Amazon indicates they'll accept Macmillan's terms | Hacker News Reader

Amazon indicates they'll accept Macmillan's terms

amazon.com

58 pointshealsdata55 comments

There's something very weird about this. I'm surprised that they would post this in the Kindle forums, and the tone is just odd:

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.

If that's true, then why wait? Just "capitulate" now and get it over with. If you're going to tell the other side that you're going to cave anyway, you've pretty much given up all bargaining power.

I see the move to this agency model as such a monumentally bad deal for Amazon that it seems like one of four things must be going on here:

   a) They've analyzed the situation and know they can't win (unlikely)
   b) There's a legal reason that they can't do what they're doing (unlikely)
   c) They're running a more elaborate play than we all realize
   d) This was posted in error or without authorization

e) 5-10 big name publishers threatened Amazon over Macmillan, and they had to choose between backing down or facing a publisher revolt.

First, I find it very hard to believe that they wouldn't have seen that coming when they first yanked Macmillan's books.

Second, even if they did realize that they were going to lose and decided to back down, I find it hard to believe that the best messaging channel is a Kindle forum, and that the best language to use makes you sound like a tiny retailer with no power who has to "capitulate".

f) Amazon believes the consumer will eventually force the prices down and this was their method of bringing public attention to the issue. Thus every author posting on their blog today ultimately helps Amazon.

If Amazon's goal was to make noise they'd hardly have picked the Kindle forum as the place to do so.

why not; that's probably their most vocal consumer market for ebooks after all

Huge win for the publishers. If Amazon accepts, then the publishers (And I disagree with Amazon, once they conceed with Macmillan, the rest will want the same deal) will be able to leverage this agreement to get the same from Barnes and Nobles and other eBook sellers - I'm sure Apple will, likewise, agree - if they haven't already.

This will restrict (prevent?) Amazon, B&N, Apple from discounting eBook prices to get people into their eStore. It hurts the reader, in that they can't get cheap eBooks until a year after they are released. I wonder if the publishers will try to extend this to the "Physical" book market, or whether that's a different ballgame altogether. (If Walmart is the Amazon in the physical book market, who is the Apple? I'm sure B&N likes being able to flexibly price books to get traffic in the store. As does Target. For that matter, so does Amazon. Is there an odd man out there with enough volume to make a difference?)

From a competitive landscape perspective - Steve Jobs knew that providing an agency model as a negotiating tool to Macmillan was valuable - I'm wondering what he got back in return?

All in all, a very exciting weekend of developments in the eBook economy. All started with the iBook store negotiating between Apple and Macmillan, I'm sure.

Interesting. If it has the effect you postulate, I would expect to see reduced demand for ebooks, and more "piracy" (copyright infringement).

Interesting analysis. Yet I think over the next several years authors (who, after all, produce new content) and readers will be thinking about these trade-offs from their own perspectives, and it's not necessarily so that all publishers will agree with Macmillan. High prices produce business opportunities for sellers who offer lower prices.

Considering the immaturity of the ebooks market, price variability seems like a good thing. Increased margins (whether the result of higher or lower prices) will let publishers experiment with better typography, lesser known authors and more interactive works.

The last thing most of us would like to see would be the ebook market turned into a numbers game such that only mass market paperbacks, poorly converted public domain material, and amateur self-publishers ever get access to the market.

How would we have reacted if Apple had announced a $0.99 ceiling for the AppStore?

> amateur self-publishers

If amateur self-publishers have access to the market, then how do you figure that non-'mass market paperbacks' don't?

(And I disagree with Amazon, once they conceed with Macmillan, the rest will want the same deal)

But who cares? The big publishers aren't the only publishers out there, and it leaves a lot of scope for smaller, more agile publishers to steal business from the bigger ones selling the overpriced e-books.

If Amazon had "won" this one and the big publishers' e-books were all under $10, it'd have done more to hurt entrepreneurs and small publishers since they'd find it a lot harder to compete. Macmillan winning means that, ultimately, they lose.

The longer "established" publishers keep high prices on their e-books, the more opportunities there are for top writers to self publish to these new e-book stores. Wouldn't that be great? More money for the authors and a steadily reducing influence by the publishers. It's started to happen in the music industry..

