Publishing/Writing: Insights, News, Intrigue

04/04/2012

Looks Like the Agency Model May Survive DOJ as a Valid Business Model


The Right Decision on Agency Model ?

Signs emanating from news sources point to the agency model (backed by the big six publishing houses) being judged a valid business model by The Department of Justice.

With one alteration — Apple must drop its MFN (most favored nation) designation. MFN status meant Apple could not be undersold by other retailers.

What does this mean?

To me it means that all the best content, known authors, bestsellers, etc. will probably be available only through sites employing the agency model. Why? Simply because authors/creators can make more money with the 70%/30% revenue split — and at a price set by the author/publisher not a third-party retailer.

This also means that all the best new content, authors, bestsellers, etc. will probably leave Amazon with its cheapo book model, unless they make some changes.

That some of its titles in iBooks are uncompetitive probably won’t worry Apple much. It cares a hell of a lot more about upholding agency terms and MFN with magazine and newspaper publishers, where the market structure is totally different. 

What tomorrow may look like:

    For quality content go to Apple iBooks and other agency model sites.

    For lesser, second-rate, cheapo content go to Amazon.

More details here by  at Digital Book World:

Breaking Down the Apple-DoJ-Agency Five Saga and Its Ramifications

What could the actions of the Department of Justice mean for e-books? Here’s a breakdown with some scenarios as I understand the situation. 

Apple’s Agency Model

Publishers selling through Apple can only do so through an agency agreement (a uniform 70%/30% revenue split across all categories and digital products). That is true for all assets – games, music, video, movies, etc. – sold through Apple.

Based on the recent news reporting, the DoJ might accept agency as a valid business model. In an interview with the Wall Street Journal, Sharis Pozen, the top antitrust official at the Department of Justice states “we don’t pick the business model”, and is focusing its efforts on a settlement under which Apple drops the “most favored nation” clause form contracts according to a report by Reuters.

This means Apple’s business model for iTunes – including iBooks – may remain largely untouched. Apple does not have to worry about price-matching, does not need buyers or merchandisers to come up with the right price, and does not need to change its technical or e-commerce infrastructure. 

Most Favored Nation

To be competitive under its retail model, Apple originally insisted on a Most Favored Nation (MFN) clause to make sure its goods (and its processes for pricing these, where the publisher set the retail price) were competitive (i.e. Apple would not be undercut on the same goods in the marketplace).

Being forced by the DoJ to drop the Most Favored Nation (MFN) clause means that Apple could no longer insist that the retail price agreed between Apple and publisher is the lowest in the market at all times. 

Agency and the Big Six (Penguin, Macmillan, Hachette, Simon & Schuster, Random House and HarperCollins)

The big-six publishers (except Random House, which followed the “agency five” to this business model one year later) had agency agreements in place with Apple when iBooks launched and more importantly were able to force these agency agreements (RH included) on Amazon, too. Due to their market position and the popularity of their books (and authors), the big-six publishers prevailed in negotiations with Amazon (remember the outcry by authors and customers when Macmillan books disappeared from Amazon? Amazon caved inside of 3 days.)

It is likely that nothing will change for the big six if Apple is forced to drop MFN. It will be agency terms as normal with all retailers be they Apple, Amazon, BN, Google, Kobo or others. This is probably a very happy outcome for the big six.

However, at the same time, the big six are less constrained when doing short-terms promotions and will only be able to do these promotions selectively, i.e. only in certain channels and on certain titles. Regardless, I think the big six would be very happy with this outcome. 

Agency and the Second Tier

Many publishers in the “2nd tier” (all those outside big six – this in no way refers to quality of the output, it is just a reflection of size and market-share) have agency agreements with Apple, but wholesale agreements with Amazon, because Amazon had the upper hand in negotiations along the lines of “you are not willing to sell on wholesale terms? O.K. we will not sell your books” and swoosh these publishers would have lost the potential of selling to 60% to 70% of the now very large e-book market (as much as 50% of the total market for many titles).

