4 Replies Latest reply on Apr 21, 2012 4:32 AM by kamas716

    E-book Availability Upheaval - the sequel


      Coming this summer to e-book stores near you... e-books disappearing from the e-shelves.


      Maybe. There are still a lot of question marks, but the proposed settlement accepted by Hachette, HarperCollins, and Simon&Schuster could make their e-books unavailable at various e-book stores late this summer and into the fall.


      E-book stores can't sell e-books without a contract with the publisher. Two years ago, when the Agency Model went into effect, all of the e-book stores' contracts were voided. They all had to scramble to get new contracts in place, but the publishers weren't prepared to negotiate with all of them at the same time. It took Diesel six months to get contracts with all five publishers. Surprisingly, it also took Amazon six months to get that fifth contract (Penguin).


      E-book stores all over the web were unable to sell a lot of Big Name authors. Some of them still can't.


      And here we go again. Sometime after a 60-day comment period, the judge in the DoJ lawsuit will rule on the acceptability of the proposed settlement. If it goes through unchanged, Apple gets hit the hardest: within 7 days after the judge's ruling, they lose all of their contracts with the settling publishers.


      For the other e-book sellers, they'll be getting the right to cancel their existing contracts on a 30-day notice. It's very likely that the publishers will notify the sellers that the Required Ebook Pricing and Most Favored Nation sections of their existing contracts will not be enforced. Maybe the e-book sellers will be satisfied with that, and not cancel their contracts.


      30 days after the judge's ruling, the publishers are required to terminate their contracts with any sellers who haven't already given their 30-day notice, as soon as possible within the terms of the existing contract. How soon that would be, I haven't a clue. It depends on what latitude the publisher has for cancelling contracts. They certainly seemed to have a fairly free hand back when the switch to Agency Model occurred.


      Speculation: suppose the contracts all have clauses permitting the publishers to cancel on a 30-day notice. That means that we have 58 days (remaining of the 60 for commenting), plus however long the judge takes to make a ruling, plus 30 days before the publishers are required to act, plus a 30-day notice. That takes us to, oh, late August or so. We can hope that in those four months, the publishers will be able to negotiate new contracts. But I'm not very sanguine about that: there were about two months of negotiations before the April 1, 2010 cut-off, and negotiations were continuing for six months afterward.


      Apple's situation is much more clear-cut. Within 7 days after the judge's ruling, their contracts are canceled and they won't be able to carry e-books from the settling publishers until new contracts are in place.


      On the other hand, Amazon's situation is more complicated. All of the Big 6 publishers, not just the three settling publishers, are reportedly balking at signing new e-book contracts with Amazon because of radically increased mandatory co-op advertising fees that Amazon wants. Also, the publishers are almost certain to insist that Amazon contracts include the "no sustained selling below cost" clause allowed by the settlement, and Amazon is almost certain to refuse that condition.


      How big a mess this next transition will be, and how long it will last, we'll see. Random House isn't affected, since they weren't involved in iPad-launch maneuvers and weren't named in the lawsuit. I guarantee that Hachette will be fighting furiously to get every possible contract in place for the September 27 launch of JK Rowling's new book.


        • Re: E-book Availability Upheaval - the sequel
          All of this is exactly what I expected since the settlement was announced. Plenty of people naively think the settlement will just automatically revert ebook sales to the way they were in March 2010, but there's no going back to the way things were before. First, as you so eloquently explained, is the issue of negotiating new contracts. I'm sure that will be done as quickly as possible in most instances because the publishers don't want to lose more money than absolutely necessary. But these things still take time. Second, ebook sales have only increased exponentially over the last two years, despite the fact that some have issues with the current riding structure. All of the proclamations that people just won't pay the higher prices is not being borne out by the market. The publishers and retailers have already been shown that the general public has no issue paying. I just don't see incentive for them to drastically lower the prices.

          While I think what is happening now is necessary, I do not believe it will be the panacea some expect.
            • Re: E-book Availability Upheaval - the sequel
              I've said it before and I'll say it again. This is a market still in its infancy. From 2008 to 2011 ebook sales went from $70 million to $1.7 billion. It takes a while for the market to determine the best prices. Supply and demand is far from a clean or orderly process. Expect to continue to see wide price fluctuation for a while yet, with different publishers (as long as nobody is trying to lead them in concert) experimenting with different pricing models and practices.
              • Re: E-book Availability Upheaval - the sequel

                Welcome to Speculation Station.  All Aboard!  *whooohooo*


                I speculate that the three pubs in the settlement are already preparing new terms or deciding how to move forward with the old terms with the major vendors other than Amazon.  I doubt they've forgotten how things went last time, and the ebook business has a much larger market share than it did last time.  I speculate that they are also deciding how to handle the Amazon situation, which is much more tenuous.


                I think it's absolutely possible that there will be gaps in availability, especially for the less prominent epub vendors.  I think it's extremely likely that there will be significant gaps in availability for kindle books.  But I expect that B&N, Kobo, Google and Sony will not see too much disruption in service.  In fact, I think that if the pubs are serious about playing hardball with Amazon, they're going to do their best to prop up their other major vendors.


                Regardless, I plan to behave as if the supply could be cut off at any time.  I intend to weather this storm with my reading materials intact, and I have quite the stockpile already.

                  • Re: E-book Availability Upheaval - the sequel

                    keriflur wrote:

                    Regardless, I plan to behave as if the supply could be cut off at any time.  I intend to weather this storm with my reading materials intact, and I have quite the stockpile already.

                    Yup, I plan to have a fairly large stash of stuff backed up onto other storage.  I want to insure that the stuff I've leased/purchased is always available to me.