It hurts the reader, in that they can't get cheap eBooks until a year after they are released

One of the lessons I have learned from this debacle is that I should be careful what I wish for. It turns out, according to my favorite authors, that time-sensitive pricing is a huge part of what makes the economics of their business work. After all, an author's hardcore fans are willing to pay more, and time-sensitive pricing -- with books costing more on the day of release, then gradually getting cheaper -- is the established mechanism for extracting that premium. The "hardcover" vs "softcover" vs "remaindered" thing is the industry's way of signalling the different price points.

I've suddenly started looking at hardcover buyers with more respect. These people aren't suckers, or at least they aren't mere suckers. They are the patrons, the hardcore fans, that are keeping my favorite writers in business.

It would be the height of irony if I eventually got what I used to think was my wish -- flat-rate ebooks at, say, $5 per copy, no premium pricing -- only to see my favorite authors either go out of business or figure out some other way -- exclusive early releases by subscription, the street performer protocol, selling T-shirts, product placement -- to recover the equivalent of the cost of a hardcover book!

We're all going to save money in the e-book era, but I'm not really sure it's going to be that much money: Writers and editors and marketers still need to be paid. We'll save on printing and shipping, but that may be about it. There just aren't tons of excess profits sitting around in book publishing: The audiences are too small. I might not even save money on bricks and mortar: I like visiting bookstores or the equivalent, even if just to sit and drink tea while surrounded by media.

There may not be tons of excess profits, but there are certainly tons of efficiencies to be gained by eliminating the print/ship/warehouse model of distribution.

I simply don't accept the argument that ebooks can't be sold drastically more cheaply than paper books. To me, there's no reason for the publisher to exist at all (not that the various functions they provide don't need to be done, just that they don't need to be provided by a single large entity).

Not to mention that, as sold, Ebooks represent a drastically _worse_ value than paper books. They aren't lendable, they're often linked to a single device, and the right to read them can even be revoked remotely. Publishers are offering a worse product for nearly the same price, while simultaneously crying poor.

What most people don't realize, is that the "physical" cost of a book isn't a particularly significant portion of its cost at low volumes, and very little of its risk (You can do multiple printings should a book do better than expected)

The author here: http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-...

Did a great job of capturing many of the costs of publishing a book - Author's Advance, editor, copy-editor, proof reader, typography, design, art, Marketing/Advertising - regardless of whether it is physical or electronic.

I've only ever been on the periphery, as a technical editor - but I can tell you, watching the birth of even _one_ book, is a painful, extensive, and incredibly expensive process involving a ton of highly qualified professionals. The actual "physical" production of the book is almost an after-thought. And, every author I know in the technical industry, has always had to have a "real job" in order to make a living.

So, no - I don't actually think there really is much difference between the cost of a physical book and an eBook for normal volumes < 10,000 copies, which is considered a good success for most authors - the fixed costs are pretty significant.

I do agree with you, though, that there are a lot of liabilities associated with DRM encumbered eBooks, that hopefully publishers will drop, and therefore _enhance_ the value of eBooks. I certainly am willing to pay more for a non-drm encumbered eBook than it's paper equivalent. With the number of Ebook readers I have (iPhone, K1, K2) - they simply are more valuabe.

What you are missing from the argument is that the reason the publishers existed was not for the ancillary services, but because of the huge capital costs of running a printing press and moving that object down the production chain to the network of distributors and retailers. If we can accept that the printed book is no longer the primary artifact, we can accept that we no longer need huge publishing houses to wrap all of the costs in.

The cost differences between producing a paper book and an eBook are striking to me. I read the linked article and it makes some imaginative leaps in assigning all costs to the eBook venture, resulting in some ridiculous numbers. If you compare the costs of physically printing the book to publishing an eBook, there is obviously a huge difference. Look at lulu.com for starters on this.

On the other hand, his argument for flexible pricing is quite sensible. The difference as we go to eBooks will be that the popular books will cost more, and the less popular books will cost less, as we get the physical production costs out of the way and the overhead is greatly reduced.

Just like recording artists and labels, authors will separate from publishers, as publishers fragment into the the physical production, editorial service providers and financial risk backing operations.

I'm actually trying to make the opposite point, which is the physical cost of a book is relatively unimportant. LuLu actually throws you way off. They quoted me $7.95 for the cost of a 300 page perfect-print edition. They are a small volume printer, <1000 copies. At Volume (2000+ copies), a perfect-print 300 Page book can cost as little as $2.50 - And there are, and always have been, a lot of printers that could that work for you. You are correct in indicating that the big publishing houses have access to scale and vertical integration in which they are probably paying around $1 for each book - but, at 2000 copies, $5000 vs $2000 doesn't matter very much when you consider all of the fixed costs associated with a book.

