Deep Thoughts
Tale of a Dying Industry
Feb 3rd
Although the mainstream media has barely covered it, the last week has seen all out warfare break out between Amazon.com, perhaps the world’s largest online retailer, and Macmillan, one of the world’s six largest publishing companies. At issue is the price of eBooks — Amazon wants to charge $9.99 for the eBook version of a new hardcover, while Macmillan believes the price should be raised to $14.99, with the price declining over time, much as a paperback is cheaper than a hardback. Amazon strongly disagrees with Macmillan’s point of view — they rightly hold that they should be able to negotiate a price for an ebook with Macmillan and then sell it at a loss for $9.99 if it serves their interests.
Macmillan countered that they would let Amazon sell eBook editions of their titles for $9.99, but only after “aggressively windowing” their eBooks — which in plain English means that the Amazon Kindle edition of new titles would be delayed by seven months to a year after the release of the hardback edition. One of Amazon’s arguments for Kindle is that you can buy nearly any book right now for $9.99 or less.
Amazon bid Macmillan’s president farewell from their meeting, and after he boarded his plane home to New York, yanked not only every Macmillan eBook from Amazon, but also all of their print titles, too.
Naturally, Macmillan and their stable of imprints and authors were outraged. Such luminaries as John Scalzi, Cory Doctorow and Charles Stross began blogging about evil Amazon and how the $9.99 eBook is going to hurt authors, independent bookstores, publishers and their readers. Of course, fans of these authors piled on in the comment sections of their blogs, declaring their hatred for the Great Satan, Amazon, and their personal fealty to the Macmillan corporation and the serfs they get their content from.
Suddenly, Amazon became the source of all the publishing industries’ woes, and the reason why everyone’s favorite little bookstore couldn’t turn a profit. Of course, the fact that a large chunk of Americans don’t read at all, or have stopped reading completely escapes their attention. eBooks are only a tiny part of the overall publishing ecosystem, and to blame them for its long decline is really to avoid the real issue.
“eBooks” on Kindle are not the same a dead tree books. They are not a product that you can hold in your hand, loan to friends, or pass on to your children. They are essentially the same as a Netflix rental, or a digital download of a video game. They are tied to a very specific device — in my case, a Kindle — and they are not often transferable to competing eReaders. The argument for eBooks is convenience — accessing a book from anywhere at any time. But who in their right mind believes that a Kindle eBook should have price parity with print editions? $9.99 seems to be a very fair price for a product that one does not truly “own.” Increasing that price by 50% seems incredibly unfair to me.
The publishers claim that between the writers, editorial staffs, typesetters, cover artists, marketing expenses, etc., that eBooks are not recouping their initial costs. That would be true if an eBook was cannibalizing sales of print books, but the evidence doesn’t seem to bear that out. An eBook is not printed, so you don’t have any printing and binding costs. Additionally, eBooks aren’t warehoused or shipped via freight, and they definitely are not returned or pulped. An average eBook is under one megabyte in size, so it’s not as though there are major data center or bandwidth costs involved per book. It would seem to me that $9.99 per eBook has almost zero overhead, especially if the initial start-up costs are rolled into the print editions.
The extra $5 is about two things — the publishers making more money that is pure profit, as well as being able to dictate to retailers how their prices should be set. Point number one is perfectly fair — companies are certainly allowed to raise prices to increase profits. But price setting on the part of a supplier to a retailer is in direct opposition to free market capitalism. Once a retailer purchases a product for an agreed upon price, they should be permitted to sell that product for whatever they want.
Now, here’s the rub — Macmillan threatened Amazon this past week, because of Apple’s announced iPad with its iBook reader software. Apple, in order to get publishers on board with their platform, allowed them to set whatever price they wanted — or $15 for new books, as it would ultimately shape out. Now Amazon is selling books for $9.99, which is a considerable discount over Apple’s $15 price. This means that if the pricing situation stayed as is, Amazon would be undercutting Apple and very likely Kindle would be undercutting the iPad. This is unacceptable to Apple, and since the publishers stand to make more money under the Apple model, is therefore unacceptable to the publishers.
