The problem with much analysis of the old-versus-new media wars (including some of my own, I confess) is that we always assume that there’s a moral struggle going on, that the real battle is between fairness and injustice, and that, in the best Hollywood tradition, good will eventually triumph over evil.
Take, for example, last weekend’s battle between Macmillan and Amazon over e-book pricing. The real story is amorally simple: Macmillan, one of the world’s big six publishing multinationals (and, full disclosure, the publisher of my next book), wanted Amazon.com Inc. (Nasdaq: AMZN) to conform to Macmillan’s so-called “agency model” arrangement for selling electronic books, which involves Macmillan determining e-book prices (from $5.99 to $14.99) and giving Amazon a 30 percent commission on each sale.
Amazon, which currently sells all e-books at $9.99 and pays a 50 percent of the list hardcover price commission on each sale, refused. So Macmillan threatened to pull its e-books out of the store, which, in turn, resulted in Amazon pulling all Macmillan’s physical books from Amazon’s entire book store. After some obligatory huffing and puffing over the weekend, Amazon eventually backed down and put Macmillan’s physical books back into its e-commerce store.
Unfortunately, a parallel shadow war about this Amazon-Macmillan business dispute erupted amongst all-too-predictable online bloviators. On the one side are hardcore digital utopian ideologues like Henry Blodget who take open pleasure in the destruction of old media by supposedly innovative new technology businesses. On the other side are Macmillan writers like John Scalzi who see supposedly destructive technology platforms like Amazon killing the writing profession (and thus Western civilization).
The problem, of course, is that both sides are wrong. There is no good and evil dog in this fight, no scripted, morally suitable ending. Rather than a movie, this is capitalism, an economic system that rewards the strong and punishes the weak. The truth is that Amazon and Macmillan are both way beyond good and evil. They are both smart companies trying to maximize their commercial power in the new digital economy by controlling the terms of trade in the e-book market.
Macmillan wants Amazon to be just another e-store for its individually priced digital products; Amazon wants Macmillan to be just another supplier to its price-controlled e-store. Both companies are doing exactly what they should do, and neither deserves to be boycotted by either writers or readers.
Even the conflict itself is delusionary. Lurking menacingly in the digital playground is the real big dog in this fight: Steve Jobs’s Apple Inc. (Nasdaq: AAPL). The only reason Macmillan has taken on Amazon is that, with last week’s introduction of the iPad and the iBookstore, Macmillan now has an alternative to Amazon’s $9.99 e-book pricing. And Jobs, of course, is more than happy to allow variable pricing in his iBookstore, especially if it results in more readers buying iPads than Kindles.
Fortunately for all of us, Apple isn’t the only really big dog in the digital playground. Lurking equally menacingly behind Steve Jobs is Eric Schmidt’s Google (Nasdaq: GOOG). There are already rumors this week of a Google Android touch device. When this device comes -- and come it will, I guarantee you -- expect another round of e-book pricing fisticuffs.
So sit down and enjoy the fight. This war is only just beginning, and it’s going to be a story with more twists and turns (but less good and evil) than anything you’ll read on your iPad or Kindle this summer.
— Andrew Keen, Silicon Valley author, broadcaster, and entrepreneur, can be reached on Twitter at @ajkeen.
Glad to hear from conciliatory blog. I hope you have not resigned to the fact that Old Media is fastly loosing the media war!
On a more serious note, who do you think is the real winner in this case? The follwing article sems to give valid reasons as why Amazon would come out the ultimate winner both in the short and long term.
"Google is going to have to kick it up a notch to come up with a competitive online storefront, methinks..."
Kick it up a notch? hmm, let see, how is the market for finding really good unsigned writer's work? I mean really good, the ones that rival publishing companies - Nothing shabby, the whole production team is involved, just not the publisher?
A good search and a tablet, they're in. UNLESS Publishers boycott - just my abrasively constructed opinion (slapped together that is).
Andrew Keen came through with a blog that basically put me in 'the know' REAL FAST!. going to tweet this. AND fb 'share it'. it deserves it.
I appreciate you not casting this in good-and-evil terms, Andrew -- still the market power of Amazon and its "Clear the shelves of your titles when you don't cave to what we want" attitude is worrisome. Yes, that may be capitalism at work, but how many more incidents of this sort will the market (and regulators) tolerate before the company is subject to some sort antitrust investigation? Apple and Google in the wings notwithstanding, the market control of Amazon should rattle publishers, content producers and consumers everywhere.
Why this posturing had not happened earlier. I felt the book publishers had a huge amount of leverage. Thank you for pointing out why it did not work until now. I see that Mr. Jobs has changed yet another media.
I'm surprised that Amazon is only getting 30% on e-books. On the real books that they sell that I designed, they are getting 40% and that's usually the standard rate for bookstore markups. Unfortunately, to cover publishing costs and to actually make a profit to the author, the price is higher than what the author wanted to charge.
When Macmillian published one of the author's books back in 1991, for every bookstore sale she got, she receievd only a dollar in royalties from each copy, paperback or hardback at pricing between 15 and 25 dollars. The only way she could earn money with that model was to buy wholesale copies and then sell copies herself at events, but even that was just over break-even.
Now as a designer, my future problem will be who will determine e-boiok standards? I figure PDF, or a variation of, should be the standard because it works already but there is already a couple of competitors around.
Amazon probably has the biggest lead in online store technology. Apple is not far behind with its iTunes/AppStore/iBook/etc efforts. But Google's online stores? Google is going to have to kick it up a notch to come up with a competitive online storefront, methinks...
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