Cover Story: Amazon: The Elephant in the Room
To the extent that agency is a response to Amazon's cut-rate pricing, it's not necessarily a bad thing, in Norris' view. "It's clear that the industry needs to have better control of the price of their own product," he says.
But control of pricing doesn't mean control of the future, at least when it comes to the retailers who put publishers' products into consumers' hands. "Amazon's pockets are deeper than all of their traditional book retailing competitors, so how long can those competitors keep up with this money-losing approach?" Wikert wonders.
Wikert notes that the e‑commerce behemoth is ratcheting up the pressure with marketing campaigns that go beyond price competition. Specifically, he references Amazon's December 2011 offer of 5-percent off for customers who checked prices on selected items using its Price Check mobile device shopping app while browsing at bricks-and-mortar retailers. "It felt like a mean-spirited attack at the brick-and-mortars who have become Amazon's showrooms," he said. "I'm guilty of showrooming and I'm not proud to say I've done it. But for Amazon to make such a big deal of it really turned me off."
Wikert also would like to see changes in the compensation model Amazon has described for its Kindle Owner Lending Library program, which lets Kindle owners borrow and read books for free while paying authors and publishers a portion of a fund capped at a set amount; for February 2012, for instance, it was $700,000. "They're paying most publishers a flat fee regardless of how popular their books are in the library," Wikert says. "That means both publisher and author income is capped. A much more equitable model would be where they pay for performance. That's how Safari Books Online and Books24x7 do it, for example."
Doing Digital Rights Wrong
Two issues that recur repeatedly are control of digital distribution and the need for more compelling products. Publishers erred when e‑books first started by failing to properly time the release of e‑books and print books, Norris says. They should have set up a system that provided a window during which shoppers only had access to print books before lower-priced e‑books became available, similar to the way paperback and hardcover releases are handled.