New comments from Macmilan CEO

Macmillan’s CEO John Sargent has made new comments about Amazon and Macmillian.

To: Macmillan Authors and Illustrators and
Cc: Literary Agents
From: John Sargent

I am sorry I have been silent since Saturday. We have been in constant discussions with Amazon since then. Things have moved far enough that hopefully this is the last time I will be writing to you on this subject.

Over the last few years we have been deeply concerned about the pricing of electronic books. That pricing, combined with the traditional business model we were using, was creating a market that we believe was fundamentally unbalanced. In the last three weeks, from a standing start we have moved to a new business model. We will make less money on the sale of e books, but we will have a stable and rational market. To repeat myself from last Sunday’ s letter, we will now have a business model that will ensure our intellectual property will be available digitally through many channels, at a price that is both fair to the consumer and that allows those who create and publish it to be fairly compensated.

We have also started discussions with all our other partners in the digital book world. While there is still lots of work to be done, they have all agreed to move to the agency model.

And now on to royalties. Three or four weeks ago, we began discussions with the Author’ s Guild on their concerns about our new royalty terms. We indicated then that we would be flexible and that we were prepared to move to a higher rate for digital books. In ongoing discussions with our major agents at the beginning of this week, we began informing them of our new terms. The change to an agency model will bring about yet another round of discussion on royalties, and we look forward to solving this next step in the puzzle with you.

A word about Amazon. This has been a very difficult time. Many of you are wondering what has taken so long for Amazon and Macmillan to reach a conclusion. I want to assure you that Amazon has been working very, very hard and always in good faith to find a way forward with us. Though we do not always agree, I remain full of admiration and respect for them. Both of us look forward to being back in business as usual.

And a salute to the bricks and mortar retailers who sell your books in their stores and on their related websites. Their support for you, and us, has been remarkable over the last week. From large chains to small independents, they committed to working harder than ever to help your books find your readers.

Lastly, my deepest thanks to you, our authors and illustrators. Macmillan and Amazon as corporations had our differences that needed to be resolved. You are the ones whose books lost their buy buttons. And yet you have continued to be terrifically supportive of us and of what we are trying to accomplish. It is a great joy to be your publisher.

I cannot tell you when we will resume business as usual with Amazon, and needless to say I can promise nothing on the buy buttons. You can tell by the tone of this letter though that I feel the time is getting near to hand.

All best,
John

19 Responses

  1. anonymouse

    In sum: You’ve guaranteed all your ebooks will be $15, no matter where we buy them?

    Good bye, Macmillan and all Macmillan authors. Many of us won’t be purchasing your works anymore as e-books. I, for one, won’t be purchasing them new in any format, thanks to this.

  2. Kenny

    I hope your authors leave if droves because you are doing them a vast disservice! This is the 21st century, please act like it.

  3. Kenny

    I hope your authors leave in droves because you are doing them a vast disservice! This is the 21st century, please act like it.

    (fix typo)

  4. Derek

    Mr. Sargent,

    It is clear you have NO concept of what drives book sales. Nor are you interested in creating a greater income for your authors. Amazon had a decent ebook price schedule for ebooks and even with the possibility of a time-delay between paper and ebook release, I was comfortable with paying up to $9.99 for an ebook. Note that I’d be happier always paying $4.99-$6.99, such as I’d pay at Baen Books, but I can live with a price as high as $9.99.

    But $14.99 is too much. Period. I will no longer be *buying* MacMillan titles. (Does that mean I might finally consider dark-net downloading them? Why yes, yes it does! I leave it up to you whether getting 0% of $14.99 puts more into MacMillan’s pockets or a greater percent of $9.99. Somehow I believe you won’t be able to do so without help from a stable full of economists.)

  5. /shakeshead

    The jokes on you John.

    There is a new frontier out there and you publishers burying your head in the sand isn’t going to stop it. Instead of fighting tooth and nail to keep the status quo. You should be positioning your company to take advantage of it. There is a lot of money to be made out there but having your eyes closed makes it hard to see.

