Pub Rants

Amazon Macmillan Kerfuffle

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STATUS: Well, the above is all I’ve been dealing with this morning.

What’s playing on the iPod right now? SMOOTH by Rob Thomas

Normally Saturdays and Sundays in Publishing are a little quiet. Not so for this weekend. My goodness. I had emails coming at me from left and right on Saturday. I was actually in the office working so I heard the news almost immediately as it was hitting the wires.

To make a long story short, John Sargent, CEO of Macmillan, met with Amazon last Thursday to discuss moving to the agency model/commission split structure for Macmillan eBooks starting in March 2010. Amazon was in disagreement in terms of that being the only structure.

In response, Amazon pulled the buttons for all Macmillan titles on Buyers could still purchase the books from third parties but not directly from Amazon. The buttons were pulled for ALL books—not just the eBooks. To make matters worse, all Macmillan Kindle books disappeared from customer wish lists. Oh shades of last summer when Amazon pulled the illegal eBook from customers’ kindles. As one Macmillan editor said to me, “what a sh*tstorm.”

Yes, Amazon is flexing a muscle but whether it’s going to impress the general populace remains to be seen. For my part, I’m trying to fathom their thinking in terms of the PR for this. Perhaps they think their customers are completely wed to the $9.99 price point and will salute their action. Rumor has it that Amazon has been inundated with chatter and emails complaining about the action and thus their step back late on Sunday.

Bottom line, it’s authors who get hurt the most here. I’m really feeling for authors who have on-sale dates for today and maybe tomorrow. I have an author releasing in two weeks in hardcover from St. Martin’s Press (HESTER by Paula Reed) so I’m particularly anxious to see a resolution.

Talking with Macmillan editors, I hear that John Sargent has a meeting this afternoon with Amazon and that the company is “optimistic” that links will be back up by tonight or tomorrow morning. I’ve been assured that the conversation is continuing.

Below is the string of communications from the weekend. Also, Nathan Bransford, Ashley Grayson, and Richard Curtis have excellent detailed entries about this showdown if you want more understanding.

I’ll update if I hear more news.

It begins with New York Times breaking the story late on Friday, Jan. 29 at 11:19 p.m.

Publishers Lunch did an email blast Saturday afternoon:

The Battle Over the Agency Model Begins, As Amazon Pulls Macmillan Buy Buttons
As originally reported last night and many readers know by now, sometime yesterday evening the buy buttons for apparently all of Macmillan’s books–including bestsellers and top releases, and Kindle editions–were removed from Amazon’s site. Macmillan books remain listed but can be bought only through third-party Marketplace sellers, while Macmillan Kindle titles all lead to pages that read, “We’re sorry. The Web address you entered is not a functioning page on our site.” It is the first shot across the purchasing bow in big publishers’ efforts to reset ebook pricing above the loss-leader $9.99 price point and retake control over that pricing by moving from the wholesale selling model to an agency selling model (first reported exclusively in Lunch Deluxe on January 19), at least for ebooks published simultaneously with new hardcover releases. Kindle customers further reported on Amazon forums that any Macmillan books that were on their “wish lists” disappeared from those lists with no explanation, as apparently did Macmillan sample chapters that had been downloaded previously.

More story here.

John Sargent issued this statement Saturday afternoon:

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 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,

Amazon retorted with this:

Dear Customers:

Macmillan, one of the “big six” publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.

We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it’s reasonable to pay $14.99 for a bestselling e-book. We don’t believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.

Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy!

Thank you for being a customer.

Late Sunday night, it looks like Amazon is going to step back from their stance via The Consumerist.

And the Association of Authors’ Representatives just issued this statement about 10 minutes ago.

A message from the AAR Board of Directors concerning the sale of e-books:

The AAR strongly believes that the future of the digital book market requires a business model that is sustainable over the long term, and is fair to retailers, publishers and our authors. To be in the best interests of our clients, such a model must respect the high value of book-length work, and adhere to the long-held practice in all media (and most retailing) that new and exciting work bears the highest prices. We have never believed that a model that incurs a per unit loss on every sale, and sets an unrealistically low price on the most popular bestselling books, can possibly be in the best long term interests of our clients or the publishing industry. Therefore we applaud Macmillan’s stance on e-book terms; and Amazon’s stated intention to work within Macmillan’s model. We hope and assume other publishers will soon follow suit.

It is unclear at the moment the extent to which the ‘agency model’ sales terms will work to the advantage of our clients. But it is clear that having access to our authors’ work used as a weapon in negotiation is an unacceptable turn of events that we roundly condemn. Regardless of the content of the negotiations between Amazon and Macmillan, about which we have no information beyond what has been reported publicly, we believe that Amazon’s punitive choice to stop selling print editions of work by all Macmillan authors was a blow to the industry and to authors. We certainly hope to see Amazon rectifying this situation with regard to our Macmillan authors immediately. We and our clients have been hugely supportive of Amazon’s innovative, indeed groundbreaking efforts since its inception, and we hope that going forward the spirit of partnership between Amazon and our authors can be once again something we can depend upon.

