An elderly woman receives a phone call from a once eminent publishing house. The nice man on the phone tells her that his company is going to reprint her deceased father’s books. Wonderful news, she says — delighted that her old man is not quite dead and buried yet. Hope for us, she thinks. The publisher adds that they want a party to mark this important literary event, a proper knees up with champagne and canapés. She’s all for this. What generosity, she thinks. Then they say that want to make a small contribution to the party costs, maybe fifty quid.
Traditional publishers are in extremis. Print continues to collapse; eBook sales are not covering losses. That’s the prevailing story, even if the precise elements fluctuate from time to time. And that is not all. The US Justice Department’s price-fixing suit against Apple and five publishers, if upheld, may force publishers to abandon the agency model, which has maintained high prices for books and driven down the net sum, from which writers take their royalties, to the equivalent of 17.5 per cent of the retail price. (Joe Konrath explains the maths here.)
The Justice Department has been criticised for siding with Amazon’s low price model. The most vocal critics have suggested that the Justice Department is endangering traditional publishing, entrenching Amazon’s “monopoly”.
A backlash against is building this view, epitomised by this piece in the Guardian by author and self-publisher Barry Eisler. His argument rests on the contention that Amazon is not a monopoly and neither does it behave like one. This is incontrovertible. Amazon is certainly dominant in the digital market, bagging much more than 50 per cent of eBook sales regardless of what measure you use. But it does not behave like a monopoly. It cuts prices rather than raises them; and offers authors higher royalties than its competitors: 60 to 70 per cent on titles priced between $2.99 and $9.99. (Barnes and Noble offer similarly competitive royalty rates through sales on their Nook tablet.)
Amazon’s dominance is reflection of its consumer first principles; that, presumably, will always remain. Established publishers are going to have to confront that fact and act accordingly; and it may be that the Justice Department has done them a favour by undermining a poor business model. But there is a further consideration, though. Will the choice of tablets expand beyond Kindle, iPad, Nook and Kobo? This is important, because unless that happens, consumers, authors and publishers are going to limited to a narrow field. Four tablets might sound like a good selection, but just think how many brands of TV, computer and sound system are for sale. Four isn’t that many in the grand scheme of things.
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