Wednesday, February 03, 2010

In books, what looks like death is really progress

Ed here: Steve Pearlstein almost always finds an interesting angle on publishing news. Here's a excerpt from his column today:

Steve Pearlstein from The Washington Post 3 Feb 2010

Last weekend, a noisy little melodrama in the book publishing world involving and Macmillan provided a wonderful case study of the radical transformation taking place all across the economy as a result of the digital revolution.

In books, what looks like death is really progress.

Wednesday, Feb. 3 at 11:00am EST: Pearlstein: How the iPad impacts new media business models
In the book business, that transformation has been led by Amazon's Jeff Bezos, who has been a master at using the Internet to cut out the middlemen that stand between the author and the reader, delivering books to consumers at lower prices. This process of "disintermediation" started about 15 years ago, when Bezos figured out how to cut out bricks-and-mortar retailers by shipping books directly to consumers' homes from his company's warehouses. But the real breakthrough came when Amazon introduced the Kindle reader and began using wireless phone networks to deliver digital books for $9.99 a pop.

Amazon's business model was, in fact, the reverse of the one used so successfully by Gillette, selling razors at little or no profit but making it up on high-margin razor blades. In this case, the $9.99 retail price for the books (the blades) was actually less than the $12 to $14 "wholesale" price Amazon paid to publishers. That loss, however, was made up for by the high profit margins on the Kindles (the razors), which sell for $260 to $490.

for the rest go here:


Matt said...

VINCENT: Did you just order a $15 .pdf file?

MIA: Sure did.

VINCENT: A .pdf file? 0's and 1's?

MIA: Uh huh.

VINCENT: It costs 15 dollars?


VINCENT: You don't put movies or music in it or anything?

BUDDY: Nope.

VINCENT: Just checking.

Matt Tarantino is currently reading Robert Campbell's "Sweet La-La Land." 4 bucks from Powell's. He will lend it free of charge to anyone who provides an email address.

Richard S. Wheeler said...

Mr. Pearlstein's version of the conflict is the third or fourth variation I've read, and I have been unable to sort them out. He states (later in his piece) that Macmillan threatened to keep Amazon from receiving Macmillan titles until months after they were made available elsewhere if Amazon rejected Macmillan's agency offer. I can't find any evidence for that and don't think it is true.

All I know is that Amazon continues to refuse to sell Macmillan titles, including mine, even as I write.

Peter L. Winkler said...


The 1s and 0s comprising a digital document actually take up physical space, whether they are stored as magnetized sectors on a hard drive or microscopically sized pits on a cd. If a digital file was totally immaterial, data storage media would have an infinite carrying capacity.

Matt said...

That's terrific.