An American Editor

February 28, 2011

Never Give a Sucker an Even Break!

In 1936, in the movie Poppy, W.C. Fields tells his daughter, “If we should ever separate, my little plum, I want to give you just one bit of fatherly advice: Never give a sucker an even break!” It appears that Apple has adopted it as its motto for the 21st century, at least in regards to ebooks and publishers.

I’ve got to give credit where credit is due, and Apple deserves credit for great design. Apple’s approach is like wrapping a Volkswagen Beetle in a Lamborghini shell and proclaiming the new car to be a $100,000 car. Apple gives you a great shell but the components are often mediocre at best. And when a design flaw is caught out, the usual response seems to be it’s the customer’s fault — never give a sucker an even break!

Let’s face it — the iPad is really a so-so device. Pretty to look at, but not a great computing experience, especially when compared to notebooks that permit multitasking. Perhaps this will be cured in the forthcoming version 2, but even if it is, Apple still will be a company that treats its customers and partners as suckers — suckers who will part with hard-earned dollars in exchange for good design, mediocre performance, and anticonsumer restrictions. Just consider Apple’s recent insistence on getting a cut on all ebook sales.

The initial culprit in the current ebook fiasco was Amazon who spread its tentacles to far too quickly, giving Apple the opening it needed to give false hope to publishers and consumers that there would be another, better way. Regular readers of my blog may recall my post from 9 months ago, The Decline & Fall of the Agency 5, in which I wrote:

April 2011 is the month to prepare for armageddon in ebookdom. It is when the 2010 agency model pricing scheme will be buried by publishing’s 2010 savior, Steve Jobs and Apple. You read it here first.

All the stars and moons and planets will align and the caterwaul of panic will be heard throughout ebookdom, because that is when the Agency 5 — Macmillan, Simon & Schuster, HarperCollins, Penguin, and Hachette – will realize they have been snookered by the snooker master.

In April 2011, publishers will discover that the iBookstore is a losing proposition. Oh, Apple will have sold many millions of iPads, fulfilling expectations for a successful tablet, but the buyers, it will soon be discovered, either aren’t buying ebooks at all (maybe 1 or 2) or what they are buying they are buying from Amazon or Barnes & Noble or Smashwords.…

Well, I wasn’t spot-on, but pretty darn close. iPads did sell millions and the iBookstore is a loser. iPad owners who are buying ebooks, emagazines, and enewspapers are buying them through the Amazon, Barnes & Noble, Kobo, and publisher apps, not from the iBookstore. But Apple has moved to close down any pipeline that bypasses the iBookstore by making it impossible for those apps to remain in the Apple iOS system.

So, tell me again how much of a friend Steve Jobs and Apple are to publishing and to readers. How did Apple become the publishers’ white knight? How did Apple save publishers from the clutches of Amazon?

Publishers certainly have had their comeuppance. What was supposed to save the industry has turned out to be less a saving grace and more of another poke in the eye. The Agency 5 can sit back and be satisfied that what ebooks they are selling they are selling at their dictated price. But if they look at Random House’s ebook sales (remember that Random House was the only one of the big 6 not to embrace agency), they must look with jealous eyes.

So how did Apple’s “generous” offer in April 2010 help the Agency 5? It appears to have put them against the proverbial wall and offered them a rotten carrot — never give a sucker an even break! The Agency 5 will have to pay yet again (i.e., in addition to lower sales for going the agency route) for siding with Steve Jobs when the various ebook apps, including the Amazon, B&N, and Kobo apps, disappear from the iOS. Because of their greed and reluctance to embrace ebooks, the Agency 5 have shot themselves in the foot yet again. They bet on Apple and the iBookstore and the only winner was Apple.

The harder it is for people to buy ebooks, the fewer ebooks they will buy. Yes, I know the Agency 5 would prefer to sell fewer ebooks, but they are already doing that. This latest Apple move simply makes it more difficult for a large segment of the reading market to buy ebooks, a segment that no publisher can afford to ignore in the long run. It seems that no matter what the Agency 5 do in their attempt to thwart the rise of ebooks or to control pricing and sales, someone is waiting to prove to them that they really are fools for not embracing ebooks and trying to exploit the new market to its fullest — never give a sucker an even break!