As the largest of the big six, Macmillan led the vanguard against Amazon. Forgetting, I think, that Amazon is the world’s largest online retailer of dead tree books, as well as eBooks, and that most of their competitors are perilously close to failing. They depend on Amazon not just for eBook sales, but for print sales. And Apple’s “magical” iPad isn’t due out for another three months — it’s a market that doesn’t even exist. Amazon exists now and is necessary for this quarter’s earnings. I can only suspect that unless it’s an absolute failure (which I’m not ruling out), then iPad might sell out at launch and be largely unavailable to potential readers. And the fact that the device is a mobile computer and not a dedicated eReader also means that people aren’t going to necessarily be buying iPads to read books. Unlike Kindle, which is only useful for reading books.
So, in a combination of gouging Kindle customers (who are also dedicated readers and loyal to their devices) and trying to strong-arm their biggest online retail partner, Macmillan overreached. The result being that Amazon stopped doing business with them entirely.
The authors argue that this is unfair — that they have nothing to do with Amazon or Macmillan, and they don’t deserve to lose sales over this disagreement. If this were the case, the writer’s guild would not be backing Macmillan’s position — that eBook prices should go up 50% and follow the traditional hardback/paperback model.
I find it entertaining that self-righteous futurists like Charles Stross and Cory Doctorow (who isn’t a fan of Kindle or DRM’ed eBooks, anyway, but that’s another conversation) don’t seem to get the central point. A 500 kilobyte file is not worth $15. It’s barely worth $10. When a reader buys a hardback for $28, they’re getting a product designed to be kept forever, essentially. The lower-priced paperback is a more disposable copy, capable of only holding up for a few reads. The price difference exists not because a hardback comes to market first, but because a hardback is permanent and a paper back is not. There is no qualitative difference between an eBook released today over an eBook discounted a year from now except that it’s cheaper a year after it comes out. The file is the same.
Now, if the eBook edition was released a month before the hardback edition, I could see charging $15 for it. That’s truly early access. But otherwise, there’s no reason for the increase in price save greed. But given the trouble publishers are having, greed may not be the right word — financial desperation may be more accurate. They are in essence becoming aggressive corporate panhandlers, seeking to leverage their content in exchange for a bigger slice of the pie, all the while trying to hold onto their aging hardback book business.
In some ways this is a symptom of a much larger problem — the crumbling of many of the old 20th Century media industries. Publishing, music and television have all wilted in the digital age. Only cinema seems to be resilient (though in an age of Torrents, the home video market is a shadow of its former self). Part of this is due to piracy, new forms of media (video games come to mind), but also the democratization of the means of production. It is now easier than ever for people to create and distribute content to the world — the old gatekeepers that controlled production no longer have the ability to keep the masses out. Not only can people publish things themselves without relying on big companies, the greater impact of the digital age is that they can also pirate content and distribute it themselves. With the file-sharing genie out of the bottle, nothing can be done to put it back in.
But gouging people like me who buy legal DRM’ed digital downloads on Kindle isn’t going to solve the publishers’ real problem. A Kindle eBook is not akin to a pirated product — it’s a brand new market. Kindle readers buy more books — I’ve certainly bought more in the past two months than I bought in the previous year. Selling Kindle books at $9.99 seems like a no-brainer to me, especially since it encourages readers to buy more books. But publishers view the eBook as a threat to the old hardback/paperback model — and they will raise prices on us in an attempt to protect the old system.
As for the Macmillan authors, it’s not unsurprising that they’re backing their own publisher — as much as they rail about their independence, they depend wholly on Macmillan for their livelihood. They are effectively subcontracted content providers owned lock, stock and barrel by their corporate benefactors. More than the publishers, they have the most to lose from the collapse of the old system. If writing and publishing turns into a hobbyist industry like blogging or podcasting — and anyone with talent can find an audience through the Internet without having to “break in” — then the big lottery ticket the professional writers scored with Macmillan, the stamp of approval of a “real” publisher, becomes meaningless.
Ultimately, this issue isn’t about Amazon, or the failure of independent bookstores or the consolidation of the publishing industry — it’s about how the Internet has transformed the old models of the 20th Century. And instead of letting the free market sort out pricing, the publishers would rather fix prices and force retailers like Amazon to adhere to them. Amazon should not bend to Macmillan’s panhandling. Kindle is one of their best paths to future profitability. Alienating Kindle owners now doesn’t seem like a good path to success.
