higher price than its physical counterpart — depending on features and other things.
Apple is not the bad guy in this. Apple is driving the creation of a whole new market for interactive publishing and in the process forcing Amazon to play straight in the near-term. Win-Win.
The actual hard cost for a printed book (hardcover) is very cheap.
Less than a buck.
I posted it in the earlier thread, but Amazon, until a week ago, gave publishers roughly $3.15 on a $9 ebook. Amazon got the rest!!!
The author got about 80 cents of the $3.15, so, the breakdown is roughly:
$8.99 ebook
$5.84 to Amazon
$2.35 to Publisher
$0.80 to author
As you can see, until Amazon upped the split so that the publisher gets roughly 70%, to match Apple’s split, they were raping the authors and publishers. They sell the Kindle near-cost and try to make it up in books.
I want to see the price of ebooks come down, and I believe they will, but the majority of money should go to the authors, not the publisher or distributor.
The criticism of Amazon is about the fact that they have been subsidizing the cost of the Kindle on the backs of authors and publishers. They have been acting like the music labels which everyone hates, and they aren’t even the publisher but the distributor.
Their distribution cost is 6 CENTS! And somehow, until last week they were getting almost $6 a book. That’s why I was opposed to Amazon. I wanted a Kindle, but if they are making $6 a book, then the Kindle should be free.
@ iMaki – 10:01 pm
$15 for a non-physical product with no manufacturing or packaging overhead?
There’s covert art, editing, proofreading, etc. even for entirely digital books.
This seems like bad news to me. Amazon and Apple should have held the line at $9.99.
This is very similar to the iTunes story. The music industry tried to foist overpriced download stores on consumers, charging in the neighborhood of $3-4. Epic FAIL. iTunes pricing was in line with what consumers wanted to pay. Apple is still fighting this battle with video content providers and it can be argued that the prices have stunted sales of shows and movies via iTunes.
I do not know the publishing industry very well or know much about prices. However, some friends that are avid readers have told me that the higher prices would dissuade them from buying – to them $9.99 was even at the upper end of what they would spend on an ebook.
Yes, there is a gain for everyone in per unit sales with higher prices. However, the real money will be made by the medium being adopted by more people. I don’t know that the prices the Macmillan is suggesting are actually at or over whatever sweet spot book consumers have. However, the smart thing to do would be to price books to encourage people to adopt ebooks sooner rather than later.
@Giles
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If it’s covert art, can you still appreciate it?
Keeping music prices low (99 cent model) boosted sales of iPods and gave Apple a preeminent position in music distribution. In other words, it benefited Apple to keep the price low. But Apple also took a much smaller cut (30%) of the revenue in exchange for the massive profits from sales of iPods.
Breaking Amazon’s ebook pricing model *also* benefits Apple. The massive reduction in Amazon’s cut means that even at the higher price Amazon is not making as much money per ebook. In addition, Amazon is not selling boatloads of Kindles at the current price points and there will soon be an iPad 16GB available for $499. So the price of the Kindle will likely drop along with sales of ebooks at the higher price points due to price elasticity of demand. So Amazon loses…and loses again.
Apple’s iPad is not just an ebook reader. It is a multifunction device that can link into multiple revenue streams (e.g., advertising, App Store, iTunes, etc.) other than ebooks. Apple will sell ten times as many iPads this year as Amazon does Kindles, and the iPad will even more consumers to consider purchasing Apple hardware such as Macbooks and iMacs. So Apple wins…and wins again.
Game, set, match. Apple. You are welcome to iCal that. Given Apple’s amazing success over the past decade, I have great confidence that their audacious plans will continue to bear fruit (pun intended).
One more thing – the iPad’s color display and video capabilities will offer a great deal more value than the Kindle. If someone does decide to spring $15 for an ebook (or even $10), do you want the black-and-white version with no pictures? Or do you want the fully interactive version with video links and author’s notes, etc.?
It’s the difference between a video CD and an 8-track tape. Apple evolved the technology to field a worthy tablet computer with their iPod experience, their work with P.A. Semi, the wifi and 3G connectivity strategy developed for the iPhone, and the miniaturization and packaging of the Macbook Air. This won’t be another Newton – brilliant in its conception, but just a little too far ahead of current technology to have wide appeal. This is the real thing, just like the iPod and the iPhone. And the AppleTV will follow, in its time, as the media issues are worked out.
@ King Mel – 11:23 pm
Your Majesty,
Let’s say Covert art is the illustration we see on espionage books.
“The criticism of Amazon is about the fact that they have been subsidizing the cost of the Kindle on the backs of authors and publishers. They have been acting like the music labels which everyone hates, and they aren’t even the publisher but the distributor. “
KenC
This is the bottom line to all who really care to have a say.
Get it???!
@BlackWolf:
Dream on.
What an impressive display of intestinal fortitude, Amazon!
Ain’t it grand how we live in a society where most people expect to pay next to nix for Books & Music. Get real folks!
