A lot of my friends are in the book biz so we’ve been talking for a few weeks now about what’s going on between Amazon and Hachette (one of the Big Five publishers—think Little, Brown and Company; Hyperion Books; Grand Central Publishing, which is the former Warner Books). To wit: it’s time to renegotiate the distribution contract, and because they cannot come to terms, Amazon has brought sales of Hachette books to nearly a halt.
“It’s gotten nasty,” says literary agent Chip MacGregor in this explanation he published on 3 June:
In February, Amazon stopped discounting nearly all Hachette titles. You know how you could usually go to Amazon and find a $23.99 hardcover on sale for $18.99? No more. In March, Amazon started slowing down all Hachette sales. You used to order a book online and receive it within a few days—now the page will say the book will be available within four to six weeks. In April, Amazon stopped discounting Hachette ebooks, or in many cases simply not listing the ebook at all on their site. So while the average Hachette ebook sold for roughly $7 a few months ago, it’s now about twice that … if you can find it at all.
I quit buying books from Amazon several years ago, because I’d looked at the evidence—small independent booksellers going out of business, for one thing—and concluded that Amazon is not my friend. (Full disclosure: I have a very old Kindle, so I purchase e-books from Amazon. But I buy more physical books than e-books.)
I came to this conclusion because I make my living editing books, primarily for publishers, and while Amazon isn’t directly responsible for all of what’s being called the Great Publishing Disruption (for example, here and here)—which is really just a change in technology—it is at the heart of a lot of it. Too much for me to ignore. I’ve concluded that Amazon doesn’t care about authors (only their books) and it makes no distinction between the books your neighbor Joe wrote and uploaded last week and the books that spent eighteen months going through a professional grooming (read: editing) process.
Now I’d like you to consider the fact that Amazon is not your friend either, even if you’re not in the book biz. This fight—up to now confined to publishing gossip—has gone public. Many of you may have seen television personality Stephen Colbert (a Hachette author) broach the topic on his show. You may have seen it on the morning news. This morning I opened my 13 June 2014 issue of Entertainment Weekly, which is reporting,
The brouhaha … came to a head on May 22 when Amazon stopped accepting preorders for Hachette books. … Customers suddenly were deined the option of clicking “Add to Cart” on upcoming works.
In a sidebar, author Stephen King notes,
It’s like a hoodlum in the protection racket strong-arming one small-business owner so that all the other owners on the street—we could call it Book Street—will fall into line. … Amazon would protest that the word hoodlum is unfair and pejorative, and in a sense they would be right, but strong-arm tactics are strong-arm tactics, meant to instill fear, and many writers I know are loath to speak out on this subject because they’re afraid Amazon will retaliate by removing the “Buy” buttons on their real-books and e-books.
Thank you, Uncle Stevie. And thank you, Chip MacGregor, who has posted a second update here, concluding,
Sometimes there are factors more important than price. … [S]ometimes consumers have to think long term. And thinking long term in publishing, you have to admit that having one book retailer in this country isn’t good for authors or readers. Amazon is a great company, who sells my authors and helps us all make money. But I don’t want them to have a monopoly on book sales, because monopolies never are good for consumers. So while I understand both sides of this debate, I’m not comfortable with Amazon pushing other people out of business. (Emphasis mine.)
Please give this some serious thought, friends. I understand that Amazon is a boon for those who choose to self-publish, but even those sweet deals are subject to change. I’ve just watched these predatory business practices for long enough to be convinced that Amazon isn’t a friend to me or to the publishing industry. If you’re a reader of books, this means Amazon isn’t your friend either.
Tweet: I don’t think Amazon is my friend. I don’t think it’s yours either.
Tweet: Amazon vs. Hachette: “Strong-arm tactics are strong-arm tactics.”
Tweet: Amazon vs. Hachette: “Sometimes there are factors more important than price.”
For more on this subject, see this update.
Disclosure of Material Connection: I have not received any compensation for writing this post. I have no material connection to the brands, products, or services that I have mentioned. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
It’s interesting to read your perspective on it. Mine is different. I don’t think Amazon is my friend, but the big five publishers don’t play well with others either. We don’t know much about the terms at the center of the battle between Amazon and Hachette, but I’m certainly not going to feel sorry for a publisher that a district court judge found colluded with Apple and other publishers to raise e-book prices (now on appeal).
If Amazon were the one and only outlet for consumers to purchase books, then I’d care about every negotiating tactic it uses. But, even as Hachette’s own press statement says, their books are available at many other outlets. So, if they don’t like Amazon’s terms, they should go on selling their books elsewhere.
If what they’re seeking is to raise prices, particularly for e-books, I wonder whether their speculation about the market will pan out. It’s hard to convince me to pay the prices they sought with Apple for what is essentially a computer file that I can’t loan to others or give away. I’ll just end up buying fewer new releases and more free or nearly free out-of-copyright classics. So, if other consumers also feel this way, Hachette might lose even if it “wins” this battle against Amazon.
That said, I do feel very sorry for the authors in the middle of this battle. I hope their fans continue to buy their books through other outlets.
Totally understand your POV; a lot of folks have trouble sympathizing with the big publishers. I don’t work for any of the the big publishers; I work for much smaller publishers, and they are also feeling the pinch (and thus, *I* am). Amazon isn’t the only outlet but currently it accounts for 40 to 50 percent of sales for most publishers, across the board. This makes it a powerful player. And it’s well on the way to becoming a monopoly.
We do know some of the terms of the deal being negotiated. Chip mentions in his first article (remember, this started as industry gossip at BEA) that one of the issues is Hachette doesn’t want any books sold for less than Amazon paid for them, something Amazon does do, and which other outlets—particularly independent booksellers—cannot afford to do.