John Scalzi has called on his readers to buy Macmillan books as a sign of support for the authors. I would urge Kindle owners to the do the opposite — buy non-Macmillan books at Amazon and add even more to your wish list. Boycott the company that wants to increase eBook prices for 50% — and support the publishers that currently accept $9.99 model. Mid-list writers be damned, we should not accept Macmillan’s attempt to gouge us.
What Conan O’Brien Really Means for Television
Jan 16th
I’ve never been particularly interested in late night talk shows — not Johnny Carson’s storied Tonight Show, or David Letterman, or Conan O’Brien, or Jimmy Fallon, or Jimmy Kimmel or Dick Cavett. To me, the tradition of the late night talk show is something out of the distant past, a mix of vaudeville humor and celebrity puffery.
Conan O'Brien is a better bet than Jay Leno.
But I am interested in the war between Conan O’Brien and Jay Leno/NBC. Because objectively speaking it represents the failure and desperation that has haunted the broadcast networks for several years. Here you have Conan O’Brien, beloved by a cult of hardcore fans with low ratings in the 11:35 pm timeslot against Jay Leno, loved by — well no one — and floundering in the ratings in his 10 pm show that almost everyone universally despises. NBC gets the bright idea that Leno’s not the problem, just the timeslot, and decides to give the Tonight slot back to Leno, outraging O’Brien and his small, but dedicated fanbase.
If this isn’t representative of what’s troubling the broadcast networks, I don’t know what is.
There was a time — not so distant, since it encompassed a big chunk of my own youth — when there were just three broadcast networks (plus PBS) serving the entire nation. That’s three and one quarter channels! And until fairly recently, those networks shut down at midnight.
NBC, CBS and ABC — and to some degree Fox — are still chasing the big ratings of yesteryear, when the audience had nothing better to watch. They haven’t woken to the new reality where no single program can draw in a majority of the American public — where the audience has splintered into dedicated niches that love their shows intensely, but aren’t that “big” in terms of the old numbers.
A lot of people love Lost. It’s not as many people as watched The Waltons by a longshot, but they really love those characters. Who in America can rightly say that they loved John Boy and his family? I mean, really loved them.
The fact is, Conan has a lot of fans — and they exist in a key audience demographic. He may not appeal to the masses, but what the networks don’t understand is that except for sports and American Idol, there’s very little cultural glue that holds the television audience together. Science fiction fans are not going to tune into Law and Order just because it’s on — nor will CSI fans necessarily watch Heroes simply because they clicked passed it. They’re more likely to stop at Diners, Drive-in’s and Dives on the Food network, or Bizarre Foods with Andrew Zimmerman on the Travel Channel than they are to watch a network hour-long, or a comedy talk show in an aging format.
Television changed the moment cable television became a widespread phenomenon, graduating from the only way rural American communities could get broadcast television to a delivery system for exclusive content you couldn’t see over the air.
The cable networks get it — FX understands that It’s Always Sunny in Philadelphia won’t pull in most of the country or even a sliver, but its dedicated fans will watch, and those fans will pay attention to the advertisements keyed towards their demo. The same goes for other shows, such as Warehouse 13 on SyFy, Sons of Anarchy on FX, or the Venture Bros. on Adult Swim. The audiences for those shows will watch the ads for say video games and buy those games. And they’ll collect previous seasons of those shows on DVD and Blu-Ray to watch over and over again.
And then you have HBO and Showtime who don’t use an advertising revenue. In many ways, they’re like the BBC with its television tax — people pay to watch them. So in order to increase subscriptions, they have to put on risky, adventurous material you won’t see anywhere else such as The Sopranos, True Blood, Dexter and Weeds. A buzz grows around those shows, and then people sign up for subscriptions so they can see them. HBO doesn’t expect the numbers that Cagney and Lacey used to give CBS, they just expect to see their subscription numbers rise. Not to mention, wanting to make a killing on DVD and Blu-Ray sales.
Which brings me back to NBC. If they were smart, they would understand that Conan O’Brien’s devoted fan base is worth more than Jay Leno’s alleged mass appeal. They would look at Leno’s numbers and realize that his failure at 10pm didn’t have anything to do with timeslot, but everything to do with the fact that lowest common denominator he was shooting for just doesn’t exist anymore. Everyone has there own niche and can find exactly what they want in the expanded universe of television and the Internet. I’d take Conan’s guaranteed audience over Leno’s imaginary one any day.