On many levels I am glad to see the Agency 5 suffer from this blow; it seems to be fair payback for Macmillan’s and Simon & Schuster’s refusal to sell ebooks to libraries and for HarperCollins’ new change to library licensing terms that restrict the number of times an ebook can be lent even though libraries are paying 60+% more for an ebook version than for the hardcover version of the same book. (One example: A library can buy John Grisham’s The Confession in hardcover for $17.37 and lend it out hundreds of times. In ebook, a single license costs $28.95 and if the new HarperCollins license terms were applied, it could be lent only 26 times. In addition, while libraries have to pay $28.95 for an ebook version, the consumer, whose taxes support libraries, can buy the ebook version for $9.99.) It also seems fair payback for the outrageous pricing the Agency 5 have imposed on their ebooks.

It is clear to me that with each misstep that the Agency 5 takes, the more likely it is that increasing numbers of ebookers will remove DRM and share ebooks. When you make an enemy of someone whose good wishes you need, you invite them to retaliate as best they can. In the case of the Agency 5, the best way to retaliate is to not buy their books, or if you buy them, to remove the DRM and share them.

When will publishers ever learn?

October 13, 2010

Authors and eBook Problems: Expanding The Net of Responsibility

I recently complained about production problems in two new novels I purchased in ebook form — Brandon Sanderson’s The Way of Kings and David Weber’s Out of the Dark — both from TOR/Tom Doherty/Macmillan (see On Books: Brandon Sanderson and David Weber — 1 Up, 1 Down and The Problem Is: Publishers Don’t Read eBooks!). The failure in both instances, I think, at least as regards the problem of producing an ebook, is that review-before-release rights either didn’t exist in the authors’ contracts or if the rights did exist, they weren’t exercised.

With all the problems consumers are seeing in ebooks, regardless of whether the problem lies in the conversion process or in the file preparation, authors who sign contracts with traditional publishers fail their audience if they do not negotiate review-before-release rights. Too many ebooks are being released that are poorly formatted and rife with errors that could easily be corrected just by proofreading the converted version before releasing the ebook on the unsuspecting public. And this should be of primary importance to authors, perhaps even more so than royalty issues (after all, if consumers get fed up with poor quality production, there won’t be any royalty to collect!).

The clear wave of the future is the ebook. The tsunami is about to hit and authors need to be prepared for it. Just as authors have been attuned to the problems that exist in “normal” pbook production, they need to become attuned to the problems that seem to occur with regularity in production of ebooks. It is one thing to pay $1.99 for an ebook that is riddled with errors, but quite another to pay $12.99 or higher. More important than price, at least to me, although not to many ebookers, is that if important information to the story is to be reproduced in illustrations/tables/figures, the illustrations/tables/figures need to be readable on common-size ereading devices, which means on 6-inch screens. Similarly important is that dropped words not be dropped, that uppercase letters that should be lowercase be lowercase (it is annoying to read “…they came across A cave…”), that suddenly left justified text becomes centered text, and so on.

Is it asking too much to be able to enjoy a read without being confronted with obvious, distracting errors? If you (i.e., authors and publishers) are going to permit (or simply accept) errors, can you at least make them subtle, such as using “a” when it should be “an” and “which” when it should be “that” — the types of errors that most readers won’t give a second thought to.

With the boom in ebook sales, authors owe a duty to their customers — their readers — to make the reading experience as undistracting as possible; readers should be permitted to focus on the story and not need to comment on or note formatting, spelling, and grammar errors. Authors go to great pains to ensure the quality of the pbook version; now they need to go to those same lengths to ensure the quality of each ebook format. Failure to do so jeopardizes their relationship with their readers and thus jeopardizes their future income and popularity. It is much too easy in the Internet Age to become a yesterday has-been through self-destruction.