As you know, Amazon won the court case on e-book prices and they have crept downward over the years. But there are still costs associated with producing that book; paper and ink are actually the smallest line items on the P&L.
Thanks for commenting!
I can see that. To me, though, the solution for Hachette is to just sell its products elsewhere, especially if it wants to reduce Amazon’s dominance in the market. As for the costs associated with producing a book, the question is whether Hachette in its current form adds much value. Does Stephen Colbert need Hachette? There must be ways of reducing costs so that an e-book doesn’t have to be $14.99 or $17.99 (as Hachette charged initially for JK Rowling’s Casual Vacancy).
Overall, this is a tough issue, and for many people, it’s an emotional one too. I can see why traditionally published authors are outraged by Amazon, but what I can’t see is why they aren’t more outraged at Hachette too.
Thanks for sharing your perspective on Hachette v. Amazon on your blog. This has been a very interesting discussion.
Since the Big 5 don’t have a NATO agreement (an attack on one is an attack on all, which probably wouldn’t be legal anyway), it might be best if two of the five were brave enough to pull out of Amazon. Amazon’s consumer appeal is, you can get everything in one place for cheap. The entertainment industry is pulling back from Netflix to try to “restore balance to the force.” Amazon’s infrastructure and direct relationship to the customer will be hard to rival.
AMB – That “computer file” was written, edited and marketed by humans who need sustainable income to continue. Authors don’t negotiate with Amazon. Publishers negotiate on their behalf. If either side acts like a cartel, or negotiates in bad faith, it’s ultimately bad for consumers.
A common phrase has been “content is king.” However, in our economy, not just books, “distribution” is going for the “throne.” Based on what you’ve seen, will Amazon be a benevolent king once it becomes dominant in your industry too? I suspect this is not the only industry Amazon is deploying these tactics. For now, publishers have a voice to fight back. That’s the only reason consumers have any idea this is going on. What if you make BBQ sauce and Amazon takes 50% of that market and they insist you lower prices? Do you lower quality to meet the demand or lose half your sales? Tough decision.
Great topic Jamie!
“AMB – That “computer file” was written, edited and marketed by humans who need sustainable income to continue. Authors don’t negotiate with Amazon. Publishers negotiate on their behalf. If either side acts like a cartel, or negotiates in bad faith, it’s ultimately bad for consumers.”
I certainly understand and appreciate the hard work that goes into creating a novel. Authors CAN negotiate with Amazon directly. These authors, however, have chosen to have a publisher do it. Amazon isn’t a monopoly in the way that Standard Oil or AT&T were. There are many other outlets for Hachette’s books, as the publisher admits on its own press release about this issue.
I’d love it if more writers were able to sustain themselves on writing alone, but I don’t think that’s ever been the case for the vast majority of them. Stories are valuable, but new traditionally published ones are competing with indies and out-of-copyright releases. There are more free books out there than any single person can read in a lifetime.
Anyway, thanks for the discussion. It’s very interesting to see these different perspectives.
I actually DO work for Hachette (not directly, but via a client). I do NOT know what terms they’re fighting over with Amazon, but I’m pretty sure the publisher wants to stop the rapid erosion of actual selling prices, and doesn’t like being bullied by a large retailer.
I hope Hachette prevails. And I hope Amazon prevails. While I love being able to buy anything and everything at Amazon, they have long demonstrated a my-way-or-the-highway approach to both publishers AND the self-published authors to whom they sell services like Create Space and Kindle Direct Publishing.
So here’s what I hope happens: Hachette doesn’t re-sign any deal with Amazon. This will test the Free Market for both parties–which is premised on transactions between a willing buyer and a willing seller. If one party isn’t willing, it isn’t free. Amazon could still decide to offer select Hachette titles, which they would presumably purchase via 3rd party distributors. Hachette would find other online and brick/mortar retailers HAPPY to pick up the slack. Before too long one or the other party will recognize either that they’re better off without the other, or that they actually NEED the other…resulting either in a return to the status quo or a dramatic change signal to the entire market.
Really good response. There are quite a few of us hoping Hachette will be brave and walk away.
The good reminder for all of us, is that no big company is our friend. They each have something they are good at and we need to decide whether they are delivering good value to us as consumers.
Hachette has been good to many authors and Amazon has been good to many authors. Each author probably needs to make their own decision on which company has been better to them. Safe to say, that if one company has provided more value to a person than the other, then that person is more likely to come out on that company’s side in this debate.
Amazon could certainly cut royalties to authors just about any time they want to and some day they probably will (but at least now, those royalties are relatively high). But Hachette and other big publishing companies already have low royalties to authors. And in the case of e-books, where the big publishing companies really do have room to share more of the royalty on each book with authors, they haven’t yet moved the needle much. Instead, they’ve chosen to keep the lion’s share of their e-book profits for themselves. Does that mean Hachette is bad? No, it means they are a business and they are trying to maximize their profit. Just like Amazon. What it means is neither company is our friend.
Ultimately, big businesses like Hachette and Amazon don’t react favorably to appeals to friendship or what’s fair. They respond to competition. I agree with Wayne that I would love to see each of these big companies call each other’s bluff. And while we are talking about big companies, let’s talk about big authors. A guy like James Patterson is essentially the size of some publishing companies. I would love to see him and other big authors pull their books from Amazon. Those authors might win, they might force Amazon to make changes that benefit authors and consumers. Or maybe those authors will realize that Amazon was a pretty good business partner after all.
In the end, its all business. When these big companies decided to run their companies as anything but a business, please let me know.
Totally agree that the publishers have been slow to figure out how to make the electronic revolution work for them, and it’s turned into a PR disaster. 🙂 And you’re absolutely right—it’s just business. I just think that the old-fashioned way of doing business—looking for a win/win, that is—would serve everyone well.
Thanks so much for weighing in!