Where a big publisher CAN take advantage of their scale, is in spreading the risk over thousands of books. Sure, a lot of their $5K advances will yield a grand total of 75 books sold. Or, in fact, be completed but not published (Seen that happen). But, many of those books will break even, some will make a profit, and every so often, JK Rowling will show up.

Note - a private publisher is risking everything. If their 3-4 months worth of heartfelt effort turn out to sell 70 books at $10, and they get to keep all of it, well, 100% of $700 is still less than an advance of $5,000.

Almost all of the time, energy, risk(!) and money associated with creating a book come before the actual physical creation. I'd be prepared to say that for a 5000 book run, (which is considered a success, for most authors), approximately 90% of the cost is associated with the creation of the book, advertising, marketing of the book, and only 10% in the manufacturing of it.

Now, where we can reduce costs is in the marketing/advertising - with eBooks, you don't really need shelf space. And Social Networks/intelligence engines can do a better job of getting me the book I'm interested in anyways.

But, to create a great book, requires a team of professionals. And those people have to eat....

[edit: And, to steal a point from retric above, "What publishers focus on is not high quality books but rather figuring out how to convince people to buy crap books that they will not actually read." - That's true, the other strength of the Publisher is controlling the channel, aka the bookshelf in the past. But, given that there is no "bookshelf" to control anymore, hopefully great content will rise to the top, and that is yet _another_ inefficiency that we will be able to eliminate ]

with eBooks, you don't really need shelf space.

I predict that the extent to which this turns out to be false will surprise us all.

Shelf space at a bookstore is the primary advertising medium for books. Most people don't consult the New York Review of Books. Most people see very few book advertisements. Even those of us who do most of their book buying online still wander through bookstores and libraries. Physical objects have a powerful draw. I buy almost all of my computer equipment online, and yet I still find myself wandering through the Apple Store, just to experience the physical presence of computers and computer users.

Dedicated physical bookstores are going to get even harder to keep open. They might get smaller. They might continue to diversify until they're basically cafes with books lining the walls, or small performance spaces where authors gather to hold readings, or something. But I suspect that, somehow, the biggest and most successful publishers will continue producing copies of physical books and putting them on shelf displays in places where readers are likely to gather, just to get those books in front of people's eyes at the exact moment when those people are in a book-browsing mood.

Then they'll sell electronic copies. Right there in the store. Barnes and Noble apparently agrees with me: They're plugging the Nook front and center in their brick-and-mortar stores.

Or, maybe I'm wrong. It will be interesting to see how it plays out.

PS: To anticipate every reader's first objection to my wacky hypothesis: This didn't save the music stores because music is inherently unbrowseable in a store. Music stores used to have little listening stations with headphones, but did anyone ever actually use those things? They never had what I wanted to hear. The iTunes store blows that experience away, to say nothing of Pandora or YouTube or a filesharing network.

Actually, I think you missed my point. I was talking about the historical reasons that publishers came into existence. At that point in time, it was (and still is) a huge expense to run a printing press and book bindery. Then, they took control over the distribution channel. These are huge costs- Lulu doesn't get your book into B&N. I was speaking to a future where bookstores are as rare as record stores as one where those costs are not significant.

It is just a historical accident that the people that control the printing presses control the rest of the process. It used to cost quite a bit. With on demand printing, there is little need for their services.

I understand that your premise is as follows:

"In the 1800s, or early 1900s, there was massive capital required to print a book. As a result, the books that people bought, came from those who had capitalized the printing presses. Now a days, the publishers are historically tied to those large printing presses, which really are less relevant with inexpensive on-demand printing. "

But this overlooks that you don't need to _own_ a printing press to have your book printed/bound.

Every town I've ever been in has had several printing companies that would do all types of printing jobs for you. Including your book and binding, if you were so interested and actually had a need for 5,000 of them.

LuLu, btw, is the _counter example_ to this. They are hugely expensive, but convenient for very small print runs.

Yes, large book publishers can print a 300 page book for $1, whereas it will cost you $2.50 to do so at your local printshop, but the real risk is the fact that you probably spent 4 months of your life writing a book, and paying people several thousand dollars to edit/proof/provide art, all for a book that may sell 70 copies @ $15.