Gail Hochman, President
For the AAR Board of Directors

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31 Responses

  1. India said:

    So because of an e-book quarrel, Amazon, which is SO concerned about its customers, wipes out our ability to order ANY book from a Macmillan publisher (which includes St. Martin’s, Tor, Forge, Picador, FSG, and others)except via secondary sellers. As a long0time Amazon customer, I’m outraged. As a St. Martin’s author, I’m deeply unhappy.

    Lose customers to BN much, Amazon?

  2. Kerry said:

    A Macmillan book I had put in my shopping cart last Thursday had been pulled out when I tried to check out this morning. I was annoyed with Amazon, but this annoyance was assuaged when I realized that the $30 book was available from a third party seller for $2.63 (plus $3 shipping). Turns out Amazon’s stubbornness saved me $25. I think I’ll go out to lunch.

  3. Kalika said:

    Amazon doesn’t need to worry. Macmillan will get what they deserve with falling sales. I still find $9.99 too expensive for an ebook when I see the paperback selling for the same price–or for *less*. The idea that they expect me to pay more than that makes me laaaaaugh. I won’t buy Macmillan books. If I wish to read one of their books, I will get it in a free way.

    Plug to fellow kindle owners–try Baen Books (ebook website: They sell many of them for $4-6. It makes me very happy.

  4. Amanda J. said:

    I’ve been away from the computer, so I had no idea that Amazon responded after John Sargent said his piece, or that the AAR jumped in on it too.

    Thank you for the update. Much appreciated! 🙂

  5. Leona said:

    They pulled chapters that had previously been downloaded? Even if they are free chapters, it disturbs me that thye have this capability.

    Pulling all available titles was a ddrastic move that I don’t believe Amazon thought out very well. It lead to people (as has previously been expressed) going elsewhere for their titles. It also did a disservice to authors. Who are they kidding? Price fixing is against the law, last I heard. Or, maybe the lower priced things keeps it from being actual price fixing. However, it is still ridiculous to tell a publisher what the price should be.

    Sounds like Amazon is too big for its britches and we need to support as many other lines of business we can without going through them.

    Sorry to all authors who were and still are affected by this.

  6. Jackie said:

    “…Macmillan has a monopoly over their own titles…”

    For the record, this is one of the most idiotic things I’ve ever heard.

  7. angry kitty said:

    “If I wish to read one of their books, I will get it in a free way.”

    I hope you mean via library or borrow from a friend, Kalika, and not a pirate site. Those criminals make me want to heave.

  8. Richard said:

    Seems to me Amazon might be shooting themselves in the foot so to speak. They are fixated on the $9.99 E Book even if it cost them money. Having been self employed for many years I have found markets have prices for reasons. Sure you can buy and sell hearing aids cheaper than many of the nationl brands. However you do not sell them everyday and you have to make the money to cover overhead and living expenses in the interim. The cut raters come and the cut raters go. All Amazon is doing is making it easier for the person who wants to self publish and has no concept of the long term cost. Yes they make more per book, but if they do not have the resources to sustain themselves sooner or later they loose out unless they are as lucky as the author of “The Shack” which is the exception and not the norm.
    Even that author saw the benefit of going with established market trends when it took off. Amazon better wake up. Just like K-Mart fell to the cutrate competition of Wal-Mart. Sooner or later someone will play their game better than them.

  9. Kristie Cook said:

    Thank you for this direct, clear-cut post. I’ve been trying to follow on the ‘net but it became a little too crazy over the weekend. I also appreciate AAR’s take being included. Both companies can look good or bad in this situation, but to readers/consumers, Amazon looks like the hero for trying to reduce prices. Unfortunately, the general public has no clue how this affects authors. It’d be great if the media would cover this from the authors’ perspective so people can be better informed. If they understood, they’d be more willing to pay $12.99-$14.99 for a new release. Geez, we pay $20+ for a DVD – 2 hours of entertainment compared to days or more in a book.

  10. AstonWest said:

    Hopefully MacMillian decides to price their Kindle versions the same as their hardcovers. It will make me laugh to know that other publishers who price their e-books competitively (and based on the amount of overhead that went into them) will sell more copies that way. 🙂

  11. Anonymous said:

    I know I’m in the minority, and god knows I don’t have the money to spare at the moment, but no writer should think its a great thing to buy a 9.99 book as opposed to a hardcover $25-30.

    What’s the incentive to keep writing if you are going to get so royally screwed like that? I think the same of other aspiring writers buying used books on Amazon or the like. None of those sales goes to the writer. And now the writers are getting screwed by ebooks too. And this is a good thing? Good for Apple and Amazon, but not authors. The whole thing makes me sick.

  12. Anonymous said:

    Plug to fellow kindle owners–try Baen Books (ebook website: They sell many of them for $4-6. It makes me very happy.

    Baen Books is a pirate site. And that makes me very sad.

