The Battle Over the Agency Model Begins, As Amazon Pulls Macmillan Buy Buttons

Fascinating. Good for Macmillan, I like this shot across the bow. Well worth the read.

From Publisher's Lunch:

As originally reported last night and many readers know by now, sometime yesterday evening the buy buttons for apparently all of Macmillan's books--including bestsellers and top releases, and Kindle editions--were removed from Amazon's site. Macmillan books remain listed but can be bought only through third-party Marketplace sellers, while Macmillan Kindle titles all lead to pages that read, "We're sorry. The Web address you entered is not a functioning page on our site." It is the first shot across the purchasing bow in big publishers' efforts to reset ebook pricing above the loss-leader $9.99 price point and retake control over that pricing by moving from the wholesale selling model to an agency selling model (first reported exclusively in Lunch Deluxe on January 19), at least for ebooks published simultaneously with new hardcover releases. Kindle customers further reported on Amazon forums that any Macmillan books that were on their "wish lists" disappeared from those lists with no explanation, as apparently did Macmillan sample chapters that had been downloaded previously.

Macmillan has commented by way of a paid message to authors, illustrators and agents, reproduced below this story. Amazon has declined to comment thus far, either to the media or directly to their customers.

Among the books subject to the greatest potential short-term effect of Amazon's buy-button removal is Andrew Young's just-released THE POLITICIAN, which curiously still ranks at No. 9 on Amazon's bestseller list (and has been between No. 4 and No. 6 today at Barnes and Noble.com). Hilary Mantel's WOLF HALL was at 69 on Amazon last night, falling steadily today and now at No. 128. Atul Gawande's THE CHECKLIST MANIFESTO: How to Get Things Right was at 34 last night on Amazon, now at No. 66,--and has risen from 112 up to 86 at BN.com in the same time period. (These numbers change slightly every hour we've been checking them.)

We were able to reach a couple of agents for some of Macmillan's current bestselling authors. Co-head of the William Morris Endeavor books department Eric Simonoff, whose clients include Douglas Preston (author of the January Tor release Impact), told us: "The current model of Amazon selling Kindle editions as a loss-leader is fair for publishers and authors in the short-term but as we have told Amazon we don't believe it is sustainable in the long term. Something had to give to prevent the ongoing devaluation of e-books. Macmillan is the first to draw a line in the sand but we expect not the last."

Tina Bennett at Janklow & Nesbit, agent for Atul Gawande's new bestseller, comments: "This development is very unfortunate for my author, but it's also troubling for public health. The checklist approach that Gawande describes in his book is a major life-saving advance. It has been demonstrated to reduce harm to surgical patients by more than a third, but has yet to be widely adopted in US hospitals. To make THE CHECKLIST MANIFESTO unavailable for sale is the equivalent of blocking the distribution of a book announcing the discovery of penicillin."

Agent Robert Gottlieb at Trident Media Group offered this view: "The agents I know feel the $9.99 price for new releases is not good for the business. They want the publishers to work with all the retailers in a peaceful manner. I don't think it is in any book retailer's interest both short and long term not to do business with companies like Macmillan and at the same time Macmillan needs Amazon. What will Amazon do if S&S moves in this direction or Hachette? If consumers can't get the books they want from Amazon they will move to other retail sites for what they want."

One senior publishing executive called the move by Amazon "fairly draconian" but added that their company had not received any threats of similar action from Amazon. As we've said before--though consumers have not yet gotten the message--the agency model that publishers are trying to implement with Apple and across their customer base actually lowers the publishers' proceeds from each ebook sale and gives more profit to sellers versus the current loss-leading model behind the $9.99 price point.

Another senior publishing executive said that "Amazon may 'spin' that the consumer is at the heart of the decision, but really their goal is a monopoly position in books. Publishers don't want a monopoly - they want consumers to have choice through a number of partners and channels. They want digital pricing which allows bricks and mortar retailers to survive and thrive alongside a growing digital market." That person added, "This reaction proves what Amazon's true motives are. It is a signal to any other publishers not to change the model and weaken Amazon's pathway to a monopoly. I hope authors, agents and publishers see what these motives are and stand by Macmillan."

Among remarks from Macmillan authors posting online, perhaps one of the most curious came from Sherrilyn Kenyon, who posted to Facebook and then later in the day removed her entry, which read in part: "All of you asking why you can't find my books on Amazon Kindle? It seems that Amazon is the one to blame. They are in a disagreement with my publisher and to prove a point, they have removed Macmillan books from their Kindles.

"You know, as a Kindle owner, I have problems with this. They're not cheap and I bought it so that I could download the books I wanted to read. I don't like a store taking something from me like this without warning. It's just like when Amazon removed books from my Kindle that I'd paid for because they didn't have permission to sell them."

In comments over at John Scalzi's blog, bestselling Simon & Schuster author Scott Westerfeld writes, "The real power we authors have is removing links to Amazon from our websites and such.... Random blackouts do not make customers happy."

Amazon's own forums have been quite busy with postings today, with customers expressing a wide range of everything from support to dismay with the etailer's move. The most damaging aspect of their action in the short-term may be the removal of Kindle "wish lists" and sample chapters. For some posters that action has echoes of the incident last summer when Amazon deleted copies of certain books from Kindle owner's libraries, in violation of the site's own terms of use. As one person writes, "we do feel vulnerable, even if Amazon is right to fight. Wishlists disappeared, with no backup of what the titles were. Sample books we chose to download lead to links that say Error. It reminds us that we do not have control over the situation, even if we backup, since what is offered today may not be available tomorrow." (Amazon apologized for that earlier incident, provided refunds to customers, and eventually settled a customer lawsuit.)

While many customers support Amazon's efforts to provide low prices, one "open letter" suggests that the company let customers decide for themselves what is the right price. "Here's a thought Jeff: You list them and I will decide if I want to buy them or not. How's that sound? I agree with you they should not cost more than $10, but I can enforce that with my pocketbook. I don't need you to make a big hairy freakin deal out of it on my behalf and I certainly don't need you to limit my choices based on this principle."