August 11, 2014 Last Updated 1:42 pm

Books on Monday: eBooks pricing battle – do you see yourself as an author or a publisher?

Each Monday TNM looks at books and book publishing – either a new book on the publishing industry, a new digital book release, or industry news

The New York Times, it must be admitted, knows its audience: the NYC book publishing industry, and the authors that still publish through the big book houses. Amazon knows its audience, too: self-publishers and small independent publishers who use CreateSpace and the Kindle Director Publishing services.

Readers, meanwhile, know what they want: cheaper things – whether that is clothing from Kohls and Walmart that costs $10 (but falls apart after one season), or books. For many, they are all commodity items, not the priceless work of underpaid authors (after all, readers are probably underpaid, as well).

Where you see yourself fitting into these worlds probably guides your views on the Amazon versus traditional publishers battle.

As a publisher, I am naturally on the side of publishers who want to retain the right to price their products at any level they see fit. As an author, I know the big book houses under pay your average author, but allow for the industry to have its stars. As a digital publisher, I think the big book houses are like newspaper publishers, at a complete loss when it comes to platforms they are uncomfortable with. But, as a digital publisher, I hardly see Amazon as leading the charge into a better digital publishing future as its Kindle publishing solution is really only appropriate for the simplest of publishing jobs.

In other words, a pox on both their houses.

library-abandonedBut this battle means something more because we are at a point in time where online retailing is the norm, not a fad. Consumers through the developed world now are comfortable buying everything online – from media to clothing, from food to office supplies. Authors around the world see the opportunity to get their works into the hands of an enthusiastic audience which might have been too small when they could only sell regionally.

To accomplish this, there needs to be a central marketplace. Apple accomplished this for digital music when it launched iTunes, along with the devices like the iPod that could be used to play that music. Amazon entered the space, then others. But consumers did not need to know what they record label was, they only needed to check one or two online retailers to find their favorite music. This gave these outlets tremendous power.

There are efforts to diversify the marketplace. Publishers maintain their own online stores, as do the record labels. But they reach a much smaller audience, one that is often disappointed to learn that the music or book they seeks can not be found there.

We have the same problem with digital magazines: Apple’s Newsstand is a disaster. More and more it reminds me of the Washington DC drugstore I recently entered that kept its magazines in a corner, still bundled in its shrink wrap. Want a magazine? It’s up to you to tear open the packaging and go through the piles of titles to find the one you are looking for. Apple Newsstand is no better for either consumers or publishers.

One wonders if Amazon understood what the implications would be when it entered this war with Hachette. Maybe they thought Hachette would simply cave, knowing how much of their business depends on sales through Amazon. But if so, they did not understand how fundamental the right to pricing is to a publisher.

Conversely, Amazon sees itself up against it: growing its revenue, but growing its losses at the same time. Amazon, rightly, sees itself as the one company most responsible for the growth of eBooks, and the one who knows best how to sell them.

But publishers price to maximize profits. Low sales books are priced high, with low print runs. Popular books are priced high at first, when the hardcover copy is produced, then priced low later. Books published first to paperback are cheap – your textbook is outrageous. The big book houses like this system, it has served them well for years – even if the system seems to be failing now.

As for Amazon, why are books so important to them? Does it really matter that a publisher wants to price them higher and as a result will have fewer sales? I think the answer lies in the need to promote digital delivery and lessen shipping of physical products. Amazon, like magazine publishers, sees that its costs continue to rise and would like to find an alternative to the USPS, UPS and FedEx.

So we continue this increasingly bizarre dance. But today Amazon learned a huge lesson: the one having to explain their position loses. Until recently, Hachette has found itself having to explain what the dispute was about. Amazon got a few insults thrown its way, but otherwise was seen as the one wanting only lower prices, the one protecting readers.

But after its lengthy, and utterly odd email to KDP users, it it facing the wrath of the press and those smart enough to Google search for the quotes of George Orwell. Amazon, now, has come off as clumsy, amateurish, and not exactly honest. Making the big book publishers look good is quite a trick considering that few would describe them as transparent, honest and trustworthy.

What to do about all this? In the past, in a more activist government era, someone in the Federal government would suggest an intervention. Get Jeff Bezos and Michael Pietsch together in a room at the White House and leave them be for a couple hours. Then the President walks in, like out of a scene from The West Wing, and says they have one hour to work out their differences. If they don’t he will nationalize both companies, call in the National Guard, or tell the CDC to quarantine their offices.

Well, I guess that just wouldn’t work in this case. Which is why we can expect more weeks of this drama. If it were entertaining I would say ‘pass the popcorn’ – but is getting to be a sad affair.

  • Marc Cabot 3 years ago

    Actually, Amazon’s whole point is that publishers DON’T price to maximize profits. They are doing it the way they’ve always done it because… that’s how they’ve always done it. Like the mythical monkeys with the banana that trips the squirtgun, they don’t even know why they do it anymore. Witness Pietsch’s assertion that windowing paperbacks was how they were meant to work, and thus to *support* traditional publishing’s pricing structure. It’s completely and utterly wrong, and demonstrates a complete lack of understanding of how we got here and why path-dependance is such a cruel mistress (See: http://edwardwrobertson.com/the-true-history-of-paperbacks-a-small-correction-to-hachette-ceos-response-to-amazon/ ).

    Obviously Amazon’s 1.74x volume is an average and a hypothetical. But the underlying principal is sound and literally *thousands* of independent publishers are making a lot of money, even living wages, by using it. Traditional publishing needs to stop worrying about wringing every last cent out of the decreasing number of people who will pay $30 or more for a hardcover and start trying to get everybody to read more.

  • J. R. Tomlin 3 years ago

    Damn those cheap clothes and cheap e-books that fall apart. People should have known to pay more like Macy’s and the big publishers told them to.

  • Terrence OBrien 3 years ago

    As for Amazon, why are books so important to them? Does it really matter that a publisher wants to price them higher and as a result will have fewer sales?

    One of the things that really matters to all retailers is their freedom to set retail price as they choose.