John Sargent is the CEO of Macmillan, the U.S. companies of the Georg von Holtzbrinck Publishing Group, a venerable enterprise based in Stuttgart, Germany. The American imprints include Farrar, Strauss and Giroux, Henry Holt, and St. Martin's Press, among others. Sargent is what in another age might be called a scion of a publishing family. His father ran Doubleday and Company in the 1960s and 1970s, its glory days.
What makes Sargent notable now is that he has taken a firm position on behalf of Macmillan with Amazon about who would control the price of e-books, and the Internet behemoth acknowledged that "ultimately" it would have to "capitulate." To the consumer, that a big publisher wants to charge more for its books may not immediately seem like a big breakthrough for the world of letters, but it almost certainly is that (about which, more in a moment).
Moreover, this is not the first time that Sargent has taken a leadership role on behalf of publishers grappling with the complexities and enormous potential of the digital age. As chairman of the Association of American Publishers, Sargent joined other publishers and the Authors Guild in a lawsuit to forestall Google's intention to digitize millions of books without regard to copyright. The suit was settled in 2008 and Google agreed to pay $125 million to establish a system for registering digital use and to pay royalties to authors and publishers going forward. Predictably, that agreement has its critics as well as its admirers. The concept of giving Google so much of a head start in the creation of a vast digital library still makes many in the book universe, including potential competitors and the Justice Department, unhappy. Another hearing on the Google accord is scheduled for February 18.
But the main point about the Google settlement and Macmillan's confrontation with Amazon is that the publishers, significantly, again with the support of the Authors Guild, are stepping into the fray to represent their interests despite the popular and commercial dominance of these great Internet-based companies and the momentum they have in setting new terms for distribution of information and entertainment. What Sargent did on behalf of Macmillan--there is no evidence that he was acting in consultation or collaboration with other publishers--is challenge Amazon's policy of offering e-book bestsellers at $9.99. Based on the publishers' list price, these were loss leaders designed to boost the sales of the company's proprietary reading device, the Kindle, which retails for $259. The publishers' concern was that Amazon was preparing to declare that it would no longer accept a loss on each sale and would insist that books be made available to it at lower cost. The result would be a precipitous drop in revenues for everyone--except Amazon.
What Sargent told Amazon, he said in a statement addressed to "authors/ illustrators and the literary agent community," is that, in early March, Macmillan would begin selling to Amazon at prices it set and would pay the retailer a 30 percent commission on what is known as the "agency" model. The seller is, in effect, paid a fee for its services. Amazon immediately retaliated by deactivating direct sales of Macmillan books on its site, even withdrawing sample chapters that had already been sent to consumers. But after forty-eight hours, Amazon relented, accusing Macmillan of punishing consumers with higher prices (a few dollars), yet acknowledging that eventually it would have to go along or lose the sales altogether. Negotiations on these new conditions continued through the week, and the final terms have not been disclosed.
Amazon plainly was influenced by the fact that Apple is preparing to accept the agency model for book sales on its new iPad and that Google, also preparing to launch a book retailing site later this year, has now said publishers will set the prices. The Kindle's overwhelming share of the digital book market is no longer assured.
To be clear: the price of most books on Amazon and on the Kindle will not be affected by this dust-up. On EarlyWord, a blog for librarians, Nora Rawlinson wrote that of "the nine titles with full reviews in the current New York Times Book Review, only one is available in a $9.99 Kindle edition. Three are not available at all and the rest were just $1.13 to $2.83 less than the hardcover price." The underlying issue is that Amazon's strategy of driving prices down (while reaping the lucrative reward of selling Kindles) meant that publishers and authors would find it increasingly difficult to generate the revenues necessary to sustain their businesses as the percentage of e-book sales rose compared with higher-priced print books. Despite the apparent outcome of the Macmillan case, that tug-of-war is certain to continue with other publishers, perhaps, or over other conditions. And the same goes for the Google settlement. Whatever the judge decides will almost certainly lead to challenges by one party or another.
So John Sargent's demarche with Amazon and his role in the Google accord by no means assure the future of publishing. What they do mean is that, in the frenetic pace of change for book distribution, publishers are taking a stand and even holding their own. For that, John Sargent deserves thanks.
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