Authors already are responsible for their choice of words, but the Age of eBooks has made it much too common to find the wrong word used (see On Words & eBooks: Give Me a Brake! for some examples and On Words: Is the Correct Word Important? for why word choice is important). This is the result of too much author reliance on spell checkers and too little education and emphasis on correct word choice.

So why not hold authors responsible for poorly done ebook versions of their books? We are quick to blame the publisher, who does deserve heaps of scorn over this issue, but we need to include the author in this because the author could raise a fuss and publicly demand that the ebook be corrected and purchasers be given new versions. Yet authors are silent for the most part; not even self-publishing authors alert readers to having corrected errors and making redownload possible. It is almost as if there is disdain (perhaps contempt?) for the reader.

With all the restrictions imposed on ebooks that are enforced by DRM, authors in the first instance, and publishers in the second, should at least actively strive to produce a first-class ebook and when they don’t, stand before the bar of public criticism, admit failure, make corrections, and provide free replacement copies to those who already have purchased the book.

This goes back to the publisher’s warranty of quality that I proposed nearly a year ago (see A Modest Proposal II: Book Warranty), a warranty that continues to be ignored by publishers and by authors. Authors need to insist as part of their contract that a warranty be given the consumer and that the author get review-before-release rights and undertake to review the ebook form of their work before it is made available to the buying public. Doing so would be good for the author and for the consumer, and, ultimately, for ebooks. Receiving a well-crafted ebook would make the higher price demanded by some authors and publishers more palatable.

This is certainly something to think about, if not to act upon. But in any case, we readers need to expand our net or responsibility to include the author, not just the publisher, when we receive a poorly constructed ebook, especially at the prices some authors and the Agency 5 are demanding.

October 7, 2010

Ripping Off is Soooo Easy to Do: The Charade of Pricing

This past week the New York Times reported that two Amazon Kindle ebooks, Ken Follett’s Fall of Giants and James Patterson’s Don’t Blink, are priced higher than their hardcover counterparts. This is the result of the Agency 5 pricing scheme for the ebooks (for some background, see Agency in eBooks: Just the Start? and The Decline & Fall of the Agency 5) that allows the publisher to set the ebook price and the ebookseller to set the pbook price.

I hadn’t planned to note this “event” as it has been noted numerous times since its discovery, and I considered it just another rip off of consumers by publishers. I suppose the biggest fools in the unfolding of this event are us commentators who cry about the high price of the ebook in comparison to the pbook. Why are we made to look so foolish? Because thousands of the ebooks are being sold despite our negativism. So perhaps the publishers are a bit smarter than us in terms of sales, even if dumber than us in terms of actual revenue.

(In terms of revenue, booksellers pay 50% or more of the suggested retail price as the wholesale price on a pbook. Consequently, the publisher receives more per-unit-sold revenue on the sale of a heavily discounted pbook than it does on an agency price ebook. I know, the logic of that situation escapes me as well, but the chiefs at the Agency 5 get much bigger salaries and bonuses than I do and have the pleasure of telling shareholders how they are cutting costs by laying off the grunt workers.)

But I was finally agitated enough by the ripping off scenario to write today. The rip off today is a Barnes & Noble masterpiece of legerdemain. I am a B&N member whose membership “privileges” have been steadily eroded by B&N since the advent of ebooks. Yet today’s legerdemain is the best yet. Granted we aren’t talking big bucks on an individual purchase, but in the corporate world, pennies add up to dollars, and I’ve now gotten a glimpse into how Leonard Riggio plans to save his world.

Like all B&N members I received an e-mail touting new publications with offers of discount coupons — either for the store or online. First clue: I received 2 separate e-mails — one offering me a 30% discount (members save 40%) coupon and the second offering me a 40% discount (again, members save 40%). Apparently the offers have changed so that even nonmembers get these coupon offers. I do concede, however, that B&N can legitimately offer the discount to both members and nonmembers (but why would you want to kick your members, your most loyal customers, in both the stomach and the head?).

Clue 2: To take advantage of the online coupon discount, you need to click the Get BN.com Coupon button, which takes you to a special offer page at the website where you get the book of your choice (from among those being offered with the coupon) at the discount.