I think we do agree, that (one) real value of publishing companies has been their ability to control the channel (book stores). I think we differ on their importance in developing books (Copy Editors, Editors, Proof Readers, Designers, Artists). I don't think you've commented on the publishers ability to spread risk over thousands of authors (and also pick the good ones!)

Now, authors still need book shelf space _today_, as ebooks do not yet dominate. This is why a famous and well known author, with their own brand, would stick with a publisher when they already have a brand. They need the channel. I like your quotation "Lulu doesn't get our book into B&N." :-)

But, Peter Hamiliton or JK Rowling are in the drivers seat. Unless they've been tied down with contracts that prevent them from going elsewhere, I would think that, right about now, they would start to realize they can go their own. They don't _need_ a publisher. They can personally hire their own editor, copy editor, proof reader, design, and artist, and self publish. Why more famous authors don't pull a Stephen Covey is beyond me.

Every word of your analysis and reflection is spot on regarding the importance of time-sensitive pricing, incenting authors to produce great works, and, what I believe, is my _moral_ responsibility to reward those authors/software publishers/directors/actors/content creators who give me so much pleasure. I'm happy to see there are others out there who share my worldview.

So, I think it's really important to emphasize, that Amazon wasn't suggesting non time-sensitive pricing, instead, they were requesting the ability to set the prices, EVEN IF it meant they would pay Macmillan $25 and sell a book for $9.99.

The net result would be - I get a great book, day one, cheap. MacMillan (and the author) get their cut of the $25. Amazon gets my business. (Because, once I'm at amazon.com, good chance I'll go back when buying my EOS 7D). Walmart mastered the art of selling something at a loss to get you in the door, Amazon is just following in their well understood footsteps.

The publishing industry, though, has done the analysis and realized that setting a price point of $9.99 constantly, means that readers will have a difficult time paying more than that. Which means that, eventually, Amazon.com doesn't have to sell the books at a loss, because that is the only price that books will sell at.

I don't really buy the argument - I'm going to purchase the next Peter Hamilton Void Series Book on Day 1, even if it is $50; but clearly the publishing companies do, because they desperately want to control the price that the _reader_ sees, regardless of what the publisher is being paid. Ergo, the "Agency Model". Amazon is no longer a Book Buyer/Seller for MacMillan, and will not be able to discount eBooks to get more volume.

There is a meta-game being played here, and it is for control of the Channel - to some degree, the party that controls the pricing controls the channel. If Amazon can set the pricing to a below-cost number, then they grow their (already strong) control over the channel, and make it up on all the other elements that people purchase. By turning Amazon into an Agency that has to price their books at the same price as everyone else, Macmillan has regained that control.

If you can quickly crate high quality books that people actually like you will make a lot of money as an author. To paraphrase one of the best "We don't subsidize an incompetent hore why must we subsidize incompetent authors."

Most published authors suck which has a lot to do with them making no money. What publishers focus on is not high quality books but rather figuring out how to convince people to buy crap books that they will not actually read.

Amazon cut's into this in two ways, if you can read reviews before you buy you are less likely to pickup something you don't like. The other approach is by removing the limited shelf space at the book store you reduce the control large publishing houses have over the channel which allows higher quality books to compete without backing from a major publishing houses .

I've suddenly started looking at hardcover buyers with more respect. These people aren't suckers, or at least they aren't mere suckers. They are the patrons, the hardcore fans, that are keeping my favorite writers in business.

For years I felt proud of that -- as I mentioned yesterday, I used to buy hardcovers pretty indiscriminately. I'll happily pay extra for quicker access. That's why I shelled out $350 for the machine which teleports books directly into my hand. When I hear publishers talking about windowing books on my Kindle to protect their no-longer-relevant-to-me hardcovers and physical distribution systems, I get a little upset. I mentioned so on my blog.

This morning, I woke up to an inbox full of mail from people who profess to be professional communicators telling me that I "stabbed them in the back" and was a "useless parasite" and "tightwad" for expressing my desire to continue paying them thousands of dollars in return for fastest possible access. I think of myself as a patron. They clearly think of me as a sucker. Did the Medicis ever have to put up with this? Of course not: in addition to hiring artists they also had assassins on the payroll. I'm strangely tempted.

It seems like six authors have a radically different understanding of the patronage relationship than I do. In a not totally unrelated turn of events, today my To Read list got shorter by two books.

