The Shatzkin Files


The ebook marketplace could definitely confuse the average consumer


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There are no links in this post. I refer to searches done in several ebookstores, but the pages reporting results would be dynamic, so creating a link wouldn’t assure you’d see the same results as I saw. You can replicate the searches and you may or may not see the same thing because the facts might change.

Here’s what the ebook marketplace looks like without agency pricing.

Having just polished off Phil Pepe’s “61” about Roger Maris’s great home run season of 50 years ago, I was ready for my next read. No book has gotten more press on my radar over the past week than the new memoir from Jacqueline Kennedy, transcriptions of interviews she did with historian Arthur Schlesinger just a few months after JFK’s assassination. That looked like a good next choice for me.

(I have learned through the exercise described herein that the book is actually billed as “by Caroline Kennedy”, who controlled the property, edited it, and contracted for its publication and also “by Michael Beschloss”, the historian who wrote the introduction.)

Although I have several readers loaded on my ereading device (the iPhone), I have found myself recently defaulting to the Kindle store because it is the best place for me to browse. It allows me to search very granularly by category and sub-category (which the others don’t) and to array the choices in inverse order of publication (which the others don’t, or if they do, they don’t make it obvious enough how). That’s how I found “61” and “The House That Ruth Built”, my two most recent reads in baseball history (my favorite subject.)

However, when you know you want a very specific book, all the ebook services are pretty much equivalent. They all let you search by title or author and deliver what you’re looking for. Since I like to spread my reading around to keep up with what the various experiences are like, I decided to search Nook first for “Jacqueline Kennedy”.

And the search engine found 22 items matching my search, the first two of which were what I was looking for.

Sort of.

Match number 1 was the book I wanted (“Jacqueline Kennedy: Historic Conversations on Life with John F. Kennedy” by Caroline Kennedy), but only available for pre-order, delivery taking place on January 3, 2012. The list price is $29.99 and the NOOK price is $9.99. Obviously, not agency, Apparently B&N will accept about a $5 bath on each copy, presuming they get these $29.99 ebooks at 50% off from the publisher, Hyperion.

But I want to read it now!

Match number 2 is the same book. However it is a “NOOK Book Enhanced (eBook)”. It is available right now. The list price is $60.00 and the NOOK price is $32! That’s thirty-two dollars! List price of SIXTY dollars? WTF?

Let’s note here that B&N is apparently making very little margin on this, if they’re paying 50% to Hyperion. But since I’m the biggest spendthrift I know on ebooks (I happily bought and read both “Fall of Giants” and “George Washington” from Penguin for $19.99 without blinking; some years ago I bought an ebook bio of Grover Cleveland for $28) and this price stops me, I wonder if anybody would buy it.

So I kept shopping.

My next stop was Google eBooks. The book I’m after was not in the first two pages of results returned in a search under “Jacqueline Kennedy”. (However, there was one book called “Inventing a Voice: The Rhetoric of American First Ladies of the Twentieth Century” that is on sale for $42.36 and another called “The Kennedy Family: an American dynasty, a bibliography with indexes” for $55.20).

So I tried Kobo. By the time I got to the bottom of the first page of results, we were on to other Jacquelines. And the book I wanted, the one getting all the publicity, wasn’t shown.

I almost never use the iBookstore because the selection is more limited. But I decided to try it for this. I found something cool immediately: it gave me an auto-complete choice for “Jacqueline Kennedy” when I had typed a few letters of her first name. Helpful on an iPhone.

Here I found a variation of what I’d found on NOOK. The first listing was for the plain vanilla ebook, only for pre-order for January 3, 2012 delivery, for $14.99. (iBookstore, unlike NOOK, doesn’t list a publisher’s list price.)

The second listing labeled “Jacqueline Kennedy The Enhanced Edition” offered that book for $19.99, also without telling me what the publisher’s list price was.

One thing was odd. iBookstore says that the “print length” of the enhanced edition is 400 pages and the print length of the vanilla edition is 256 pages! Since I thought most of the enhancement was video and audio, that’s a bit of a headscratcher too.

So, finally, I went to Kindle. The number one listing there, available now, was “Jacqueline Kennedy (Kindle Edition with Audio/Video)” for $9.99. The book’s page says the list price is $60 and the Kindle price is a saving of 83%. (Of course, I bought it, and I can tell you that my iPhone progress bar says there are 349 pages in the book!)

What that suggests is that Amazon could be subsidizing sales of this book to the tune of a massive $20 per copy sold! (Next time I’m with a person from Amazon, the cup of coffee is on me.) I’m assuming that Amazon is paying half that $60 retail price to Hyperion.

