Tag Archives: MacMillan

3 Reasons Why E-Book Failed In 2000 And What It Means For 2010

There is no doubt that 2010 has a lot to gain from the e-book industry. There are six e-book devices (Kindle, Nook, iPad etc) in the market and more soon to be released. As per predictions from a major business magazine up to seven million of these devices will be offered for sale next year.

Moreover, one of the major consulting firms have predicted that e-book sales will account for close to 10 percent of the the publishing market in five years. Clearly that indicates the rate at which more and more publishers will switch to electronic book publishing.

But this was not the case in the year 2000. Here are a few reasons for what went wrong in 2000 for the e-book industry and how could those mistakes be avoided in2010.

1. Lack of sufficient e-books – One of the mindsets that users of e-book devices had and still have is that if they don’t get to read all the books (literally all books under the sun) on their device then the worth of the device starts losing its value. If voracious readers are asked how many books would they like to read on their e-book device they would just say all (else there is no point spending hundreds of dollars on the device).

But in 2000 there weren’t much e-books available. They were expensive to covert to an e-book format and publishers were too reluctant to think in those terms. Today, the scenario is different – far better (although much scope to improve). Almost all of the top 10 New York Time Bestsellers were available in e-book format. Although some issues around the availability is the timing. Barnes & Nobles had 15 books i its Coming Soon List but made only 6 out of those 15 were made available in eb–k format the same time as the print release. That still is and will continue to be a huge concern for users and this is somethig the ebook industry should be careful about.

Another concern that needs to be addressed is the gaps in the way the books are available. For example many of the books of popular authors are not available in the Kindle store but are available in Nook device. There needs to be some consistency here in order to increase the e-book adoption rate.

2. Pricing – In 2000 many of the ebooks were priced the same as their print versions. But the way a user percieves a hardcover book is different from the way he would look at an e-book. Hardcover  books gives a nice feeling, has more substance and they can keep it in their book shelves to show how tasteful they are. But all of this is missing in an e-book. Moreover, due to the same reason the cost of publishing an ebook is much lower as compared to  a paperback/hardcover.  So why not pass on that cost saving to the users. keeping the same price is definitely not justfiable.

Amazon had been trying to resolve this by pricing the ebooks much lower than their print versions but this arrangement could not be carried on due to challenges raised by Macmillan. And now Apple also in a way supporting what Macmillan had been asking for the industry is shifting towards agency model pricing (where the publisher and NOT the retailers decide the price of the ebook at which the retailers will have to sell to the end users).  Pricing still remains a big topic of debate in 2010.

3. Poor Marketing – One of the ways by which a market for tech prodcucts are created is by identifying a groups of users and some of the problems they are facing and then trying to solve their problem with the product. I am not sure if ebook had succeded in filling up this gap back in 2000. But even now I am not sure if that need for an ebook device/reader is felt very highly. I think most of the buzz and envestment in the ebook industry is still being driven a lot by strategy than by user needs. Its just that ebooks are considered to be a huge area of oportunity and so all publishers and electronic companies are jumping into making their own device just to be sure to take full benefits of the opportunity. I think the need/benefit for an ebook needs to be better pronounced. Check out Amazon’s announcement of why one should use kindle – Point to see is that it lists all the features but not the benefits to the users.


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Ebook Pricing War Between Apple and Amazon – Who Will Win Publishers or Amazon

As we all know book publishing industry is going through one of the biggest industry defining change in last 100+ years. When the industry seemed all ready to go ahead with the ebooks (with Amazon successfully launching and selling kindle and kindle books) Apple decide to disrupt the party with its announcement of launch of iBook Store through iPad and by signing Agency model (a pricing mode were publishers decide at what price they want to sell their books to the end users contrary to the normal distribution deal that publishers had with Amazon where publishers sell these books to Amzon at normal discount on list price and Amazon can sell it to publisher at whatever price) deal with Top 5 publishers (all the top except Random House)

The ebook pricing model is going through an interesting time with Apple trying to talk to publisher (both small and big) to go for agency model (which means 70% for publisher & 30%  for retailer split) and get an assurance that they will not sell the same book at a lower price through any other retailer (read Amazon). Amazon on the other hand has made it clear that it is not going to sign Agency model deal with any one except the Top 5 Apple publishers. This has left Publishers in a dilemma.If they go for Agency model with Apple they will not be able to sell through Amazon because Apple deal will not allow them to sell the same ebook at a lower price anywhere else and if they do not sell through Apple then they are increasing the power of Amazon even more.