> When I hear publishers talking about windowing books on my Kindle to protect their no-longer-relevant-to-me hardcovers and physical distribution systems, I get a little upset.

It's important to note that Macmillan was only considering windowing books on the Kindle because Amazon was forcing them to sell their books at a price below what they believed was profitable. Had Amazon been more flexible in allowing publishers to set prices for the content they own, then this never would've happened.

To be clear, publishers can set any price they want on the content they own. Amazon never set (nor could it) the price at which Macmillan was selling their content. Amazon was just asking for the freedom to determine what price they could sell it to their customer at - even if it was below they price they were purchasing it at.

You don't think Amazon/WalMart/Target forced Scribner to sell "Under the Dome" for $9, do you? Hardcover releases are typically sold at a 47 percent discount, Under the Dome has a list of $35, so amazon probably paid around $18.00 for that, and turned around and sold it to their customer for $9.

That's what Amazon was trying to get the rights to do with eBooks. Macmillan didn't want Amazon discounting books to their customers.

Here's what I'm hearing from Macmillan: whine whine whine, blah blah blah, windowing. Whine whine whine, blah blah blah, price increase. Whine whine whine, blah blah blah, most books will be released simultaneously.

(When I hear that I start speculating on what books a hit-driven industry will make into the exceptions from simultaneous release. Oh, right: the ones they think I'm most likely to want to read.)

I understand on an intellectual level that Macmillan has business model problems, but their problems are not my problems. Attempting to make them my problems does not endear them to me.

Wow. I'm surprised Amazon didn't leave the hurt on longer, find some way to ensure used stock of the most important Macmillan titles to block revenue to Macmillan, go all out tactical maneuvers on this one. Their not-even two week old impressively ambitious strategy is already cracking and I suspect once one publisher has stiff-armed them, their ability to reel-in the others will be nullified.

I don't really have a team I'm rooting for here, but this is as close as I get to watching sports and the quarterback for one team just got taken off the field in a stretcher 2 minutes into the game. Man, and I thought the final bit of this was going to be Bezos vs. Jobs slugging it out over the future of publishing, now it's looking like it'll underwhelm.

Going nuclear on Macmillan was a mistake. It made Amazon look like the bully, and I wouldn't be surprised if it scared the other major publishers into standing behind Macmillan.

That's believable. But Amazon basically declared war on book publishers two weeks ago anyway. It's disappointing that when the publishers (predictably) pushed back that Amazon didn't have something more nuanced than this worked out.

I figured going nuclear was part of a scorched earth strategy, "You can die now or later..." sort of thing. From the (admittedly, little) that I understand of the publishing industry, it's fragile enough that there was at least uncertainty in what the result of such would be.

Amazon would have done a lot better out of this if they hadn't pulled the dick move of removing all of Macmillan's irrelevant-to-the-argument print titles.

Now we've seen Amazon's true colors. They're not bothered about destroying their entire relationship with you if you want to negotiate on one element of it.

I'm curious why people think e-books should be so cheap? $15 for a recent release really isn't a bad deal in my opinion. Books are a value compared to most other forms of entertainment. A new release movie costs you $15-$25 and it's only 2 or 3 hours of entertainment. A new release video game costs $50-$60 and is probably pretty close to the number of hours of entertainment a book offers. A CD is $10-$15 for up to 70 minutes of entertainment. That's simplifying it a bit since we should consider the re-consumption value of each medium but I think it's worth considering that a book has quite a bit of consumer value. I think it's also worth considering that the number of people who actually read books has been on the decline for some time. I'm not sure a lower e-book pricing model makes up the difference. Are people more likely to read if a book is $5 instead of $10? Doubtful since libraries have books for free and most people still don't read that much.

Libraries aren't exactly convenient for normal consumers. To go against your video game and cd relation to a book: Video Games are targeted to a very large market and the majority of games today tend to offer much more than 2 or 3 hours of entertainment especially if you take the case of online play; CDs are in a market that is surrounded by piracy and yells of corruption but to take the price point a cd usually offers much more value than 70 minutes of entertainment and one popular way to consume music and purchase it is through itunes which does indeed offer lower prices for basically the same content.

Why was this post voted down? It was very insightful. Is voting down if one disagrees with the post okay or something?

