Never Give a Sucker an Even Break!

In 1936, in the movie Poppy, W.C. Fields tells his daughter, "If we should ever separate, my little plum, I want to give you just one bit of fatherly advice: Never give a sucker an even break!" It appears that Apple has adopted it as its motto for the 21st century, at least in regards to ebooks and publishers.

I've got to give credit where credit is due, and Apple deserves credit for great design. Apple's approach is like wrapping a Volkswagen Beetle in a Lamborghini shell and proclaiming the new car to be a $100,000 car. Apple gives you a great shell but the components are often mediocre at best. And when a design flaw is caught out, the usual response seems to be it's the customer's fault -- never give a sucker an even break!

Let's face it -- the iPad is really a so-so device. Pretty to look at, but not a great computing experience, especially when compared to notebooks that permit multitasking. Perhaps this will be cured in the forthcoming version 2, but even if it is, Apple still will be a company that treats its customers and partners as suckers -- suckers who will part with hard-earned dollars in exchange for good design, mediocre performance, and anticonsumer restrictions. Just consider Apple's recent insistence on getting a cut on all ebook sales.

The initial culprit in the current ebook fiasco was Amazon who spread its tentacles to far too quickly, giving Apple the opening it needed to give false hope to publishers and consumers that there would be another, better way. Regular readers of my blog may recall my post from 9 months ago, The Decline & Fall of the Agency 5, in which I wrote:

April 2011 is the month to prepare for armageddon in ebookdom. It is when the 2010 agency model pricing scheme will be buried by publishing’s 2010 savior, Steve Jobs and Apple. You read it here first.

All the stars and moons and planets will align and the caterwaul of panic will be heard throughout ebookdom, because that is when the Agency 5 — Macmillan, Simon & Schuster, HarperCollins, Penguin, and Hachette – will realize they have been snookered by the snooker master.

In April 2011, publishers will discover that the iBookstore is a losing proposition. Oh, Apple will have sold many millions of iPads, fulfilling expectations for a successful tablet, but the buyers, it will soon be discovered, either aren’t buying ebooks at all (maybe 1 or 2) or what they are buying they are buying from Amazon or Barnes & Noble or Smashwords.…

Well, I wasn't spot-on, but pretty darn close. iPads did sell millions and the iBookstore is a loser. iPad owners who are buying ebooks, emagazines, and enewspapers are buying them through the Amazon, Barnes & Noble, Kobo, and publisher apps, not from the iBookstore. But Apple has moved to close down any pipeline that bypasses the iBookstore by making it impossible for those apps to remain in the Apple iOS system.

So, tell me again how much of a friend Steve Jobs and Apple are to publishing and to readers. How did Apple become the publishers' white knight? How did Apple save publishers from the clutches of Amazon?

Publishers certainly have had their comeuppance. What was supposed to save the industry has turned out to be less a saving grace and more of another poke in the eye. The Agency 5 can sit back and be satisfied that what ebooks they are selling they are selling at their dictated price. But if they look at Random House's ebook sales (remember that Random House was the only one of the big 6 not to embrace agency), they must look with jealous eyes.

So how did Apple's "generous" offer in April 2010 help the Agency 5? It appears to have put them against the proverbial wall and offered them a rotten carrot -- never give a sucker an even break! The Agency 5 will have to pay yet again (i.e., in addition to lower sales for going the agency route) for siding with Steve Jobs when the various ebook apps, including the Amazon, B&N, and Kobo apps, disappear from the iOS. Because of their greed and reluctance to embrace ebooks, the Agency 5 have shot themselves in the foot yet again. They bet on Apple and the iBookstore and the only winner was Apple.

The harder it is for people to buy ebooks, the fewer ebooks they will buy. Yes, I know the Agency 5 would prefer to sell fewer ebooks, but they are already doing that. This latest Apple move simply makes it more difficult for a large segment of the reading market to buy ebooks, a segment that no publisher can afford to ignore in the long run. It seems that no matter what the Agency 5 do in their attempt to thwart the rise of ebooks or to control pricing and sales, someone is waiting to prove to them that they really are fools for not embracing ebooks and trying to exploit the new market to its fullest -- never give a sucker an even break!