  6. Mike

    I am amazed that all the blundering of the music/movie industry attempting to retain and enforce a totally outmoded distribution system has not come to your attention. It plainly has not has it? Instead of embracing the 21st century and the changes it has wrought like Baen has done, you have dug in your heels and refused to change. The demise of the Dodo comes to mind.

  7. Rachel Swirsky

    This was a very smart letter. Thanks for writing it, Mr. Sargent, and thanks for hosting it here, SFWA.

  8. DLR

    At $9.99 I purchased more books than I ever did before my ereader – it is so easy to make impulse purchases of books, and Amazon didn’t help me control myself, because they insisted on the one-click purchase for ebooks. I could, and did, buy ebooks at 2 am. But with an ebook I cannot lend it out to anyone, I cannot display it. I knew all these things when I switched to an ereader – I’m not complaining, just saying why I will not be buying ebooks at $14.99. I will be getting books from the library, or the darknet.

  9. Thomas M. Wagner

    You know, all you guys basically saying “If I can’t pay what I want, I’ll steal!” can’t exactly claim any moral high ground in this debate. You do know that, right?

    As for me, I agree $14.99 is too high for a Kindle edition. In point of fact, $9.99 is too high. Come to think of it, 3¢ is too high. Why? Because I have this thing about actually owning what I buy. Call me crazy. I’m just old fashioned that way. And with Kindle editions, which come loaded with more DRM than Paris Hilton’s had yeast infections, actually owning your books just ain’t in the program. So yeah, hooray for dead trees. Pay once, read ‘em forever, and no political/corporate BS.

    (And yes, I do find it funny that people who willingly paid $350 for that ugly-ass locked-down glorified PDA are grousing about an extra $5 for content.)

  10. Derek

    Thomas,

    If that’s all you think of an e-ink reader I can understand your comment. However, I *DON’T* ever intend to use my Kindle as a PDA. It is my replacement library. And from that point, it makes sense because I can stuff all my current ebooks on it without having to make storage space for them in my home. Plus, I can take them pretty much everywhere without breaking my back.

    I don’t have a problem with paying $4.99, $5.99 or even $9.99 for an ebook version of a novel. Heck, I used to spend that much for a mass-market paperback.

    What I won’t do is feed $14.99 to the big publishers like Hatchette or MacM just so they can bleed off some of the legacy costs they incurred in their print divisions.

    Boycott them and let them fail!

  11. Thomas M. Wagner

    Derek, I acknowledge the convenience of a handy e-reader, especially for storage concerns when you cannot or simply don’t want to deal with a big library in your home. It’s just that, where the Kindle is concerned, well, it’s kind of a shame you don’t really own anything on it that you’ve paid for. Just sayin’.

    You’re certainly entitled not to buy anything you think is priced too high. Folks do that every day when they shop for anything. I certainly do. I do all my brick-and-mortar shopping at Borders because they give out weekly 30% Off coupons and B&N doesn’t.

    But why this attitude of “Boycott them and let them fail!” Well, great, so much for all those books you claim to love to read, then. Perhaps a better policy is “only buy ebooks in the price range you think is fair.” When the Big 6 see their $15 ebooks aren’t moving worth a damn until they drop to $10, they’ll figure it out.

    It’s just the way this whole thing has turned into a parade of “fuck you too” vindictiveness that I find absurd. And Amazon, by delisting print editions that have nothing to do with an ebook pricing dispute, are the worst offenders by far, regardless of whether their pricing plan is better or worse.

    And to read a bunch of comments from folks who, frankly, are not published authors and have zero experience in publishing lecturing experienced authors on how publishers themselves are somehow totally obsolete, and they’re just greedy swine who don’t want you to be successful anyway, and writers should just hire their own editors and PR people and self-publish (presumably out of their bottomless trust funds or something) because they’d make so much more money, is, to be perfectly honest, the most preposterous load of STFU ignorance this side whatever conspiracy theory Glenn Beck’s spewing this week. People who think along those lines owe it to themselves to read this educational post by Jay Lake.

