I’ve talked a lot today about the Amazon/Macmillan issue to various people on the loops. I’ve even made a few blog comments. And as a reader, an author, and a publisher, I find the entire issue boiling down to one basic fact.

By law corporations are required to make money for their investors. Not only that, but corporations are bound to make as much money as possible for their investors.

Seriously. As much money as possible. This means that all the conversations about looking out for “the reader” or “the author” are really just well meant intentions that can never happen in today’s business world. (1)

This means that Amazon wants to make as much profit as possible. Hence, it wants people to buy as many books as possible. Which is why it wants to maintain the $9.99 or below price point for electronic novels. Because Amazon, being pretty savvy about the marketplace, knows that most of us think that even $9.99 is crazy high for the price of an ebook. But we’ll pay it to get the next Grishom/Dan Brown/Stephen King masterpiece.

This means that Macmillan wants to be fluid in the pricing of its books. Whether that’s a higher “new release” price point until the book transitions into paperback release of some port. Or whether that’s setting a higher, fixed price for the electronic version. It wants to be able to set the prices it wants to sell its books at. And, as the publisher, it has a right to do so.

Such strong-arming of wholesale suppliers by retailers isn’t unique to Amazon. And it isn’t new. Wal-mart has been doing this for years. Documentaries have been written about their activities, so it’s all there if you want to do the research. The thing is, this is really the first time that this has happened in the publishing world, and that’s what makes it all “oh my god” and new.

The truth is publishing is changing. And I see this as one of the many upheavals that will happen as publishers try to wiggle out of the ruts they’ve built over the years and find new ways to earn revenue. The truth is this is the flipside of the coin that happened a few months ago when Ellora’s Cave decided to arbitrarily create a fake “suggested retail price” for their books by doubling the current price. They never intended for the book to be sold at that price, but if it were, then at least they could secure their financial position even with all the third party discounts provided. This was a move designed to boost their profit margins.

And sure, they, just like Amazon and Macmillan, spin all of this to be “author friendly”. And bloggers get up in arms and say that they don’t care about the authors or the publishers. They care about readers rights. And if those rights are at odds then so shall it be. The truth is, no one is on the readers’ side or the authors’ side. Remember, we’re dealing with corporations, whose sole responsibility by law is to make as much money for the investors of the company. The “author friendly” response would be, to be blunt, revamp the entire royalty structure for their books to ensure the author is receiving a fair electronic royalty rate. The “author friendly” response would be not to price jack the cost of existing books, but simply use this as the structure going forward. The “reader friendly” response would be to put out the best books at the best price. And, not to drive the authors out of the marketplace.

I see both sides, because they’re really the same side. The side of profit and money. Both Amazon and Macmillan want it, and they’re legally obligated to go after it. You can decry the various sides as acting like bullies in the school yard. You can say that someone is right and someone is wrong. I think the truth is we can both agree the publishing industry is changing. Things that worked in the past, such as set pricing, may not work now. And publishers such as Macmillion have always had to rethink their electronic book policies.

The truth is you can either have a discussion based solely on the actions of Macmillion and Amazon. Or, you can broaden the discussion to the actions taken by other publishers, such as the Booklocker suit against Amazon, or Ellora’s Cave price doubling. It’s all different sides of the same coin. And right now, that coin doesn’t look good for authors or readers.

1. I won’t talk about Conscious Capitalism, which does foster an environment where this can happen, because let’s face it, few companies practice such a positive notion. And I feel just as few publishing companies follow this belief too, though it does happen, and I’ve seen it happen in smaller, mostly electronic presses including my own. I also would note that the companies where I’ve seen the most “conscious capitalism” acts, are also NOT corporations.

(I’ll also note that a large part of the context for this article was taken from the comments at Dear Author: 

http://dearauthor.com/wordpress/2010/01/29/game-on-macmillan-pulls-the-kindle-books-and-amazon-removes-the-buy-button/)

This entry was posted on Sunday, January 31st, 2010 at 2:29 am and is filed under publishers, rambling thoughts. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.