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."

And now . . . Barnes and Noble?

 Barnes & Noble (BKS), the largest book store company in the US, recently disclosed that sales from November 1, 2009 to January 2, 2010 were down 5% to $1.1 billion. Same-store sales were off 5.1%. BKS is up against a rapid increase in book sales over the internet which is dominated by Amazon (AMZN) and includes large retailers such as Wal-Mart (WMT). The rise of the e-reader and e-books is also in the process of undermining “bricks-and- mortar” book buying traffic. BKS peer Borders (BGP) recently closed 200 of its Waldenbooks outlets and fired 1,500 people. Barnes & Noble has 775 outlets and 636 college bookstore. BKS will have to push online sales, marketing of it Nook e-reader, and close at least 100 stores.


Read more here.
. . . Which explains why (most) Savas Beatie authors understand when we tell them, if you really want to sell niche history books and expect a royalty check larger than $100.00, you better be active, aggressive, involved in social networking, etc. . . .

--tps

Outlook for Waldenbooks / Borders is Bleak

Waldenbooks/Borders


2009 Store closures: 110 (Q4 2008 to Q3 2009)
 
Outook: Amazon.com continues to wreak havoc on traditional booksellers. The Borders unit says it will close an estimated 200 stores during the three months ending January 31, for a total of roughly 300 Waldenbooks stores over the past 13 months, close to 70 percent of all outlets. Retail analysts at Davidowitz & Associates give Borders Group, plagued with losses three years running, a 50-50 chance of survival.

Had 'Em, Let 'Em Up.

Well, with five turnovers it is tough to win, and yet we took the game to overtime. And could have won it in regulation several times. Did not close the deal, so  . . . they go to Miami and the Vikings (5 NFC Championship games in a row for them over 35 years) . . . go home.

I am getting used to this.

tps

Pants on the Ground! Who Dat! Saints? That Be the Norsemen Coming to Town

What a victory Sunday. I was worried about the Cowboys, but the Vikes showed up and dismantled "America's Team." And then they whined about an extra touchdown near the end of the game. Whaaaa.

http://www.youtube.com/watch?v=TNMzWKn3OCE

Pants on the ground, baby.

-- tps

Writers are in the "No" Game. Good Advice From the Sporting World

Take it to heart. (Hat tip to Kevin)

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By Jason Boog on Jan 07, 2010 02:23 PM

As the NFL playoffs loom this weekend, sports writers around the country are dusting off metaphors and polishing their action verbs.

Today's guest on the Morning Media Menu was Matthew Shepatin, the sportswriter and author of the new book, "Madden Said to Summerall...The Best NFL Stories Ever Told." We discussed sportswriting, upcoming football games, and the stories behind the NFL playoff games this weekend.

Here is Shepatin's advice for aspiring sports book writers:

"I encourage anyone to get into sports writing and the publishing world. It's one of the things I hated when I was younger. People would tell me, 'You know what your chances are?' No matter what you pick in life, it's tough. So why not pick something you love? ... It takes a lot of patience and determination. Just like a football player. If it's a passion of yours, don't be discouraged by what other people tell you."

Barnes & Noble Holiday Sales Down 5.4% Over 2008

More bad news. Stores now order fewer books, don't even put all of them out for sale, AND return them early for credit. And sales are down. Again. Significantly. When I go into our local chain store and see how poorly trained the staff members are, how uncaring they appear, how little they really seem to want to sell books, it drives me to distraction. If I ran the store, sales would explode. I guarantee it. Note where their sales improved.

Read on:

The nine-week holiday selling period at Barnes & Noble was another rough one, with same-store sales down 5.4 percent at $1.1 billion (and bear in mind that the comps a year ago were down 7 percent from 2007). Sales at BN.com rose 17 percent however, at $134 million, in large part because of nook revenues recognized in that period. (BN.com had sales of $114 million in the same period a year ago. When the company reported second quarter earnings in late November, BN.com was up 9 percent for the period. So figure that recognized nook revenues are roughly between $10 million and $20 million."

Holiday sales were "lower than expected," and the company lowered their guidance on earnings for the full quarter from $1.30 to $1.50 a share down to $1.20 to $1.40 a share. BN already reduced full-year earnings guidance in November based on holiday doldrums and extra costs of ramping up the nook.

CEO Steve Riggio indicates in a brief statement it will take them another few months to catch up with nook demand: "Orders for nook remained strong throughout the holiday season, and, in fact, accelerated after we announced that we had sold out our initial supply. Demand remains strong in the New Year and greater than our supply, however, we expect production to catch-up with demand and be fully stocked in our stores in the next few months."

And books?

--tps

Happy New Year. 2010 Should be . . . Interesting

I hope your Christmas was good and that the turn of the calendar passed smoothly, happily, and healthily for you and yours.

2009 is now in the books (no pun intended--well, maybe a small one), and 2010 is upon us. Thankfully, we escaped the devastation suffered by so many publishers in 2009, although the last month of the third quarter and the first month of the last quarter witnessed dramatically higher trade book returns--something Savas Beatie has largely avoided throughout our history.

Happily, our marketing department's efforts paid dividends in 2009 by opening new sales outlets and increasing specialty sales. Sarah, Veronica, Kim, and Tammy also worked closely with our hardworking authors and opened many new opportunities for them. The result was significantly increased media exposure (ABC Nightly News, Fox News, CNN, and major syndicated radio talk shows) and increased opportunities for personal author sales. These author efforts, in turn, help drive people into the bookstores.

As we have been preaching year in and year out, author efforts translate into increased trade sales and reduced returns. In nearly 100% of the time, a book that experiences heavy returns does not have an author working Facebook, Twitter, on the speaking circuit, etc. In one case this year a very popular author suffered staggering returns in a single month, and the author is hardworking and does everything right. As it turned out, the books were returned in cases unopened as a means of paying down debt owed to the distributor, and all the returns were resold into the trade in orders received over the next sixty days. Since publishers carry the paper for these books (publishers do not get paid for four months after the month of sale), the returns are at the least very frustrating for both authors and publishers alike. They in payment directly affects the bottom line of any royalty statement.

Our 2010 Spring line-up (which will be set forth in a coming post) includes a wide assortment of titles and authors. We are very excited about each one look forward to presenting them to you.

In my next post, I am going to answer a question sent to me by a reader about changes in the book trade over the past decade or so, and how this affects our authors.

Many thanks for your support and all of us wish you well in 2010 and beyond.

--tps