On many levels I am glad to see the Agency 5 suffer from this blow; it seems to be fair payback for Macmillan's and Simon & Schuster's refusal to sell ebooks to libraries and for HarperCollins' new change to library licensing terms that restrict the number of times an ebook can be lent even though libraries are paying 60+% more for an ebook version than for the hardcover version of the same book. (One example: A library can buy John Grisham's The Confession in hardcover for $17.37 and lend it out hundreds of times. In ebook, a single license costs $28.95 and if the new HarperCollins license terms were applied, it could be lent only 26 times. In addition, while libraries have to pay $28.95 for an ebook version, the consumer, whose taxes support libraries, can buy the ebook version for $9.99.) It also seems fair payback for the outrageous pricing the Agency 5 have imposed on their ebooks.

It is clear to me that with each misstep that the Agency 5 takes, the more likely it is that increasing numbers of ebookers will remove DRM and share ebooks. When you make an enemy of someone whose good wishes you need, you invite them to retaliate as best they can. In the case of the Agency 5, the best way to retaliate is to not buy their books, or if you buy them, to remove the DRM and share them.

When will publishers ever learn?

reposted with permission from An American Editor

6 Comments on Never Give a Sucker an Even Break!

  1. Amen! It’s a pity that anti-trust regulation has been reduced to a joke in the US. I’m just praying that Android makes enough inroads to drive competition.

  2. Apple would be better off making it easier to buy books from the ibookstore. It’s the most difficult store and seems to have the fewest books.
    To be honest, when I do read a book in ibooks, it’s the best experience of all readers. If I want to buy a book that isn’t a best seller or by a famous author, it’s very difficult to find other than specifically searching for the title.

  3. Well, I don’t think you really understand the iPad, nor its customer base. You might as well say that nobody should like a bicycle because it’s not a motorcycle.

    Nor does it seem to me that you grasp that the typical iPad buyer does not read books on it. Perry admits as much for himself. Anyone who has an iPad can probably afford a dedicated ebook reader. If that person really reads very many books, he has a dedicated EBR as well. Heck, I have an iPad & 3 EBRs.

    It’s obvious that Apple doesn’t need any kind of bookstore. And it’s obvious that the Agency 5 are suckers. But if suckers leave money lying on the table, why shouldn’t Apple pick some of it up?

  4. BTW MacWorld reports that Random House has gone over to the Agency model.

  5. I personally think that the Agency model will stay around, but will mutate.

    There is nothing wrong with the supplier setting the price. In Australia they can set what is called “Reccomended Retail Price”. The difference is that sellers can ignore and add or subract to that. In reality, adding to the RRP is sales suicide.

    The issue is setting the wholesale price so high that retailers cannot make a margin to cover the cost of supplying the good. While the cost in ebook retails are low, it is not trivial with server costs, credit card processing fees and bank fees.

    In a normal market, the price would be set partly by the cost + margin that the market can bare, based on the supply and demand curve.

    We are not in a normal market as publishers are defending another market (paper books). So as long as they think they can get away with a higher price, they will.

    However, the market does correct things. People are not buying books in the same way as previously (competition from a lot more media and entertainment sources) and declining book sales will not be met by riding e-book sales on a 1 to 1 basis.

    As soon as publishers find themselves in the same hurt that music publishers find themselves in, they will reduce the cost of e-books.

    Setting a more realistic price is a good thing, and is far far better than the retailer setting the price, if only that the publisher has a better grasp of the margins and costs required to produce a book.

    It is not the retailers place to set price, as they generally use it to support sales of goods that the publisher has no stake in. We saw this with Apple and iPods/music/apps and Amazon with kindle/books.

    So I have no issues with the agency system per se, just use of it to defend a dying business model.

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