For me (and I don't claim this calculus works for anyone else) an ebook is overpriced if I can get a discounted or used copy of a print version for the same amount or less. The print copy has intrinsic value; I can resell it, lend it out, donate it to a "books for prisoners" program or leave it to my grandkids; it requires no additional hardware, and I'll be able to read it anywhere, anytime for the rest of my life. If I drop it down a sewer grate or forget it in a cab, I'm out no more than the replacement cost of the book (which is probably out in paperback now). If I throw it in a box in the attic and leave it there, barring the Rise of the Silverfish I'll be able to pull the box back down again in ten years and pick right back up reading it again.

But the electronic copy has no intrinsic value; I can't resell it, lend it out, or donate it; it requires additional hardware to use, and I can only read it on the platform(s) the vendor allows me to read it on for as long as the vendor allows me to read it. If I'm reading on my PC, I can't change platforms or upgrade my OS unless the proprietary reader software is available for the platform/OS I'm moving to. If the vendor decides to adopt another format or leave the business entirely, my books suddenly have a drop-dead date: once my hardware breaks, I lose the titles I've bought forever.

A lot of these issues go away with non-DRMed titles, but in all but a few cases (bulky tech reference titles for example) a DRM-free eBook is still unlikely to be worth as much to me as the print version.

And you really don't want to get into the "dollars per hour" argument here. The iPhone game I just finished up cost me a dollar and I got a good 20+ hours of play time out of it. But I can get through an average-sized book in four or five hours, so if I went by price per enjoyment-hour, it'd make that book worth about twenty-five cents. (I'm cheap, but not that cheap...)

I can't upvote you enough :)

The calculus works for me, as well, with a twist. I place very little intrinsic value on the paper book, myself, other than as a delivery mechanism. As you point out, however, since I can resell it, the market places non-zero value on some instances of paper books[1].

Since the value, for me, is entirely in the convenience of delivery, hardback books, by their bulkier, heavier nature, have less value than mass market paperbacks. I even wrinkle my nose at "trade" paperbacks[2]. The size of the current crop of e-readers fail to be no larger than a mass market paperback, even the silly extra-tall ones.

An electronic copy, to me, does have some intrinsic value in that it's searchable, but that's primarily interesting for the bulky tech reference titles you allude to.

Everything else is delivery. I'm only willing to pay the full $8 price when I'm desperate, having nothing with me to read, but a local bookstore having something I know I'd buy eventually anyway. It's something I try to avoid by thinking ahead. Otherwise, for a brand new book, the Costco $6ish is my limit, and that's typically only for the more popular releases. Otherwise, it's $2-$5 at the used bookstore or online.

In contrast, perhaps since I'm not an avid game-player, or, perhaps because I read for pleasure 2-3 slower than I could, I find the price per enjoyment-hour to be one that makes some sense. This leads to a desire for a subscription model, since, after all, I can only read one book at a time. It would allow me to try out a writer without forking over my time and the cost of a whole book. Moreover, I'd be happy to pay several times as much for a 1k+ page Pynchon tome as for a pulpy novella or something in between[3].

If such a system were to pay royalties based on usage, I would expect it to encourage writing that's a balance between being so light as to be skimmable and so involved as to be inaccessible. I believe this to be a desirable consequence, though I recognize the danger in, if I may abuse the term, engineering regression toward the mean.

[1] This is on the order of $1 per item, in trade, at my local used bookstore. It's often $0.

[2] though some can mostly fit in a pant pocket, especially the Canadian Costco cargo pants I favor

[3] all of which I enjoy, but I can't fathom paying full price for 150 pages consumable in one sitting.

I'm curious why people think e-books should be so cheap?

Many years of rhetoric about other industries' transitions from atoms to bits have left many with the mistaken impression that the price should gravitate toward the cost of moving and storing the bits rather than the value in their particular arrangement.

The peak of this way of thinking was AllOfMP3, that dubiously legal Russian site that used to sell music by the megabyte. There were people who actually considered that fair and reasonable. Fortunately we're all a little more used to the idea of paying for bits these days, but the tendency to under-estimate their worth is persistent.

the mistaken impression that the price should gravitate toward the cost of moving and storing the bits rather than the value in their particular arrangement

I disagree that the impression was mistaken. I also disagree that it was rhetoric about digitization that produced such an impression.

Even the word "publisher" means distributor, not content creator (or bit arranger, if you will). Consumers therefore have a reasonable expectation that the value they're paying for is the delivery of the content to them in a convenient fashion.

