I saw someone else refer to this (or at least the negotiations that it describes) elsewhere. I've been trying to track that coverage down for parts of two days and I can no longer find it, probably because I was sick and not paying enough attention when I saw it the first time. Oh well. h/t somebody, right?
Here's what caught my eye:
"Also indicated in one client notification is that Amazon has also increased the ebook conversion fee they charge publishers who provide only a print book or PDF and want Amazon to produce the book file. That charge is now 8 percent of digital list price, up from 5 percent previously."
(1) I had NO idea that Amazon was providing this service. Period. End. When I was busy moaning about the horrifyingly bad conversion of Gail Collins otherwise excellent book about political gossip, I entertained the idea more than once -- and dismissed it as implausible and I-would-have-heard-if-they-were. Well, they are.
(2) Something about, well, publishers really aren't planning on providing digital services to their authors, are they? To be fair, the publishers being described are rollups: Perseus Book Group and National Book Network, that is, not precisely publishers at all. And the underlying publishers they represent are often so small they're only moving one or a few titles. Total.
Coop dollars have never made any sense to me, and I've known about them for a long time. I know what the rationale is, and I have a theory about what they are, but whenever I float my theory, people get annoyed with me so I won't bother. Most people are smart enough to figure it out anyway. The fact that kindle books have moved from the no-coop to the coop category is a solid indicator of where the balance of power lies in the industry. That is, once, Amazon was desperate to increase the amount of content they had. They are no longer.
This: "It is expected that, as Kindle wins coop allocations, Barnes & Noble will impose a similar policy." is one of the most reasonable sentences I've seen in any article about e-books. Ever.
"we heard multiple reports from professional and/or academic publishers who sell to Amazon on traditional "short discounts" that they have been asked to radically restructure their terms of sale." I had been wondering about this. The discount structure for professional and academic publishers has historically been much less than for trade books (translation: the price paid by the retailer to the publisher is a lot closer to the list price for academic books than it is for "normal" books. Academic books does NOT mean textbooks in this context). I've known for a long time that Amazon moves academic books in a way that traditional bookstores never did/could (long tail effect and an artifact of the audience they drew as a result), however, once academic publishers started allowing their books to be offered as e-books, _everyone_ seemed to have been surprised by how fast they moved. Once an academic or professional book is moving the way a trade book moves, there's no longer a justification for a short discount. Once large chunks of the category are moving the way trade books move, all that extra juice going to the publisher starts to look worth going after.
The concluding paragraph is particularly awesome, especially in the context of talk of anti-trust action, and includes a quote from the IPG blog.
It is times like these when I really wish more people would talk about what killed Rocket eBooks. Because what killed Rocket eBooks was ultimately very simple, and it wasn't crappy technology. It was brutally obvious, then as now, that ebooks _could_ be sold at a far lower cost all along the chain than pbooks (if for no other reason than the savings on returns and retail square footage). So the question became, who gets the new juice? The Authors Guild wanted it for their people. B&N bought Rocket, IIRC, in an effort to improve their position. And publishers wanted it, too. Rocket died because everyone figured customers would pay the same price for an ebook as a pbook and thus there would be new juice for the rest of the players. It only sort of worked, because while there _are_ customers who will do that, there probably weren't enough (altho we'll never know, because the players in ebooks prior to Amazon did not produce a Truly Excellent Ecosystem so disentangling the effects is pretty much impossible). The margins people are crying about on ebooks are where pbooks have been for a while now.
I lack sympathy.
ETA: Here's what that last paragraph at Publishers Lunch was referring to:
A couple observations.
(1) When the kindle launched, it was with a commitment to most e-books being $9.99 or less. The Agency Model is what led to general rise above this price point. Here's what the CEO at IPG has to say about an appropriate price point for a $14.95 trade paperback: "Deduct these specifically print related costs from the price of a printed book and the minimum price for a straightforward e-book comes to about $10.00—less than the price of the print version but not some small fraction of the print price." I'm trying to figure out whether he factored in returns. I think he didn't, which I think is at least somewhat dishonest. Also, I don't see that he's in any position to calculate what the savings on margin for an ebookstore should be vs. a bricks-and-mortar store (which isn't obviously the correct comparison anyway, since pbooks are sold online too) and think his $2/book savings is on the low side.
Further, he doesn't get into what a hardcover should cost, but it is in no way obvious to me that hardcovers cost more to produce than trade paperbacks. Thus, it would seem he's kind of conceding exactly the point that so many people objected to in the early days: $9.99 as the default price point. (And a default price point that Amazon was discounting for over a decade, long before they rolled the kindle out.)
(2) "And is it obvious that independent presses should have to work at such a huge competitive disadvantage to the major publishing houses?" I'm going to assume that's a trick question, based on some confusion about how capitalism works, because confusion about capitalism, competition and how prices are set seems rampant in the book industry.
(3) His closing sentence is clever, but undercuts his argument. Perhaps he's feeling a little martyred. Independent publishers "are the reason why in America almost no good author goes unpublished." Nice little homage to "no good deed goes unpunished", right?
I'm having a lot of trouble figuring out why IPG walked away from the table. Is this really all about coop for ebooks?