Certainly the cut going to writers & musicians is debatable but is $14 too much to pay for a book? I don’t think so.
MDN word: “amount” – says it all!
Macmillan’s “plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99.”
From other sources today: eBooks $14.99 when the hardcover is released, less when the paperback is released and for older books.
The publishers want even more variability in their prices. Say $14.99 for eBooks when the hardcover is released and $9.99 when the paperback is released. If the $14.99 eBook doesn’t sell well, it may see a number of price reductions before the paperback-released eBook rate of $9.99 goes into effect. Down to $5.99 for old/out of print books.
This looks like the book version of the variable pricing Apple has for tunes.
It can be somewhat misleading thinking about what someone makes from a per unit sale, it is possible for an author to make more money if his books are selling for $10 each than at $15 each. It is quite possible to sell twice as many books at $10 because that price is low enough to be an impulse buy where at $15 the consumer is more inclined to weigh the value or necessity of that purchase. If you are only making $1 per unit but selling millions of units you might be pretty happy with the results.
This will be a lot different than the iPod/iTunes/Music label model. Initially, the music download industry had no prior model on which to be based. Now that Apple has matured and perfected(?) the music download industry they have turned their attention to the book and advertising industry.
I believe that instead of raising prices on books in the future (as Apple let happen with music) and foregoing the initial price adjustment what we will really see is future price reductions in the ebook industry.
Once the iPad becomes widespread and penetrating many market segments, Apple will begin to reduce ebook prices. Several factors will enable this. The biggest factor will be competition, as Apple’s slice of the pie grows it will force pressure on Amazon and Google to reduce their profits. Apple profits from both the ebook and the reader. Amazon’s Kindle is soon to be history if they can’t change drastically and I don’t think Amazon has the DNA for the hardware like Apple does. Give it several years, I bet Apple announces a price reduction.
Second, associated purchases will let Apple profit additionally (via ads and advertising-re Quattro Wireless) via ebook elinks.
That is not all, think music videos, movies, TV shows. And the list really begins to grow. Add in Apple Publishing (direct to web writing/sales), Apple Music -they will have to buy the Apple label though.
Currently, I own Macs, iPhones, iPod Touches (kids) and use them at home and work (also PCs, but trying to weed them out.) Prior to the iPad, I am not that much an electronic consumer of books or movies although I do purchase music via iTunes. However, I do see myself purchasing more books and movies online for consumption with an iPad.
Finally, per Steve’s comment about the intersection of technology and liberal arts. We are on the cusp of really, finally entering the digital age. You ain’t seen nuthin’ yet.
@simple: That actually makes sense; cutting edge folks will spring for the full $16, just like the folks that rush out & buy hardcovers, while others wait for the paperback or for the book to hit the bargain price tables.
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@DRMSSDB
There are many “don’t knows” in your post. When you “don’t know” then “don’t post” – then you’ll avoid letting everyone else know that you “don’t know” what you are talking about…
@theloniousMac
Apple takes 30%, as they do for music.
@Creatives Deserve to be Compensated
Right on mate!
Independent musicians can sell their music on iTunes and reap 70% of the revenue. Independent film-makers can, with some wiggling, get their films onto iTunes and reap 50% of the revenue. It won’t be long before authors get their books onto Apple’s bookstore.
Apple is not targeting the creatives – Apple is changing the way creative people bring their products to market, and increasing their share of the revenue. Note, however, that listing your song, film or book is one thing – marketing it so that people hear about it and actually buy it is something else. That is the job of the publishers – who still have a place in the new e-world….
…it’s just that they are now a lot more accountable…
Apple, of course, has not been in the book distribution business.
I think it was a brilliant move to offer increased prices and splits to publishers to get them on board.
The marketplace and competition will ultimately dictate the prices.
In addition it wouldn’t surprise me if Apple opened up their ebook store to authors directly.
In that case many authors could choose to get one master put together and self publish. They may not be in book stores but being in the Apple book store may do for ebooks what I tunes does for music.
It could operate on the same principle as app developers. A successful private author could make a nice living from just the Apple bookstore with no publishing costs other than producing the master. This could explode e-publishing by individuals.
Did I mention that the iPad wil be big? Really big.
Producing a e book is much simpler than making a recording. With a Mac and the iTunes Store, I wonder why an author still need the middle man.
This looks like Apple did not want another long running big fight on its hands, so settled generously with the publishers rather than risk missing the boat and letting a competitor steal a march.
That Amazon are now flexible proves the worth of Apples strategy before a single iPad or eBook is sold. Amazon know who is going to be king of the ebook market and it wont be Kindle.
Tick-tock, I just want to get mine ordered and in my hands.
Apple is letting the publishers set the price of books jus like it let’s app developers set the price of apps. And it forced Amazon to abandon it’s ridiculous split where it kept most of the profit. I see nothing wrong with that.
@ iMaki, R2 and dalix
I’ve got a driveway that needs the snow shoveled.
Stop by and shovel it for for me for free.
