I’m reluctant to get into the whole Hachette vs Amazon affair. I’m a Hachette author (and despite what Hugh Howey might claim, they’ve always been good to me), so I suppose I have a certain bias, but I also recognise two corporate behemoths fighting when I see it, and I’m happy to leave them to it for the moment, especially when the terms they’re fighting over, while guessable to an extent, remain unclear. I have no desire to sign either an open letter or a petition. And if you’re a self-published writer, listen: I think you’re ace. I couldn’t do what you do – all power to you, seriously.

But I am interested, and I am engaged, and I’m increasingly seeing comments very similar to the following one on today’s Guardian article:

“Hachette wants to sell to Amazon at grossly inflated prices, and then wants Amazon to discount their wares, and take the loss, so their stuff will sell.? Amazon begs to differ”.

If you see that, or variations upon it, I think it’s fairly natural to assume that Hachette really must be the bad guys. (Side note: “bad guys”. Honestly, this is what the present intellectual level of the conversation reduces us to. Goodies and fucking baddies). The implication is that Amazon is being forced to buy stock at a certain price and sell it below cost price and take the loss, and Amazon aren’t having it. Who can argue that’s wrong?

Well, guess what: that’s what Amazon has been doing for a while. When you bought that Peter James book on the 99p promotion a couple of years ago? The author and publisher got the full amount. When you got that bestseller cheap? The same. Amazon didn’t beg to differ then; it was more than happy to eschew profit in the moment for a gradually increasing market share, building the ubiquity of its Kindle platform. And as it did so, it was misleadingly lowering expectations of what an ebook must cost to produce. Predictably, it now appears that it finally has the market share to not want to take that loss any longer.

That’s why the comment above is interesting: it’s true, in its own weird way, but it’s also gloriously spun, and the argument has a number of effectively suppressed premises. “Grossly inflated prices” implies that the natural price of ebooks is the artificially low one previously offered by Amazon, when of course the real price inevitably depends on the cost to the publisher – at least if we want the product to exist in the first place. And since publisher profit is based on an aggregate bet over a series of titles, with all the risk swallowed upfront in the form of advances, that’s no easy thing to calculate, especially in a world where digital is increasingly cannibalising paper. “Discount their wares … so their stuff will sell” ignores the fact that Amazon is the one that’s established that a price that amounts to a loss for someone is the effective price point for ebooks. They were happy for it to be a loss for them as they gained market share and leverage over their suppliers, and now suddenly – stunningly – it appears they might want to pass that loss up the chain. Who could have seen that coming? Honestly.

I’m not interested in taking sides here; I dislike it, along with all the pointless rhetoric I see on both sides. But to be honest, I don’t know many traditionally published authors who look down upon their self-published counterparts as lesser, while I see a hell of a lot of the latter expounding with glee on the downfall of traditional publishing, as though in this economic climate the collapse of an industry and all its associations – from financial to social and cultural – is something to be celebrated rather than mourned. Fuck that, and fuck off. There will always be readers, of course. But I don’t want to live in a world where we all work in a warehouse just so we can order stuff from it. I want to live in a world where there are bookshops and libraries on the high street, and publishers and printers, and booksellers and distributors. It’s a personal thing. And on that level, although I wouldn’t sign either the open letter or the petition as things stand, I’d be far more inclined to sign the former.

This entry was posted on Friday, July 4th, 2014 at 9:28 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

 

5 Responses to “some thoughts on Amazon, Hachette and spin”

  1. David Hewson Says:

    Very well – and bravely – put Steve. One of the most depressing aspects of the writing world over the last few years for me is the way that talk about business – channels, distribution, percentages and ultimately money – seems to have surpassed the more interesting subject we all used to discuss, namely books.

  2. William Ockham Says:

    I can’t speak the specific situation in the UK, but it seems to be the same as in the US. The dispute is about who will control the retail price of Hachette ebooks. Hachette’s CEO told investors that back in May. Amazon confirmed that in an interview with the Wall Street Journal this week. This is the same dispute that the big publishers have been having with Amazon since the Kindle took off. One that concerned the publishers enough that they engaged in a price-fixing conspiracy that got them in trouble with regulators in the US and the EU. For whatever reason, the publishers want to minimize the price differential between paper books and ebooks while Amazon wants to offer lower retail cost ebooks to promote their Kindle platform.

