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Widely reported over the past few days that the Dept of Justice has filed collusion between Apple and the ‘Agency 5′ to fix the price of eBooks.

Agency 5 = Penguin; Simon & Schuster; Hachette; HarperCollins: Macmillan.

Big 6 = Add Random House.

Many feel Amazon is the big winner here because they will be able to price eBooks as they want. Amazon has been very vocal that they want lower prices. This suit gives them that ability. Three publishers have already settled.

Why was Random House excluded? When Apple introduced the iPad; Random House was not in the iBookstore. They continued to sell at Wholesale. They also charged a premium for their eBooks (was it at the same price at the hardcover?) and Amazon took the loss. Millions of copies of Steig Larssen made RH millions. It was smart of them to hold out. Notice how Scholastic has sold millions of HUNGER GAMES without Agency and Apple?

A year later, Random House went Agency. They now have control over the prices on their books. They have some amazing content too. Plus, RH is the biggest of the ‘misnamed Big 6.’ RH rolled with the iPad 2.

Now the DOJ is not only costing mindshare and attorneys for the Agency 5, but those publishers have lost Agency. They need to re-adapt. But RH can keep Agency. So, does that give them a competitive advantage over the others? Those publishers dearly want to hold onto it. Two are willing to fight – Macmillan and Penguin. But if this is over control over pricing… then RH is in a good place while this gets sorted out.

Amazon won.

Random House won.

At least today, publishing is a roller coaster, tomorrow there may be different winners.

Publishing used to be so mellow… The world has changed.

As many expected, the US Department of Justice filed suit against Apple, Macmillan, Penguin, HarperCollins, Simon & Schuster & Hachette. The latter three have decided to settle the case but not admit collusion. Apple, Macmillan and Penguin have said they did nothing wrong and will fight it.

I applaud Macmillan and Penguin for fighting for what they believe.

The stakes are high. The direction of the publishing industry is changing again. It moves a lot these days.

Whether guilty or not, defending a lawsuit is expensive and time-consuming. It is too and that it has become this. But for Harper, S&S and Hachette, the cost of fighting outweighed the cost of settling. So they took the least-expenisve way out.

Macmillan will fight the battle.

They were the leaders on battling Amazon on agency. So much, Amazon yanked their BUY buttons during the feud.

They are the leaders again.

Of the Big 6, Macmillan is by far the smallest in billing. But it leading, they are number one.

What happens to all the non-corporate publishers and their deals?

I love Pandora internet radio.

I listen to it on many devices. I have it on my MacBook Air; Samsung Galaxy; iPad and iPhone.

I have 10 or so channels for each. Most of them are close in style to one another.

I don’t have them all synched together. Is that even possible?

I also find the iPad App not as helpful for the song lyrics don’t come up.

The Galaxy isn’t good because I like to buy a lot of the songs I hear and that doesn’t have my iTunes Cloud. I can buy on iPhone, iPad or MacBook Air and the songs go to all devices. Yes, the cloud is impressive.

I don’t pay for premium. Maybe I will one day but the commercials are fine. I do but a lot of songs through Pandora to iTunes. I hope Pandora gets a cut of that action. I would guess they get some type of affiliate fee? No?

Pandora is great for any occasion. Need background music? Classical? Christmas?

I see that some cars now come with Pandora streaming through them. That is cool too.

I just bought an entire George Harrison LIve from Japan with Clapton and others as guests. Love it.

“While My Guitar Gently Sleeps”…

 

Suzanne Collins’ THE HUNGER GAMES continues to burn up the charts. The movie based on the first book made an estimated $25-million last night at the midnight showings. The movie also racked up the largest on-line pre-orders ever for a film. It is to be expected since the build up for the movie has been going on for over six months. Plus, more people buy on-line tickets these days.

