Apple helps shift landscape for UK publishers over e-books
08.02.10 | Benedicte Page
The world's biggest publishers will follow Macmillan US' lead in demanding changes to how Amazon sells and prices e-books, after what was described by one senior UK publishing executive as a "very significant week and genuinely a very good week for book publishers, authors and readers".
Hachette USA was the first to declare its hand after last week's move by Macmillan US, with its chief executive David Young writing to agents on Thursday (4th February) that it was "willing to accept a lower return for e-book sales" in return for control over the "value of its product", namely pricing.
And a well placed source in the UK indicated that others would follow, prompted by last week's launch of the iBook Store on Apple's new iPad: "I think Apple's iPad is a big opportunity for the market to sell e-books at sensible prices to a growing market. And it creates some competition to the Amazon channel and the Amazon platform, and competition is healthy."
Earlier this week Amazon said it would accept Macmillan's demand for new terms for the sale of its e-books in the US, following a stand-off in which Macmillan US titles were removed from direct sale on the Amazon.com site. However, Amazon.com has still not enabled the "Buy" button on Macmillan titles such as Wolf Hall, though Macmillan chief John Sargent sent a second letter to agents this week indicating that a deal was close.
Other publishers have also hinted that they will follow Macmillan's lead, with News Corp chief Rupert Murdoch this week indicating that he wanted to renegotiate the current deal with Amazon for HarperCollins titles. Murdoch said Amazon.com's $9.99 standard e-book price "really devalues books and it hurts all the retailers of the hardcover books".
Trade observers speculate that other iPad launch partners Simon & Schuster, and Penguin are also likely to follow Macmillan, and that any changes to trading terms in the US market will inevitably later translate to the UK.
The launch of the iPad and Macmillan's dispute with Amazon come at a time when publishers are having to use different sales models when they deal with Apple and Amazon. Publishers sell to Amazon resale, with Amazon determining the price to consumers, while Apple works on an agency model, with e-books sold at the publisher's price while Apple takes a commission.
As one insider put it: "Publishers have lost control over pricing with the Amazon model, as Amazon can [afford to] sell e-books at a loss. The problem is that both Amazon and Apple would want to match each other's price, and as pricing goes down the model blows up. The only solution is to move everybody onto the same model."
UK publishers are currently tight-lipped about their relations with Apple, but it is believed that they have not yet begun detailed negotiations over the launch of the iPad in the UK. Apple's website now states that the iPad will be shipping to the UK in late March, but the iBookStore will not be available in the UK from launch.
Comments on this article
By Retailer
As a retailer I think that it is great that value is being promoted above price but to state that it is "a very good week for book publishers, authors and readers" is over-egging it. In this age of still rampant price driven consumerism I suspect that the customer may not agree that 'price fixing' by publishers is a good thing! Bye bye Bookshops06 Feb 10 10:09
By Joe
why is this a 'very good week for readers'? Readers can now look forward to paying more for ebooks from the big six publishers and once again the publishing industry demonstrates that they are hell bent on book prices that exclude many customers. Hope they all have a re-think if the higher priced ebooks see falling sales.06 Feb 10 10:27
By jack jones
hope fully retailer this may have the oposite effect of bye bye bookshops, as if this can be done to the ebook market, why not the same for the printed books. where then new harbacks can be more realistically priced and sold by all at that price. jamie oliver @ £15 rather than £26, but half price at all the "loss leader" places. there is enough scope in the pricing and the sales for all to succeed, and not just make a loss- but have the majority market share.06 Feb 10 11:56
By Bookseller
The problem is, the customers idea of how much a book is worth has been seriously damaged and I personally can't see that this is going to change anytime in the future. ebooks are still used by relatively few people so as the market begins to shift over to this format people will be more accepting of the prices listed for them. But for bookshops, I can't really see how they can double back on the cut prices that have been offered in recent years without reducing their customer base further06 Feb 10 17:02
By Ancient Mariner
Surely the Office of Fair Trading and, in turn, the Competition Commission would be interested if an agency agreement were attempted here? Perhaps the agency model might stand up if it could be proven that e-books are substantially a different product from paper books. There are, though, plenty of high street booksellers and large supermarkets who could argue that e-books would cannibalise their paper book sales and that restricting e-book sales to one or two brands (Amazon, Apple) and allowing publishers to set prices would be anti-competitive and illegal. Admittedly the OFT has been somewhat ineffectual in many consumer sectors but it appears to take considerable interest in the book trade. Has the PA issued any legal advice on this? If I were a publisher or an agent I might consider paying for a stitch in time from my solicitor now.08 Feb 10 09:15
By Noor Jahangir
As a writer, I really hope that this doesn't signal the end for the traditional printed book. My reading is that there will be people who embrace the technology solution (as we are already seeing), and therefore means that it would be stupid to ignore the ebook market, but (I pray) will not sway those of us who love the feel, look and yes, the smell, of a printed book.08 Feb 10 12:47
By Yehright
You can have a good week for publishers. And you can have a good week for authors and readers. But those can't be the same week.08 Feb 10 19:10
By Parsifal
Before we hang out the bunting to celebrate a 'good week', some questions need answering including: Will authors and agents see the benefit from any improved deals that BigPub wins? Will revenue be reinvested back into creating good product or just the bottom line and dividends? Will etailers share all their valuable database info with publishers? When senior execs start celebrating 'good weeks', scepticism might be a cynical stance but past experience shows it's the correct one to take.09 Feb 10 12:22
By Mina Kelly
It's a bad week for everyone except ePublishers, who can price their books at less than $8 because they have fewer overheads. Macmillan's wholesale price is rumoured to be half retail (someone confirm this?), and they were retailing eBooks as the same price as hardbacks, $25. Amazon, then, paid them $12.50, and thensold the books at a loss at $9.99. Now Macmillan are retailing as starting point of $14.99, giving 30% to Amazon to sell them on ($4.49) and are priced higher than many other eBooks on the market. They're not only going to sell fewer eBooks, they're going to make less money on each one. All because they want to protect hardback sales. Somehow, I don't think ebook buyers are any more the same market for hardbacks as audiobook buyers - they're people who weren't going to buy them in the first place and now they feel slighted definitely aren't going to now. Besides, why should they when they can buy two eBooks from someone like Baen for the same price?10 Feb 10 13:16
