"The future of e-books, the future of publishers' control over their own destiny, and the future of retail pricing, is being forged right before our eyes."--Richard Curtis, literary agent and e-book publisher, in a Wall Street Journal article about the Amazon-Macmillan dispute and broader e-book pricing issues.

Talk about a quick news cycle. Since our last issue Friday morning, Amazon stopped selling all titles by Macmillan, the book world reacted with astonishment, mostly siding with Macmillan, and many customers sided with Amazon. What might have been a protracted fight that could have drawn in more publishers was then resolved--in part--late yesterday when Amazon reversed its position.

The announcement came in classic Amazon style: via a letter to customers posted on its Kindle Community page. Amazon said that "ultimately" it had to capitulate "because Macmillan has a monopoly over their own titles," forcing Amazon to sell its titles "even at prices we believe are needlessly high for e-books." Amazon concluded, "We don't believe that all of the major publishers will take the same route as Macmillan" and called it likely that "many independent presses and self-published authors will see this as an opportunity to provide attractively priced e-books as an alternative."

"Ultimately" may be a key word in the statement. As of this morning, the famous "buy button" had not been restored for any Macmillan titles Shelf Awareness checked. This also explains Macmillan CEO John Sargent's cautious statement last night made on Publishers Lunch: "We are in discussions with Amazon on how best to resolve our differences. They are now, have been, and I suspect always will be one of our most valued customers."  

Shock and Awe

The battle over e-book pricing reached a new, very public level last Friday when negotiations over the issue between Amazon and Macmillan broke down and Amazon stopped selling all e-books and printed books published by Macmillan companies, which include Farrar, Straus & Giroux, Holt, St. Martin's, Tor, Metropolitan, Times Books, Palgrave Macmillan, Feiwel & Friends, Kingfisher and others. The ban did not include distributed lines such as Rodale, Graywolf and Bloomsbury, and third-party sellers on Amazon were still selling Macmillan titles. The ban also didn't apply abroad to Macmillan or other companies owned by its parent company, Georg von Holtzbrinck Publishing Group.

Among current major titles that were affected: Wolf Hall by Hilary Mantel, Sarah's Key by Tatiana de Rosnay, The Politician by Andrew Young, The Checklist Manifesto by Atul Gawande and Priceless by William Poundstone.

The Macmillan ban went beyond Amazon's website: reportedly without notice to Kindle owners, Amazon went into the devices and removed Macmillan titles from wish lists and removed sample chapters of Macmillan titles. This move was reminiscent of the retailer's quiet pulling last year of some e-titles whose copyrights were in question (Shelf Awareness, July 19, 2009).


Many in the book world were supportive of Macmillan, and some independent booksellers quickly seized the opportunity posed by the Amazon move. McLean & Eakin Booksellers, Petoskey, Mich., had a table display in its store (see photo left), a prominent post on its website and was "talking up all Macmillan titles in our store." Bunch of Grapes, Vineyard Haven, Mass., had a display centered on a New York Times article highlighted with notes telling customers they can purchase Macmillan titles in store (photo right). WORD, Brooklyn, N.Y., highlighted some of its favorite Macmillan titles on its website.

E-Pricing Issues

Amazon has consistently priced new e-book titles at $9.99, below its cost, taking a loss of at least $4 or $5 on each sale of those titles. Publishers and others in the industry have been concerned that the Amazon approach will create in customers an unsustainably low expectation about what constitutes a fair price for e-books and are concerned in general that such pricing taints the prices of all books. Amazon argues that consumers want and deserve lower prices--it's also a classic way for a leader in a new market to maintain its dominant position, especially as competitors enter the market. (Hello, iPad.) Certainly Amazon has a lot of power: its Kindle represents an estimated 75% of the e-reader market, which does not count smartphone and computer readers. And Amazon continues to be a major outlet for printed trade titles, as much as 20% on average for many publishers. It recently offered its own "agency plan," under which authors and publishers would retain 70% of the revenue on e-books if they licensed the titles to Kindle and agreed to various limitations, including Amazon setting the price (at a high of $9.99) and a cap at that level on the price of the same e-book sold by others.