I am interested in buying Chernow’s George Washington. So the first thing I did was go to B&N’s online store to see what the price is. If I just buy it at its regular discount price, the hardcover cost is $23.40 — a 41% discount — and this price is available to everyone, member or nonmember. If I click the coupon for my special discount price, the price is $24.00, the member’s price. So for being a member of B&N, I get the privilege of paying 60¢ more than the price everyone who isn’t sucker enough to use the coupon pays.

Is this a rip off or not?

Of course, in B&N’s case they aren’t even matching Amazon’s current hardcover price of $21.60, which makes one wonder what life after death there will be for B&N. But Amazon doesn’t sit pretty here either. Just 3 days ago, as the New York Times reported, the Follett book was being sold by Amazon for $19.39. What happened in 3 days to cause the price to rise by $2.21? The need to make the Kindle edition, which is still $19.99, appear to be a bargain compared to the pbook?

Why shouldn’t an Amazon customer who wants to buy the Chernow pbook be angry today that the price has been raised? Especially when there is no assurance that it won’t rise or fall tomorrow. There is no logic to the changing prices other than to extract the most possible from consumers. We aren’t talking about precious metals that are traded on commodities exchanges that have price fluctuations based on availability. There is no shortage of pbook copies.

Bottom line really is that both B&N and Amazon (and probably other ebooksellers as well) are simply playing their customers for suckers — B&N by the coupon legerdemain and by offering all comers the same buy price at the expense of members and Amazon by shifting the price up or down as it sees the interest in a book wax and wane.

It’s a war of nerves for book buyers, because one has to guess when to jump on the offer and when to hold steady. Who ever thought buying a book would be a high-stakes poker game?

July 26, 2010

The Screw You eBook Deal

Every week it seems something new is happening in eBookland to set the ebook cause back a decade or two. Always at the forefront of the reversal of fortune is greed.

This week’s menace to eBookland is literary agent Andrew Wylie and his new publishing venture Odyssey. Wylie could have summed up his actions in simple terms: to disserve both his clients and the ebook-buying public. What, you ask, did he do? He agreed to give Amazon exclusive rights for 2 years to his authors’ backlist titles; Wylie will publish the books and exclusively sell them through Amazon. The backlist includes authors like Philip Roth, Ralph Ellison, and John Updike.

This is tragic on many levels. First, unless he has been given exclusive information by Amazon, he really doesn’t know how much of the ebook market Amazon “dominates.” All Amazon says is “we’re #1” but has yet to actually prove it. Everyone assumes it is true, but without hard data, it is just an assumption (and you know what assuming does — it makes an ass of u and me!).

Second, even if Amazon has the largest single-vendor market share, it isn’t certain that how dominant a market share it has when all players are considered. Everyone assumes it does, but no one really knows — Amazon hasn’t put any real numbers on the table, just the hype, which makes me suspect that that’s all it is –hype.

Third, contrary to what Wylie thinks about his backlist authors, there is nothing out in the open that demonstrates that they are worth the $9.99 that is planned to be charged. What data does Wylie have to demonstrate that $9.99 is the ideal market price point for decades old books? I might reread Ellison at $1.99, but not at $9.99 — he (and Roth and Updike) just aren’t that good. Wylie complains about the Agency 5 pricing and then proceeds to draw a number out of the air himself.

Fourth, 2 years is a long time to exclude all other ebooksellers from having the ability to sell these books. It ignores the thousands, if not millions, of readers who do not buy from Amazon and who do not own a Kindle (and who do not want to read on their PCs or cell phones). If Wylie were my agent, I’d be looking for another one. As a writer I wouldn’t want thousands (millions) of potential readers excluded. As icing on the cake, no one knows whether at the end of the 2 years Amazon has an option to extend that exclusivity. It would fit Amazon’s usual tactics.

Fifth, if Wylie’s goal is to sell as many of his client’s books as is possible, why would he give exclusivity to a company who uses a format that is incompatible with every other ebook-reading device? I hear the pundits now: Because Amazon has an application that lets you read on nearly every device imaginable, just not other dedicated ebook reading devices.

