wanted: professional negotiator

May 5, 2010

apparently a hall monitor is no longer sufficient.  with the introduction of the iPad into the ebook market, the pricing war and debate has escalated to a whole new level.

publishers were gleeful at Apple’s entry into the ebook market despite Steve Jobs’ declaration a couple of years ago in response to the Kindle that “people don’t read anymore.”  they hoped to use the competition as leverage with Macmillan’s John Sargent leading the way, insisting that Amazon follow their rules or they’d withdraw their ebooks from Amazon.  a brief tussle ensued, but was ultimately resolved.

Apple negotiated with 5 of the big 6 publishers (Random House as the holdout) an agency model pricing structure which means that the publishers set the price with the retailers making a commission off the established price.  Amazon has operated under the retail model:  publishers sell to retailers who then establish their own price (Amazon has a fondness for $9.99) when selling to consumers, sometimes at a loss.  this has not pleased publishers, but Amazon is fighting back.

Exhibit A (via GalleyCat)

Exhibit B (via Dear Author)

Amazon is now selling some new Penguin hardcovers at a reduced price of $9.99.  there is speculation that this move (ya think?!) is pay-back for Penguin withholding ebook versions of their titles from Amazon when pricing negotiations failed (via Dear Author).

the deal with Apple appeared initially to be a win for publishers, but some are questioning that notion.  in a very thorough New Yorker article (is there any other kind?), Ken Auletta summarizes the ebook dramatics, players, and implications  in “Publish or Perish.”

But in the long term Apple and Google will not necessarily be better partners than Amazon. One day, they, too, will complain about the cumbersome publishing process, or excessive prices. Just days before the iPad went on sale, on April 3rd, there were rumors that Apple might list best-sellers for as little as $9.99. Apple agreed to the agency model for just one year, and, as publishers are acutely aware, Jobs has a history, with music and television companies, of fighting to reduce prices.

if you’d like to geek out further, Auletta was interviewed on “Fresh Air” which covers some of the same material (via Shelf Awareness).

Rich Aden over at TeleRead (via Dear Author) outlines several drawbacks of the ebook agency model:  publishers have burned their Amazon bridges; in forcing retailers across the board to adopt the agency model, publishers can’t evaluate its success (or failure) as compared to the wholesale model; and iPad users may not be ebook readers.

The big 5 have declared war on me (and like-minded ebookers) with agency model pricing and aligning themselves with the iBookstore. This may well be their Waterloo, yet it is a battle the publishers cannot afford to lose. If the iBookstore’s sales numbers do not at least meet the sales numbers of the wholesale model, publishers will have won the battle (imposition of the agency model) but lost the war (decline in sales and revenues).

plus, Aden identifies that the iPad has physical limitations (heavy and can’t read in sunshine) and the iBookstore frustrates consumers by locking down its ebook titles with a proprietary DRM.

this all gets a little more interesting with the news that Google is developing a tablet.  not surprisingly, Google announced that it will begin selling ebooks this summer (via Shelf Awareness).

Google has been discussing its vision for distributing books online for several years and for months has been evangelizing about its new service, called Google Editions. The company is hoping to distinguish Google Editions in the marketplace by allowing users to access books from a broad range of websites using an array of devices, unlike rivals that are focused on proprietary devices and software.

ruh-roh publishers, Apple, and Amazon – what’s next? what will the impact be on consumers?  and when will libraries enter the discussion?

posting by marin


4 Responses to “wanted: professional negotiator”

  1. David Says:

    2 guys from Pacific Northwest Booksellers Association recently did a 4 day, 40 (indie) bookstore tour, and one of the questions they kept hearing from booksellers (besides “Will I have a job this time next year?) was “Is there a way for bookstores to get in on the ebook market?” PNBA unofficially predicts that in 5 years, ebooks will be 50% of the market.

  2. myounker Says:

    time will tell, but i think the pnba unofficial prediction is spot on. i think we’ll have a job, but how will that job change with ebooks? and who’s going to negotiate for libraries?

  3. Kelli Says:

    Trying to force any free market to follow a strict model will never work – there’s always going to be “something else” that will throw a wrench into the works because new platforms almost always change the rules, and they always open up new opportunities. Blackberry used to be the only smart-phone game in town: they now comprise only ~50% of the market, the other 50% made up of at least 7 other device vendors.

    My biggest concern is whether or not MLIS programs are investigating and changing their structure/course offerings to reflect the changing market. There will always be a need for information to be managed and disseminated, whether it’s for scholarly or entertainment purposes. However, the manner in which dispensation occurs will change, and likely drastically, simply because of the rapid evolution of Emerging Technologies.

    Marin is right in that negotiating for libraries is important; ensuring cutting-edge tutelage for library students is critical as well, and I hope it’s being contemplated by every institution and by the ALA Accreditation Committee. (And I will now step off my soapbox.)

  4. […] ok with this?  is it really worth aligning themselves with Apple at all costs in order to diminish the Amazon stranglehold?  and what about libraries?  if we’re able to support ebook […]

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