In a major industry development over the weekend—which saw Macmillan announce new terms of sale with Amazon for its e-books and Amazon ultimately capitulate to those terms in a statement (after removing the publisher's titles from its site)—agents watched on the sidelines, many internally cheering the move made by the smallest of the “big six” houses. It’s a move that agent Richard Curtis told PW is a “terrific thing.” (Curtis blogged about the Macmillan-Amazon showdown on his site.)
Curtis said the move “restores control of book pricing—on both e-books and print—to the publishers,” and that this is the healthiest thing for the industry. But with this development, one that many in the industry think will soon spread beyond Macmillan as the other big publishers set similar terms of sale on their digital editions, Curtis was quick to point out that agents will now need to push even harder on digital royalty rates. “The agents now smell money,” he said. “And they will not stop until the [digital royalty] rate rises to 50%.” Curtis said he “guarantees” that will happen, and thinks it could be as much as “a year or two with a lot of kicking and screaming” before the reigning 20% digital royalty rate is bumped way up to 50%.
The Association of Authors’ Representatives, however, in a statement issued this morning, was nonplussed about the short-term effect of Amazon’s removal of all Macmillan titles from its site (a move that, despite Amazon's statement accepting the publisher’s new terms, has not resulted in the publisher’s books being returned to the site).
The statement reads in part: “We have never believed that a model that incurs a per unit loss on every sale, and sets an unrealistically low price on the most popular bestselling books, can possibly be in the best long-term interests of our clients or the publishing industry. Therefore we applaud Macmillan’s stance on e-book terms, and Amazon’s stated intention to work within Macmillan’s model. We hope and assume other publishers will soon follow suit.”
The AAR note, though, acknowledges uncertainty about how the agency model will ultimately be implemented. “It is unclear at the moment the extent to which the ‘agency model’ sales terms will work to the advantage of our clients. But it is clear that having access to our authors’ work used as a weapon in negotiation is an unacceptable turn of events that we roundly condemn.” The statement goes on: “We certainly hope to see Amazon rectifying this situation with regard to our Macmillan authors immediately.”
Agent Ira Silverbeg at Sterling Lord said it was “great to see publishers standing up to retailers” and that it had “taken far too long.” Silverberg echoed Curtis’s sentiments that what Macmillan did is in the best interests of the industry. “The agency model, at this time, seems to be the most sustainable model for all parties involved. All we’re concerned about is the long-term health of the publishing ecosystem. Macmillan’s move was a jolt to get that idea moving along more quickly.”
Agent Ryan Fischer-Harbage said he was “thrilled” when he heard what [Macmillan CEO] John Sargent had done. “Pricing is tricky in any business,” he said, “and I'm glad to see that the dog is back to wagging its own tail.” He added that he now hopes other houses will follow Macmillan’s lead and isssue similar terms of sale to Amazon, thereby “taking their power back.”
Fischer-Harbage added that he thinks customers will be dissatisfied with Amazon and not Macmillan. “I think [Amazon’s] customers—people who read a lot of books, of course—will eventually figure out what Amazon did and resent them for it. And likely take their business elsewhere.” He also said that Amazon’s public acknowledgment about standing down only proves that Macmillan is in the right, here. “Apple gave Amazon a look at the future, and Amazon clearly feels scared. Removing Macmillan’s buy buttons was a desperate, childish move. It’s all the more insulting considering [Amazon] seems to acknowledge it’s a mistake publicly and yet is sticking to its guns in reality. I think what we’ve just seen is a great retailer jump the shark.”
Scott Waxman, who runs his own eponymous agency, said he was pleased to see a publisher take control of the pricing of its content, but quickly said the “royalty issue” will now become even more hotly contested. Still, with so many questions left unanswered—chiefly about if and when the agency model will become the new dominant retailing scenario—Waxman acknowledged that it’s hard to say how quickly anyone will push for things, or what precisely they should push for. “The business model for publishers is still evolving, so the business model for agents is still evolving,” Waxman said, noting that the weekend’s events created both “a lot of possibility, but also a lot of anxiety.”