Publishing: The Game of Monopoly
If you haven’t heard, there’s quite an uproar going on in the publishing industry right now. In fact, it could completely change the e-book market and how much YOU pay for e-books (and as an author, it affects you as much as it does publishers).
Here’s a little backstory so you can see where I’m coming from:
When e-books and e-book readers became popular 5-6 years ago, Jeff Bezos, CEO and founder of Amazon.com wanted to corner and OWN the market. In the traditional wholesale pricing model, a publisher sells a book to a retailer for a wholesale price (typically 50% off retail) and then the retailer can sell the book at whatever price they like. In order to OWN the market, Amazon deliberately started selling many of the top eBooks at a $9.99 price point to own market share. They alone decided that e-books should cost $9.99. Says who?!
With the current agency model, publishers can set the prices they desire for their e-books and then Apple takes a 30% commission or fee on the sale price.
In 2009, before the new pricing, Amazon was estimated to have around 90% of the e-book market. Its share has now slipped to around 60%, according to Mike Shatzkin, chief executive of the Idea Logical Co., a New York-based publishing consultancy. He estimated that Barnes & Noble had between 25% and 30%, and Apple has much of the remainder. How can consumers benefit when ONE company has 90% of the market? That is a monopoly.
So here’s the rub: The U.S. Department of Justice is suing major publishers, saying it is an injustice that consumers have to pay $2 or $3 more for an e-book when they could have paid $9.99 on Amazon. No one is forcing consumers to buy the book. Amazon threatened to stop selling publishers’ e-books if they didn’t subscribe to the $9.99 price point. In the past, the only way that publishers could force Amazon to change was to band together. What’s wrong with that? For the livelihood of the publishing industry, publishers and authors must band together to protect their interests.
The U.S. Department of Justice THINKS they are helping. In actuality, if they are successful, they will allow Amazon to once again OWN the market for e-books. When one company has a monopoly, consumers don’t win. There is only one winner, and that’s Amazon.
– Adam Witty