Amazon vs Macmillan, a question of marketing

In the past few days, several people have sent me emails with links to various people’s articles on this hot ebook topic. This is a very good thing, or I’d have had no idea what Lynn was talking about when she called last night and warned us about incoming visitors from Kindle Lists (Welcome, BTW!) in response to the excellent post she made on the AvsM situation. I thought, perhaps, I should move the Christmas decoration removal down a notch with a few, more relevant, comments.

My initial reaction? I can honestly say, I don’t really give a damn. Sort of like a baseball game between the WhiteSox and A’s, it’s interesting to watch the action, but I don’t care who wins unless it affects my Mariners’ chances of getting into the playoffs. But toward the end of the season, it might make a difference, so I observe without getting emotionally involved.*

There are many articles out there written by people who do care, people whose lives are directly affected by this new little standoff in the development of the ebook publishing business, and I encourage you to check them out. I’ll let them discuss the pros and cons as they see them (and you’ll find published writers on both sides) but if you want a really interesting take on what might well be the real truth behind Macmillan’s current actions, check out Lynn’s blog. She worked with Macmillan (TOR) through some seminal times and has done an excellent job of extrapolating her experiences with the company and their attitudes from that time to this most recent move.

At this point, Macmillan and Closed-Circle aren’t even in the same league, not economically and certainly not philosophically.  Macmillan is . . . the Yankees, if you will, we’re … let’s call us the Evansville Otters, in the Frontier League. (OK, Baseball metaphor is growing decidedly thin, but you get the picture.)

Macmillan is following a marketing paradigm designed around supply and demand. S&D is a perfectly valid capitalist philosophy that really came into its own with the mass production of product that came into its own in the 20th century, taking serious hold with the Model T and assembly line production. It is not a given of the human condition. (Okay, marketing majors, I know this is a gross over simplification of the philosophy and its origins and influences, but bear with me.)

Basically, this involves charging the most for a given shirt to the people who come into the store first, and the least to those who take a gamble and wait for the “40% off last marked price” remnants. Those who wait run the chance of not getting the product. Those who absolutely must have it, pay a premium for that guarantee.

The problem with this philosophy is, in ebooks, or even PoD, Supply is a big fat zero in the marketing equation, because the supply is, literally, infinite. Demand can afford to take its time, knowing that that sale rack is going to be well-stocked. Demand can wait, but will it? In this case, companies like Macmillan are using the S&D pricing philosophy, but what they’re really tapping is the herding instinct, or perhaps we should call it the mob mentality. Or perhaps the desire to be part of the “in” group. Call it what you will, it’s the urge to be on the same page, as ’twere, with all their friends, not to mention the “cool people” of the world. S&D practices used this way are taking advantage of the “I want it now!” mentality created by S&D marketing in the first place. And they have endless stock with which to do it, for zero cost to them.

It might well work.

Then again, it might not. Hold that thought.

Another necessity for S&D pricing to work depends on availability, which is in turn regulated by limited physical options: a dead-tree bookstore can only hold so much product.  When the vast majority of that space is taken up with NY Publishings’ “Created Best Sellers,” or just NY Publishings’ monthly batch of “spaghetti” (see Lynn’s post) those books which require time to develop a readership are ditched, stripped and depart the reading pool, never to be seen again. Heaven help you if you’re a writer who writes long complex—series—novels (see three hands raised in CC). Chances are, unless you’re a best seller, you’ll never see all those titles on the bookstore shelves at one time.

Another factor that drives S&D in the dead-tree realm is a reader’s access to other readers. Readers, for the most part, love to discuss books. Good books stimulate ideas and questions, and readers need other readers with whom to hammer out those ideas. This means that when a book touched a reader, that reader is going to recommend the book to their friends, who will rush to that limited-space bookstore to find it. Good luck with that on anything other than best sellers.

Ebooks have none of those limitations. Now, those shelves are infinitely expandable. Now there’s space not just for the new book in the series, but for all the previous books so new readers can catch up with the action. Now the community for any title is only a google search away. Now, any book a reader recommends to their friends can be available.

I have to wonder, will a philosophy based on S&D really survive in this environment? As more and more people learn that there is, in fact, no shortage of a given product, will they increasingly opt to wait for the “40% off last marked price” rack? As people learn that, when they find a new book they simply must share with others, that there’s a worldwide community discussing that book, will they be less anxious to pay that premium? Maybe instead they’ll go looking for “something different” and find that in an ebook that all their friends can download and read at the same time.

Closed-Circle is thrilled that the internet and ebooks has given us this chance to add our backlist and new works to those infinitely expandable shelves. CJ, Lynn and I want to work with the people who want to read our books. We want to make them available to those who never even knew they existed…because of NY’s “Rorschach” marketing practices (more on that tomorrow). Since we made the decision to make this leap of faith, we’ve been working literally around the clock to find a way to bring you a quality product at a reasonable price that will pay our bills while we write more books.

I can’t speak for Carolyn or Lynn, but the way I’ve figured it, at least at this point, I will charge the “new book” price (as set by, yes, Amazon’s successful marketing department) of $9.95 until I reach what I consider a fair “advance” in dead-tree publishing of $40,000 dollars. Considering each book has taken me at least a year and a half of full-time plus overtime writing, plus a cover, plus all the ebook manipulation, I think that’s a fair enough wage. To put this in perspective, this is about 4,000 copies, which is all Warner’s fancy big machine ever managed to sell of my first novel. (More on that in the upcoming Rorschach marketing post). At this point, if I manage to sell 4000 copies of my new titles I will be tickled pink. At that point, I will cheerfully lower the price of the product to the “backlist” price of $5.00. If the time comes that I have a reliable 8,000 readers, the issue price will go down to $5.00 and remain there. If I become a million dollar seller, my price per book will plummet. In other words, I don’t ask to be a millionaire, only to pay my bills doing something I love and am pretty darned good at.

Does this mean that the “first comers” are still paying a premium? In fact, it does. I don’t see any way around it. Thanks to NYP marketing practices and promises, I’m so far in the hole financially and spiritually, I’ve got to do something to catch up. I’ve set my backlist at the lower price so people can get some idea of what they’d be paying for. I’ve even offered an entire novel for free download.

I have to admit, however, that I don’t look for that 4,000 mark to be reached any time soon.

OTOH, I’d be thrilled to be proven wrong I want readers. If I can get them, I’ll find some way to compensate those who’ve helped me reach them. If that involves sending out 4,000 freebies of my next book…I’ll do it.

We are, after all on the same team.

*A brief note:

At first, I qualified this abrupt statement with “I do care who loses…and that’s the authors” but in actual fact, I’m not sure that’ll be the case. We could well be looking at a case of “any publicity…” In this case, the authors are the clear victims and their readers will be out there on the internet, raising awareness. It’s possible that at least for the next few weeks, being a Macmillan author could be the best thing ever for your sales. Because those ebook versions will return. Eventually. The trend will not be stopped. And if Macmillan continues to play dead-tree hardball, there’s nothing to stop the authors from doing what Lynn, CJ and I have done with Closed Circle and writing new stuff and publishing it themselves. Sure, it’s a lot of work. Sure it’s frustrating to be doing covers or working out the glitches in ebook formats rather than writing, but we can get up of a morning and not have to worry about clicking on our book’s URL and finding it DOA.

Ja ne!