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04/23/2011

The Hackers Quarterly…and the Apple And Amazon Continuing Subscription Debacle


 

2600 Magazine - The Hackers Quarterly

For those who have not been properly introduced to 2600, the hackers quarterly magazine…I am formally presenting this mag to you tonight.

Along with the introduction is a dissertation on how they are expanding their online publishing platforms (read that as formats)…and how they are championing the elimination of DRM (digital rights management)…which they feel is an anti-consumer restriction/regulation.

What do you think? I admit I’m still puzzling over the DRM details!

By the way, DRM is defined as the use of software or other computer technology to manage the conditions under which copyrighted material in digital form can be accessed.

From 2600.com :

2600 EXPANDS ELECTRONIC PUBLISHING PLATFORMS 

The saga of our electronic publishing endeavors continues. We’ve grown weary of waiting for Amazon and Apple to work things out between them so that subscriptions can be available on the iPad, so we’ve bypassed their stalemate and made individual issues available for those devices. We’ve also made them available for the Barnes and Noble Nook. More is on the way.

The price of the current issue is set by Amazon – we have no control over this. We’re trying to get them to make it available for less and we’ve already managed to do this for back issues. Your support at this time gives us more leverage and will help to set the standard for the entire electronic publishing world.

We’re also fighting to have any DRM restrictions removed from our publications. Please stand behind us on this as it’s our chance to show other publishers that non-DRM is the way to go and that publications can indeed prosper in this environment without implementing crippling and anti-consumer regulations. If you’re annoyed by a policy or restriction of Amazon, etc., posting a negative review actually gives us LESS leverage as it’s seen as a reflection of 2600, not Amazon. Before Amazon accidentally removed Android compatibility, we were #1 in customer service on the entire Kindle Magazine section. The complaints against Amazon that came in after their blunder pushed us way under and were likely not even seen by those in charge. So if you’re happy or unhappy with what WE’RE doing, tell the world via the feedback option. If something annoys you that we’re not directly responsible for, let us know in an email (webmaster@2600) and we’ll look into it.

We’ve made a lot of progress in a relatively short amount of time but we know there’s a great deal more that needs to be done. We find ourselves at a very historic juncture, not just for us but for the whole publishing world.

This is where we stand at the moment:

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Kindle lovers!…Go here to get this blog on your Kindle.


01/31/2011

Amazon (Kindle store) Trumping Apple (iPad store) in eBook AND Print Sales


Amazon is still king of the book-sales world, both e-books AND printed books…and shows no sign of slowing down!

Amazon had a respectable market share of printed-book sales in the pre-Kindle era. In the post-Kindle era, sales of e-books went ballistic, as expected…but, strangely enough, Amazon held on to the same per centage of printed-book sales also, despite the supposed decline of print!

This article bt Jim Milliot of Publisher’s Weekly offers a clear (with graphics) analysis of the Amazon and Apple book sales market share… with explanations by Peter Hildick-Smith, president of the Codex Group, an industry study and analytical group:    

Amazon Ups Its Edge
Apple notwithstanding, trends point toward more market power for the e-tailer

Apple caused a stir last week when it announced that it sold 7.3 million iPads in the quarter ended December 25, bringing the number of devices it has sold since it released the iPad last April to nearly 15 million. But even as the iPad gains traction among book buyers, the clear winner in the first stages of the book industry’s digital transition is Amazon. A survey of 6,250 frequent book buyers conducted by the Codex Group in early November found more book buyers acquiring their e-books for the iPad from Amazon’s Kindle store rather than through Apple’s iBookstore, with the Kindle store accounting for 40% of e-book sales for the iPad and the iBookstore 29% (one factor limiting sales through the iBookstore is that Random House e-books are not directly available there because RH is not using the agency model). John’s Note: I have posted on this and other issues with Random House on my Writers Welcome Blog (WWB)  