Macmillan's Take

In an open letter to Macmillan authors and illustrators and to literary agents that ran in Publishers Lunch on Saturday, Macmillan's John Sargent explained the company's position, saying that he had met with Amazon at its Seattle headquarters last Thursday and "gave them our proposal for new terms of sale for e-books under the agency model which will become effective in early March." He also offered "old terms of sale," which, however, would include delayed e-book versions of major titles, another point of contention between Amazon and most of the major publishers.

Under Macmillan's agency model for e-books (which reportedly will be standard for Apple's iPad), he continued, "retailers will act as our agents and will take a 30% commission (the standard split today for many digital media businesses). The price will be set the price for each book individually. Our plan is to price the digital edition of most adult trade books in a price range from $14.99 to $5.99. At first release, concurrent with a hardcover, most titles will be priced between $14.99 and $12.99. E books will almost always appear day on date with the physical edition. Pricing will be dynamic over time."

Sargent pointed out that the agency model allows Amazon "to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short-term profitability but rather about the long-term viability and stability of the digital book market."

He added: "In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated."

This was the second time Amazon has taken such a scorched-earth approach: in 2008, it removed all titles by Hachette Livre U.K. on its U.K. website in a dispute over its demands for better terms. The Bookseller reported that Hachette had widespread support in the book business.

At the time, in an e-mail to his authors, Hachette CEO Tim Hely Hutchinson said that Amazon already received on average more than 50% of the list price of the company's books. "Despite these advantageous terms, Amazon seems each year to go from one publisher to another making increasing demands in order to achieve richer terms at our expense and sometimes at yours," he wrote. "We are politely but firmly saying that these encroachments need to stop now."

Besides coverage in New York Times and Wall Street Journal, Digital Book World had a roundup of authors' responses to the banishment by Amazon.

And science fiction author Charles Stross, who has one series published by Tor affected by the ban, wrote at length on his blog about the fracas:

"This whole mess is basically about duelling supply chain models.

"Publishing is made out of pipes. Traditionally the supply chain ran: author -> publisher -> wholesaler -> bookstore -> consumer.

"Then the Internet came along, a communications medium the main effect of which is to disintermediate indirect relationships, for example by collapsing supply chains with lots of middle-men.

"From the point of view of the public, to whom they sell, Amazon is a bookstore.

"From the point of view of the publishers, from whom they buy, Amazon is a wholesaler.

"From the point of view of Jeff Bezos' bank account, Amazon is the entire supply chain and should take that share of the cake that formerly went to both wholesalers and booksellers. They do this by buying wholesale and selling retail, taking up to a 70% discount from the publishers and selling for whatever they can get. Their stalking horse for this is the Kindle publishing platform; they're trying to in-source the publisher by asserting contractual terms that mean the publisher isn't merely selling them books wholesale, but is sublicencing the works to be republished via the Kindle publishing platform. Publishers sublicensing rights is SOP in the industry, but not normally handled this way--and it allows Amazon to grab another chunk of the supply chain if they get away with it, turning the traditional publishers into vestigial editing/marketing appendages.

"The agency model Apple proposed--and that publishers like Macmillan enthusiastically endorse--collapses the supply chain in a different direction, so it looks like: author -> publisher -> fixed-price distributor -> reader. In this model Amazon is shoved back into the box labelled 'fixed-price distributor' and get to take the retail cut only. Meanwhile: fewer supply chain links mean lower overheads and, ultimately, cheaper books without cutting into the authors or publishers profits.

"Amazon are going to fight this one ruthlessly because if the publishers win, it destroys the profitability of their business and pushes prices down."