    Based on leaks from Hachette sources to the US press, it appears that Amazon has offered to go back to wholesale pricing, but Hachette is insisting on terms identical to the pre-settlement terms, i.e. no-discount agency ebook tiered pricing tied to the print price for the same title. That means your assessment that Amazon is trying to force the publishers to take losses on their books is simply incorrect. The publishers, Amazon, and Apple all agreed that the publishers made more money per ebook unit sold and sold more ebooks under the wholesale model than under the agency agreements. Hachette and the other conspiring publishers wanted to slow the adoption of ebooks in 2010 when they and Apple illegally forced the adoption of agency pricing. Four and a half years later, that is still their goal.

    I agree with you that the more extreme rhetoric on both sides is unhelpful. I also believe that everyone should assess the situation based on facts rather than misinformation.

  3. stevemosby Says:

    Hi William. Thanks for the comment.

    “Based on leaks from Hachette sources to the US press, it appears that Amazon has offered to go back to wholesale pricing, but Hachette is insisting on terms identical to the pre-settlement terms, i.e. no-discount agency ebook tiered pricing tied to the print price for the same title. That means your assessment that Amazon is trying to force the publishers to take losses on their books is simply incorrect.”

    Well, not necessarily, as I doubt the leaks tell the whole story, and a wholesale arrangement would be a prerequisite for the situation I describe. For the most part, I was reframing the quoted comment, and I did use the word “appears”, but I should have been clearer that it’s not necessarily happening yet.

    “The publishers, Amazon, and Apple all agreed that the publishers made more money per ebook unit sold and sold more ebooks under the wholesale model than under the agency agreements.”

    Yes, I’m sure that’s true. But that’s in the short term, and presumably there must be a reason publishers were and are reluctant to embrace a model that makes them more money. I would suggest they have an (in my view entirely reasonable) suspicion that the situation might change, and in ways that ultimately make their business unsustainable.

  4. William Ockham Says:

    Here is something I don’t understand about your view of the situation. If the fear from the publishers is that Amazon is using artificially low prices for ebooks to undermine the long-term viability of the publishers’ business model, why doesn’t the same analysis apply to print books? Amazon has done exactly the same thing in print. They will sell the most popular books at a loss amd they have driven down the retail price of print books substantially. If they are destroying the value of ebooks, it seems they are doing the same to print.

    Either there is a real difference in what Amazon is doing with respect to print vs. digital or the products have a different role in the publishers’ business model. I don’t see any real difference on Amazon’s side. Sure, they rarely price print books below the cost of goods sold they way they used to do with Kindle books, but if you look at their total loss per unit, it was roughly the same. That sophisticated distribution system didn’t build itself.

    The reaction of the biggest publishers to Amazon’s strategy in digital distribution vs. their reaction to Amazon’s print strategy is telling. I just don’t understand what it is telling us. What do the publishers lose when ebooks are cheap that they didn’t lose when print books became cheap? It has to be huge for them to have risked breaking the law in their biggest markets. My interest in this is mostly curiousity, although as an avid reader, I have a natural inclination to root for Amazon.

    The question for you is whether or not your interests align with your publisher. Lower prices would mean more readers for you, at least in the short-term. I am skeptical that the doomsday scenario that this is a long-term plot by Amazon to put the publishers out of business and destroy “book culture” is realistic. To be clear, Amazon’s business model puts a lot of pressure on the traditional publishing world. But the biggest publishers, like Hachette, have plenty of time to adjust and ebooks seem to have substantial advantages for publishers. So, why do they fear that format so much?

  5. stevemosby Says:

    William –

    I’m far from an expert on the publishing industry, but – certainly in the UK – it seems to me that the publishing landscape has changed significantly since the end of the Net Book Agreement, when retailers began discounting the sales price of print books. In effect, it appears to have been a lot like some of the arguments you see around cheap ebooks, in that people ended up buying more books and revenue increased, even if the distribution of sales began to cluster around larger retailers, such as chain bookstores and supermarkets, and online in terms mainly of Amazon.

    I guess the difference with ebooks is three-fold: that Amazon basically built the market, and Kindle is the main game in town; that ebooks are replacing print books in terms of sales; and that there is a preconception in the public’s mind (not solely down to Amazon, admittedly) that ebooks are substantially cheaper to produce than print books, so they expect to buy them at prices that might be unrealistic for somebody in the chain.

    To be clear, I don’t think this is “a long-term plot by Amazon to put the publishers out of business and destroy “book culture””; I just think it’s a fairly natural consequence of the way the situation is unfolding. Amazon deserves kudos for basically inventing the ebook market. I had an Iliad, back in the day, and the Kindle isn’t much better as hardware – it’s a piece of plastic tat – but Amazon delivered what I wanted back then: easy access to a huge catalogue. I can understand them acting in their best interests. But I equally understand the response by Hachette, who are doing exactly the same.

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