An American Editor

March 7, 2011

Sarah, Where Are You? Capitalism in eBookville

Sarah (Palin, that is), where are you? America desperately needs you and Michelle (Bachmann) and Glenn (Beck) and Rush (Limbaugh) and all your Tea Party compadres to save it from creeping socialism.

I never thought I’d say it, but you may be America’s first defense against the Murdochian (Rupert, that is) subterfuge to convert America from out right Wild-West-type capitalism to socialism. And, if you don’t take a stand now, how much longer will it be before Rupert starts pushing America down the path to socialized medicine plans sold under the Murdoch brand? Your buddy, Rupert, has taken that first step down the path to destroy capitalism and you are silent. Now is the time to speak up loudly and tell Murdoch you won’t stand for this subterfuge!

We know it all began with talk radio that transformed into talk TV and that became branded as Fox “News.” Murdoch established his credentials as a right-wing conservative who abhors socialism and embraces capitalism. He then suckered you and your colleagues into believing you had found a bully pulpit to protect America from creeping socialism, a mount from which you could castigate the poor for being poor and for needing government assistance. (Interestingly, you never castigated the rich corporations for needing — nay demanding — government assistance, but then no one is perfect.)

But now eBookville desperately needs you to stand tall and protest the socialization of ebooks, a charge being led by Murdochian forces. As you know (and preach), the basis of capitalism is to let the market dictate success or failure, profit or loss, unfettered by either government or private manipulation. Under capitalism, it is the end consumer who is supposed to decide the fate of a business. In contrast, under socialism, the market is hamstrung so there is no truly free market and no market can dictate success or failure, profit or loss — to each according to his want.

And so it was in eBookville until the advent of the agency system, a system put into place with the help of Murdochian forces (HarperCollins ring a bell, Sarah?). The free market was telling Murdoch that his ebooks were overpriced and to cut the prices until the market found its equilibrium. Alas, the dark forces were not satisfied and the Murdochians decided that the free market in ebooks shouldn’t be so free, and the agency system was founded in collusion with other socialist forces.

Where are the protests from you and your conservative colleagues? Is it that you fear having your paycheck cut? Or is it that you believe in a free market only when it benefits you and strangles others? Or is it that stealth anticapitalism from a fellow conservative is OK?

We ebookers need your help to straighten out this stealth attack on what we value most — free market competition. We need you to stand up to the Murdochian forces and lead them back to the path of competition. We need you, Sarah, and your colleagues to demonstrate that you are much more than empty shills for capitalism; that you are not quitters when it is your paycheck on the line; that you really believe in capitalism, in the free market, and in competition; that you are not simply Murdochian puppets in disguise. We ebookers need for you to be that grizzly mom who defends our public libraries from Murdochian overreach.

Come, Sarah, prove America wrong — prove that you really believe in capitalism. Tell your Murdochian compadres to tear down the wall of socialism with which they have surrounded ebooks; to tear down the wall of anticompetition in ebook pricing; to tear down the wall that hems in eBookville’s free market.

Sarah, give those yearning masses of ebooks their freedom.

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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