While Apple has already sold over three times more iPads in just nine months than Amazon is estimated to have sold Kindles in three years, the sale of Kindles has had a huge impact in increasing Amazon’s “share of wallet” among book buyers, the Codex survey found. Before acquiring a Kindle, book buyers made about 14% of their unit purchases at Amazon, a figure that tripled to just over 37% after they bought a Kindle. “It’s the most amazing retail share growth strategy I’ve ever seen,” said Codex president Peter Hildick-Smith, who has also worked extensively in developing retail growth strategies for stores ranging from Wal-Mart to Harrods. The increase in market share came entirely from book buyers’ added purchase of e-books, with 28.1% of all unit buys of frequent book buyers coming from the Kindle store. But Hildick-Smith said it was equally impressive that Amazon was able to hang on to almost the same market share of book buyers’ print purchases even as buyers were substantially increasing their e-book purchases.

While e-book purchases do not appear to be cannibalizing print sales at Amazon, the Kindle store has to be taking sales away from somewhere, and Hildick-Smith believes it is from bricks-and-mortar stores. With the decline in the number of bookstores, publishers are losing not only the top sales channel but the most important showcase for their new titles. According to the Codex survey, bookstores remain, by far, the most important way book buyers learn about new books: 28% of all book buyers said they learned about the last book they bought by browsing in a bookstore or through a bookstore display, while 14.5% were discovered through a friend’s recommendation. Even among iPad users, 32% of device owners learned about their last book purchased through digital sources (an e-bookstore, author Web site, and other sources), but 23% discovered the book they bought at a bookstore.

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01/15/2011

Apple iPad Too Dictatorial to Publishers?


 Is Apple getting too much into its publisher-clients’ business and dictating how to do their business? NIM (Next Issue Media) thinks so…And I

Android Tablet

think with some justification.

NIM is a new venture owned by Time Inc., Condé Nast, Hearst Corporation, and Meredith Corporation, formed so these publishers can have their own tablet app store to publish and distribute their products as they see fit and not as Apple wants to dictate to them.

I think Apple is making a big mistake. Especially with all the new, more inclusive and improved android tablets preparing to hit the market!

Chris O’Shea writes this for MediaBistro:

Publishing Companies Prepare Tablet App Store

Time Inc., Condé Nast, Hearst Corporation, and Meredith Corporation are adding the finishing touches to their tablet app store. Morgan Guenther, the Chief Executive of Next Issue Media (NIM), the new venture owned by the publishing companies, says that it should launch within the next few months.

He says that when the store launches, it will feature at least two titles from each of the companies, and by this summer, every magazine will be available. Guenther also says that News Corporation’s (another owner of NIM) newspapers will be available by then.

For now, the app store will only be available on Android tablets. This is because NIM is the result of publishing houses not wanting other companies (read: Apple) to dictate how their products are distributed.

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12/06/2010

Google Bookstore Snuffs E-Book Market Monopolies


In my post yesterday I ranted about the dumb Apple mis-management of their clients’ subscribers’ data; and mentioned that they would lose clients to Google and others if they didn’t change their hoarding of actual content provider subscription info…gained through docking on and selling through their iPad store.

Well Google opened their eBook store today! This should change the competitive landscape a little more than just a tad, my friends.

This account of the Google eBook store opening by Matthew Flamm of Crain’e New York Business:

Google shakes up e-book market

The long awaited Google e-bookstore opened for business Monday, heralding a possible sea change in the business of selling digital books.

Describing itself as the world’s largest e-books collection, Google eBooks has an inventory of more than 3 million titles, which includes millions of public domain books that are available for free, and several hundred thousand titles that are for sale.

Though some analysts have noted that Google is untested at e-commerce, the search giant’s digital bookstore has enough distinctive features to make it attractive for users, publishers and bookselling partners. Most significantly, Google is using a device-agnostic open e-publishing format, which makes its e-books compatible with computers and e-readers from Barnes & Noble, Sony and Kobo, which also use the open format.

A Google eBooks application can be downloaded for the Apple iPad and iPhone.

In addition, since Google has placed the titles in what is known as an “open cloud” platform, they can be accessed by the same user from a range of devices, each one picking up on the same page where the user left off.

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