Writers are, unsurprisingly, good at crafting a narrative. As such, the writers have managed to steer the ship of the Amazon story much more effectively than either Amazon or Macmillain. It's no shock that this narrative favors Macmillan - almost everything about ebook pricing is hypothetical, but amazon not selling books is a direct threat to authors. Its reasonable that they favor the side that keeps selling their books.
Unfortunately, that's resulted in the sense that Amazon blinking was some kind of victory for authors, and that worries me. First and foremost, there's a big echo chamber in effect here: the book trade has definitely convinced the book trade that this story went a certain way, but that perception is not reflected quite so fervently in the public press. Sure, there are a few op-ed pieces from authors espousing the party line, but the actual news stories are a lot less invested.
And this leads to things like the declaration of the death of the $9.99 ebook, a declaration that is, I think, a bit presumptive. I've said before that I'm sympathetic to the cost of ebooks being non-zero, but the fact that book nerds grasp the fine points of the pricing enough to appreciate that does not mean that knowledge is widespread. Here's an unfortunate reality: the readers who make up the ebook market are never going to be more saavy than they are today. It is currently a field full of early adopters, and that means there's a high proportion of knowledgeable folks. If the ebook market grows, its going to grow to the people who do not give a crap about the problems of production and distribution: they are people who will look at a product and simply decide if it is too expensive or not based on its own merits.
These people are going to be hard pressed to justify spending $15 on a computer file.
And the thing is, the publishers are more ok with this than not. If the whole ebook idea were to just die, they'd mostly be ok with that - lord knows they were happy to see it happen the first time. Sure, there's be the O'Reillys of the world who might soldier on, but for most big publishers, it's a big unknown that threatens to disrupt their already tenuous business model. Amazon and the kindle made it necessary for them to address the market, but if they can keep it priced high enough to stay a niche market, then that works well for them.
Of course, there's no real chance of that happening.
Book pricing doesn't follow the same rules that many other products have. If I want to buy a book, say Gladwell's "Blink", then it has a price set by the publisher. I might get a better or worse deal based on how steep a discount an individual reseller offers but the base price of the book is fixed. There is no secondary company offering me the same book with a different cover for a lower price tag, or another company offering me the same book with extra bells and whistles for the same price. There's one source, and it dictates the price, without competition.
So now these books are going to move to the ipad at a price set by the publisher, and it'll be high. This'll hurt the larger ebook market and that's going to murder the kindle in the short run. The kindle is expensive, and reasonably priced books are part of its value proposition. The iPad, on the other hand, only has ebooks as an incidental aside, so their price has no part in its value proposition. That is to say, if ebooks are $15, then I might decide not to get a kindle because the total price is too high, but that same price point is unlikely to affect my purchase of an ipad because that's only tangential to why I'm making the purchase.
But here's the problem: The value of ebooks is arbitrary.
Consider for a moment a copy of "Blink". Now imagine a book of the same size filled entirely with thousands of lines of "row, Row, Row your boat". Now, there is a _cost_ difference in producing these two books (paying the write, editor and so on), but per the echo chamber above, no one outside the book trade really gives a crap about that. For the book buyer, looking at these on the shelf, there is a value difference between these two books that he's willing to put a price tag on, but it's always a question what that price point will be. If you price the real book for $15 and the junk book for $0.01, the buyer will balk. The junk book may be junk, but it's clearly worth more than a penny - clearly the difference is just markup. So you try to close that gap.
Now, there _is_ some price point at which the customer will be comfortable, but how your reach it can be rough. Remember, there's no competition, so the market can't really decide what your book is worth, except possibly in terms of other books (is Blink worth more or less than The Tipping Point?). The alternative is that you fix prices.
Now, publishers have been fixing prices forever, so they're ok with this, but that old model doesn't hold up as well online, partly because there's greater visibility, but partly because the feedback cycle is faster. Basically, you need to set a perceived reasonable price (as Apple did with 99 cent music tracks) or else you'll experience a race for the bottom as everyone involved moves to compete on price.
And this is why punting Amazon may ultimately hurt the publishers. The terms were not what they wanted, but Amazon had been very successfully creating a default perceived value for an ebook at 10 bucks. That seems like a terrible thing when you think you can get more than that for an ebook, but its going to look MUCH better when the price you can expect to sell for starts getting lower.
Am I confident that book prices will get driven lower than $10? Absolutely. They will get driven as low as they can while still turning a profit for the publishers unless something artificially keeps them higher. Right now there are a lot of inefficiencies tied up in legacy business (y'know, actual books) but those will get trimmed down with time, technology and outsourcing and prices will reflect that (again, unless they are artificially set in some fashion). Right now, book prices are something of a walled garden more than a marketplace, because the book trade wouldn't survive in its current form in a true market.
I worry that publishers are making a decision in favor of short term gain and fear of change that is, ultimately, going to hurt themselves and the book trade immeasurably. That this may mean greater opportunity for small publishers with new ideas and greater flexibility is cold comfort at best.
(Of course, the reality is that the publishers are probably already colluding to create a fixed price structure on the ipad - it's not going to be a coincidence that their best-sellers are all identically priced - and the question is whether they can get away with it in such a visible place as out in the open on the internet?)
1 - Because authors will see so much more money under this deal...OH WAIT.
2 - Especially since the information out there is laced with a lot of self-serving misinformation.
3 - This, by the way, is part of why the "The publisher takes all the risk, the retailer exploits them!" argument is not as strong as it looks. Retailers need high margins so they can offer deep discounts. This is not a terribly reasonable model.
4 - This is, by the way, why Amazon's complaint about Macmillan's monopoly on their own products is not as silly as it sounds on the surface. It's into a great choice of words simply because it was so easily twisted into a joke, but this sort of exclusivity is actually a real problem, especially if you expect prices to be rational.
5 - Though that pain may mean more opportunity for the small players, and I'm good with that.
6 - The publishers, not the authors.
7 - I don't see that going great for authors, but I may be cynical.
8 - And there's a lot of pain associated with that. Publishers don't come of great in my perspective, but they also get checks to authors and put books on shelves, many of which are _not_ going to be the next best seller. While, as companies, they don't do this out of any generosity, the actual people involved tend to be real book lovers who have chosen this business because of their passion for it, not any sense that books will make you rich. If the book marketplace were to become rational, it would kill the midlist, at least for a while. That would suck immensely, and there's no guarantee that what would come next would be any real improvement.