Amazon is now asking for a 3 year “most favored nations” clause from publishers who use the agency model. In other words it doesn’t want any competitor to get lower prices or better terms than Amazon. This is reported in the NY Times which cites industry executives. To make matters worse, Apple, on the other hand, is requiring all publishers, not just ones who use the agency model, not to allow ebooks to be sold by any other retail outlet at lower than the iBookstore price.
This means that Apple is actually tougher than Amazon. Apple wants publishers to sell to all retailers at the Apple price or above, but Amazon is only asking that for price parity on those publishers adopting the agency model, and is evidently trying to limit the agency model to only a few of the big publishers. Thus Apple is controlling all publishers who enter its store, but Amazon is leaving 50%-60% of its content to its standard distribution terms which will still force Apple to compete with Amazon’t pricing.
All this, of course, is a perfectly normal type of thing in retail, but I bet the publishers are tearing their hair out. When the big guys went to the agency model I suspect they had no idea what they were letting themselves in for. Once you control the price, rather than let the retailer do it, you have all this type of stuff to contend with.
All of this is why most companies sell products at a wholesale price, with no returns unless the product is defective. All of the publishers’ “discounts from list” and returns muddy the clear waters of commerce, and in an increasingly transparent world, are probably more trouble than they’re worth.
Of course the big boys play under different rules but every distributor I’ve signed with has required a ‘most favored nation’ type of agreement that I won’t list my books more cheaply with someone else. Of course, many distributors (e.g., Amazon) discount from list.
Another thing the publishers need to be careful of is wha they “say” in the negotiations. You never can tell when those documents might be sub-poena’ed.
I wonder how many are aware they’re betting the farm on Apple?
@Jim Naureckas: I noticed the curiously one-sided tone of that article too. It’s also odd how silent authors are about Apple’s declaration that books published by Random House, et al, won’t be sold in the iBookstore unless they cave in on Apple’s demands. What happened to all the author solidarity against that kind of thing? Was it only because it was Amazon that everyone got their panties in a bunch, and Apple can do no wrong?
Amazon is not called the new Walmart for nothing. The hallmark of that company is rock bottom prices beloved by customers. Those prices are partly achieved by ruthlessly squeezing their suppliers for margin. Not surprisingly then that Amazon is widely feared, disliked & even hated by its suppliers – the publishers. The sentiment expressed at http://mhpbooks.com/mobylives/?p=13605 is not uncommon.
I see 3 ways this could go. Amazon ‘wins’& holds on to its ebook dominance, at least for a while. Apple ‘wins’ & rapidly dominates ebooks. The publishers ‘win’ in that neither of the 2 gets too powerful & ebook adoption is ‘controlled’.
All of this is mere skirmishing though. Once Google enters the fray the entire ebook industry is likely to become yet another field of battle in the ever growing war between Apple and Google. The publishing industry could become so much collateral damage in the struggle to control all of future digital content.
"I agree with MarylandBill, I think most super bookworms have already purchased at least one eInk reader, they would have been the early adapters, not ..."
Amazon is now asking for a 3 year “most favored nations” clause from publishers who use the agency model. In other words it doesn’t want any competitor to get lower prices or better terms than Amazon. This is reported in the NY Times which cites industry executives. To make matters worse, Apple, on the other hand, is requiring all publishers, not just ones who use the agency model, not to allow ebooks to be sold by any other retail outlet at lower than the iBookstore price. 
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All of this is why most companies sell products at a wholesale price, with no returns unless the product is defective. All of the publishers’ “discounts from list” and returns muddy the clear waters of commerce, and in an increasingly transparent world, are probably more trouble than they’re worth.
Regards,
Jack Tingle
Of course the big boys play under different rules but every distributor I’ve signed with has required a ‘most favored nation’ type of agreement that I won’t list my books more cheaply with someone else. Of course, many distributors (e.g., Amazon) discount from list.
Rob Preece
Publisher
I commented on the New York Times’ efforts to paint Amazon as the bad guys in this story:
http://www.fair.org/blog/2010/03/18/nyt-exposes-amazons-fiendish-plot-to-sell-books-for-less-money/
Another thing the publishers need to be careful of is wha they “say” in the negotiations. You never can tell when those documents might be sub-poena’ed.
I wonder how many are aware they’re betting the farm on Apple?
@Jim Naureckas: I noticed the curiously one-sided tone of that article too. It’s also odd how silent authors are about Apple’s declaration that books published by Random House, et al, won’t be sold in the iBookstore unless they cave in on Apple’s demands. What happened to all the author solidarity against that kind of thing? Was it only because it was Amazon that everyone got their panties in a bunch, and Apple can do no wrong?
Amazon is not called the new Walmart for nothing. The hallmark of that company is rock bottom prices beloved by customers. Those prices are partly achieved by ruthlessly squeezing their suppliers for margin. Not surprisingly then that Amazon is widely feared, disliked & even hated by its suppliers – the publishers. The sentiment expressed at http://mhpbooks.com/mobylives/?p=13605 is not uncommon.
I see 3 ways this could go. Amazon ‘wins’& holds on to its ebook dominance, at least for a while. Apple ‘wins’ & rapidly dominates ebooks. The publishers ‘win’ in that neither of the 2 gets too powerful & ebook adoption is ‘controlled’.
All of this is mere skirmishing though. Once Google enters the fray the entire ebook industry is likely to become yet another field of battle in the ever growing war between Apple and Google. The publishing industry could become so much collateral damage in the struggle to control all of future digital content.