And at the end of a long blog entry on the subject, author Caleb Crain wrote:

"What's perhaps most breathtaking about the Amazon-Macmillan dispute is how little, finally, is at stake: should the highest price of an e-book be $9.95 or $14.95? No one dreams any more that it's going to be $28. What's being fought over is control, and the reason control is being fought over so viciously is that the only way such massive cost savings are going to be achieved is by consolidation--by collapsing a few of the intermediary steps somewhere between the creation of a book and the reading of it. Will you some day download your e-books directly from Farrar, Straus & Giroux's website? Will Amazon some day be the publisher of Jonathan Franzen's novels? Some future between these two outcomes is more likely to happen, but precisely where the division will fall remains to be seen. Authors, in the meantime, had better ask their agents to negotiate their e-book royalties very carefully, seeing as how, while the titans rage, the financial analysts have already factored into their bottom lines the expectation that someone else will be eating our slice of the pie."

 

Milestone Books, Vestavia Hills, Ala., will close next month, as owner Linda Brown "returns to the medical sales business after six years of offering advice to voracious and reluctant readers alike on the books they're most likely to love," the Birmingham News reported.

"This is just a personal decision that I had to do for the benefit of my children," said Brown, who had tried unsuccessfully to sell the bookshop. "I'm sad that nobody was able to step up and take my place, but I have no regrets.... I feel like I'm going out on top."

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In the department of silver linings, Willard Williams of the Toadstool Bookshop, Peterborough, N.H., which also has branches in Milford and Keene, reported that the December 2008 ice storm that caused the store's holiday sales to drop 20% was the subject of several locally published books that have been Toadstool bestsellers. The store has sold 990 copies of The Weight of the Ice: The Northeast Ice Storm of 2008 by Dave Eisenstadter (Surry Cottage Books); 525 copies of Ice: The December 2008 Storm in New Hampshire's Monadnock Region by the staff of the Keene Sentinel; and 40 copies of Black Ice: The Beauty and Destruction of New Hampshire's Great Ice Storm and Blackout of 2008, a photography title from SciArt Media.

Williams commented, "It's nice to know that though this was an inconvenient and ill-timed storm for all, it did not involve any serious human injuries or death and in fact, as you will gather from the book descriptions, often brought people together in a community building sort of way."

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The Flagstaff branch of Bookmans Entertainment Exchange, the Arizona retailer of used books, music, movies and more, was wrecked Thursday night when the roof collapsed under the weight of snow. No one was hurt.

The store will be rebuilt and in the meantime, Bookmans said, it is continuing such programs as the Winter Reading Challenge (winning school gets $15,000), the Music in the Classroom program as well as store sponsorships and support of the Flagstaff Music Festival, Pride in the Pines, Second Chance Center for Animals and more.

On the store's blog, Kate Beles wrote: "I've already been amazed by all the love we've received via phone, email, and social networking sites, and it proves to me that being a socially responsible business and supporting local community causes is always worth it. This year, our 20th anniversary in Flagstaff, we will do as much as we can to support our community as ever!"

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Extreme cold caused pipes to freeze in the Bank Street Bookstore in New York City, which led sprinklers to burst, and the store had to close, according to the Columbia Spectator.

"A lot of stuff in the front of the bookstore was damaged, as well as anything on the floor," manager Beth Puffer said. "Everyone was very helpful, scrambling to try and get stuff away from the water, but many books were damaged, as well as any computers in the front of the store."

Puffer told the paper she hoped to have the store up and running by the end of the week.

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Copperfield's Books, Santa Rosa, Calif., had an unexpected and unwelcome visitor Saturday afternoon when an elderly woman who was trying to park "plowed into the store through a double-glass door and display window," the Press Democrat reported.

"There was a lot of glass flying through the air," said manager Thomas Graham, who added that although two customers suffered cuts and bruises, no one was seriously injured. "We're pretty fortunate that way."