People’s deals are private and I don’t claim inside knowledge, but my understanding is that all publishers sell to Apple on what amount to agency terms (publisher sets a price with Apple and Apple remits 70% of it) but that part of the commitment is that iBookstore can lower its price to meet competition and adjust remittances accordingly. Perhaps what happened here is that Hyperion set its Apple price at $19.99, figuring that nobody else (meaning Kindle or NOOK, in this case, since apparently Google and Kobo don’t have the enhanced book and aren’t listing the vanilla one for future sale) would drop the price more than that. But Kindle did. So, if I’m right about terms, iBookstore will shortly see this, cut its price to $9.99, and Hyperion will find themselves getting 70% of $9.99 from Apple rather than 70% of $19.99. And still Kindle and NOOK will be paying $30 a copy with Amazon Kindle choosing to lose $20 a copy to sell them and B&N NOOK choosing not to subsidize and probably hardly selling any.

Amazon’s strategy before agency was to aggressively discount the most high-profile books, the ones that the reading public would most often search for, in order to send the strong signal that their prices are the lowest and to force less-affluent competitors to engage in costly price competition. In this case, that strategy is being applied successfully, although both iBookstore and NOOK can respond. Whether one thinks it is a good thing or a bad thing that the deepest-pocketed retailer can spend $20 a copy on a big book to promote a price perception depends on your point of view but this clearly demonstrates what the publishers, the retailers, and the consumers face when a high-profile, high-demand book is sold without the price discipline of agency terms.

Clearly, something has to change here. Perhaps Google and Kobo aren’t listing this title because they can’t or don’t want to sell an enhanced ebook. Perhaps Hyperion didn’t offer it to them. We know that Apple insists on agency-like terms and Amazon is just as determined to stick with wholesale terms. My understanding is that B&N will work either way although they have made public statements that seem to support agency. In cases like this, though, I’d expect B&N to pursue the same terms as Apple gets (which, because it includes publisher price control, Amazon doesn’t want). B&N certainly doesn’t want to be selling an ebook for $32 their competitors are selling for ten and twenty dollars less than that and they also don’t want to lose $20 a copy on a high-volume title. (Perhaps by the time you read this, there will have been price adjustments already made.)

But if B&N and Apple both had terms that allowed them to cut to Amazon’s discounted price and just pay less for each ebook, it is hard to see how Amazon could accept that!

I am sorry there is no way to present this as anything other than confusing. Maybe one of the service providers or experts at our “eBooks for Everyone Else” show will be able to explain it better!

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  • Juliarachelbarrett

    Yes, I’m confused.  Please let us know, after you read the book, if it’s the complete edition.  I’m wondering when and if the price will go up.

    • I’ve only read a couple of pages, but, yes, I’ve got the “complete” edition, including all the video and audio (which I haven’t yet accessed at all; I’m just reading, and frankly, I’ve hardly started.)

      There is no difference in the files being peddled by the different retailers. The publisher has decided to put only the enhanced one out first and is releasing the more stripped down ebook later. It’s a windowing strategy.

      But isn’t it amazing that a retailer would subsidize their reputation for low prices by paying TWENTY DOLLARS (okay, maybe they get a *slightly* better deal…) per sale to make the point? I find this stunning.

      Mike

      • Bibliofuture

        The $60 paper book comes with 8 CDs. With the $9.99 Kindle purchase you received the audio that is on the 8 CDs?

        If the audio did not come with the Kindle purchase I would doubt that Amazon is paying $30 per copy. 

      • Bibliofuture

        A person on Amazon gave the Kindle version a one star rating and had this comment:

        Not a comment on content. The page that sells this on Amazon does NOT show the disclaimer that video/audio is ONLY available on Apple devices unless you scroll down. Something this important should be front and center obvious. I will still read it because I am interested in the subject but real Kindle users should be aware of this.

      • Thanks for the additional clarity. I had no problem because I do all my reading on an Apple device. I am assuming my wife will be able to read the book part on her regular ole Kindle. Now I wonder if the NOOK complaints were really all about the multi-media, not about being able to read the ebook. (But, of course, the ebook alone isn’t worth $32 in anybody’s book.)
        Mike

      • Andrew Rhomberg

        What this really shows is how meaningless  the “list price”, “Recommended Retail Price” (RRP) or “Suggested Retail Price” (SRP) is becoming.

        Its like merchants announcing a 1/2 price sale immediately AFTER increasing prices by 100%…..

        It focuses how drawn we are to the “disocount” displayed by AMazon and not the absolute price.

        How often did you think of something as “expensive” is Amazon’s sells it only at a 10% discount even thought the item was modestly priced to start with.

