The Two Biggest Things

On this blog, I am frequently asked about trends and future issues. I can tell you two of the biggest things happening in publishing hit this week, and you need to know about both of them..

First, Apple had their big press conference to introduce the iPad. Okay, get over the name jokes ("Yes, the iPad is small and light, but can you swim in it?"). In a few months, nobody is gong to be joking about the iTampon. Frankly, this is a GREAT product. Some people are criticizing the iPad for (1) not multi-tasking, (2) not having Flash, (3) not having a camera, (4) not having them all be 3G... but those criticisms are overblown. The iPad is a combination e-book, netbook computer, and portable photo display. It has a touchscreen keypad, is great for surfing the web and watching movies, and will simply be the best e-book reader on the market. For those of us who travel, this is fabulous, because we can now leave our heavy laptops at home. 

And the cost for an entry-level iPad is $499 -- not cheap, but fully half the cost everyone was projecting. Apple has a history of making new products like this work, and I think this one is going to work in a big way. In fact, word is the folks at the Apple press conference specifically held off talking about the e-book capabilities of the iPad until last, because they feared that one application would overshadow everything else. And... it will. Jeff Bezos at Amazon is looking at the future, comparing this to his Kindle, and recognizing that he's in a tough place. Amazon has dedicated themselves to the Kindle, which is a good product that is dedicated to one thing -- reading books electronically. But the iPad allows you to read books AND watch movies AND surf the web AND check your emails AND keep all your photos close by. And, of course, it's got Apple behind it, pushing to make sure you know it's cool. 

If you want to see what all the talk is about, visit: http://www.apple.com/ipad/#video

Second, there was a huge battle taking place in the e-book market. This also relates to Amazon, and if you're a writer, to your future. Let me offer a bit of background. The folks at Amazon want to rule the world. They really want to wipe out the competition to their Kindle for e-books (and there's nothing wrong with that -- every agent would prefer to represent ALL good authors, and every publisher would rather OWN the bestseller lists). The problem is that Amazon has forced a bad deal onto publishers, and therefore onto writers. They want to list all their e-books at a retail price of $9.99, and then keep 70% of the income. That means the publisher, who has invested money in editing, copyediting, interior design, marketing, and a thousand other things to get your book to consumers, is making almost nothing. And, frankly, it means the writer is making even less. Some of the publishers (notably David Young, CEO at Hachette and my old boss) has made it clear they can't live with that arrangement. Amazon is taking some of the best books and making them loss-leaders, which isn't terribly helpful in a 90/10 business like book publishing. 

So last week the folks at MacMillan announced they couldn't live with it any more. They stated there was a price they needed their books sold at. (This is unusual. I mean... if you create shoes and sell them to Sears, you don't have too many concerns what Sears charges consumers so long as you get paid, right?) In this case, everyone in the writing community was cheering MacMillan. The company simply made a point that they need to be able to make money in order to stay in business, and they offered a very clear note to Amazon, that in essence went like this: "List the books for what we suggest as a retail price, and let consumers decide whether to pay that or not."

Amazon's response? They stopped selling MacMillan books. In what can only be described as a nakedly political move, they took all the "buy" buttons off books published by MacMillan. If you had a MacMillan book on your "wish list," it disappeared, without explanation. If you had downloaded sample chapters to your Kindle, those were gone. You could still buy a book through a third-party seller, but not directly from Amazon. That meant even bestsellers (such as Andrew Young's fascinating but repugnant tell-all on Sen. John Edwards, THE POLITICIAN, which ranked #9 on Amazon's bestseller list) was no longer for sale by Amazon. 

Um... let's just say that was a bit of a reach by Mr Bezos and his minions at Amazon. Publishers made it clear they weren't going to be pushed around (especially with Steve Jobs and the Apple team ready to launch an e-Book store). Authors, who you would think couldn't live without Amazon, came down squarely on the side of MacMillan -- insisting it wasn't fair to simply de-list all MacMillan books. And literary agents made it clear they wanted the longterm health of the industry to take precedence over short-term sales. 