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The former bookkeeper who embezzled more than $100,000 from Page and Palette, Fairhope, Ala., has been sentenced to eight months in prison, two months of home confinement and ordered to make restitution of $81,000, according to the Mobile Press-Register.

Owner Karin Wilson told the paper that "the business is still suffering" and the store had gone into debt as a result. "It was such a hit."    

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Terre Haute, Ind., "appears to be a book haven for traditionalists who prefer paperbacks and hardbacks" over online book-buying temptations, the Tribune-Star reported, noting that the city offers many options for its 60,000-plus residents, from national chains to indie bookseller Book Nation, which Todd Nation purchased in 1991 when it was Campbell's Book Shop.

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What do dog day care, a used bookstore and blacklight mini golf have in common? The three seemingly disparate ventures will soon share a property in Caledonia, Wis., the Journal Times wrote. DCS Trading Co. is scheduled to open tomorrow and will carry used books, DVDs and video games.

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Effective tomorrow, William Preston is joining Sourcebooks as senior account executive--mass market and new business development, a new position. He was most recently v-p, North American business development for Gardners Books, the U.K. wholesaler, and earlier was senior v-p of retail sales for Baker & Taylor.

In his years at B&T, Preston expanded business with traditional booksellers as well as initiated business with special market customers such as Costco, Whole Foods and Petsmart and led the sales effort for selling direct to consumers.

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Tony Proe has joined BookMasters Distribution Services and AtlasBooks as v-p of business development. A longtime salesman, he founded Proe & Proe Associates in 1991 and more recently was a principal of the Empire Group.

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Simon & Schuster has added the following people to its new in-house telemarketing group, which was created in response to the sales force cutbacks last month (Shelf Awareness, January 5, 2010). The telemarketing managers, who start training today and report to Jonathan Earls, director, retail development, are:

• Ann Carlino, who is joining the company with 16 years of publishing sales experience, most recently as a national account manager at Macmillan.
• Karen Fink, who has been with S&S three years, most recently as coordinator in the marketing department. She earlier worked more than 20 years at Random House, part of the time as a telemarketing rep.
• Stuart Smith, who has worked in the sales division, most recently as part of the sales & client communications team.
• Hilary Lowe, most recently a customer-driven publishing sales coordinator in the premium group.

 

While everyone was buzzing over the Apple iPad and the Macmillan-Amazon skirmish over the weekend, publishers are still putting out paper books and they still want to create buzz among booksellers--and the 500 booksellers heading to San Jose, Calif., for the ABA's Winter Institute 5 this week are very desirable targets, especially for fiction. The tradition goes back to the first Winter Institute, when Algonquin distributed galleys of Water for Elephants by Sara Gruen, which the house credits with making the book a bestseller.
 
This year the galley that is getting the most advance buzz is The Passage by Justin Cronin (Ballantine, June). Known for literary fiction such as The Summer Guest and the PEN Hemingway Award–winning collection Mary and O'Neil, Cronin was challenged by his nine-year-old daughter to write a not-boring book about a girl who saves the world. Ballantine paid $3 million for the resulting trilogy, and Ridley Scott bought the film rights for the first book, The Passage, for Fox. Ballantine has created a 700-page galley for The Passage loaded with in-house blurbs written by just about everyone at Random House--in time to whet bookseller appetites at WI5.
 
If anyone had told Sheryl Cotleur, a buyer at Book Passage, Corte Madera, Calif., she'd stay up late reading a vampire book, she'd never have believed it, she said; but that's what happened when she started reading her galley of The Passage. But rather than Stephenie Meyer's Twilight books, she and other readers of The Passage compare it to Cormac McCarthy's The Road and Stephen King's The Stand.
 
Another major title getting buzz already is Matterhorn by Karl Marlantes, a decorated Vietnam War veteran who took 30 years to write this novel based on his experience as a Marine. In a letter featured on the back cover of the galley that explained how Grove/Atlantic came to co-publish Matterhorn with the Berkeley, Calif., nonprofit El Leon Literary Arts, publisher Morgan Entrekin likened the book to a title he unveiled a decade ago--Black Hawk Down--for its gripping depiction of young men at war.
 