      • There is no doubt widespread consumer confusion about this. Since all print is sold on wholesale terms where the retailer sets price, a retailer can make the price of print cheaper than the price of digital for any agency book. That’s something Amazon does and it inspires complaints about the relative ebook and print book pricing directed at the publishers who have, of course, set the ebook price somewhat below the print.

        William Lynch of Barnes & Noble predicted that agency would become more widespread. Right now, it is as widespread as Amazon lets it be. With two such powerful companies (Amazon and Apple) entrenched in diametrically opposed positions, it is hard to see how the market can rationalize itself.
        Mike

      • True. Mike, as always, your analysis is excellent! Amazon and Apple are in “diametrically opposed position” but how it will play out will depend (in my humble opinion) on how  their “weapons” work out. Which is most effective? Whiach has largest market share? I’m talking of  the Kindle + new Amazon tablet (comes out in November?) vs. the iPad/iPhone…

      • Could be interesting because it could end up with Apple having a bigger share of devices being read on but Amazon having a bigger share of ebook sales! (I guess I should never say “end up”…)

        Mike

      • The audio came AND the video came! All on my iPhone. They got the whole package.

        Thanks for describing the “book.” My guess now is that on January 1 they will also release a book without the CDs. And that’s why the vanilla ebook will be made available then.

        Mike

      • Juliarachelbarrett

        I’m kind of blown away.  That’s an incredible, and unexpected, leap of faith for a retailer to make.

      • A totally appropriate reaction. I’m gobsmacked myself.

        Mike

  • Jack W Perry

    Insanity but it all makes sense given the various rules, contracts and agreements. I’m sure once it all shakes out we will see a much more logical ebook pricing world. Or at least I hope so.

    • It’s a tough situation when two very powerful intermediaries, Apple and Amazon, take intrinsically conflicting views of how it ought to work and, therefore, what they will accept. So except for the Big Six publishers whose lists are strong enough to effectively force Amazon to accept agency agreements, everybody else has to live in a Wonderland world. Without Alice.
      Mike

  • I just looked on, both, Amazon and the iBookstore. The $9.99 Amazon book is text plus 85 still photos and is not available until January 3, 2012. The $19.99 iBookstore edition has the text and photos, plus 22 minutes of video, plus the 8-1/2 hours of the audio recordings, and is available now. I don’t buy that many e-books so I don’t know how “limited” Apple’s offerings are compared to other e-book retailers, but, for me, reading ANY book on an iPad is great, but experiencing an enhanced e-book there is unparalleled. I will gladly pay the extra $10 to get it, and get it now.

    • It’s interesting that’s what you saw. I bought and have on my iPhone the *enhanced
      *version from Kindle and I paid $9.99.

      I can, of course, play this on my iPad. I don’t go for enhanced ebooks, but I watch old TV shows thru Netflix on my iPad all the time.

      Mike

  • DIane Whiteside

    I just checked at Apple and Barnes & Noble. To my surprise, folks are bitterly complaining that their copy won’t play on their Nook. Over at Apple, they’re chortling that this is what the iPad was made for.

    • Oh, goodness. And that would be a problem not of Barnes & Noble’s making nor one that they can solve. The developers make *damn* sure it will work on iOS devices and everything else is dealt with later. In that case, B&N certainly wouldn’t want to encourage sales to their customers by cutting the price!
      I bet the file would work on the NOOK reader on the iPad or iPhone. And I’ll also bet that the video I just watched from the book on my iPhone won’t work on my wife’s Kindle, which is first generation and just fine for reading narrative text, but for absolutely nothing else.

      Mike

  • So do I understand that a publisher can use *both* trade pricing and agency pricing for a single ebook?  It appears that Hyperion used agency pricing for the iBookstore because those are Apple’s rules (except I didn’t know Apple was free to reduce its price as market conditions dictate), but went with trade pricing for Amazon and B&N.  (I’m thinking Google and Kobo were presented with this schizoid choice and, in the immortal words of Sam Goldwyn, said “Include me out.”)

    BTW, Mike: How long did it take for you to download this enhanced ebook with  8 hours of audio and all that video?  Can I assume you used WiFi at home?

    • Actually, all publisher except the Big Six are *obliged* to use a “hybrid model” (both wholesale pricing and agency pricing) if they want their book on sale at Amazon, which insists on wholesale, and Apple, which insists on agency.

      Google and Kobo, I believe, are comfortable with either, as is B&N. They didn’t opt out of this book because of the pricing scheme. It could be they don’t want the enhanced ebooks; it could be Hyperion just didn’t offer to list them. (Amazon, Apple, and B&N are the lion’s share of the sales.)
      I downloaded the book onto my iPhone which was hooked up to wifi at the time. It took noticeably longer than a normal ebooks (which is usually just a couple of seconds.) But it didn’t take a really long time; almost certainly under 30 seconds.

