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I Wouldn’t Get Too Attached to Those Amazon Prime Ebooks

November 4th, 2011 by · 13 Comments · opinion

Because I don’t expect that service to stay around for very long.

I’m sure you now that earlier this week Amazon launched a new free ebook service for Kindle owning Prime members. As part of the $80 a year Amazon Prime (I only paid $40), Kindles owners can now borrow up to one free ebook each month of their prime membership (in addition to the free movies & TV shows, and free shipping).  The selection is currently limited to about 5 thousand titles and none are from the Price Fix 6.

I don’t expect the Prime Ebooks to stick around because it looks like Amazon couldn’t figure out how to get around the one major stumbling block that gets in the way of  any netflix-style ebook subscription service.  Namely, publishers cannot sign over subscription rights because for the most part their contracts with authors don’t cover it.

That contract problem will be Amazon’s undoing.

This was something I’d been wondering about ever since that WSJ article broke months ago. According to that story Amazon had offered publishers a fee for access to entire back catalogs. At the time I couldn’t see how it would work.

It’s just not possible in publishing; they  don’t have the same contracts as in the recording industry or in movies. No, while an author might not be happy with the terms of a contract, it’s still quite limited when compared to the agreement signed by an actor or musician.

That’s a good thing, but it’s also unfortunately getting in the way of offering services that consumers want.  I liked the Prime ebooks, and I’d love to see it expanded. But clearly there’s going to have to be a lot of rethinking of contract terms before that happens.

And it looks like I was right. Amazon didn’t sign the Price Fix 6 because they couldn’t, not because the publishers weren’t interested.

You might be wondering how Amazon got those 5 thousand titles if publishers can’t sign this type of contract. Well, it looks like Amazon neglected to actually tell at least some of the participating publishers that they would be participating (here, subsc req). Instead Amazon simply decided to treat each loaned ebook as a sale and pay the appropriate cut to the publisher (or self-publisher, as the case may be).  Since they’re getting paid for each copy, I’m not sure that very many will mind (once they get over being pissed about not being asked).

But I also think that the funky way Amazon went about getting these ebooks is probably going to be their undoing. It’s questionable whether Amazon can offer these titles in this service, so any number of lawyers will want to sue over the matter in order to settle the issue.  Which is exactly what I think the Authors Guild will do.

Scott Turow currently heads the Authors Guild, and let me describe him this way. We live in a time when the AG needs a futurist at the helm, but  they instead have a lawyer. The AG recently filed a lawsuit against the HaithiTrust over orphan works, and you can take that lawsuit as a template for how the AG will respond to Amazon.

The HaithiTrust, a coalition of university libraries, were formed to digitize the libraries’ collections so they would be more accessible to researchers.  The AG lawsuit covered a small group of around 200 titles which were believed to be orphan works (that means they weren’t sure who owned the copyright).

My issue with the AG is that they chose to respond combatively with a lawsuit rather than proactively engage with the HaithiTrust. The AG could have offered to help find the copyright holders, but instead they decided to sue over the matter first. Arguably this is a sign that the AG doesn’t want to work with anyone; they’d much rather pursue an adversarial process in order to resolve issues.

I expect the Authors Guild to also sue Amazon over the Prime ebooks. Amazon will be put in a position where they will have to back down, and that means they will probably pull titles from the service and they might even kill it entirely.

If the Prime ebooks are still around in 6 months, I will be terribly surprised. Heck, if they’re still around by Christmas I will be shocked.

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13 Comments so far ↓

  • fjtorres

    Amazon isn’t afraid of flirting with red ink, Amazon isn’t afraid of lawsuits, and as their stunt fight with MacMillan proves, they’re not afraid of a losing fight.

    Think: what does Prime exist for?
    To build customer loyalty.

    Let’s assume the AG (again) takes the bait and Amazon backs down: what is the narrative that prevails? Good guy Amazon is bullied by the litigious AG over a small promotional effort. (Remember the TTS flap with the AG?)
    Amazon is your friend.

    Depending on how many books they are paying wholesale for, they may *want* to be stopped sooner rather than later. :)

    Or maybe, they hope to establish a precedent, like their TTS fight, where authors can opt-in to a subscription service. As the saying goes, some times it is better to for forgiveness (or pay a settlement) than to ask permission.

  • Sherri

    I’m sure the AG will file suit, since that’s what they do, particularly with Turow as president (his first statement was that the biggest problem facing authors today was piracy.) And I’m sure Amazon will say, we paid for the book, the publishers got their cut, the authors got their cut, what’s your problem. But I don’t think Amazon wants to be stopped before a month after Christmas – they want all those Fire users who get a month’s free Prime to pay up for the year.

  • Paul Durrant

    This is another case of the digital media license/sale sleight-of-hand becoming visible.

    There’s already the Music Industry case where there’s a class action to claim 50% licensing fees on digital music revenue instead of the tiny sale percentage.

    I wouldn’t be surprised to find that a similar thing happens with ebooks. If ebooks transactions were sales, Amazon would be able to do their lending operation with any ebook in their catalogue – Amazon would become owner on large numbers of copies, lending them out to prime members.

    I suspect it’ll take many years for the situation to become resolved, as there doesn’t seem to be any consensus on how to handle transactions involving digital media.

    • Nate Hoffelder

      Well, Amazon will be the first to tell you that they don’t sell ebooks, they license them (check the TOS). So I guess they were hoist by their own petard.

  • willem

    You are probably correct in your assessment – see this interesting piece on the pitfalls at:
    http://aardvarknow.us/2011/11/04/author-contracts-and-subscription-models/

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