What's Going on With Amazon and Macmillan?

The book blagosphere has been buzzing with the news that Amazon, a big website to which I link in most of my posts, isn’t selling any titles published by Macmillan, the smallest of the big publishers in the U.S. The dominant question in all this is “why?” There’s been lots of speculation, much of it not worth linking to, but Charlie Stross has written a handy outsider’s guide to the fight, which is actually about how the publishing industry will shake out as a book makes its way from an author to you, a reader.

The bad news is that Stross’ post is almost impossible to excerpt effectively, but I’ll try:

Publishing is made out of pipes. Traditionally the supply chain ran: author -> publisher -> wholesaler -> bookstore -> consumer.

Then the internet came along, a communications medium the main effect of which is to disintermediate indirect relationships, for example by collapsing supply chains with lots of middle-men.

From the point of view of the public, to whom they sell, Amazon is a bookstore.

From the point of view of the publishers, from whom they buy, Amazon is a wholesaler.

From the point of view of Jeff Bezos’ bank account, Amazon is the entire supply chain and should take that share of the cake that formerly went to both wholesalers and booksellers. They do this by buying wholesale and selling retail, taking up to a 70% discount from the publishers and selling for whatever they can get. Their stalking horse for this is the Kindle publishing platform; they’re trying to in-source the publisher by asserting contractual terms that mean the publisher isn’t merely selling them books wholesale, but is sublicencing the works to be republished via the Kindle publishing platform. Publishers sublicensing rights is SOP in the industry, but not normally handled this way — and it allows Amazon to grab another chunk of the supply chain if they get away with it, turning the traditional publishers into vestigial editing/marketing appendages.

The agency model Apple proposed — and that publishers like Macmillan enthusiastically endorse — collapses the supply chain in a different direction, so it looks like: author -> publisher -> fixed-price distributor -> reader. In this model Amazon is shoved back into the box labelled ‘fixed-price distributor’ and get to take the retail cut only. Meanwhile: fewer supply chain links mean lower overheads and, ultimately, cheaper books without cutting into the authors or publishers profits.

Read the rest on Stross’ blog.

This makes me feel slightly dirty for having bought a Kindle recently. On the other hand, this… thing… is between giant corporations, both of which are working to extract as much money from me as possible. If I had to root for either Macmillan or Amazon, I’d chose the former, since the prospect of Amazon as the middleman between virtually every reader and every author is unpalatable. But with the iPad en route, the Barnes and Noble Nook at least in existence, and other eReaders on the way, the prospect of Amazon’s dominance looks far less likely than it did. That’s probably why the company is so desperate at the time.

2 responses

  1. Very interesting! And don’t forget that with its Create Space Print-On-Demand business unit, Amazon is also trying to play publisher too. I have this sneaking feeling that five, ten years hence, a major transformation in publishing is coming down the pike. It’s possible we won’t even recognize the publishing business once it hits.

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  2. Jason, that major transformation is called, “blogging.”

    Jake, feeling “buyer’s remorse” is pretty common with gadgets. Don’t let it get you down. See this list of online novels for something to pick you up.

    I probably will be buying an ipad when that comes out, but only because my current ereader is 3 years old. But I am certain that weeks later I’ll hear about some reason to wish I had waited until Device Y came out.

    The choice of gadget is not important. What it gives you access to is.

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