This argument intrigues me. I understand James Patterson or Stephen King taking this position because they are currently writing bestsellers. The likelihood that someone will agree to read the latest James Patterson novel on their mobile phone or their PC is decent — not great but decent. But will these same people want to read a long ago Roth or Ellison or Updike novel that way? I have my doubts. I don’t personally know anyone who reads a book sitting at their desk on their PC or on their cell phones for pleasure (although I am assured that there are people who do), because that is what we are talking about — pleasure/leisure reading.

The argument also discounts all the people who buy ebooks at, for example, Barnes & Noble, which also has applications for various devices and keeps adding them. Are we to be an ebook world of Amazon only, perhaps a little B&N, but no one else?

Sixth, is the arrogance factor. Wylie doesn’t like the Agency 5’s pricing. Fine. Most ebookers don’t either. But you tell me how giving Amazon 2-year exclusivity at $9.99 sends any message of dislike about Agency 5 pricing to the Agency 5 — or even to the consumer. The only message I get is the one to the consumer, which is “screw you! If Amazon is willing to pay enough for exclusivity, I could care less whether you can read my author’s books.” Reminds me of an old radio ad: “Money talks and nobody walks!”

I admit that John Sargent’s (Macmillan) response was laughable in light of his own actions as a founder of the Agency 5. But even so, his response was on target. This exclusivity deal is not good for anyone. Is the goal to discourage reading and drive sales down? If so, these long-term exclusivity deals are a good step in that direction. People are interested in buying books only if they are available when they want them, in the form they want them, and at a price they are willing to pay. Wylie’s exclusivity deal is a 3-strike out: the books aren’t available to many readers in a form they want at a price they want to pay for ghosts from the past — $9.99 is the price point for new bestsellers, not old books from has-been authors.

And did Wylie give any thought to what state of affairs he is helping to create in the long-term? If giving a 2-year exclusive deal to Amazon is his idea of long-term strategic thinking on behalf of clients, he needs to get off his meds. Giving Amazon these kinds of deals plays into Amazon’s long-term goals of dominating ebook publishing and being able to dictate all terms. Every exclusive deal adds a nail to the coffin of marketplace competition because once Amazon sews up a significant portion of the market in these kinds of deals, Amazon will be able to dictate terms — all other competition will have been buried because they can’t get product to sell and they won’t be able to sell for less than Amazon. (That is also one of the problems with the Agency 5 thinking but at least they make their books available to everyone.)

Now that I have castigated Wylie, a punch needs to be thrown at the Agency 5 who brought this about. What did the Agency 5 think Amazon would do in reaction to their concerted efforts to control pricing? Amazon has done the smart thing for Amazon (although not, ultimately, for the consumer) in pursuing these exclusivity agreements. If anything will undermine the Agency 5, it is these deals. Unfortunately, consumers will be collateral damage. The Agency 5 thought Apple would be their savior; they were willing to overlook the fact that Steve Jobs and Jeff Bezos are identical twins. And so they pushed Amazon and now Amazon has pushed back.

Wylie has made what I consider to be a fool’s deal, but the deal is of the Agency 5’s making. “You shall reap what you sow” should become the motto of the Agency 5; Andrew Wylie should resurrect as his motto “Money talks, nobody walks.”

May 7, 2010

Smashwords is the Real Threat to Agency Pricing of eBooks

Smashwords and ebooksellers like Smashwords (such as Books for a Buck) are the real threat to agency pricing and the Agency 5 (Macmillan, Hachette, Simon & Schuster, Penguin, and HarperCollins). The reason is simple: the combination of quality and low price.

I find it hard to justify paying $14.99 for a fiction ebook unless I am absolutely enthralled with the author, and even then I am more inclined to pass on the ebook than spend that kind of money on a read-once-throwaway ebook. No need to repeat all the reasons; they have been bandied about the Internet and the magazines for months. And if I don’t know the author, I certainly wouldn’t pay the agency price. Amazon may have had it right when it set a top price of $9.99.

