Monday, September 13, 2010

Selling Out

About a year ago, Fictionwise was acquired by bookseller Barnes and Noble. This is old news. The reaction was mixed, positive and negative. Some thought, well it had to happen some time, as ebooks became a bigger part of the market share, and if Fictionwise was going to be acquired by anyone, at least it was by someone who actually cared about books. Some, though, hated to see the biggest independent ebook retailer sell out to one of the big boys. Up until the surge of Amazon's Kindle (followed by Barnes and Noble's Nook and Apple's iPad) they were the considered THE place to buy ebooks.

But in a free market system, competition is good, right? The consumer never benefits from a monopoly, and in some ways, before the acquisition, Fictionwise was monopolizing the ebook market. Sure, some other distributors (most notably All Romance Ebooks and Omnilit) had come out to challenge them, and were even making some headway, but Fictionwise still had a lion's share of the market.

Then the acquisition happened, Kindle exploded for Amazon, and the world turned upside down.

Fictionwise had already begun to have some major customer service issues. They were getting pretty big for their britches before the acquisition, ignoring customer and publisher complaints, all the hallmarks of a company who thinks it's the biggest bully on the block who can get away with it. (Anyone hear Lily Tomlin's cackle, followed by, "Because we're the PHONE COMPANY!" in their head, or is it just me?) But even big ol' Fictionwise saw the writing on the wall about the future of ebooks and sold out to the highest bidder.

They said selling out wouldn't change anything - Scott Pendergrast, head of Fictionwise, was quoted as saying, "Barnes & Noble (is) fully behind Fictionwise’s philosophy of 'platform neutrality and eReader everywhere.'"

Hm. Really? A big corporation holding the same philosophy as an independent retailer? Who was he trying to convince exactly?

Then came the extinction of Fictionwise's Buywise program, due to agency model pricing. It was a great program for consumers, offering 15% off books for members, along with special “micropay rebate” offers. Of course, it wasn't always so good for the publisher. Fictionwise standard contracts said that royalties to the publisher would be 50% of the sale price, or 25% of the list price, whichever was greater. And the "sale price" was defined as "the price paid by the customer." Of course, Fictionwise stipulated that the price "may be less than the List Price because of coupons, promotions, or other discounts."

Promotions like the Buywise program.

The small independent publishers had always complained about Fictionwise's deep discounts of their books and the smaller percentage of royalties that they received based on those discounts. Unlike Amazon, who only gave a 35% royalty rate to publishers, but always based that rate on the publisher's set list price even when they discounted a book, Fictionwise passed that consumer savings on to the publisher, much to the publisher's chagrin. But at the time, Fictionwise was the biggest dog on the e-book block, and volume of sales helped alleviate some of those consumer incentives. You don't bite the hand that feeds you, and small independent ebook publishers were loathe to complain.

The Big Six, though, weren't having any of it. With the typical arrogance of the "too big to fail" philosophy of most big corporations, they complained. They wanted to sell their books and receive royalties based on the price they listed. And now that Fictionwise had been acquired by Barnes and Noble, they didn't have much say in the matter. And the Buywise program bit the proverbial dust.

But that was just the first indication that the biggest independent online retailer's selling out to one of the big boys might have been a mistake - at least, if they wanted their philosophy about ebooks to continue into the near future, let alone a long-term one.

Then, Fictionwise closed applications to any new publishers wanting to publish directly with them - I was told they were "indefinitely on hold." I was also told to inquire with Barnes and Noble instead. I know of several publishers who applied and had been waiting six months or more without any response from Fictionwise about their applications, in spite of numerous attempts to elicit one.

And now, Fictionwise is closing all of its branded stores. According to Publisher's Weekly, Fictionwise boasted about 500 of these store-fronts that were hosted by Fictionwise and enabled customers to view only a publisher's own titles rather than the entire list of all ebooks sold by Fictionwise. EPIC's (Electronically Published Internet Connection) own bookstore was powered by Fictionwise - but has since been redirected to All of the branded stores will reportedly be closed by the end of September.

I can say now that I'm glad I followed my instincts in dealing with Fictionwise from the beginning and didn't invest the $1000 (that's right, it cost those who wanted a branded store $1000 for the privilege) to power Excessica's storefront. Although I feel sorry for those who did make that investment.

I'm also a little sad, in spite of my difficulty in dealing with Fictionwise over the past few years, to see the end of an era. This, to me, more than the explosion of Kindle, the Coming of the iPad, the scrambling of Borders and Barnes and Noble to keep up, marks the true beginning of the end. Fictionwise, once the largest and most profitable ebook retailer, isn't going to survive the ebook boom we're facing, and certainly not in the way they claimed to have hoped.

Perhaps Fictionwise saw the future of ebooks and sold out at just the right time. It was inevitable, wasn't it, that once ebooks reached a certain share of the market, that the "little guys" just wouldn't be able to hold their own anymore? Even the biggest "little guys" were going to take a hit or disappear altogether.

But why all the smoke and mirrors? Why not just admit that you sold out, that the impending change in the market necessitated the sale? Instead, we heard platitudes about things staying the same.

I don't know, but it seems to me the winds of change have taken on the distinct odor of manure.

-Selena Kitt


  1. I've often wondered if the platitudes offered by large corporations when they sell out or otherwise do something to cut costs and/or stick it to their suppliers or customers are really believed by those large corporations.

    Call me skeptical.

    We never dealt with Fictionwise, since our entry into ebooks came just as the Kindle was picking up speed in 2009. But I do wonder also if they are going to refund the $1000 to all those small publishers.

  2. Fictionwise? Refund money? Bwahahahahahaha!