Saturday, January 30, 2010

Mind Your Business

People are tweeting and blogging about the latest spat between and Macmillan Books. What exactly is going on? Apparently Amazon has pulled all of Macmillan books from their store over a price dispute. But this is just the result of a much deeper problem. What it really comes down to is the fact that one of these companies doesn't know what business they're in.

A hundred and fifty years ago people didn't buy candles so they could be candle owners. And they didn't buy ice from the ice truck because they wanted frozen water. Consumers wanted light, and consumers wanted cold food, and candle making companies and ice delivery services that didn't understand this fact disappeared when the light bulb and the refrigerator came along.

So what business is Macmillan in? That's an easy question to answer. Macmillan is in the business of printing, distributing, and selling hard copies of books. Macmillan doesn't want Amazon to release their ebooks until the hard copy version has been out for seven months. Printed books are their business. It's the one they have become comfortable with, and it's the one to which they are currently clinging, hoping that the life they now understand will still be here tomorrow.

The problem lies in the fact that readers don't buy books to own wood pulp and ink.

They buy books because they want stories.

Amazon is in the business of connections. They connect people who have stories with people who want stories. They allow almost anybody with a book to put it in their store. But they don't stop there. They also make it so that you can download books from Project Gutenberg. They know that good stories aren't just the new releases, but the classics as well. It's not about selling enough hardback copies to cover the bottom line, it's about providing a rip-roaring good story to somebody who needs the escape.

Amazon isn't perfect, but they do know their business. Publishers who figure it out have a good chance of staying in business.


Jaime Theler said...

But then you throw in the fact that people like to own their books and their music, and right now the Kindle locks them in to reading books only on the Kindle. So if they switch to, say, the iPad, they have to purchase the books again. Sneaky Amazon.

I'm really interested to see how this keeps developing. It's been a bumpy ride for publishing-as-normal.

Matthew Buckley said...

Yes, that is covered by my 'Amazon isn't perfect' comment. :)

However, it's important to note that a lot of the DRM that Amazon has on the kindle is demanded by the publishers. If they stripped out DRM, most publishers would run away screaming.

And if I understand correctly, you can read pdf files on your kindle. So if you own a book in the pdf version, you can do whatever you like with the book.

L.T. Elliot said...

This is one of the best analogies for the eBook discussion that I've ever read. It is about supplying what people want and people are increasingly wanting a faster, easier way to get what they want.

This is what I mean when I tell you what a smarty you are, Matthew. ;)

Daron D. Fraley said...

Well said. What we don't need: DRM. What we do need: honest people. Since not everybody will be honest whether DRM is there or not, DRM only harms the honest folk.

I am 100% for open file format standards and affordable prices that makes it easy for the honest reader to be a repeat customer.

This has already been proven to work with open source software, and it is a multi-billion dollar marketplace now.

Just my two cents.

Kristi Stevens said...

Scott Westerfeldmakes a good argument for Macmillian's case.

I think it goes much deeper than just a matter of how people read their "stories". This seems to be more about mammoth business undercutting the competition.

As a small retail store owner I can tell you that it is never a good business practice to undersell the independent sellers. Price point is a very important part of the retail bottom line. When a large business cuts the cost of new items to bargain basement prices small independent business owners suffer.

The customer now expects the lower price to be standard and the small business can't keep up. Manufacturing tries to make up for the new price point by marketed a substandard product to keep the new price point affordable.

Eventually, quality decreases as the small business owner tries to keep up.

Perhaps the argument can be made that this doesn't apply to ebooks. As a writer who would like to see my book in wood, pulp and ink I fear that if Amazon undercuts the competition on new ebooks this will eventually affect the price point of hardback sells.

If this affects publishing the same way similar business practices have affected other areas of retail sales it will be detrimental to all story lovers in the long run.

Ellen Ruppel Shell makes a wonderful case for the long term implications of discount culture in her book CHEAP. You should read it. I think you'd find it very interesting. (It's available on Amazon. ;))

I applaud Macmillian for standing up for the independent booksellers, authors and publishers. Hurray for small businesses!

Matthew Buckley said...

Kristi, I think all of your points are dead on when applied to physical goods. However, when you move to a digital medium, the entire landscape changes.

Think of your blog. You have a voice, a place where you can publish your thoughts and ideas. You'd never be able to do this under the old model (newspapers/newsletters). The internet has given millions of writers and millions of readers a new way to connect and converse, a way that wasn't available under the old model.

I have never subscribed to more than 2 magazines at once in my entire life, and yet I have about 80 blogs I follow. I get to connect to all these cool people because of a new medium.

It is going to be the same way with storytellers. We have this fantastic new medium to share our stories with others. In my opinion independent authors and presses should be squarely on the side of Amazon in this debate. Blogs gave the little guy a voice, and I think Kindle and other eBook readers will do the exact same thing.

Anonymous said...

Dear Mr. Buckley,
I am writing from the International Herald Tribune to request an interview with you on OpenCourseWare and how it is or is not changing university education.
If this would be possible, please email me at
Thank you,

オテモヤン said...


Anonymous said...

Well said. Carry on and best of luck to you!!

rsgoldfeng said...

Macmillan Diablo 3 Itemsdoesn't want Amazon to release their ebooks until the hard copyGW2 Gold version has been out for seven months.