  12. Inanna Arthen

    As the owner of a small press, and an author, and a lifelong reader and book-lover, I’m just saddened by all this. When I started my company, my business plan was based on one rule: my first priority was meeting the needs of readers, because without them, we authors and publishers are nothing. It was abundantly clear to me that book formats do not compete with each other. I decided to release every title simultaneously as hardcover, paperback, and multiple ebook formats (DRM-free whenever possible). The only place we’re lagging is audiobooks, and that’s only because they’re so labor-intensive. What I’ve found is that all the formats sell, to different kinds of customers. I know that readers who don’t want to pay for a hardcover won’t buy one just because they can’t get another edition. They’ll wait for the paperback, or go to the library, or download it illegally, or wait until the hardcover is remaindered and buy it for $4.99 at Barnes & Noble. On the other hand, customers who prefer hardcovers, including libraries, will buy them no matter what other, cheaper editions are available, because for them, the hardcover is the best value.

    Cory Doctorow is right when he says obscurity is an author’s worst enemy. Amazon has it right when they aim to make everything available as fast as possible, as easily as possible, to as many people as possible. What can the Big Six publishers possibly gain by withholding their products from their customers? Do they really think, with all the alternative platforms for entertainment and information available now, that they have leverage, and can force higher prices? I sure don’t have that luxury. I want every potential customer to be able to get any one of our titles in any format they want, right out of the gate. If they can’t, I’ll lose that customer to someone else.

    The big mistake that the Big Six publishers are making is to equate ebooks with hardcover books. This is absolutely wrong (and Amazon gets it). Ebooks are the replacement for the mass market paperback. That is how their pricing should be calculated. Ebook buyers and readers are the people who used to buy mass market paperbacks–unconcerned about the book’s aesthetics, not looking for something durable or collectible, just after economical, accessible content. Most customers are not going to pay hardcover prices for ebooks, especially if they know the price will drop over time. The Big Six publishers need to start thinking like readers and book buyers, because until they do, they simply don’t have a clue.

  13. Name (required)

    Dear Mr. Sargent

    If you really intend to keep your word and make the pricing dynamic, this is really, really excellent news.
    You really should publish the e-book priced at $14.99 the day the hardcover has come out. No I am not being sarcastic or sardonic here. There in nothing wrong with $14.99 for an e-book for somebody that can not wait to read the newest Hary Poter, or the newest Discworld novel.
    BUT!
    The price should come down at the moment those $24.99 hardbacks start to appear in bargain bins.
    The price should come down AGAIN the moment a MMPB is released. The price must be a bit less than the price of discounted MMPB. The price should reflect the fact the fact that I can not resell the e-book, I can not even lend it to my wife. An average hardcover is read by at least 6 people, but there are very few e-books (I am talking about e-books purchased from official legal store, such as Fictionwise or Amazon, or Sony or Apple) that are read by more than one person.
    Then the price must go down yet again when Trade Paperback hits the shelves.
    When the number of purchases slows down again, the price should go down to reflect the situation.

    The only problem is, I do not believe you will make true dynamic pricing. You are talking about those few e-books that are on NYT bestseller list that Amazon sells for $9.99.
    There are, however, large numbers of e-books that sell for $20 or more, where paperback was released years ago.

    Just have a look at
    http://delkytlar.livejournal.com/81497.html?thread=361561&style=mine#t361561

    I just did a price search on Fictionwise and found that only 285 of their 2032 titles there are priced at $9.99 or less. 857 are priced at $19.99 and up.

    I find it hard to credit that over 40% of their books are still in hardcover.

  14. Thomas M. Wagner

    What can the Big Six publishers possibly gain by withholding their products from their customers?

    You’ve gotten misinformation, Inanna. It was Amazon, not Macmillan, who unilaterally and impulsively delisted Macmillan titles. Books from the Big Six are completely available, right now, from every retailer on Earth not named Amazon, just as they’ve always been.

  15. Inanna Arthen

    You misunderstood me, Thomas. I was referring to the publishers’ plans to hold back on releasing ebook editions at all for several months after the hardcover’s release. And besides, Amazon hasn’t “delisted” anything. They’ve simply stopped selling some books directly. The books’ detail pages, with full information intact, are still on Amazon with active links to multiple resellers. Readers who follow an Amazon link to an Amazon detail page can still buy the book, to the benefit of both author and publisher–they just aren’t buying directly from Amazon. That’s why it’s counter-productive for authors to be removing all their Amazon links. This kerfluffle will get resolved, but authors have permanently eliminated a sales avenue from their own websites (a very popular sales avenue with readers whether the authors like it or not). How does that help them?

