Wha, wha whaaat?  Who's the big gorilla in the room?

Tor

Amazon "capitulated" -- their words -- just an hour or two ago. Here is their (in my opinion, hopelessly passive-aggressive) statement to that effect:

Dear Customers: Macmillan, one of the "big six" publishers, has clearly communicated to us that, regardless of our viewpoint, they are committed to switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers and most hardcover releases.We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. We want you to know that ultimately, however, we will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books. Amazon customers will at that point decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling e-book. We don't believe that all of the major publishers will take the same route as Macmillan. And we know for sure that many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative.Kindle is a business for Amazon, and it is also a mission. We never expected it to be easy! Thank you for being a customer.

I have to say, I was slightly more on MacMillan's side than Amazon's, as the article I saw originally on this topic stated that an e-book only cost $2.50 - $3.00 less to produce than a standard book, and Amazon wanted all e-books (including of new hardcover titles) to be $9.99. They wanted the publishers to take this loss to further the new medium -- but of course, Amazon is hardly a neutral party, invested as it is in making sure its Kindle takes off. . .

Oh, and here's Charles Stross' take:

http://www.antipope.org/charlie/blog-static/2010/01/amazon-macmillan-an-outsiders.html

And here is what Tobias Buckell says, and a better intro to the industry (and economic theory) than Stross' briefer piece:

http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-longer-for-sale-via-amazon/

And John Scalzi on the particular timing of the event:

http://whatever.scalzi.com/2010/01/30/its-all-about-timing/

Although of course, all those posts are outdated now that Amazon caved. . . :)

It's predictable.  I think new authors are going to be the ones taking it on the chin with lower royalties because people are expecting cheaper e-books.

I guess Amazon finally noticed the almost universal critisim they were getting for pulling Macmillan's books, not to mention the way they went about it.

There's no reason ebooks can't be cheaper and still make the same amount of profit for everyone involved that paper books did, since ebooks eliminate a lot of costs from the whole process, such as printing and warehousing and shipping.

Authors who are already successful, or don't mind investing a little in their writing, can also now publish themselves and take all the profits. And if they want to ensure their work is well edited, they can hire an independent editor. (I can recommend several if anyone needs one.) 

For large trade press publishers like Macmillan, the actual physical costs of a print book — paper, printing, binding, packaging, warehousing, etc. — are less than 10% of the cover price, even in small volumes, and drop to less than a dollar per book for large volume titles such as bestsellers.  The electronic format doesn't save nearly as money as you might expect.

The money that goes into a book is dominated by acquisition costs, editorial costs, production costs, layout and design, art, marketing and business overhead. Ebooks must bear all those same costs as print books.

Source: Jay Lake, author of the Mainspring Trilogy, posted on his blog this morning.

One of the more interesting things I found out in reading up on all this a day or two ago was that the likely reason it was Macmillan that put its foot down to Amazon over pricing was that Macmillan is one of the largest nonfiction publishing houses. And while the cost of converting plain text to ebook format (as you would for most fiction) isn't tremendous, imagine trying to convert graphs, tables, footnotes, and indexing to a properly usable format!

The other issue is one that I've been a little frustrated the mainstream media isn't explaining at all. . . it isn't that Amazon wanted a price point of $9.99 and Macmillan wanted the higher price point of $14.99; it's that Amazon wanted a flat price (yes, of $9.99) and Macmillan wanted an adjustable price -- $14.99 at first for brand-spankin'-new hardcovers titles which would then drop at set intervals as the book has been out longer (you know, EXACTLY the way books go from $28 in hardcover to $15 in trade paper to $8 in mass market and then $6 for hardcover remainders) allowing the market to be much more responsive to consumer demand while still recouping all the up-front costs Aaron mentioned.

But Amazon pulled the PRINT versions, not just the eBooks.  I could understand them putting the eBooks on hold.  But they played the heavy when they went after the print versions.  Making them look bad rather than MacMillian.  Really poor marketing and PR.

That was why they did it on Friday. . . taking advantage of the slowed down news cycle hoping they would send their message to Macmillan without getting a ton of bad press. (Plus apparently people do less online shopping on the weekends, so hopefully minimizing their lost sales.) Of course, it didn't exactly work. . . which is why they caved not two days later.

Except they didn't really cave.  We still can't buy Tor books directly from Amazon.

"We want you to know that ultimately, however, we will have to capitulate and accept Macmillan's terms"

They said they will cave at some point in the future, but aren't caving yet.

Really? I hadn't gone that far into Amazon looking. . . oh how funny. . . what was the point of that passive-aggressive letter then?

The point was to make Macmillan look like the bad guys.