Clever Moves All Around In The B&N And Amazon Chess Game

This post, by Mike Shatzkin, originally appeared on The Shatzkin Files blog on the Idea Logical site.

Readers who have been following publishing’s digital transition for two years or more will recall the situation in 2010 when five of publishing’s Big Six switched over from selling their ebooks on wholesale terms, by which the retailer sets the price to the consumer, to agency terms, by which the publisher sets a price that prevails across all retailers. Random House stayed out.

 

That decision seemed to puzzle many observers despite the realities for the publishers. Making the change required actually reducing per-unit revenues to the publisher (and author) while at the same time making each unit more expensive to the consumer, so it was done by what was then called the “Agency Five” at some sacrifice (in their view) for the greater good (in their view) of the industry. Agency protected weaker ebook retailers — Barnes & Noble, Kobo, and Google as well as independents — from having to compete with the deep-pocketed Amazon’s loss-leader pricing strategies. The immediate payoff was the opportunity to sell through Apple’s fledgling iBookstore.

As we explained at the time, Random House’s choice was transparently in their short-term self-interest. It was understandable that their competitive cohort, who saw themselves making a sacrifice on behalf of the industry’s long-term future, were unhappy that the biggest player among them was staying out. But it was a bit hard for me to understand what was so hard for everybody else to understand about why Random House did what they did. (Random House switched over to selling on the agency model in March, 2011.)

Those times are recalled for me by the recent round of indignation and analysis over the jockeying among the retailing competitors over the titles published by Amazon. Everybody is just acting in their own best interest. There really isn’t much mysterious about anybody’s behavior.

We could say the most recent set of events was begun by Amazon’s escalating efforts to capture titles for ebook rendering exclusively on the Kindle platform. They were apparently doing this two ways: by signing up authors directly for their own imprints and by offering self-published authors financial incentives — such as paid participation in their lending library program — for making their ebook a Kindle exclusive.

For the books they signed directly, Amazon recognized that it might not be the most comfortable sales call in the world for any rep to pitch these books to B&N’s buyers. Representing the books of every bookseller’s biggest competitor would be a challenge but it was one that Houghton Mifflin Harcourt decided to attempt. Last year it was announced that HMH had taken the opportunity to license the Amazon-originated titles in paperback. Major publishers had often expressed the view that publishing in print without ebook rights was a non-starter for them. HMH hoped that their efforts wouldn’t be viewed in that light since it is not considered unusual (although I’m not sure how often it has happened) for ebook rights to remain with the hardcover publisher when paperback rights are licensed.

More heat was generated when the Kindle Fire debuted with some graphic novel content delivered exclusively to it. When Barnes & Noble pulled the paper versions of those books off their store shelves, they explained that their policy would be to refuse to stock the print version of something not offered to them for sale “in all formats”.

 

Read the rest of the post on The Shatzkin Files.

Comments are closed.