  16. Thomas M. Wagner

    I was referring to the publishers’ plans to hold back on releasing ebook editions at all for several months after the hardcover’s release.

    In other words, treating them as paperbacks have always been done. The publishers’ position here — and I’m not saying it’s the right one, as I think they could come up with a compromise — is that if Amazon wants PB pricing on Kindle editions, then they should settle for a PB release window. Now, I actually think that’s short-sighted BS. The publishers should learn to treat ebooks as a whole different entity. But — and here’s the kicker — so should Amazon. And there was no call for them to delist print titles in a dispute over ebook pricing.

    And besides, Amazon hasn’t “delisted” anything. They’ve simply stopped selling some books directly.

    Hmm, I call that delisting. We’re not going into get into the definition of what “is” is, are we?

    The books’ detail pages, with full information intact, are still on Amazon with active links to multiple resellers.

    Ah, but you see, Inanna, now we’re into the spectrum of general principles. And the fact is, those buy buttons matter, and if you think Amazon doesn’t know full well that most of the people who visit their site won’t take the extra effort to look up one of those resellers (to buy from whom, I might add, such things as Amazon gift certificates cannot be used), then I have a nice beach house in Nebraska to sell you.

    The truth is, you cannot buy Kindle editions of Tor books right now at any price, and that was unilaterally, 100% Amazon’s decision, not Macmillan’s, not the authors’. So if Amazon’s attitude is that they’re going to punish authors on general principles over a dispute that authors aren’t even a party to, then Amazon shouldn’t be surprised if authors and their supporters exercise some principles as well and remove links in response.

    To sum up, Macmillan may be d-bags over pricing, but Amazon were double-deluxe d-bags for delisting. Both parties need to stop being d-bags, come to terms, and stop screwing both authors and readers.

  17. Inanna Arthen

    But remember the Number One Rule, Thomas: only the reader matters. (Remember “the customer is always right,” also phrased more clearly as “no one ever won an argument with a customer.” The customer can always take his or her business somewhere else, and the business person loses, permanently). It doesn’t matter what I think of what Amazon does, I have to work with them because Amazon is the best friend a small press ever had. And while staggered release of editions may be established practice for the Big Six, it’s also part of the unsustainable publishing model that is dying before our eyes. That’s why I’m not imitating it.

    In any event, I’ve run an Amazon Associates online store for about twelve years, and I noticed a drastic change in the way paperback/hardback/other editions of titles were released in just the last four years or so. When I started my bookstore, edition releases were like clockwork: hardcover, then paperback about a year later. That whole pattern completely shattered a few years back. Publishers were issuing multiple editions at the same time, putting out new hardcover editions of books that had previously been released only in mass market paperback, and the trade paperback edition became far more common in fiction than it ever had been before. It made updating the bookstore a real PITA, let me tell you! It also demonstrated the panic that was engulfing the industry.

    I’m not condemning or defending Amazon or the Big Six, but I think authors–and this is a forum for authors–are hurting their own interests by taking sides either way. Authors need to remember that none of these big corporations on “on their side” although they all claim to be concerned about authors if it makes them sound good to say so. But for authors to be running around taking down their Amazon links and telling everyone never to buy anything from Amazon is just cutting off their noses to spite Amazon’s face. Readers and book buyers love Amazon and there are plenty of other authors for them to buy and read. Neither authors nor small publishers can afford to shun Amazon. And if that wasn’t true, why would so many authors be so upset that Amazon isn’t selling their books? “I’m temporarily losing sales because of Amazon–so I’ll tell all my readers never to buy my books from Amazon again.” Do you detect a logical gap there? “You can’t fire me, I quit!” Somehow I just don’t see how that attitude benefits an author!

  18. Thomas M. Wagner

    Well, first off, most of the authors who have been vocal in their anger at Amazon haven’t been telling their readers, “Never buy from Amazon again!” Not Scalzi or Buckell, or Jay Lake, or Cat Valente. Maybe some writers have, and certainly many readers unilaterally made that decision, as did many who just as self-righteously declared they’d never buy a Macmillan title again. Whatever. You can’t control what your own readers will or won’t do.

