Amazonfail: What Happens if the Distributor (Amazon or Apple) Controls Prices

January 30th 2010 at 7:07 am

The current #Amazonfail is about them pulling all of the Macmillan books off of Amazon (the last one -if you remember – was pulling a rankings off of gay and lesbian themed books).  The apparent issue is about price control.  For those who find this news new, John Scalzi has a good summary of the issue.  As an author, and someone who’s always been loyal to Amazon,  I’m pretty pissed off.

Here are the business model points as  I understand them.

Today, in print, the publishers have full control of the price.  The books are pre-ordered by bookstores and cannot be discounted (except for things which are almost surely in contracts between major chains and the publishers like the B & N loyalty program).  They can be – and often are – returned.  The super deal books you see (for example, at Half Price Books) are usually overstock the publisher has sold a very steep discount rather than paying to have it destroyed. This model has flaws, but it results in dependable pricing and a lower inventory carrying risk for bookstores.

If publishers lose all control of the price with ebooks, then a few things happen.  One is that ebook prices may approach zero (the is bad for publishers and authors and even bad for readers in the long run).  If ebooks go too low too fast, the bookstores go belly up too fast to adapt to the market.

Bookstores will go the way of record stores some day; sad but nearly inevitable.  If Amazon wins, this will happen much faster.  If they don’t, some stores and chains will be able to adapt and live.

iTunes means I buy about three times as much music as I used to.  Maybe iBooks will have the same affect, especially if it’s available widely and not just for Apple products (remains to be seen).  Kindle has driven me to buy more, too, by the way.  I like my Kindle.

But if Amazon wins the ebook price war and publishers lose complete control (whether that’s me – I’ve published some of my back list stories on Kindle — or that’s Macmillan/Tor who owns all of my novel print rights) then many of things we need in this industry will go away completely.  Publishing is changing, and we need publishers to change, too.  But this is one battle I want them to win, as a reader and an author.

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