MacMillian's Letter

[Jack Getze]

To: All Macmillan authors/illustrators and the literary agent community
From: John Sargent

This past Thursday I met with Amazon in Seattle. I gave them our proposal for new terms of sale for e books under the agency model which will become effective in early March. In addition, I told them they could stay with their old terms of sale, but that this would involve extensive and deep windowing of titles. By the time I arrived back in New York late yesterday afternoon they informed me that they were taking all our books off the Kindle site, and off Amazon. The books will continue to be available on Amazon.com through third parties.

I regret that we have reached this impasse. Amazon has been a valuable customer for a long time, and it is my great hope that they will continue to be in the very near future. They have been a great innovator in our industry, and I suspect they will continue to be for decades to come.

It is those decades that concern me now, as I am sure they concern you. In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.

Under the agency model, we will sell the digital editions of our books to consumers through our retailers. Our retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time.

The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market.

Amazon and Macmillan both want a healthy and vibrant future for books. We clearly do not agree on how to get there. Meanwhile, the action they chose to take last night clearly defines the importance they attribute to their view. We hold our view equally strongly. I hope you agree with us.

You are a vast and wonderful crew. It is impossible to reach you all in the very limited timeframe we are working under, so I have sent this message in unorthodox form. I hope it reaches you all, and quickly. Monday morning I will fully brief all of our editors, and they will be able to answer your questions. I hope to speak to many of you over the coming days.

Thanks for all the support you have shown in the last few hours; it is much appreciated.

All best, 
John

[Jon Loomis]

Dear John,

WTF?

Your friend (and Macmillan author),

Jon Loomis

[I. J. Parker]

What exactly is "windowing." Sounds a bit like a threat and an ultimatum to me.

[Jon Loomis]

I'm impressed, John. Who knew you spoke publish-ease?

[Dave Zeltserman]

It sounds reasonable to me--simply pricing the ebooks at a level where it doesn't damage brick & mortar stores. Amazon's reaction was typical of a monopolistic company that feels it can bully any company to bend to its will. I hope more of the publishers join Macmillan in this.

[I. J. Parker]

Sarah Weinman's Sunday Smatterings carries a link to another take on this matter.

[John Dishon]

Is it this one? I got that from her blog. It's a good read.

[I. J. Parker]

That's the one, John D.

[Jon Loomis]

Interesting, and meshes just about exactly with what I've been hearing. It's all a big pissing match over Kindle book pricing, which Amazon wants to keep artificially low compared to Apple in order to make the Kindle seem relatively attractive, clunky and lifeless though it is. Macmillan's looking for pricing consistency in order to protect its margins, both on ebooks and bound books. My sympathies here are with Macmillan: I think an environment in which retailers dictate wholesale pricing, driving prices ever lower in order to capture a greater and greater piece of the market, is ultimately monopolistic behavior and bad for everyone but Amazon.

[Jack Getze]

Sure works for Wal-Mart. :-)

[Lucinda Surber]

Windowing sounds like a reasonable compromise to me. I certainly don't expect to be able to get a DVD of a new movie the day it is released. The windowing concept is working for the movie industry.

[John McFetridge]

I don't like windowing at all. I don't understand why every version of a book can't be available at the same time. Do they really think more than a very small number of people will buy the hardcover at $25+ instead of the e-book at ten bucks? Do they really think there's much overlap of markets?

I don't know if I'm typical but when new books come out and get good reviews and look interesting to me, I make a note of them. Maybe three or four times a year they look so good I buy the hardcover. But by the time they come out in paperback a lot of them have started to feel like old news to me and I don't buy them. If they had been available as paperbacks at the same time they were being reviewed I would buy a lot more.

I can't even my relatives to buy my books in hardcover but I want them published that way to get reviews. Then, likeI said, by the time the paperbacks come out the reviews are too old to matter much.

This business is crazy.

[I. J. Parker]

Actually, much the bigger competition to e-books are library books. Libraries these days have the new releases as soon as they are in the stores. I never could understand why publishers don't ask libraries to hold back a month. Keep in mind that times have changed: it used to take the library a month or more to catalog the book and get it on the shelves, but that's no longer the case.

And I also want hardcovers, for much the same reason, but we don't always get what we want. The reason publishers protect hc editions is that they make a bigger profit. And so does the author.