So Amazon announced they "will have to capitulate," and made noises about how unfair it all is, and complained that "MacMillan has a monopoly over its own titles" (a laugh-out-loud statement, coming in the face of Amazon's own clear desire for an e-book monopoly). If you listen to the folks at Amazon, they make it sound like they've just got the best interests of consumers at heart, and those terrible publishers are ruining it for them. My response: "Yeah, I'll cry all night." 

Look, sometimes you just have to take the good of the industry-at-large into consideration. What MacMillan did was good for ALL writers. And other publishers are going to jump on board. We'll look at a breakdown of the actual dollars earned in a few days, but for now, THIS is where the biggest news of publishing is happening. 

Comments

[Marla Taviano]

My graphic & web designer/Mac lover husband Gabe "invented" an iPad that will please even the oldest-school book-lovers.

http://bit.ly/aTNeZ2

Brilliant.

[Timothy Fish]

I have my doubts about iPad because it falls into what may be a no man's land. It isn't powerful enough to be a good laptop replacement and it is too large to carry on your belt or in a purse. If they travel, people will still want their laptop. They may not want another $500 device to worry about.

On the bright side, if people do actually start using iPad as a book reader, as a software developer, I see great potential for rich content books. It won't do much for fiction, but color on every page and the possibility of demonstrating concepts rather than just writing about them is something intriguing.

[Pegg Thomas]

Thanks for keeping us in the loop about what's happening in the industry. I find your blog helpful beyond measure.

[Karen Robbins]

I agree with Timothy Fish. I'm not ready to give up my little notebook computer that I travel with. I have a Sony e-reader for my books. All of that fits nicely into a pocket of my backpack. The iPad is flashy and has all those neat apps like an iPhone but it's not a phone and it's not a computer and I'd need both of those on the road as well.

On the other hand I was reading that the iBookstore is offering a 30/70 deal to publishers with publishers getting the bigger cut and pricing on books being more to their liking. That's got to have Amazon scrambling. This is going to be a real mess until the rules on the playing field get a little better defined.

Thanks for your insight.

[Jodie]

iPad is WAY cool, I'll give you that. But I agree with Timothy on the "no man's land" comment. I love my MacBook and can't imagine trading it for an iPad on trips. I won't carry an iPad in place of my iPod, because it's too big. And my Kindle whips the iPad on battery life. I can read for weeks on the Kindle without a recharge, but the iPad can't touch that. For now, I'm drooling over the iPad just because it's cool, but the cool factor isn't enough to make me go get it.

Thanks for the play-by-play on the Amazon/MacMillan showdown. As a consumer, I like $9.99 or less books. As a writer... different story. :-)

[Tricia]

I love that MacMillan is standing up to Amazon. A modern day David and Goliath.

[Jan Cline]

Can we as writer/consumers make any noise to Amazon about the MacMillan issue? It really is the same old bottom line means everything practice. Most people dont really realize where the bottom is however. Consumers have to look at the long term effects. Where do we want this industry to be in 20 years? I am a farmers wife and I understand the need to be paid a fair price for our product-some years are pretty lean because someone else dictates what our commodity is worth. But what would happen if we all got to decide to charge as much as possible? Your loaf of bread would become a luxury.
Thanks for the update.

[Robbie Iobst]

It's not often you see companies stand up and say, "No more!" How wonderful to courage in the marketplace.

[Susan Meissner]

Thanks for distilling this info here. I knew I needed to know this stuff but didn't have the time to read all the press about either one. Now I can go back to work!

[Chip MacGregor]

Actually, the iPad IS a computer, Karen. I think Apple needs to focus more on selling the e-book features. As for the Kindle, the battery is better, you can make a case the screen is easier on the eyes over the long term, but the features of the iPad far outweigh the features of the Kindle. (Um... in my humble opinion.)

