macmillan year end letter

John Sargent from Macmillan on DOJ Settlement, E-books, and Piracy

In a year end letter to authors, illustrators, and agents, John Sargent from Macmillan wrote candidly about where Macmillan stands with regard to the DOJ and other current topics that seem to be twisting around in the air these days and no one’s sure where they’ll land and settle.

So far, I’ve seen nothing but negative comments about this letter. I personally wouldn’t comment on this if my life depended on it. At least not most of it anyway.

Here’s why. I don’t think anyone has any answers right now.

 I do know that we are not in discussions, with anyone. This will leave us where we have always been, the smallest of the big publishers.

This is a good thing; no mergers. I would imagine agents are happy to hear this. Now for the DOJ business:

There are two reasons we decided not to settle. First, it is hard to settle when you have done nothing wrong. Much as the lawyers explain to me that settling is completely standard business procedure, it still seems fundamentally flawed to me somehow. Call me old-fashioned. The second reason is the more important one. Since the very beginning, the government’s demands have never wavered in all our discussions. They still insist on the two year discounting regime that forms the heart of the agreement signed by the three settling publishers. It was our belief that Amazon would use that entire discount for the two years. That would mean that retailers who felt they needed to match prices with Amazon would have no revenue from e-books from five of the big publishers (and possibly the sixth) for two years. Not no profit, no revenue. For two years.

There are those who would argue with me, but I also believe any settlement is an admission of guilt. And if you don’t think you’re guilty, it’s tough to settle. Plain and simple. It may be standard, but it’s still an admission of guilt to some. So Macmillan has decided to go to trial, June 2013. It should be fascinating to see how this turns out.

The second reason why they decided not to settle is something I’d never even attempt to comment on. Amazon is very secretive and no one really knows what they are up to. In many ways, they’ve changed the world for writers and I would be a fool at this point to comment. Publishers like Macmillan who have always been the ultimate gatekeepers haven’t done even half as much.

Which leaves me with the final and more jolly topic of this missive-matters digital now and in the future. At this writing 26% of our total sales this year have been digital. It is good to remember that means 74% of Macmillan’s total sales are ink on paper books. Just as in 2011, the percentage of e-book sales has remained consistent week by week through the year for the most part (the big uplift in the last two years has occurred the week after Christmas). Our e-book business has been softer of late, particularly for the last few weeks, even as the number of reading devices continues to grow. Interesting.

This is the part where it really gets interesting. Sargent seems to be suggesting, by his own comments, that he’s not sure e-books will continued to rise in popularity. And he could be right. Who knows at this point? I do know this. I’m not handing back my e-reader for a print book. You’d have to wrestle me to the ground first, and it wouldn’t be pretty. And the younger people I know between the ages of say seven and eighteen years of age are only interested in all things technology, which includes e-books and digital readers (they aren’t even taught how to write cursive anymore; images of sugar plums don’t dance in their heads; images of mini iPads dance in their heads now). I might consider going back to vinyl records if iTunes disappeared tomorrow. I might consider driving a car with roll up windows. But not print books. No. Way.

I do think Sargent writes honestly and he believes in what he’s saying. Like I said, he could be right. There’s a lot at stake right now and publishers like Macmillan don’t seem to be sure about anything. No one is.

The best news as we enter this holiday season is that independent booksellers have had a good year, booksellers in general have had the time to adjust their product mix and store counts, and consumers continue to value and buy real books. Piracy continues to be an issue, but it has not exploded. More people are reading more books. The playing field in e-book retailing, while not even, has not yet tilted too far. There is a bright future out there.
Now, that sounds good on the surface. But take a closer look at this: “consumers continue to value and buy real books.” So does this mean e-books are not real books? So the digital version of J.K. Rowling’s “The Casual Vacancy” I’m still slogging through (and loving; review to come) isn’t considered a real book because I’m reading it on a tablet? And is the digital version of any book less important because it’s not considered a tangible item?

Interesting.