But look at Smashwords and similar sites. They sell ebooks in many categories from authors with whom I am not familiar for a reasonable price. I’m much more likely to spend $3.99 on an unknown author than $14.99. Of course, that isn’t enough to be a threat to the Agency 5. The Smashwords threat comes by Smashwords’ authors also being available in the iBookstore and Amazon, but primarily in the iBookstore.

It is in the iBookstore that the Agency 5 are face to face with competing books that cost significantly less. In publishing, it isn’t the publisher who sells an ebook; it is the author, the story synopsis, the ebook itself. No one goes around and says “I bought a great Hachette ebook yesterday.” Publisher branding value among ebookers is nearly nonexistent and I suspect noninfluential in the decision whether or not to buy an ebook.

For agency pricing to succeed, by which I mean the Agency 5 at minimum do not see a decrease in ebook sales from the pre-agency days, ebookers have to equate quality reads with the names of the giant publishers. Otherwise, all that will happen is that the blockbuster bestseller from the Stephen King-/Dan Brown-recognition-level authors will sell at the agency pricing and less-recognized authors down to unrecognized authors without the Oprah kick will have less-than-stellar ebook sales.

It is these second- and third-tier authors who have to compete against the Smashwords authors and for whose readers price is a major component of the decision to buy or not. In a bricks-and-mortar world, the Smashwords authors stand little chance, but in the Internet world they stand an equal chance — the Internet is the great sales leveler.

The playing field is level because all books display a cover, offer a sample read, have similar story blurbs. The differences are price and publisher name, but the latter has little, if any, swaying power, especially when you get down to the subsidiary names with which few readers are familiar. (Can you tell me who owns Ballantine? DAW? Basic? Do you care?)

The advantages that the Agency 5 do retain really relate to the level of professionalism in putting together the ebook — the professional editing, the professional cover design. But that advantage is easily eliminated by Smashwords authors who could hire these services independently [see, e.g., Professional Editors: Publishers and Authors Need Them (Part 1) and Professional Editors: Publishers and Authors Need Them (Part 2)], and with the right pricing, is readily overlooked by ebookers. Even though I am an editor and find amateurish errors annoying (see On Words & eBooks: Give Me a Brake!), I am more forgiving of them in a $1.99 ebook than in a $14.99 ebook, where I won’t forgive them at all. (Perhaps the Agency 5 should rethink offering a warranty of quality; see A Modest Proposal II: Book Warranty.)

The big gamble that the Agency 5 is making is that ebookers will associate quality reading with their brands and be willing to pay an inflated price for that quality. The reality that will strike home eventually is that such thinking is delusional. eBookers do not equate quality with the Agency 5 brands; if anything, the Agency 5 have done such a poor public relations job with every aspect of ebooks that any association of their brands with quality have long disappeared. eBookers, as is true of most readers, look first for an interesting and seemingly well-written story. Then they look for pricing and production quality.

Combine an interesting and seemingly well-written story with a reasonable price and you have an ebook sale. The ebooker doesn’t care if the ebook is from Smashwords or Hachette. Consequently, Smashwords-type ebooksellers are the real threat to agency pricing and the Agency 5. The more Smashwords and its companion ebooksellers, like Books for a Buck, do to increase quality of the books they offer and the lower the prices they offer those books for, the more in trouble agency pricing and the Agency 5 are. I’ve yet to meet an ebooker who only buys Simon & Schuster ebooks. And we haven’t even touched upon the all the places that offer free ebooks, such as Feedbooks.

Smashwords, Books for a Buck, Feedbooks, and other smaller, independent publishers or ebook outlets are squeezing ebook pricing. eBookers want a good read at a reasonable price, which is what they get from these alternatives. The Agency 5’s plan to force ebookers to “value” ebooks by keeping pricing artificially high will not withstand the assault. Yes, the very top authors — the most popular authors — will probably be able to command the Agency 5 ebook prices, but they are not enough to sustain traditional publishers. There are too few Stephen Kings and JK Rowlings to build a business around the popularity of their books.