Oh OK, I’ll pay ya 99¢.
I haven’t paid much attention to the ebook phenom. Someone posting above, under the name “simple”, mentioned out of print pricing. Have books that were previously out of print been resuscitated as ebooks? That would be a welcome bonus to this current shift to digital readers.
@all the people who think they know how e-publishing works:
Please, please, please STFU. Even if it is the comment section of a blog, It’s embarrassing.
Mea culpa:
Regarding the Kindle, I wrote “…do you want the black-and-white version with no pictures?”
That is incorrect. I should have said “do you want a grayscale display that updates at a slow rate?”
The Kindle can display graphics.
Macmillan does not Need Amazon.
If Macmillan’s books were only available on the iPad, that would only hurt the Kindle, which Amazon has only sold a couple of million. Apple will sell that many iPads in the first few months.
You could still buy Macmillan books On Amazon, just not From Amazon.
I believe that Amazon actually pays around 14.99 now for ebooks and takes a 4.00 loss on the 9.99 sales. I like the lower cost to me, but losing that much on each sale is not sustainable.
jax44
My problem with paying $15 for an ebook is that whereas when I purchase a physical book I actually ‘own’ something (if only the physical medium), when I buy an ebook I own nothing – I am merely ‘renting’ the right to access the content. It is inevitably a temporary thing – whether the DRM on the product sets a time limit, or the ability to access the media goes out of style/availability; whether my hard drive crashes or whether my copy ‘in the cloud’ suddenly disappears when Company X goes out of business. I have paperback books today purchased decades ago that I can still enjoy (or give away, for that matter). I seriously doubt that decades from now the ebook I paid $15 for is still going to be accessible.
And if I’m merely renting the right to access something, why pretend I’m actually ‘buying’ something, something to own? With DRM, as I’ve mentioned above, I don’t ‘own’ anything.
While I agree that whoever created the content should get a ‘fair share’ of the profit, why must the profit be so high for something I’m only renting?
Wow! What a stunning lack of confidence in free market capitalism is going on here. From what I’ve read, Amazon is taking a loss of around $5 a book on the bestsellers it’s pricing at $9.99, with the difference going to the publishers. They’re basically using the bestsellers as loss leaders to both sell Kindles and propagate the ebook format.
The publishers’ objections to this, as far as I can tell, isn’t what they’ve been receiving under the Amazon regime so much as it is that they don’t want the $9.99 price to become established as a ceiling for ebooks. Under their agreements with Apple, the price of bestsellers will fluctuate — more upon release, less over time — and eventually achieve a decent equilibrium. But the key point is that it will be the publishers — whose goods are being sold — who will make those decision and deal with the market forces. As it should be.
Of course, most authors — except mega-sellers with clout — will get screwed under any pricing regime, but even more so if written intellectual property becomes permanently devalued, as it arguably is with Amazon.
Correction: I should’ve said that one of Amazon’s objectives is to establish its *proprietary* ebook format.
I agree with “Creatives Deserve to be Compensated”
It’s also unfair to compare the music pricing with books. Books have always cost more than music records. Most professional musicians make their bread and butter from live performances; the records provide income, but are mostly promotional material. Authors can’t sell our 100,000 seat stadiums to fans wanting to hear them read aloud. Books typically take longer to both write and consume than does a song. You can wake up late and still bang out a hit single before lunch if your semi-talented.
A song is a snack. A book is a meal. Most new hardcover releases are between $25 and $40. It sounds like $14-$15 is already a pretty heavy discount for the electronic version.
How long before we see authors SELF PUBLISH at half the price or less. Cutting out the middle men and sell direct. I could see that become a VERY attractive option for some authors.
Me? I always wait for the paperback and I always wait for it to go on sale. Screw anything over $8 for a physical copy and forget anything over $3 for a eCopy that I can’t loan out to a family member or friend or recycle after I’ve read it once.
There’ as many books in the world as songs, why should they cost anymore. At least a song you generally listen to over and over again. Why should eBooks be a substantially different pricing model than music?
$.99 per 5 min. song = $12 / hour. That’s reasonable.
“The actual hard cost for a printed book (hardcover) is very cheap.
Less than a buck.”
What volumes are you talking about? I spent 30 years as a technical writer, and besides printing costs being very dependent on order volume, we wouldn’t see prices anywhere near the $1/ea range cost to us for anything larger than a very slim document, folded once and stapled, and large print runs.
On the other hand, $15/ea is a lot more than it would cost to print; I’m seeing about $8/ea + $.02 per page for hardcover, no jacket. Paperback saddle stitched or perfect bound around $2+. You’ll get lower prices on much larger volumes, but except for best-seller fiction, it doesn’t pay to print too many at a time, what with warehousing and related costs.
Which explains in part why print on demand is so popular; it’s not that you save a huge amount on direct print costs, you don’t get mauled by overhead.
Everybody got hammered in the mid-90s by printing costs going through the roof, they haven’t come down *that* much since.