Amazon had a bit of a kerfuffle with MacMillan over the weekend. Amazon was upset at having to sell new hard cover books at $13 or $14 dollars instead of the usual $10, so they stopped selling books by MacMillan for one day in protest.
Now, the interesting part of this story is that Amazon was losing $3-$5 on every new MacMillan book they wanted to sell at $10. Their business model reflected Jeff Bezos’ original Amazon.com model back in the late 90’s and early 00’s. Amazon operated at a huge loss for its first five years, selling at prices well below other online book retailers. The result? Online sales became the way of the future and Amazon took a massive lead in the industry, earning $10.7 billion in 2006.
In the current row, Bezos is trying to do to eBooks what he did to paper books 15 years ago. Undercut the iPad, make the Kindle brand the go to machine for eBooks, take a huge lead in the industry. Great plan, right? So why is MacMillan throwing a fit?
Computer Scientist and writer Charlie Martin:
The key is the mainstream publishers’ worry that e-books will cannibalize the sales of physical books. Mainstream book publishers, along with mainstream music publishers and the legacy media newspapers, are actually primarily manufacturers. The costs of the content, in royalties to the authors, are only about 10 percent of the cover price of the book, and less than that for the record. It’s the costs of setting type or mastering, printing the books or pressing the disks, shipping, cataloging, and selling them that dominates the costs of publishing.MacMillan is trying to fight the rising tide. Because it realizes that once we do away with paper entirely, “MacMillan” is just a quaint old name. Digitalization is about to obliterate the profit margins of the entire publishing world.
Now, along come e-books and readers, like the Kindle and the iPad. Suddenly the whole business of publishing has changed. You can sell a physical book or an e-book — but each copy of the e-book costs literally one one-millionth as much to produce.
In the world to come, book publishing will merely be the cost of (1) Finding the author, (2) Editing the work, (3) Proofing the work, and (4) Advertising. That’s it. You will be able to “Publish” your own work at virtually no cost whatsoever. Really the only thing you’ll need a publisher for is to help make sure that your book sells; and MacMillan knows what we all know—advertising in the era of social networking is, like everything else, going DIY.
Twenty years from now, buying a book will probably be like buying an MP3; maybe popular authors will be able to charge a bit more than newbs and hacks, but the era of Big Publishing is over.
Which is actually good news for would-be academics. Imagine all dusty tomes of scholarly research available for a couple bucks a pop.
I might actually get readers.
