Clash of the Titans

[Dana King]

This post may do nothing more than re-assert my ignorance. It won’t be the first time.

I have no dog in the Amazon-Macmillan pissing contest. I’m not published, and I’m not particularly hopeful about the prospects, so it doesn’t have much of an effect on me, other than potentially forcing me to buy books by Macmillan authors elsewhere. I have friends who are potentially effected by this, and I feel for them (John McFetridge must feel like Joe Bftsplk by now), but I have a little objective distance, which leads me to say,

A pox on both their houses.

As several others have noted, this is not about serving customers, and it’s sure as hell not about doing anything for writers. It’s about control. Period. It was brought to a head by Apple’s introduction of the iPad last week, but its roots have grown in the fertile soil of publishing’s inane distribution policies.

Let’s all forget we’re readers and/or writers for a few seconds and put on our MBA hats. (I know, that’s as demeaning as asking Jackson Pollock to paint your house, but bear with me.) No matter how much we treasure books, in the grand scheme of capitalism they’re widgets. Someone makes them, and someone sells them. The manufacturer (in this case, Macmillan) sells the widget (in this case, a book) to a retail outlet (in this case, Amazon) for whatever the traffic will bear. Amazon then sells it to the general public, fixing its price in a similar manner. Both set their prices just high enough to maximize income, but not so high total sales are too adversely affected.

This is as it is for just about everything sold in this country. If Macmillan sets its wholesale price too high, Amazon will but fewer, or no, books. Same deal for Amazon vis-à-vis the public. It should be none of the manufacturer’s business how much the retailer charges its customers for the product; that’s restraint of trade. They can set a manufacturer’s suggested retail price, but that’s about it.

This would necessitate two dramatic changes in publishing. First, advances and royalties would have to be pegged to the wholesale cost of the book, as the publishers have no say in what it can be sold for. Second, and possibly more stressful—because neither side in this dispute really gives a rat’s ass about the writers’ profits*--returns would be forbidden. Imagine ordering 100,000 tires, then telling Goodyear they had to take 50,000 back, at their expense. Right.

I’m sure there’s a hole in this logic somewhere; arguments born of as much ignorance as mine usually have several. “This is the way it’s done,” or, “This is the way we’ve always done it” don’t count. If nothing else, it sure would make bookkeeping a lot easier.

* -- Before someone sticks up for how concerned publishers are with making sure their writers make a good living, ask yourself one question: do you really think your publisher would pay you—at all—if they thought they could get you to give them your rights for free?

[John McFetridge]

Good point, Neil. This is why I wonder if publishing is the right business for multi-nationals trying to squeeze as much out of it as they do their other businesses. Nothing else works like publishing and publishing may not work any other way.

[Neil Nyren]

You're right, Pepper, and I've posted on this before. We'd all be happy not to have the returns system, believe me. But if it were abolished and the stores had to eat every copy they didn't sell, what do you think they'd be focusing on? The books and authors that they know they can sell -- or the ones that are a gamble? What do you think the publishers would be focusing on (yes, even more than now)? The books and authors they know the stores will take -- or the ones they know will be tough?

I'll give you one guess.

[Pepper Smith]

Actually, that would probably result in publishers being even more reluctant to take on new authors or try anything different. Bookstores would also be less willing to order in books, especially by new authors, because they can't be certain they can sell them.

The returns policy was put in place during the Great Depression, when bookstores were struggling to stay open and didn't have money to buy stock they couldn't sell. Publishers stayed in business by offering to let them return anything they couldn't sell. I'm sure it was a good idea at the time, but it's anything but, now.

[Jack Getze]

Does anybody here really think the publishing industry exists to serve writers? That they care what's best for US? It's a business. If it doesn't make a profit, it can't exist. Writers are a resource, a raw material. Very necessary, as are printers, distributors, telephone service, and marketing people. Publishers need a capable supply of all. But like a coal company or an auto manufacturer, publishers wants their raw materials at the cheapest possible price. That's why we have agents.

[I. J. Parker]

Well now, using the Goodyear example is somewhat enlightening. Of course there is a big difference. The tire retailer knows what he's getting. This is not true of new releases in the book world. The return policy was put in place so publishers could sell new authors. However, say we stopped the generous return policy. What then? The publishers would have to make an effort to support each new author with sufficient paid promotion to make the new release marketable. It would take the marketing dollars away from the known bestsellers and instead give the new novel a better chance. Not such a bad idea, I think.

[Pepper Smith]

I'm thinking that the agency agreement applies only to ebooks. Paper will probably still be under the old system. But since Apple intends to work with the big publishers on the agency model, someone was eventually going to have to approach Amazon to make the same sort of deal, if only to level the playing field. Macmillan was the first, but I'll bet they won't be the last.

[Dana King]

A little extra research after work has shown me my proposed model is the norm for print books, more or less. (That returns business is the main difference; whoever locked publishers into that precedent should go directly to the Herbert Hoover School of Long-Term Economic Development Hall of Fame.) So, much as Amazon's ham-handed response makes everyone look bad, it appears Macmillan's power play to set what's called an "agency" agree in place more or less unilaterally is the catalyst.

The more I learn about this, the more I think there are no good guys. We may be facing a situation where the whole system has to fall apart before it's replaced by something better. (Kind of the way government's going.) It's just our bad luck to be the pawns in play when it happens.

[Pepper Smith]

I'm not sure if this is what you're asking about, but what I've been reading is that Macmillan wants to move from the 'wholesale' model (selling the product to Amazon, who then sets the price they want on it) to the 'agency' model. In this model, Macmillan maintains control of pricing, and vendors like Amazon sell the product on a commission, getting something like 30% of each sale. They are not allowed to discount the product because they are only acting as an agent for the real seller, which is Macmillan.

Macmillan's concern is to not have ultra-low ebook prices undermine their new hardback sales. As a reader who is quite happy to read either paper or ebook, I can see where they have reason to be concerned. I'd rather buy a $9.99 ebook than a $25 hardback, and I have done so. As I've seen stated elsewhere, hardback sales are where the publisher makes back the money they put into the book to begin with, so having that income stream sabotaged by an e-reader vendor's efforts to dominate the e-reader market is a very undesirable thing.

[John Dishon]

The fact that this was a surprise to Macmillan authors shows how little Macmillan cares about them. You'd think the authors would at least know what is going on with their own books.