The solution to this stalemate is

1. Apple becomes more flexible and decides to have a mix of both Agency and normal wholesale model (offer similar revenue split for agency and normal wholesale model i.e. 70%/30%)

2. or Amazon is fine with Publishers doing Agency agreement for ebooks sales.

Next few months are going to be really interesting as Amazon will try its best to use its clout in print books to arm twist mid and small publishers in staying away from Agency model and Apple will try its best to make its ebook offering best by having as many publishers in the program as possible. The third big player in this game is Google. It will interesting to see which way will Google go with its Google Editions offering.

Lets wait and watch and enjoy the game. My bets are on Amazon 🙂

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Amazon Vs.The Publishing Industry

In the midst of the latest battle over e-book prices ($9.99 vs $14.99) between online retailer Amazon (AMZN) and the publishing giant Macmillan the e-book industry is faced with a series of serious questions. Whether Amazon will be approached by other publishers-the top 6 at least (like Macmillan) to raise the price of e-books sold trough Kindle to $14.99? If so what happens to the users (Something for users to think)

Amazon currently offers e-books(for new releases and bestsellers) at $9.99  in a move that is aimed at driving Kindle sales and increasing demand for digital books. But since this pricing policy of Amazon might land up hurting sales from bestsellers and higher priced hard covers for some of the publishers Macmillan has asked Amazon to sell their books for $12.99-$14.99.  Although Amazon did pull Macmillan titles to protest Macmillan’s pricing plan, they were eventually being forced to give in.

The ultimate result being that Macmillan gets to keep their profit margins. Macmillan’s Sargent said that “in the future Macmillan would set the prices for e-books and retailers such as Amazon would take a 30 percent commission — the same deal Apple has entered into with Macmillan and other major publishers”.

In its statement, Amazon said “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 dollars for a bestselling e-book” and that they do not expect other publishers to follow the same policy as Macmillan.

Paul Aiken, executive director of the Author’s Guild, disagreed to Amazon’s beliefs over the pricing war and said he does expect other publishers to follow Macmillan’s path.

Aiken told “It’s hard to imagine that there’s a responsible publisher out there with adequate clout that won’t be following suit,”. “There are at least five other publishers who can get this deal from Amazon.”

Aiken also brought another interesting blend to the entire price was debate. He says that Macmillan’s pricing model will, for the time being, actually mean more money for Amazon and less for publishers.

Why So? How about this…..In the existing model, Amazon is paying the publisher half the book’s list price and then sells the e-version in the Kindle store for $9.99. But this model does result into a loss for Amazon for books (bestsellers) priced over $20.

“Taking into account a 30-percent commission to Amazon and e-book prices of between 12.99 dollars and 14.99 dollars, Macmillan’s pricing plan would result in even less money for publishers in the short term, Aiken noted”.

“But Sargent is definitely playing a long game here,” he said. “Everyone knew that Amazon wasn’t going to sell books at a loss forever. They’ve been willing to lose money on e-books to sell Kindles and to lock in a customer base,” Aiken said. “That game was going to end at some point. And when it ended was up to Amazon”.

Aiken also said “Once Amazon decided that it had captured enough market share, that it had control of the industry then it could dictate terms to publishers,”. “At some point we all knew the squeeze was coming.”

Amazon shares dropped close to 6 percent on Wall Street on Monday – closed at 118.87 dollars.

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Amazon Shares Down 6% After Accepting Macmillan’s eBook Pricing Strategy

After a much heated up debate between the two companies, Amazon.com has finally agreed to give in to publishing giant Macmillan and will be selling e-books at a higher price (price that Amazon thinks is too high).

Hilary Mantel’s “Wolf Hall”, Andrew Young’s “The Politician” and other books published by Macmillan were made unavailable for sale on Amazon.com last Saturday, as Amazon thought the publishers’ new pricing strategy was too high for the e-books.

In an attempt to stay ahead of the competition that Amazon is facing from Barnes & Noble, Sony (and now Apple once the iPad is available) Amazon had decided to offer e-books at $9.99. A price that publishers say is too low and would seriously hurt their sales revenues for some of the higher priced hardcovers.

Amazon told customers on its online Kindle Forum that it “expressed our strong disagreement with Macmillan’s determination to charge higher prices”.   Under the new pricing strategy e-books will be priced from $12.99 to $14.99 the first time it is offered and prices will change over the time.

“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 said in the posting.

Macmillan is one of the largestt English language publishers division including St. Martin’s Press, Henry Holt & Co. and Farrar, Straus & Giroux.

Macmillan CEO John Sargent told The Associated Press that they were in discussions with Amazon in order to resolve the differences.

As per Amazon other publishers might “see this as an opportunity to provide attractively priced e-books as an alternative.”

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