I'm arguing for the portion of the bit-arranging that the publisher (or record label or movie studio) is responsible for. I think we tend to under-estimate that, probably for the simple reason that it is invisible to us.

I'm not about to argue that they deserve every last cent they demand, though. Only that pricing should be dragged down kicking and streaming by what the market is willing to bear for the content and not encouraged to free-fall until it barely covers the cost of the bit-moving. As much as I may want cheap books, I can sympathize with a publisher's desire to not get bitch-slapped by the invisible hand.

(Also: I'm usually opposed to meta-discussion about moderation, but I did want you to know that I am not the ass-hat that voted you to zero.)

"Macmillan ... are committed to switching to an agency model and charging $12.99 to $14.99

"We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. 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. 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.

"Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!"

Wow. What a masterfully passive aggressive mash. They made us do it. But they'll see. They will. Will.

Also, even if Amazon's posts on that forum are normally signed by "the team," this was a decision by somebody or a small group of somebodies, and it should have been signed by a name. Especially something as masterful as this.

I agree with Amazon's opinion on the prices, but disagree with their action.

If the publishers wish to have their items for a certain price, let them. However, I think it's clear they are in for a rude awakening when they see the sales figures.

My fear is that the publishers will find a way to blame not their prices, but another variable (Amazon, the devices, something else). Ultimately hindering the availability of books and adoption rate of what could have been an excellent format.

Your product is only worth what others are willing to pay and I do not believe I am in the minority when I think that $14.99 (or even $9.99) for many is too much for a non-tangible drm (or not) ebook.

An author published by Macmillan did a write up about this on the Science Fiction and Fantasy Writers of America's blog: http://www.sfwa.org/2010/01/why-my-books-are-no-longer-avail...

You can probably skip the commentary on free markets, but he has some interesting insight in the actual cost and mechanics of publishing. He explains that at the moment eBooks are the equivalent of selling limited editions of paper books because they just don't have the volume yet.

Ironic that Apple is the one forcing Amazon's hand for not allowing publishers to use the agency model. Steve Jobs went to war with the record labels when they wanted the same thing as Macmillan. Even better is that Amazon went agency for their music sales which put a kink in Apple's plans and caused them to introduce flex pricing and DRM free content. This is all the result of two egos duking it out. Fun to watch.

It's more than just an indication: "we [Amazon] will have to capitulate and accept Macmillan’s terms" ( http://www.nytimes.com/2010/02/01/technology/companies/01ama... )

I never understood why an e-song can be sold for 99cts and an e-book can not.

Anybody care to explain the economics of both?

e-songs sell much higher volume. Therefore, e-books must cost more to cover the fixed costs (someone else posted a breakdown of book-costs in an earlier thread).

Edit: http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-...

Additionally, the effort required to produce a song is much less. I could write, record, mix, and master a song in a week. A book would take several months just to get a first draft.

An album of songs is much closer in terms of production costs, and requires a similarly large effort.

Why are authors going to stick with publishers in 10 years or 20 years or however long it takes for there to be more eBook purchasers than physical book purchasers?

I mean, it only took cell phones what, 15 years before they were so common that people in third world nations had them, right?

And...queue Amazon publishing house in 3...2...1...?

Which would be interesting to see them try, but I don't think they'd find many takers among popular authors right now. Most of the anti-Amazon press this weekend was generated by authors angry over the stealth delisting of their physical books. It's a community response, too: many of the angry authors did not even publish through MacMillan.

Apple is encouraging cartels.

Sure, but most cartels fall over time as the players find themselves having divergent priorities. And even now, I'm going to tie myself to Amazon's MP3 store. I just got a Pre Plus and I'm never, ever going to buy a song from iTunes again.

Why do you tie yourself to anything? There is no more DRM. No need for any tieing.

Buy wherever it’s cheapest or where what you want is available. File formats are no problem, webOS plays both MP3 and AAC files.

I thought the cheaper iTunes downloads are still FairPlay protected AACs and only the $1.29 downloads are DRM free.

They dropped the price of DRM-free tracks to be the same as DRMed tracks way back, and during the first quarter of last year they removed DRM from all of the songs in their library.

Some music videos are still DRMed, but all songs are DRM-free 256 KBps AACs for 99 cents.

No. iTunes went DRM free nearly a year ago. You can’t buy any music with DRM from iTunes even if you wanted to. (That doesn’t apply to some music videos and all other video content as well as iPhone apps.)

Reply on news.ycombinator.com