John Sargent, CEO of Macmillan, one of the US's "Big Six" publishers, is not afraid of new business models. Over the past year, Macmillan has been trying to figure out how to push ebook pricing above the $9.99 level that Amazon had set as a standard on the Kindle. They had explored "enhanced" ebooks- ebooks that come with extra content- and were about to implement "windowing" (holding back ebook release to protect hardcover pricing, something that Sargent felt was "completely stupid").
Instead, Sargent decided to take advantage of Apple's announced entrance into the ebook distribution game to force a change of Macmillan's business relationship with Amazon. Instead of using the same discount model for both ebooks and print books, Macmillan wanted Amazon to change to a "agency model" where pricing would be controlled by Macmillan and Amazon would take a percentage. Amazon (which is Macmillan's 2nd largest customer) balked, and stopped selling Macmillan books entirely. But two days later, Amazon gave in
. As a result, Sargent has been called publishing's "new hero".
Sargent spoke with the "Publishing Point" Meetup Group today in New York City, and I got to participate in the questioning. Michael Healy, Executive Director Designate of the Book Rights Registry, did a great job of leading the conversation. I was very impressed with Sargent, who dressed in jeans and had a casual, down-to-earth manner that matched. Sargent clearly understands all the challenges his industry faces- disintermediation, shifting distribution, the need to develop technology expertise, but at the same time he's very optimistic about publishing's prospects. He understands the assets at his disposal, in his words, "a lot of extremely good people who know how to obtain manuscripts and who know what people want to read", and who know how to gather enthusiasm around a piece of writing, a process that's "magic".
The most amusing comments by Sargent came in response to Healy's questions about whether the large, generalist, publishing houses would continue to be viable. Sargent seemed to think that in the near term (5-10 years) the big 6 would likely remain intact. (HarperStudio's Robert Miller has predicted the Big 6 could shrink to 3) His reason was not what I expected. The Big 6 are in no danger of implosion- they survived a very hard economic stretch quite well, but no private equity firm or bank would go near them because of "disastrous" balance sheets. They "suck cash, and have terrible profits." "We're disastrous but stable" quipped Sargent.
When my turn came to ask a question, I asked Sargent if he had thought about the role of libraries, and particularly public libraries, in ebook distribution. His answer indicated that just as he was not afraid of changing the relationship with Amazon, Sargent is not afraid of changing the publisher's relationship with libraries. In fact, change may well be required.
"That is a very thorny problem", said Sargent. In the past, getting a book from libraries has had a tremendous amount of friction. You have to go to the library, maybe the book has been checked out and you have to come back another time. If it's a popular book, maybe it gets lent ten times, there's a lot of wear and tear, and the library will then put in a reorder. With ebooks, you sit on your couch in your living room and go to the library website, see if the library has it, maybe you check libraries in three other states. You get the book, read it, return it and get another, all without paying a thing. "It's like Netflix, but you don't pay for it. How is that a good model for us?"
"If there's a model where the publisher gets a piece of the action every time the book is borrowed, that's an interesting model."
Sargent has clearly thought about libraries, but perhaps he's not talked much to them. His points are valid- the existing business relationship between publishers and libraries won't work for ebooks the way it has worked for print books and the "frictions" that exist for print materials could disappear for ebooks. But he has gaps in his knowledge of libraries. The patron-on-the-couch scenario wouldn't work for libraries either- why would a town support its library's ebook purchasing if everyone could get the ebook from a library 3 states away? The fee-per-circulation model would be a disaster for most libraries, which have fixed annual budgets, and can't just close in September if they've spent their circ budget.
On the other side, the models preferred by libraries are not necessarily going to work for publishers. While the subscription model will probably work for academic institutions, it would turn public libraries into unnecessary intermediaries. The "perpetual access" model would be suicide for publishers if applied to their most profitable top-line books.
Now is the time for publishers and libraries to sit down together and develop new models for working together in the ebook economy. Executives like John Sargent are not afraid of change, but they need to better understand the ways that they can benefit from working with libraries on ebook business models. Libraries need to recognize the need for change and work with publishers to build mutually beneficial business models that don't pretend that ebooks are the same as print.
Instead, Sargent decided to take advantage of Apple's announced entrance into the ebook distribution game to force a change of Macmillan's business relationship with Amazon. Instead of using the same discount model for both ebooks and print books, Macmillan wanted Amazon to change to a "agency model" where pricing would be controlled by Macmillan and Amazon would take a percentage. Amazon (which is Macmillan's 2nd largest customer) balked, and stopped selling Macmillan books entirely. But two days later, Amazon gave in
. As a result, Sargent has been called publishing's "new hero".
The most amusing comments by Sargent came in response to Healy's questions about whether the large, generalist, publishing houses would continue to be viable. Sargent seemed to think that in the near term (5-10 years) the big 6 would likely remain intact. (HarperStudio's Robert Miller has predicted the Big 6 could shrink to 3) His reason was not what I expected. The Big 6 are in no danger of implosion- they survived a very hard economic stretch quite well, but no private equity firm or bank would go near them because of "disastrous" balance sheets. They "suck cash, and have terrible profits." "We're disastrous but stable" quipped Sargent.
When my turn came to ask a question, I asked Sargent if he had thought about the role of libraries, and particularly public libraries, in ebook distribution. His answer indicated that just as he was not afraid of changing the relationship with Amazon, Sargent is not afraid of changing the publisher's relationship with libraries. In fact, change may well be required.
"If there's a model where the publisher gets a piece of the action every time the book is borrowed, that's an interesting model."
Sargent has clearly thought about libraries, but perhaps he's not talked much to them. His points are valid- the existing business relationship between publishers and libraries won't work for ebooks the way it has worked for print books and the "frictions" that exist for print materials could disappear for ebooks. But he has gaps in his knowledge of libraries. The patron-on-the-couch scenario wouldn't work for libraries either- why would a town support its library's ebook purchasing if everyone could get the ebook from a library 3 states away? The fee-per-circulation model would be a disaster for most libraries, which have fixed annual budgets, and can't just close in September if they've spent their circ budget.
On the other side, the models preferred by libraries are not necessarily going to work for publishers. While the subscription model will probably work for academic institutions, it would turn public libraries into unnecessary intermediaries. The "perpetual access" model would be suicide for publishers if applied to their most profitable top-line books.
Now is the time for publishers and libraries to sit down together and develop new models for working together in the ebook economy. Executives like John Sargent are not afraid of change, but they need to better understand the ways that they can benefit from working with libraries on ebook business models. Libraries need to recognize the need for change and work with publishers to build mutually beneficial business models that don't pretend that ebooks are the same as print.
Article any source
No comments:
Post a Comment