If iBookstore sales aren’t significant for the Agency 5 at the higher end of the agency pricing scheme, and if iBookstore sales for the Smashwords-type publishers/sellers show growth, the Agency 5 are doomed. Of course, it doesn’t help the Agency 5 that Random House is sitting on the sidelines. Imagine if its ebook sales continue to grow while the Agency 5’s sales decline.

May 3, 2010

The Decline & Fall of the Agency 5

April 2011 is the month to prepare for armageddon in ebookdom. It is when the 2010 agency model pricing scheme will be buried by publishing’s 2010 savior, Steve Jobs and Apple. You read it here first.

All the stars and moons and planets will align and the caterwaul of panic will be heard throughout ebookdom, because that is when the Agency 5 — Macmillan, Simon & Schuster, HarperCollins, Penguin, and Hachette — will realize they have been snookered by the snooker master.

“Why is April 2011 so important,” you ask? Because it turns out that Steve Jobs did the Apple version of bait and switch on the big 5 — the agreement for agency pricing was/is only for 1 year. Come April 2011, I’m willing to bet that Jobs will drive the final spike into the agency pricing system for ebooks. Not necessarily the agency model, just the pricing — $9.99 (or less) will become the Jobs mantra.

In April 2011, publishers will discover that the iBookstore is a losing proposition. Oh, Apple will have sold many millions of iPads, fulfilling expectations for a successful tablet, but the buyers, it will soon be discovered, either aren’t buying ebooks at all (maybe 1 or 2) or what they are buying they are buying from Amazon or Barnes & Noble or Smashwords. (By the way, nothing could be worse for the Agency 5 than if Smashwords is a bigger success on the iPad than the iBookstore, because that success would be price based.) If the iBookstore is a flop for Agency 5 books, the Agency 5 are out of the catbird seat and Amazon is back in.

Not only does it matter that the iBookstore may be a flop in terms of Agency 5 sales, but if Steve Jobs determines that agency pricing is hurting his income or the iBookstore, he will scrap agency pricing in a heartbeat — or even quicker if he can (again, pricing parameters not the model for the split). eBookers know who to blame for the high pricing, and if they don’t, Amazon reminds them constantly and Amazon controls (or so it is claimed) 80% of the ebook market.

Even if Amazon’s share of the ebook market drops to 50% by April 2011, it won’t have dropped enough to salvage the agency pricing system. To salvage it, the iBookstore has to command at least 35% of ebook sales and probably 50% of Agency 5 ebook sales — plus there can’t be much dropoff in sales of Agency 5 ebooks from pre-agency levels. The Agency 5 are already losing a significant percentage of money on the agency split as compared to the traditional wholesale split, so a drop in sales will compound the problem.

So what’s the backup plan? My bet is there isn’t one. It will be more of the same crying and complaining from the Agency 5, a wailing lament about how ebookers simply do not value ebooks. And then the moment of truth will come — that moment when Apple and Amazon each pressure the Agency 5 to lower prices; that moment when Amazon decides that the Agency 5 needs Amazon more than Amazon needs the Agency 5; that moment when authors decide it is better to cast their lot with Amazon than with the Agency 5; that moment when the Agency 5 realize they have doomed themselves to oblivion unless they take immediate, bold steps.

Jobs and Apple have demonstrated repeatedly that they are no friend of anyone but Jobs and Apple. (Do we need to go any further than the raid on the reporter’s home at the behest of Jobs because one of Jobs’ minions lost his cell phone?) Apple proclaims an open system as it closes its doors; it offers a carrot to publishers while hiding the stick. And there is no doubt that Jobs and Apple will decide on “proper” ebook pricing based on what is good for Jobs and Apple, not for anyone else’s survival.

April 2011 will be the moment in ebook history that historians will be able to point to as the turning point. If the iBookstore succeeds in eliminating Amazon’s dominance of ebook sales and in selling a lot of Agency 5 ebooks, then agency pricing may have a longer life. But if Apple fails to topple Amazon and if the iBookstore sales of Agency 5 books aren’t spectacular, agency pricing will die. The clock is ticking. If I were one of the Agency 5, I’d be working on a new plan and doing a lot of heavy public relations work in preparation for doomsday. Will Google be proclaimed the next industry savior?

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