    I like dealing with Amazon too. Their customer service is reliable as hell and their Associates program is the most user friendly for webmasters. They do a lot right.

    But remember, authors had not taken a side in the current dispute until Amazon made them do so by denying the public access to their books. Spin it how you will, that’s what Amazon did. And so of course, writers, whatever their position on ebook pricing, are going to think of their own incomes, families, bills and mortgages first. Naturally they’ll take a side against anything that negatively impacts those things. So would you if someone threw up a needless roadblock between you and your ability to earn a living. Sure, writers were pissed, even if they thought Amazon’s model for pricing ebooks was the right one all along.

    As for who cares about the author more, look. The internet is chock full of people who go off on emotional tirades without thinking about what they’re saying, and so the bizarre conspiracy theories that flew in the last week have been insane to say the least. Truthfully, I think both players here — Amazon and the publishers — want to sell books. Apparently they have differing ideas as to how to best do it, and the answers will come from how the market responds to whatever is done. That’s how it’s always been. To comment on some of your examples, trade paperbacks began to overtake mass markets because they were actually selling better in certain genres. Among fiction bestsellers and age-old genres like romance, mass market rules, while in nonfiction and most literary fiction, those customers wanted trades. The market shifts you were seeing were nothing more than examples of the business finally responding to what people were buying. It was exactly the kind of adaptation you’re arguing (rightly) that publishers need to make where ebooks are concerned, and yet you’re strangely offering it as an example of the way publishing is apparently “unsustainable” and “dying before our eyes.”

    Much of this discussion is now moot, basically, as Amazon has put the buy buttons back on all Macmillan/Tor product. Great. Now they can get on with negotiations as they should have done, without Amazon idiotically bringing writers and the public into it by denying them the books they wanted. They should have been negotiating intelligently all along. Now Amazon has to do so in a climate of severe loss of goodwill and a 7% drop in stock value because their investors interpreted their actions as real fear over the upcoming iPad. This could not have been a worse PR disaster for Amazon, and they simply didn’t need to do it.

  19. CWP

    Since this is an authors site, think about what is happening, the publishing houses, have turned from making a connection with the readers, to a rental scheme. DRM=Rental. I can not look at it any other way, and as a rental, it’s value to me is the same as a DVD rental, about $1. This may shock some of you, but if you allow your publishers to do this (this is your creative work, you control it until you sign this control away), you devalue your work far more than Amazon ever did.

    There is a lot of work out there offered for free, for a low price, and for what I feel is a fair price, if higher than I would like to pay ($5.99-$6.99). Anything more and I won’t buy it, I won’t go to the Darknet either, I will just not read your work.

    An example of this, I used to buy a huge number of paperback books every year, then the prices went higher than I like, I started buying used copies, going to the library more, borrowing. I will still buy paperbacks if I get an author I love, but I will not try new authors that way. (Magazines are the same, they hit a certain price, and I don’t buy them much anymore).

    Now, I have been looking for a good e-ink for reading PDFs (datasheet, reference manuals, etc) for my hobbies and work. I just found one that meets my needs wonderfully and have it on order now. I have downloaded some novels that the author puts out the first for free, with the rest of the series what I consider to be a good price. I will be reading those first, and buying from authors I like. I will probably also sample and buy from Bean more. I have sampled on my computer in the past from them, and ended up buying the paperback because I liked the first chapters, and didn’t want to read it on an LCD. Now I have an e-ink coming, I probably will not buy paper except in the rare occasion.

    So, think, you are allowing your publishers to drive readership away. I read alot, I work with people who read a lot less then I do, and a number pretty much stopped reading fiction when the prices hit the point I stopped buying new. A number of them have been looking at getting e-readers, but this reaction from Macmillan really turned a number of them away.

    Anyway, I will support the authors/publishers that treat me well (fair prices, no DRM, etc) and not the ones that treat me like I am a criminal or like I am stupid. Yes, authors and publishers are treated as a unit, it is the authors intellectual accomplishments that the publishers package and sell, and none of that can be done without the authors express consent.