Apple and Amazon in the battle for books

Three weeks ago there was a very public bout of fisticuffs between Amazon and Macmillan over the pricing and sale of eBooks. The fight was a by-product of Apple's announcement of the iPad and Macmillan's desire to extend the trading relationship and pricing parameters that will now be deployed for the iPad to its existing business with Amazon. After the dust settled it looked as though Macmillan and the authors, who largely backed Macmillan, had won; that Apple had won without needing to raise a finger and that Amazon has lost. From now on pricing will follow the so called 'agency model' which is really just the supplier management system that Apple uses in its iTunes store. The term 'agency' is a huge misnomer, because Apple is much more than an agent for the publisher. Apple 'owns' the customer and Apple retains all the information and almost all the demographics relating to users (this is something that the magazine and newspaper publishers are very upset about). Under the Apple one-size-fits-all e-commerce system, the publisher sets the price and sells the product (eBook or digital license) to a customer and Apple takes a 30% cut from facilitating and exclusively managing the transaction. Amazon is now being invited/instructed by publishers to follow a similar route, and in fact Amazon had earlier seen this coming and announced that it was willing to work with authors/publishers on a 30:70 split provided some other conditions applied.

Although this dispute appeared to be a dispute about pricing: it was really a dispute about control. Macmillan as a publisher, having been reminded of its role in the supply chain by its dealings with Apple, was asserting its power to set the terms of sale and to regulate the flow of goods. The best commentary on the upshot of this change in the balance of book power comes in a pair of blog postings by Michael Clarke at the Scholarly Kitchen. Why Publishers have Won and Why Publishers have Lost.

The real reason the iPad marks the end of pricing controls for ebooks has nothing to do with Apple’s iBooks pricing policy. In fact, the iPad renders Apple’s own ebook pricing policy as irrelevant as Amazon’s. The real reason the iPad renders any ebook pricing policy irrelevant is because the iPad is not a dedicated ebook reader. Why Publishers have Won

Because the iPad is not a dedicated ebook reader, there are, unfortunately, many things that users can do with the device other than read books. .......Publishers may have won the pricing war, but the real struggle is going to be for users’ attention. Why Publishers have Lost

We can add that the book publishers also lost in a way which they appear not to have noticed or minded, Apple's definition of 'agency' presented the publishers with apparent control of list price but snaffled the customer while they were pondering the various regions and the 85 tiers in the Apple pricing matrix. Reverting to Clarke's observation that the iPad is a multiply undedicated book reader: we should point out that it is a media pad with an impressive technical specification and at the same time a peculiarly empty and neutral format, such that it can be used for accessing and displaying many kinds of media. Certainly the iPad is not primarily to dedicated to books (as is the Kindle), and it is also not restricted to reading books in any particular format or digital manifestation. Books could be on the system as ePub files, but they could be there as title-specific Apps, or they could be there as web resources simply accessed through the browser, plain old HTML, or they could be there as viewable via title-agnostic apps (as Amazon already has a Kindle app on the iPhone platform, and Exact Editions has a generic app, Exactly). Clarke, we must assume, has been studying Derrida and Lacan in preparing for the iPad (I am positively certain that Steve Jobs reads Derrida); for, as the post-structuralist theoreticians might put it: the flexibility of the iPad is radically overdetermined since the consumer can not only read books on it in different ways and from distinct routes and formats, it is also much more than a book reader: music, film, TV, photos, email and the web will all crowd for attention on the device. The iPad is a great but 'undedicated' digital picture frame, a fabulous but undedicated hold-in-your hand TV consol, a truly amazing, undedicated, but remarkable music centre, wonderful for games etc.... It is this very flexibility and media-omnivorousness of the iPad that led to the initial "Is that it?" reaction to the Apple presentation ("Just a large iPhone with a chunky bezel"). The device appears to be strangely empty because it seems to invite or depend upon such a confusing variety of media inputs.

This may seem like a confusing situation and a perplexing opportunity for media creators and media owners. It is. But I will draw one urgent conclusion from the confusion. Scoffing aside, the iPad is a huge and wonderful opportunity. The flexibility and omnivorousness of the device will remain a feature, but the apparent emptiness will not. Book publishers, magazine and newspaper publishers had better figure out quickly how to make books, magazine and newspapers more attractive than film or TV shows. Or, at least more attractive in themselves. Did you notice that Apple are encouraging TV broadcasters to offer their shows for 99c each (a 50% price cut)? So winning in this competition is partly a matter of pricing, where comparisons will be drawn with other media. But it is also a matter of availability and even more of attractiveness. How do publishers make their digital offerings on the iPhone/iPad peculiarly and uniquely attractive? That is the key to success in a multi-media, marketplace, maelstrom.

Making the newspapers look more like broadcast news is surely not the answer; and making the magazine look more like a collection of YouTube videos, or Flickr slide shows is not going to be a winning strategy either....