[Kris]

It does seem like the iPad is a man without a country to me. Too little on the computer end, too much on the reader end. A next-gen Kindle can learn from the iPad and hold strong. Thing is lots of folks will buy iPad just because its Apple - I'm still biding my reader time. As for the pub industry, I think we writers should fasten our seat belts. It's bound to get much more interesting before it settles.

[Jess]

I heard someone describe the Iphone as being like a futon--you know, a lousy bed and a lousy couch. I think the Ipad is kind of like that. But I also think that the next one will be more functional (with--hello--USB outlets) and even cheaper. Eventually, people will be calling all e-readers "Ipads."

[Laura Droege]

I'm glad you explained that entire Amazon-MacMillan controversy/fight. I heard about it, didn't research it thoroughly, but definitely felt queasy at how Amazon treated publishers, agents and writers. I also stopped buying books from Amazon--not that Mr. Bezos will cry all night over losing my business. There are other rivers to swim, so to speak, and I'll buy my books from them.

[AimeeLS]

I really appreciate the info re MacMillan & Amazon. I had read other stories about it, but I trust your judgment on these things.

As a writer I just pray I'll be able to work with MacMillan or another publisher with those kinds of...er...cahones in future.

Nice to see someone with the power to stand up for this kind of thing actually doing it!!!

Kudos MacMillan!

[Katie Hart]

I can never see myself paying more than $9.99 for an ebook, especially if it's DRM-protected. I love loaning my books to siblings and friends (and if they love the book, they often end up buying it for their collections, so it's a win/win situation). I love that I have the option of reselling the book if it doesn't wow me.

However, Amazon keeping 70% of the profits is completely unfair. Physical bookstores typically only get 50% of the profits if they sell at retail, and their overhead is astronomical compared to a files on a computer. The publisher should get the same amount of money from an ebook that sells on Amazon as compared to a physical book (with perhaps a slight difference to account for printing costs). Then, let Amazon set its own prices to sell the book to the consumer.

[Lauren Sylvan]

I'm scratching my head over the Amazon thing. Why should they risk annoying their customers by not stocking what the market wants at the price the producer is asking? It's true they have a lot of stored data on consumers (including myself), but if they don't have a book I want, I can get it pretty easily from somewhere else. It's not as though I have to drive an extra ten miles to find another store.

The internet is a fickle field. One thing can replace another in a year with the tapping of the consumer fingers on their keyboards. Myspace was growing like mad for a while, and Facebook hadn't even been conceived of; and now Facebook is passing it up by leaps and bounds.

Mr. Bezos would do better to mind his manners. The consumer has no particular loyalty to his website. They are there for the price and the convenience -- two things that can be challenged by the next comer.

[Karin]

I've never been a Mac girl, but the iPad intrigues me. However, I think I'm going to wait a while. I've never bought the first generation ANYTHING because there are always kinks that need to be worked out (like giving this device a homeland). I'm very interested to see how this evolves.

[Rich Bullock]

Chip, I heard recently that Amazon pays the same wholesale price to the publishers for both paper and ebooks, no matter what they decide to sell them for. Therefore, virtually all the first release "hardbacks" are loss leaders for Amazon.

Not sure if that's true or not, but wondering what you've heard.

[_*rachel*_]

I'm not buying Amazon until everything's back up, and even then I'm heading local for books for quite a while, even if it is more expensive.

Frankly it's just mean to authors. Here's the Amazon forum if you want to comment: http://www.amazon.com/tag/kindle/forum/?cdForum=Fx1D7SY3BVSESG&cdThread=Tx2MEGQWTNGIMHV

Anyway, I like paper books best, and I hear there's a great little indie bookstore downtown that has several resident cats.

[Theresa Lode]

In the words of that intergalactic sage, Spock, "Fascinating."
Seriously, this is indeed very interesting. We are watching history unfold in publishing. Not unlike what happened in the oil and later automobile industry.
Amazon's attempts to Monopolize an industry that depends upon creative individuals....now there's an interesting twist.

[cheap computers]

Apple has a history of making new products like this work, and I think this one is going to work in a big way.