  13. Cole K said:

    The piracy allusion raises another key point in this whole debacle. The best way to curtail digital piracy is to offer a legal, convenient market with reasonable prices. Amazon pulling the buttons, whatever their intent may be, just yanked the “convenient” part of that right out from under authors and buyers alike.

    It’d be the same result as if Apple yanked an artist from iTunes, and flipped some kill switch on all iTunes-purchased copies of their songs. All it would do is drive people to find alternatives (esp. illegal ones). Especially if they paid for it!

    (As for the habitual, unregenerate pirates, they weren’t the target customer to begin with since they weren’t going to buy it either way. Probably healthier to think of it as extreme loss lead, if only to preserve one’s own sanity.)

  14. Courtney Milan said:

    “Baen Books is a pirate site. And that makes me very sad.”

    I’d like to see a link to the place on Baen’s website where they are offering books in violation of copyright.

    “Free” does not mean “pirated.”

  15. Gilbert J. Avila said:

    I see that “The Last Ghost” (USA title “Spellbinder”) by Helen Stringer is still available from Amazon U.K. Is Amazon U.K a separate entity from the U.S. site? And are other affected authors still available there too?

  16. Anonymous said:

    Courtney, you’re so right and I’m so wrong. (And embarassed.) Baen is obviously legit.

  17. _*Rachel*_ said:

    Is this something where it would do any good to tell Amazon I wouldn’t have bought that new book today if I’d heard this sooner? Because that is pretty rough on both writers and readers.

  18. Anonymous said:

    Amazon appears to presume that we customers will be so thankful they are guarding our right to a lower price point we will ignore the fact they withdrew a whole slew of books as a bullying tactic.

    Not so, Amazon. If Macmillan wants to place a higher price point on their products that is their choice. We then have the choice to buy or not buy.

    Amazon’s bullying big brother tactics as they attempt to control the price of books look like the tantrum of a petulant child who wants everything their way.

  19. Anonymous said:

    MacMillan is either clueless or desperate or both. Amazon is in no way going to surrender their ability to set prices, because the real battle is six months later, with Apple.

    You know e-books are going to be on iTunes (see iPad announcement), and you’ve seen the Apple playbook. Do the math. Amazon has, and that’s why they’re happy to throw MacMillan under a bus.

  20. Anonymous said:

    Baen Books is a publisher, not a pirate site. They’re trying a different approach to ebooks with free books and “Webscriptions” (and you can bet other publishers are watching).

  21. Jeff Baird said:

    It seems to me we are missing an American Model. You know, authors sell books for a contract, publishers do the same. A set price doesn’t differentiate between top books with top authors and those that aren’t! Isn’t this yet another example of socialism? In a free enterprise system shouldn’t better be worth more? It seems more and more that point gets blurred! Kudos to Kristen who keeps us in the loop with many, many hours of personal work without pay! Thank you! I love this site!!!!!

  22. Sarah said:

    So I got so fired up about all of these shenanigans that I decided to stop just thinking about it and I actually wrote a letter to Amazon (respectfully, of course) to let them know how strongly I disagree with their leadership and business practices. Ugh, one year ago I was in the dark about Amazon (the whole publishing industry, really) but have since learned so much about the fact that what initially seems so good for consumers (what?! A $5.99 book? OF COURSE I’ll buy it!) is actually awful for the author, publishing industry, and ultimately for the consumer. Knowledge, as scary as it can be, is power!

  23. Robin S. said:

    I’m so angry with Amazon. I’ve been ordering books from them for years – loads of books – for myself, my daughters, as gifts – the list goes on and on. This entire episode brings into sharp relief, the difference between Amazon’s user-friendly look and feel, and the underlying corporate attitude.

    I just tried to call the corporate offices to voice my dismay with their behavior, and when I did, I received another slap-in-the-face educational moment, when the ‘helpful electronic voice’ on the line tried repeatedly to steer me back to the website to use email or call the “customer service line”.

    I remember several years ago when Jeff Bezos’ business model was being hammered by investors, and he looked like he’d been beaten six ways from Sunday in interviews over his stock price and his business concept – dark circles under his eyes, a sadness in his demeanor, the whole fighting-for -your-life shebang.

    Perhaps old Jeff should reflect a bit on those terrible days, and take a step back, and think hard about what ‘winning’ means, and just who is winning in this battle.
    It sure as hell isn’t the world of books that existed before he came along. I’m not against progress; I AM against assuming any and all change can be defined as progress.

    By the way, for anyone interested, Borders Books has a nice deal now. If you go into one of their stores and they don’t have the book you’re looking for, they will mail it to you free of charge. I frequent a large Borders in DC, so I hope this is company-wide as a policy and not store-specific. My point is, there are other ways to buy a book than popping over to Amazon, and maybe it would help if word got out that we should do so.

  24. Anonymous said:

    Anyone who spends more than $9.99 on an ebook is an idiot. I’m sorry. But you want to spend $12.99 on something that is digital and does nothing other than display written words??

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