The three books, THE HUNGER GAMES, CATCHING FIRE and MOCKINGJAY (plus the boxed set of the three) have been at the top of the bestsellers lists for months. With THE HUNGER GAMES on Amazon’s top 100 for over 500 days! ¬†Amazon is selling each at a 44% discount. B&N is selling the paperbacks at full price and the hardcovers at 40% off. I am sure Costco and Wal-Mart have been selling at a deep discount too.

The eBooks have also dominated the best-sellers lists. In this case, since the publisher Scholastic is a NON-Agency publisher, the retailers control pricing. Amazon is selling the eBooks below cost (more than 50% off). B&N is selling at a discount but still above cost. Actually B&N nook is approximately $2 higher per eBook. To buy all three eBooks together, it is $18.99 on Amazon and $28.29 on B&N. That is a big difference.

The books are also in Amazon’s Lending Library, so anyone that is a Kindle owner and Amazon Prime can check the titles out for free.

Apple is not carrying these books (the biggest titles of the year) because they only sell on an Agency model and Scholastic only sells on a Wholesale model.

This is an example of where Amazon can and will under-price their main competitor. Because they control the pricing and have the resources to take a loss on every sale. They will do so. B&N can not afford to lose on every sale and has chosen to charge a bit more. Apple can not come to terms with the publisher and is missing out selling these books.

But the sales are stronger than ever and it has saved Scholastic’s quarter (they still are losing money overall but it is much, much less).

I went to the University of Missouri, so I am used to being disappointed in the NCAA tournament. But tonight’s loss to Norfolk State was probably the biggest shocker of all. Missouri was a 21-point favorite. Mizzou won 30 games for the first time in history. The Tigers won the Big12 tournament. It all looked like a season that was destined for the Final 4.

But Missouri didn’t win. They almost pulled it out. But the game should have not been so close?

Were they over-confident?

Were they un-prepared?

Did they just not prepare for the game?

Who Knows? But this was a shocker.

But then…. Duke (seed 2) loses to Lehigh (seed 15) and I feel much better.

Misery loves company and it is always fun to watch Duke suffer.

It’s a new day. You never know when the upstarts take over and become the tradition.

The US Department of Justice plans to file suit against five corporate publishers and Apple yesterday reported the Wall Street Journal.

The five publishers are HarperCollins; Simon & Schuster; Macmillan; Hachette and Penguin. Five of the Corporate Big6. Random House is not included because they didn’t immediately switch to Agency. The others went live with Agency when the iPad was introduced. Random House waited a year.

What does this mean?

The DOJ claims that the publishers worked together to raise prices and therefore it was more expensive for the consumers. Agency allows the publishers control pricing. Every retailer is required to sell ebooks at the same price. The DOJ claims that this has been bad.

Amazon would agree. Apple would disagree. B&N would disagree.

Before Agency and when the accounts controlled pricing, the prices of best-sellers from the Big6 were generally set at $9.99 (even though accounts were paying $10-$15 for the books – yes they were taking a loss). After Agency, the prices went up to $12.99 or $14.99. The prices did go up for a certain section of books.

Before Agency, Amazon had over 85% market-share. Today that is closer to 60-65%. By forcing the same price everywhere, the advantage Amazon had in being able to sell below cost was eliminated. Sure, B&N matched some of the prices, but they didn’t have the ability to accept losses per book as Amazon can.

So, what will happen?

1) If Agency is eliminated and the retailers control pricing on all titles, the prices for the big best-sellers will come down. The barriers to entry for new eBook retailers will be higher. The ability of being able to make money selling eBooks will be much more difficult.

2) Apple will need to figure out a new way to sell eBooks (iBooks?). Their entire platform is based on Agency.

3) B&N will be caught in the middle. B&N has benefitted by not having to compete on price with Amazon. If Agency goes away, they lose that protection.

4) Google (and selling through Independent bookstores) may also have issues as the pricing would be driven down. Google recently opened up a new store called GooglePlay. It coordinates all media, music, books etc. Just yesterday, they prices some non-Agency books at $0.25. This is the first time Google has used pricing to aggressively grab market share.

5) Kobo and Sony will also be affected because the pricing protection will cut into their profits.