Booksellers who say they never read war novels or who might think that the Vietnam War's been done enough report that they just can't put Matterhorn down--and at just under 600 pages plus a glossary, that's saying something.
 
Jenn Northington at breathe books, Baltimore, Md., got a galley from Grove's Eric Price and said she was willing to take a look, but it was a Twitter posting by Joe Foster from Maria's Bookshop in Durango, Colo., that really piqued her interest in Matterhorn, which publishes in April.
 
"Every day someone else is tweeting about it," Northington said. "It has a very strong opening that sucked me right in."
 
Geoffrey Jennings at Rainy Day Books in Fairway, Kan., has read a lot about the Vietnam War and predicted that Matterhorn will become the definitive book on the subject. "The second I finished reading it, I e-mailed Morgan and told him he had another Cold Mountain," Jennings said. He added that not even the acclaimed The Things They Carried by Tim O'Brien and We Were Soldiers Once... and Young by Harold G. Moore and Joseph L. Galloway nailed Vietnam like Marlantes has.
 
Booksellers do look at those carefully worded galley letters and in-house blurbs. Gayle Shanks at Changing Hands in Tempe, Ariz., said a handwritten note from her Norton sales rep, Meg Sherman, prompted her to read The Lonely Polygamist by Brady Udall, author of The Miracle Life of Edgar Mint.
 
"It is brilliant and though it certainly deals with the Big Love issues of polygamy, it is really about lives devoid of attention and enough love to feel loved and what one does to compensate," Shanks said. "He's insightful and captures the essence of the West and how it plays into the characters' lives as they attempt to move in their crowded world."
 
Cathy Langer at the Tattered Cover, Denver, Colo., said Udall has written "a tour de force that ranks with the best of John Irving." But she stressed that The Lonely Polygamist, which comes out in May, is not just a regional title.
 
Another good galley letter writer is Knopf's Gary Fisketjon, whom Jennings called Rumpelstiltskin: "He finds them and turns them into gold." This year, he found Mr. Peanut, a debut novel by Adam Ross. Fisketjon wrote that the novel is "dark yet alluring, with a plot that's a hugely suggestive blend of passion and commitment, popular culture and true crime."
 
Sometimes reps tout books that aren't on their own lists, which really makes booksellers take note. This happened recently again when Emily Pullen at Skylight Books, Los Angeles, heard about the debut novel The Girl Who Fell from the Sky by Heidi W. Durrow from a non-Algonquin rep. Readers have described  this as a beautifully written account of a mixed-race girl who survives the fall from the roof that claimed her mother and siblings' lives, and the young boy who witnesses what may be a suicide. Skylight will launch the book in Los Angeles later this month, and Pullen said she is looking forward to seeing the author (who won Barbara Kingsolver's $25,000 Bellwether Prize) at WI5.
 
Indies booksellers are especially fond of discovering new work by a writer who deserves more attention; Pullen's enthusiasm for Emily St. John Mandel's novel The Singer's Gun (Unbridled, May) is in this category. Pullen said she loved Mandel's previous Last Night in Montreal and hopes the new book will break her out.
 
"I read The Singer's Gun in three days," says Pullen. "It's really clear and concise but also very gripping. I think she's a great new writer." This will be Mandel's second Winter Institute.
 
The Marrowbone Marble Company by Glenn Taylor, an Ecco title, gets an honorable mention here because booksellers are eager to read the new novel by the NBCC finalist for The Ballad of Trenchmouth Taggart. Word is that Harper has some galleys of Marrowbone to give away at WI5 to get buzz going for the May book that has become an in-house favorite. Book Passage's Cotleur said Taylor's book is "high on my list."
 
