It’s been a hairy few days, starting with Amazon firing a broadside at Macmillan (I like Charlie Stross’ summary the best) then, within 72 hours, backing down. The ensuing conversation (mostly on Twitter) has been very interesting.
Early on I remarked “The 21st-century marketplace is being reinvented in real time right now” which I think is obviously true. A lot of the crowd was expressing fury that anyone would charge $14.99 for a bag of bits and yes, that does seem a little steep. Later on I followed up with “The actual price isn't important. What matters is how it's set. $14.99 seems high, but pricing being an Amazon fiat is WRONG” and that got surprising push-back.
So here’s what I think. In a sanely-functioning market for books, the following should all be true:
Any publisher should be able to charge whatever they want for any individual work. For example, at some point J.K. Rowling is going to write another book, and there’ll be a certain number of people who are prepared to pay silly amounts of money to read it on Day 1. So why shouldn’t the publisher and J.K. launch it at an insanely high price, which then drifts down? Maybe toss in a few bonus features for early buyers?
And then at some later point, let’s suppose a few years go by and J.K. does something newsworthy like marry Arnold Schwarzenegger or die; why not put on a quick $2.50-off-the-whole-Rowling-list sale to capitalize on the news while it’s fresh?
The retailer (for example, Amazon or Apple) should be able to sell the work for whatever price they please, including at a loss. Smart retailers use counter-intuitive pricing all the time to maximize their bottom line across their product mix.
Publishers and retailers should be able to explore a bunch of different pricing mechanisms, including the kind of agency structure Macmillan wants, a variety of volume discounts, promotional gimmicks, and exclusivity.
Hypothetical example: Suppose, next year, you want to read Lady Gaga’s unexpectedly-bestselling Practical Semiotics, you gotta buy a B&N Nook; it might make sense for B&N to pay Lady G a cool ten million or more for that kind of deal.
Competition over data formats should be discouraged. EPUB is plenty good enough for an overwhelmingly high proportion of the books that anyone wants to buy, and if there’s a piece of work for which EPUB falls short, it’d probably be better on paper, anyhow.
Some may not know that I spent quite a few years toiling in the publishing-technology mines, and I’m pretty sure that I’m right about this. The way I see it, anyone who is peddling a proprietary book format is under suspicion of trying to establish monopoly lock-in.
This is important, because of the next important possibility:
The market should allow authors to bypass intermediaries, host their own EPUB files, and sell ’em straight to their readers. I’m not going to insult the intelligence of my readers with an explanation of why this is a good idea.
Anyhow, based on these principles, Amazon’s attempt to assert that they decree both the retail price and publisher’s cut was clearly out of bounds, and I’m glad that’s over with.
Macmillan’s attempt to assert that they will sell only for $14.99 and only allow 30% markup seems silly to me, but not damaging to the market, because other publishers can compete creatively. To be specific, 70% of $14.99 is $10.49 — if I were Macmillan, I’d wholesale at $10.49, let the retailers charge what they please, offer them volume discounts, and see if anyone were prepared to offer big bucks for an exclusive or some other promotional win.
And if $14.99 really is too much for a well-reviewed brand-new work by a hot author, well, the marketplace will expose that quickly and brutally. But I think we ought to be able to try out lots of silly ideas to find which ones work.