Lew's AUTHOR BLOG

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extracted and paraphrased from … Paper Trail, an article by Ken Auletta in New Yorker 6/25/12 …

A huge fight has been going on between Amazon and the book publishers for years …

• Amazon was selling books at a loss: while publishers typically sold e-books to Amazon for about fifteen dollars apiece, Amazon was selling many of them for $9.99.
• Steve Jobs, of Apple, was pressing publishers to agree to a new way of selling books: an arrangement called the agency model. The publishers would set prices, and Apple, acting as their “agent,” would take a thirty-per-cent commission and give them the rest.
• On January 27, 2010, Jobs announced that five of the six publishing giants—Macmillan, Hachette, Simon & Schuster, HarperCollins, and Penguin—would sell their books through Apple’s iBookstore.
• By 2012, Amazon’s share of the e-book market had dropped from about ninety per cent to sixty. Apple had about ten per cent of the market, and Barnes & Noble, which had introduced an e-reader called the Nook, had about twenty-five.
• Under the agency model, however, many consumers paid higher prices, and Amazon made more money, while the publishers made less.
• Attorney General Eric Holder announced that an antitrust suit had been filed against Apple and the five big publishers for “a conspiracy to raise, fix and stabilize retail prices.”
• If Barnes & Noble closes, Amazon will have an effective monopoly on all books, electronic and otherwise.

The fight between Amazon and the book publishers could have profound repercussions for publishers, bookstores and authors. Yet to Amazon, this fight is the “undercard.”

The “main event” is a free for all among the 5 U.S. digital giants: Amazon, Apple, Google, Facebook and Microsoft. In this fight, books are not the major battleground.

Devices (KindleFire, iPad, Nook, Microsoft ???), one-day shopping, collecting credit card information … those are the focus of the fierce competition among the giants, fighting a very large game, for enormous stakes.

John Sargent of Macmillan says, “Books are in danger of being the road kill in that larger war.”

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