[dee stewart]

Great post, Chip.

I agree with you. The iPad is a gorgeous piece of tech. I'm very interested in how the iWork features will work on it. The press conference on that section wowed me more than the iBook. I can see my daughter using the iPad easy for school work since most of her school books are online now(budget cuts.) As I read the comments,I don't think people realize that you can merge all your iGadgets(pad, tunes, touch) on this baby and that it is a notebook. It would be a great tool for business or busy people. Personally I wouldn't get it right now, because i have a feeling that video will be added in a later version like they did pictures on the iphone, but I would definitely get it for my daughter.

On the other hand, I was godsmacked to know that publishers weren't using dynamic pricing for ebooks in the beginning. Wholesale prices? Really? which means authors get pennies? Come on...Macmillan did the doggone thing and it's about time. My opinion.

But I can't let them off the hook either. Somehow there wasn't any wisdom,good judgment or vision in the beginning when publishers struck a deal with Amazon. Had Sony decided to up the prices on their e-books then the battle would have begun before the iPad announcement. Why didn't publishers ask for higher prices then? I'm kind of glad Steve Jobs fed the white elephant in the room some peanuts, but why are business related service providers doing what should have been done in the first place?

Which for me I think is the real challenge. For whatever reason decisions are being made as a result of not just lack of vision, but...not thinking things through with a decent business mindset. If authors have to change their mindset about owning and managing their readership, then the publishing industry should own and manage their sells systems better. I hope this is a wakeup call for not just them, but all of us involved to look past our noses and actually be the "smart" book people that we are.

I have said repeatedly on my blog that Authors should use B&M links on their websites not just Amazon for two good reasons: (1) authors need to build relationship with their local bookstore and chains. It is hard to book an unknown author for an instore event,especially when the author is telling its readers to buy their books via Amazon only and (2) do authors know how much they get on the back end for Amazon purchases? I think i make more as an Amazon affiliate then my author friend's do, and (3) never put all your eggs in one basket. that's just good old mother's wit there.
(maybe i should be anonymous here)

I think book publishers have dug a nasty ditch for themselves with their customers. Amazon has introduced ebooks into the marketplace at $9.99(almost dirt cheap to readers.) Book buyers have been--as they have done in these post comments-- complained about the price hike, which is normal human behavior. Had they introduced ebooks at a price point that the marketplace could absorb in the beginning this wouldn't be a big deal to book buyers. Now ebook buyers are hot. It's like iTunes selling singles for $1. Oh wait they did that and we eventually cooled off, but it's different, because they were introduced at the price. Now folks are adamant about the price change.

I wonder if society's devaluing of books is also at play. We spend more on DVDs and CDs then we do on books. Both the movie and music industry took a tumble when digital formatted products were introduced, and still are. However, they were priced as close to the floor as possible, so that the artists, writers, all the people that create these products can be compensated. In this case authors were basically giving their books away and that's not fair.

I don't understand why Amazon, publishers and now readers think that authors shouldn't be paid fairly. I don't get it.

[Jeanne]

Dee's comment mentions supporting your LOCAL bookstore--amen to that. Your LOCAL businesses--bookstores, libraries, gift shops, etc.--are the ones who will, for most authors, keep your career alive, hosting or providing space for book signings, readings, and other literary events.

I buy local when I can, and on occasion ask them to special order books for me. (Local in my area means very small independent book stores, with a Borders 90 miles away.) This, to me, is a win-win kinda deal (I get my product, they stay in business), and the small amount I might be paying over an Amazon purchase is money well spent for the good will all around.

If I buy online, I buy from Powell's (fantastic web site with lots of author content), and have used Amazon as a last resort a few times. I've never been comfortable with the "Walmart model"--move in, sell low until competitors are driven out of the market, monopoly--and I'm often drawn to support the underdog, maybe because I've been in that situation. An unfair playing field will almost always result in the producer (in this case the writer) getting the short end of the stick.

Thank you, Chip and Sandra, for your efforts to keep your readership informed about these issues.