I don’t have an opinion on the outcome of the DOJ’s actions. But regardless it will have a profound affect on the future of who sells eBooks. I tend to think in the long run the prices will be what they will be. The question is how many retailers will find selling eBooks profitable.

It would be a shame if eBooks become reduced to ‘just content’ and something to give away to control the device market. I hope books remain above that.

Maybe I’m naive? But that’s how I see it.

 

Random House made news this week by announcing their new pricing on library eBooks. Bascially the cost of a Random House eBook is now 3x the price of the physical hard-cover. In other words, many bestsellers are now $60-$100 per title. The ALA has requested Random House to re-consider.

Other corporate publisher’s eBook library programs:

  • HarperCollins has lower prices, but has a 26 check out limit. After the 26th checkout, the library must re-putrchase the title.
  • Simon & Schuster is not in the eBook library space yet.
  • Macmillan is also still not selling eBooks to libraries yet.
  • Hachette once sold to libraries, but has suspended the front-list.
  • Penguin was in libraries, but pulled out over a flap with Overdrive’s relationship with Amazon.
  • Many of the other publishers are in the libraries but this “Big6″ represent 65% of all books and probably 90% of best-sellers.

For decades, publishers and libraries were very close. Publishers liked libraries for they would a)take a big % of genre hardcovers b)buy non-returnable c)help suggest and market titles d)were advocates for reading. But publishers never felt library books ate into the retail sales.

But with eBooks, there is a major concern from publishers that getting eBooks at the library does cut into eBook sales.

Libraries counter that they still help get the word out and that the service they provide more than helps with eBook sales.

I can see both sides.

I am sure there is a solution. I have seen a dozen different ones and each makes sense. But each solution creates a new issue.

For the foreseeable future, we will continue to debate and build. But a policy is being developed. A solution will come.

Many may think this is a problem. I don’t see that at all. It is a new issue, a new world and collectively we are working on an answer. Soon, there will be a policy and it will be standard. It will work for all. There will be winners and losers. But it will be, what it will be.

It is a good time to be in publishing. Sure lots of changes and lots of new terms. But this is fun and there are opportunities for all.

Love it!

 

The book industry was much different five years ago. Publishers still called the shots and eBook were not a factor.

Today, the accounts seem to drive the dialogue and eBooks are the biggest factor.

$10,000 invested in the following would be worth today?

  • Apple – $59,000
  • Amazon — $48,000
  • Barnes & Noble — $2,700
  • Borders — $0

What will happen in another five years?

Read an excellent article today by Ellen F. Brown of Bloomberg. She describes the history of the publishing and all the ‘attacks’ it has absorbed over the years. It seems like with each new method of selling books, the standard policy was to claim publishing is over. Far from it, it evolves.

This article got me to focus on something I have been thinking about for a year.

Self-published, low priced eBooks are very much the way of pulp fiction titles in the 50s.

  • Inexpensive.
  • New (and generally unknown authors).
  • Provocative covers.
  • Frowned upon by traditional publishing.
  • Some feel the citing and writing is sub-par (not me).

But the self-publishing revolution is here to stay. It will continue to get bigger and more respect.

It’s a great time to be in book selling and publishing.

This Sunday, millions will be watching the SuperBowl. Well, at least they will have the game on. The SuperBowl has become an American experience. Even those that dislike football, know of the game. It is impossible to get away.

The game has always been played on Sunday. It used to be in the afternoon, but now it starts around 6 PM Eastern. Prime-time dollars rule.

Because it is on a Sunday, many people work the next day, Monday.

I feel the Monday following SuperBowl should be a national holiday.

Call it “Hangover Monday” or “US Boxer Day” or “Super Monday.”

Or move the game to Saturday. But doubt that will happen.

I have never been to a SB live, Maybe one day — but maybe not.

The first Superbowl I remember is the Chiefs-Vikings. The final win for an AFL team. The league absorbed into the NFL the next year.

WIll be fun….