About two weeks ago, shortly after the announcement that the DOJ would be filing a lawsuit against various publishers and Apple, I wrote:
Publishers don't want Amazon to lower prices because they fear that doing so will "devalue" the industry. They also think, as I do, that Amazon's ability to do so stands a real chance of putting competitors out of business, and without competitors, they fear they'll have to jump when Amazon says jump.
What they don't seem to be doing is innovating their way out of this mess.
If you, dear publisher, don't want to see books devalued, add value to your books. Negotiate terms with Apple and Barnes and Noble that are consumer friendly. Give me an incentive to want to pay more for ebooks.
If Amazon offers DRM-laden ebooks for $7.99, and I can't do anything interesting with those books, that $7.99 price-point is only intriguing to me if iBooks or Nook books are priced at $9.99, or higher, are still DRM-laden, and I still can't do anything interesting with them.
On the other hand, if I can pay Apple, or Barnes and Noble, $14.99 for a book that is $7.99 on Amazon, but it is DRM-free, has generous social-lending options, I'm provided an option to resell those books once I'm done reading them (at the original price, earning discounts on future purchases), and it appears as though extra care has been taken with typesetting, guess what?
I'm paying $14.99 instead of $7.99.
Since then, it has become more and more clear that 1) we're about to see ebook competition ramp up to a new level and 2) Amazon is going to be a popular target.
Apple's been relatively quiet except for a public statement detailing their take on the DOJ lawsuit:
The [Department of Justice]'s accusation of collusion against Apple is simply not true," Apple told several news outlets. "The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.
Maybe you don't agree that Amazon's grip was "monopolistic" but it's undeniable that Amazon went from a 90% share of the market to a 60% share of the market in the time since Apple's agency contracts went into effect. That's 30% of the market that opened up for competitors.
More to the point, though, this is Apple pointing the finger at Amazon, and signaling to publishers that it's willing to fight for them. Both Apple and Barnes & Noble will likely play the "we're not Amazon" card over the next several months.
Some publishers settled out of the lawsuit while maintaining they did nothing wrong, others are sticking it out and maintaining they did nothing wrong. The truth of the matter remains to be seen, but what we are seeing is some movement towards the idea that the best attack may be a move toward a DRM-free world.
Our authors and readers have been asking for this for a long time,” said president and publisher Tom Doherty. “They’re a technically sophisticated bunch, and DRM is a constant annoyance to them. It prevents them from using legitimately-purchased e-books in perfectly legal ways, like moving them from one kind of e-reader to another.
That's a big deal. TOR isn't just "any old" publisher. They're not a bit player. They're an imprint of The Macmillan Group, a publishing powerhouse. TOR is one of the largest publishers of Science Fiction and Fantasy novels in the world. This announcement may be the publishing industry's equivalent to Steve Jobs's infamous "thoughts on DRM" and I suspect it's a test run for the larger Macmillan content ecosystem.
The timing is not a coincidence.
BARNES & NOBLE
This morning, Barnes & Noble and Microsoft announced that B&N would spin off their Nook ereader, with an assist from Microsoft:
Barnes & Noble is breaking itself apart, by spinning off its fast-growing digital unit from its slow-growth bookstore business. And it’s doing so with help from Microsoft.
Redmond will put $300 million into the new business at a $1.7 billion valuation, and will get 17.6 percent of the new company. That will leave Barnes & Noble with a stake in the new unit worth about $1.4 billion.
This isn't quite as big a shocker as Apple's "Microsoft moment" in the late 90s, but given Barnes & Noble's connection to Android via the Nook, it's up there.
It also signals that Barnes & Noble is taking the threat of an empowered Amazon very, very seriously. It seems inevitable that we'll be seeing a Barnes & Noble platform in the very near future, built around an API for developers. I don't think B&N can compete without one.
Amazon recognizes the potential of all this scrutiny as well and is forging ahead with their own strategy: If you can't beat 'em -- buy 'em!
Amazon.com, Inc. (NASDAQ:AMZN) and Ian Fleming Publications Ltd today announced that Amazon Publishing has acquired a ten-year license for North American rights to the entire list of James Bond books by Ian Fleming in print and ebook. Along with the iconic series, Fleming's two works of non-fiction, consisting of a collection of travel writings called Thrilling Cities (1963) and an expose of the illegal precious stones trade entitled The Diamond Smugglers (1957), are also included in the agreement. Jonny Geller, Managing Director at Curtis Brown, negotiated the agreement. All of the titles will be reissued by Amazon Publishing's Thomas & Mercer imprint beginning in summer 2012.
More and more, we'll see Amazon working to entice authors over to its publishing platform and buying up the rights for existing books in an effort to avoid the hassle of working through the old school publishing industry.
Target is getting into the game, as well. According to The Verge, Target will officially "phase out all Kindle products this spring..."
It's worth noting that Target's statement also notes that its continued support of other e-readers and accessories — including, specifically mentioned here, Barnes & Noble's Nook.
I can think of two possibilities, here:
- Amazon already sells the Kindle Fire at a loss. If Target buys Kindle Fires from Amazon to resell, Amazon probably isn't selling them to Target for much at all below the $199 retail price, which means Target probably isn't making very much money at all selling Kindle Fires. (The same is likely true of the $79 Kindle, which also sells at a loss.)
- Amazon has been pretty aggressive with its price matching strategy, even going so far as to offer an app that will compare prices against Amazon's online prices. This could simply be a case of bad blood.
The plot thickens…