Altogether, 42 authors will be presented at WI5. Among them: Bloomsbury is bringing Anchee Min, who has written a novel about Pearl S. Buck; Houghton will have Howard Norman of The Bird Artist fame; Hyperion is bringing indie bookseller darling Chitra Banerjee Divakaruni, who has written a novel about what happens among the people trapped in a passport office after an earthquake. It all makes for what Tattered Cover's Langer called "a bounty."--Bridget Kinsella

This morning on Good Morning America: Andrew Young, author of The Politician: An Insider's Account of John Edwards's Pursuit of the Presidency and the Scandal That Brought Him Down (Thomas Dunne, $24.99, 9780312640651/031264065X).

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This morning on the Today Show: Kelly Cutrone, author of If You Have to Cry, Go Outside: And Other Things Your Mother Never Told You (HarperOne, $22.99, 9780061930935/0061930938).

Also on Today: RuPaul, author of Workin' It!: RuPaul's Guide to Life, Liberty, and the Pursuit of Style (It Books, $19.99, 9780061985836/006198583X). RuPaul appears today on Rachel Ray, too.

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Today on the Diane Rehm Show: Jane Bryant Quinn, author of Making the Most of Your Money Now: The Classic Bestseller Completely Revised for the New Economy (Simon & Schuster, $35, 9780743269964/0743269969).

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Today on the Book Studio: Dolen Perkins-Valdez, author of Wench (Amistad, $24.99, 9780061706547/006170654X).

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Today on the View: Gayle Haggard, wife of Ted Haggard and author of Why I Stayed: The Choices I Made in My Darkest Hour (Tyndale House, $25.99, 9781414335858/1414335857).

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Tonight on the Late Show with Craig Ferguson: They Might Be Giants, authors of Kids Go! (Simon & Schuster, $19.99, 9780743272759/0743272757).

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Tomorrow morning on the Today Show: Shoshana Johnson, author of I'm Still Standing: From Captive U.S. Soldier to Free Citizen--My Journey Home (Touchstone, $23.99, 9781416567486/1416567488).

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Tomorrow on the Martha Stewart Show: Alejandro Junger, author of Clean: The Revolutionary Program to Restore the Body's Natural Ability to Heal Itself (HarperOne, $25.99, 9780061735325/0061735329).

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Tomorrow on the View: Melissa Rivers, author of Red Carpet Ready: Secrets for Making the Most of Any Moment You're in the Spotlight (Harmony, $22.99, 9780307395320/0307395324).

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Tomorrow on the Book Studio: Therese Borchard, author of Beyond Blue: Surviving Depression & Anxiety and Making the Most of Bad Genes (Center Street, $21.99, 9781599951560/1599951568).

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Tomorrow on NPR's Talk of the Nation: Barry Strauss, author of The Spartacus War (Simon & Schuster, $15, 9781416532064/1416532064).

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Tomorrow night on Nightline: Rebecca Rosen and Samantha Rose, authors of Spirited: Connect to the Guides All Around You (Harper, $24.99, 9780061766244/0061766240).

IFC Films acquired the U.S. distribution rights to The Killer Inside Me, a controversial adaptation by John Curran of Jim Thompson's 1952 pulp novel. Michael Winterbottom directed. During its screening at the Sundance Film Festival last week, the "graphic, cold-blooded beatings of characters played by Jessica Alba and Kate Hudson by Casey Affleck's sociopathic small-town Texas deputy sheriff sparked outrage among some offended viewers," according to the Hollywood Reporter. 

 

Book-related winners at the Grammys last night:

• Best Spoken Word Album: Always Looking Up by Michael J. Fox (Hyperion Audio)
• Best Spoken Word Album for Children: Aaaaah! Spooky, Scary Stories & Songs by Buck Howdy (Prairie Dog Entertainment)
• Best Comedy Album: A Colbert Christmas: The Greatest Gift of All! by Stephen Colbert (Comedy Central Records)