      Mike

      • OK, so I gather that Hyperion, despite being owned by Disney and distributed by HarperCollins, isn’t a Big Six publisher, huh?  I was mystified by your answer until I finally doped out this larger reality.  Took a while to sink in!

      • That’s right. The Big Six are (in alphabetical order) Hachette Book Group, HarperCollins, Macmillan, Penguin, Random House, and Simon & Schuster. They all (or at least mostly) distribute other publishers and those do not get Big Six status from Amazon for agency selling.

        Mike

  • Guest

    Mike, your assumption about terms, that Apple will/can lower its price to meet Kindle’s deep discounting, may not hold true. The terms might be based upon publisher-supplied list pricing. In which case both Apple and Amazon are given the same $19.99 list price. Wholesale terms would allow Amazon to deep discount, even if it means a loss on each sale. Agency terms mean that Apple must sell at the publisher’s list price as long as it is the lowest supplied list price in the market. So when Amazon does deep discounting at cost, Apple might contact the publisher who then only has to explain that the list price supplied to Amazon was indeed $19.99 and that Amazon was still paying them their full royalty based on that price (even if it means Amazon makes a loss on every sale). In this case, Apple cannot lower their price to match Kindle because the publisher has indeed supplied Amazon with the same price as it supplied Apple.

    And of course every Kindle product page shows the publisher’s list price with a redline and the Amazon discount underneath. So Apple need only look at the Kindle page to ascertain that it is Amazon doing the discount, not the publisher, and that therefore according to Agency terms, the publisher-supplied list price must stand on iBookstore!

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  • June Faramore

    The complaints on the nook listing are probably from those that refuse to realize enhanced ebooks only work on the nookcolor and not the first generation nooks or the simple touch that just came out. B&N has been pretty clear about this, but their customers do not seem to get it. I will say that I get frustrated searching on the nook shop quite often, there are not enough granulated categories if one is trying to browse in subject. Kindle may have some of the same difficulties with e-ink Kindle owners feeling jilted when all the enhanced content gets pushed for their tablet.

    • I think you’re right about what provokes the complaints. The ebook purveyors have interesting issues making clear what it is they’re selling. People could always “see” exactly what they were buying when it was a printed book!
      Mike

  • Beth

    As you said over at Passive Voice: “If there were no agency, Amazon would discount every other player — B&N, Kobo, Google, and Apple — out of the game.” My personal nightmare is that, without the agency pricing for the self-publishing authors on the Kindle, Amazon and B&N would get into circles of “oh, they discounted this 5.99 book to 4.99, so we’ll go to 3.99…” until they reached .99 (probably not 0, since they’d want *some* cut…), and pay the indie author on the .99 mark. This would, in my nightmare, serve to lock authors into one discounting e-stributor or another (i.e., Amazon or B&N, pick one) in the hopes that readers would go to one or the other.

    I would welcome any sign that this nightmare *wouldn’t* become reality, in a no-agency world.

    • You’re actually pointing out an angle here I hadn’t thought of. You’re right: the self-published author gets to set his/her own price, so they effectively have agency. So the only ones without agency protection are the publishers who aren’t Big Six. When the ebookstores make pricing decisions, that’s the group of titles they have to play with.

      Mike

  • I bought the ehanced ebook edition from Amazon for 9.99. I started using it with the Kindle app on my iPad. The audio works but it does not bookmark where you last stopped listening. So when I shut it down and start it back up, it always starts back up at the beginning of the conversation. There is no slider bar either to move ahead or back in the audio file.
    I also tried it on the PC ap and on my an iTouch. It still started back at the begining of each audio convesation. Big dissapointment to me.
    I emailed Amazon and they said they would give me a refund. I haven’t got it yet but did delete it from my devices like that told me to do.
    I may try it from Apple iBookstore for $19.99 but not sure if I want to gamble again.

    • It actually happens that the person who developed the app for Hyperion mentioned that very limitation to me in a conversation. The reason that all the video is placed at the front of chapters is precisely because the audio has that limitation. You won’t find it any different on the Apple version, I don’t believe. This is what the technology, at the moment, delivers.

      I haven’t listened to any audio, personally. I’ve been reading the book and I’ve looked at some of the video. And the photographs have been useful. I like the package.

      Amazon’s customer service is great. But I imagine the other big ebooksellers would handle it the same way. They’d better…

      Mike

  • Maureen Gannon

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    Maureen Gannon

    • Hmmm. Walloping Wally. OK, I’m curious. Thanks.

      Mike



 
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