Amazon and Macmillan: Who’s the Real Winner?


mushroom-cloudThe war over ebook pricing got toasty this weekend. On the heels of the iPad release, Macmillan delivered an ultimatum: either Amazon agree to let it control ebook prices (Apple agreed to similar restrictions for the iPad) or Amazon wouldn’t be allowed to sell Macmillan ebooks until much later than their competitors, so called “deep windowing.” Amazon responded by pulling all Macmillan offers on their books from its site, not just ebooks but the old fashioned paper variety too. As an added sting, the books can still be purchased second hand. John Sargent, CEO of Macmillan, posted his volley on the dispute in a paid advertisement on Publishers Lunch. Amazon, so far, has only responded in the Kindle Forum.

The New York Times came out in favor of Macmillan, which isn’t surprising since they too would like to dissipate Kindle control. Yahoo and a few other online media outlets are declaring Amazon the victor, also not shocking. So what gives? Is this just a massive hissy fit on the part of Jeff Bezos?

This all feels like we’re watching Jeeves and Robocop bicker. The publishing world seems so refined (Sargent’s letter is filled with niceties and compliments) compared to gun-toting Amazon. Much of the commentary is shocked that Amazon would leverage one successful business to create a stronghold in another, and even more irate that while Amazon has said it will put Macmillan books back up for sale… they haven’t quite got to it yet. A couple things are certain. First, the move to yank Macmillan is much more costly to the publisher than it is to Amazon. Second, unlike Macmillan, Amazon knows exactly how much this move is costing it. Macmillan, who could see an even softer financial quarter if this ban continues, is clearly not the winner.

But what about Amazon? Though they haven’t acted on it yet, they clearly blinked. They come across as more than a bit freaked out about the iPad, and their stock fell more than 5% today. Also not the winner.

For now, the winner seems to be all other publishers. Yes, some customers in search of a Macmillan book will leave Amazon all together and get the book they want from Barnes & Noble or Powell’s, but more will buy a book–either in paper or ebook form–from another publisher. No other publisher has saddled up next to Macmillan, no standing together as an industry, instead they’re waiting to see how much damage is inflicted, willing to let Macmillan take a beating first. And that is likely a big part of Amazon’s strategy, to scare other publishers into not contemplating a similar move.

And the losers? Macmillan may have a soft quarter, but the writers they publish seem more concerned with less lofty things, like paying the mortgage or the gas bill. Several, including John Scalzi, Tobias Buckell, and Charles Stross, are irate not with their publisher, but Amazon. Which makes Amazon’s attempt to appeal directly to authors, even in its post in the Kindle Boards, a tad ironic.

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2 Comments

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2 responses to “Amazon and Macmillan: Who’s the Real Winner?

  1. Brian Thornton

    Interesting take on this topic. Have you read Laura Miller’s article on it in Salon? Her take on it is pretty interesting as well, in that she points out the fact that for all of Amazon’s beating the drum on how many Kindles are flying out the door in sales, no one (aside from Amazon itself) knows for sure how successful the Big A has become at actually cornering the burgeoning ebook market. She gives some weight to this assertion by pointing up the fact that Amazon included MacMillan’s print books in its pull order from its site because MacMillan’s ebook sales likely weren’t significant enough to give much teeth to the move if it didn’t include their print books.

    In the short run I’m happy about the move because part of my back catalogue is available on Kindle through Amazon, and I don’t make a nickel on it. And according to my publisher (and the numbers don’t lie) neither do they because of the price point. Well, at least not directly.

    Here’s a link to that Salon article in case you’re interested:

    http://www.salon.com/books/laura_miller/2010/02/01/macmillan_vs_amazon?source=newsletter

    Thanks for posting this!

    Brian

  2. D.J. Morel

    No, I hadn’t seen the Salon article on it, so thanks very much for the link. Amazon is notorious for not breaking down their figures as much as most analysts would like, including how many Kindle devices have sold.

    That said, this is very much about both companies positioning themselves for where the ebook market will be 5 years from now, not about where it’s at today. Amazon has one massive advantage over all of the other players (except Barnes & Noble) that have recently entered the ebook frey. They sell a ton of print books. Though unlike Barnes & Noble, this isn’t all they sell. (In annual revenue, Amazon is bigger than the entire publishing industry combined.) Of course Amazon is going to use this to their advantage.

    It just sucks that in the process a lot of individual authors, not Macmillan, are the ones taking the beating. John Scalzi had a great post today on buying some of these authors books, particularly those with a new book out this month.

    Thanks very much for the input, and very much looking forward to your new book!