Truthfully, I thought I had no more to say about the whole publisher/Amazon price war. I hadn’t even planned on writing a blog post today at all. I was eating breakfast, preparing to head off to the gym — you know, stretching and warm-up, a little weight-lifting, time on the dip machine and half-hour on the treadmill. But, as I was eating my oat bran, I came across this article on BNET that I just had to respond to.
One of the things that struck me was that, in my earlier post, I was operating under the assumption that part of the gripe mainstream publishers had over the Amazon deal was that they were losing money on Amazon Kindle sales. An honest assumption if Amazon is selling eBooks at a loss, then HarperCollins et. al. would also be losing money. Not so, according to Rupert Murdock:
We don’t like the Amazon model of selling everything at $9.99. They don’t pay us that. They pay us the full wholesale price of $14 or whatever we charge. We think it really devalues books and it hurts all the retailers of the hard cover books.
It does, however, prove my point about the publisher believing that the Kindle’s dominance in the digital book market damages their ability to sell hard covers. Before I delve into that subject, however, there’s more with regard to their deal with Apple:
Murdoch pointed out that even though the publisher would make less money per book in a deal with Apple (AAPL) it’s willing to take $10 per book –instead of the $15 wholesale it collected from Amazon– in order to maintain some control over suggested retail pricing (and avoid the $1 download debacle the music industry faced to boot).
Does this make sense to you? Mainstream publishers are willing to sell eBooks at a loss on Apple’s iBooks store, rather than sell eBooks on Amazon at a cheaper price for a profit? Because they’re afraid of facing the same situation as the music industry? Might I point out that digital music created a market for young, struggling artists and that the major labels are still making money — last time I checked, Beyonce and JayZ were still doing okay. I’d further point out that the $1 download market was essentially created by Apple. So making a bargain with the devil to avoid losing your soul doesn’t really compute, now does it?
Now to this belief that eBooks will kill hardcover sales. Well, maybe, but probably not. What I mean is that you have to consider that mainstream publishing is controlled by six companies (used to be seven until Dell Publishing was gobbled up by Random House). Think about it, all of the books that make it into bookstores are produced by six companies. Of course they don’t want to surrender control. They don’t care about their customers and I don’t really believe they care about their writers or literary value. They care about one thing and one thing only: the almighty dollar. They’d much rather sell a million books for $25-$30 a pop than a million eBooks for $10-$15 dollar or even less than that. Their deal with Apple has nothing to do with nurturing writers or valuing writers or literature and everything to do with devaluing the eBook market under the assumption that it will protect their control over the hardback market.
eBooks will likely kill the market for mass market paperbacks eventually. Really that’s the market the eBooks compete with. Paperbacks cost, on average, a couple of dollars when I was a kid (and the market for the trade paperback didn’t really bloom until the mid-eighties). Most mass market paperbacks cost around $10 today. It’s clear to see how an eBook priced $9.99 or less would eventually make it highly unprofitable for publishers to continue producing the mass market paperback. But does that necessarily translate into the death of hardback books? I think not. It might do a number of things though. For one thing, really really good books might just see an increase in hardback sales because of eBooks. 1. Say unknown author X writes a really great book that otherwise wouldn’t get much love from the publisher as a hardback, but thanks to the eBook version being priced a dollar, readers take a chance on it because, what the fuck, it’s only a dollar. They love the book so much, they run out and buy the hardback. It could happen. 2. Publishers stop making multimillion dollar deals with celebrity "authors" and concentrate once more on nurturing new writers and publishing and marketing quality books. 3. Publishers realize that, as the eBook market grows, eBooks aren’t competition for hardbacks, but an extra market they can exploit. 4. While eBooks might not destroy the market for hardbacks, it might very well push mainstream publishers into using POD rather than the current printing press/warehousing system. 5. It may force Big Publishing to become leaner and meaner operations with less waste, more gamble and less driven by blind greed. 6. It will definitely inspire many other companies to compete with Amazon, Apple, Barnes & Noble, Sony for the eBook dollar.
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