Feb 2, 2010

ebook wars

I've been watching with interest the standoff between McMillan books and Amazon over pricing. Some background here. In short, Amazon pulled the full catalog of MacMillan books over a dispute of pricing. Amazon wanted prices low and MacMillan didn't. Both of their stances are self-explanatory. MacMillan doesn't want ebooks 'devalued' and Amazon wants to increase acceptance of their Kindle device. At this point it seems like Amazon has lost this battle although many MacMillan books still don't seem to be for sale through Amazon.

This fight is interesting for a number of reasons.

A large segment of the blogosphere seem to be oddly siding with MacMillan on this one. You've had authors and their followers show support for MacMillan and many of the tech sites and their commenters covering this have been semi-supportive of MacMillan. One good argument for a consumer to side with MacMillan on this is that they may not want Amazon to become the defacto ebook distributor. If Kindle had the marketshare of, say an iPod, then Amazon has a semi-monopolistic role as a ebook distributor. What's odd though is that when a similar fight played out in the music arena; tech sites, their commenters, and even some musicians sided with Apple versus the labels.

The other interesting aspect of this is that while Amazon seems to have relented on a $10 price cap for ebooks people are missing an obvious data point. Go look at the top 10 ebook seller list here.

Of the top 25 bestselling ebooks:
- 12 are free
- 14 are less than $1
- 25 are less than $10

In fact none of the top 100 books are more than $10. Most seem to be less than $1. So even if MacMillan wants Amazon to charge $15 for a new book there are going to be way way way too many books available for less than $10. Hell there is even a boycott of $10+ ebooks. Of the 20-30 ebooks I've purchased I can't think of one that was over $7 and quite a few were free. Now I love some of the MacMillan authors (Scalzi?). But given how much material is available for a much cheaper price I'm probably going to be able to find something I want to read.

The other weird aspect of this is that even at $10 I would think the publishers and authors would be fine economically. An ebook has a zero marginal cost of manufacturing. It also has no inventory. A big deal for publishers because retailers like Barnes & Nobles get their books for free until they sell them. And the biggest reason they should be excited about ebooks is that I can't currently check out an ebook from the library and I cannot resell an ebook. The publishers problem is that in the meantime they still have to support the huge infrastructure around printing, binding, and storing paper books.

We'll have to see how this plays out.

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