That email from Amazon about the Amazon-Hachette Dispute

So I got THAT email this morning. The one that compares the contract dispute between Amazon and Hachette to WW2 and Orwell and I don’t even know what?

Here are my thoughts:

Dear KDP Author, Could you not have used my name? Seriously? I’m in your KDP program!

Just ahead of World War II, there was a radical invention that shook the foundations of book publishing. It was the paperback book. This was a time when movie tickets cost 10 or 20 cents, and books cost $2.50. The new paperback cost 25 cents – it was ten times cheaper. Readers loved the paperback and millions of copies were sold in just the first year. Hurrah for paperbacks. Didn’t stop hardbacks from being sold though, did it?

With it being so inexpensive and with so many more people able to afford to buy and read books, you would think the literary establishment of the day would have celebrated the invention of the paperback, yes? Nope. Instead, they dug in and circled the wagons. They believed low cost paperbacks would destroy literary culture and harm the industry (not to mention their own bank accounts). Many bookstores refused to stock them, and the early paperback publishers had to use unconventional methods of distribution – places like newsstands and drugstores. The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.” Yes, George Orwell was suggesting collusion. CITE YOUR SOURCES. This seems like a really bug-eyed view of this period of literary history, and also I quite respect George Orwell as an author so, you know, I’d think he probably had some rationality behind his reasoning. 

Well… history doesn’t repeat itself, but it does rhyme. The first part of your email is irrelevant. Great.

Fast forward to today, and it’s the e-book’s turn to be opposed by the literary establishment. Amazon and Hachette – a big US publisher and part of a $10 billion media conglomerate – are in the middle of a business dispute about e-books. We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive. I generally agree with this BUT. I buy ebooks for a wide range of prices. The value is dictated not by the format, but by how much I love the author. I’ll buy Robin Hobbs books at any price. Pretty sure this is true of most readers. JK Rowling can charge more than me: that’s kind of how a creative industry works. 

Perhaps channeling Orwell’s decades old suggestion, Hachette has already been caught illegally colluding with its competitors to raise e-book prices. So far those parties have paid $166 million in penalties and restitution. Colluding with its competitors to raise prices wasn’t only illegal, it was also highly disrespectful to Hachette’s readers. 

The fact is many established incumbents in the industry have taken the position that lower e-book prices will “devalue books” and hurt “Arts and Letters.” They’re wrong. Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books. On the contrary, paperbacks ended up rejuvenating the book industry and making it stronger. The same will happen with e-books. Already happened, frankly. If you want low-priced ebooks, you’ll find them on amazon, by KDP authors. And lots of people are buying them. For once, the marketplace is working. We’ve got erotica for all tastes, genre fiction by the bucketload, and we’ve got a platform for many of the voices that traditional publishing has often been adverse to broadcasting (e.g. minorities, LGBT, etc.) Ebooks are an important and disruptive force — but Hachette aren’t trying to stop ebooks. They just want to set the price for their own ebooks that they are publishing. 

Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive. This bugs me. The video game market supports 99c iPhone games right up to $60 AAA games. Both models are viable. TV is supported by adverts, and Netflix is supported by subscriptions. News sites are in a bit of flux at the moment, but you have ad supported, subscription supported and paywall supported all co-existing somewhat peacefully. The point is, different audiences want different things.

Some people want cheap ebooks and are prepared to wade through the self-pubbed stuff that isn’t professionally edited etc. Some people want to buy paperbacks. Some people want to buy ebooks from a traditional publisher… and are happy to pay a bit more, knowing the quality control was there. Some people like to try new authors and some people only read Stephen King/Jodi Picoult and will pay whatever to get that latest novel by that specific author. 

Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger. Give us the source data. There’s nothing more annoying than cherry-picking a few facts and figures to make an argument. As the saying goes ‘lies, damned lies, and statistics’. 

In fact, give KDP Authors more data generally. We’re using your system and we don’t even know what our conversion rates are! The day I get A/B testing is the day I’ll be able to make marketing decisions based on real data. 

But when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move. It was never in George Orwell’s interest to suppress paperback books – he was wrong about that. Ebooks have already disrupted the market. You are emailing the millions of people who took the self-publishing route. We’ve ALREADY enacted the change. 

And despite what some would have you believe, authors are not united on this issue. When the Authors Guild recently wrote on this, they titled their post: “Amazon-Hachette Debate Yields Diverse Opinions Among Authors” (the comments to this post are worth a read).  A petition started by another group of authors and aimed at Hachette, titled “Stop Fighting Low Prices and Fair Wages,” garnered over 7,600 signatures.  And there are myriad articles and posts, by authors and readers alike, supporting us in our effort to keep prices low and build a healthy reading culture. Author David Gaughran’s recent interview is another piece worth reading. It’s almost like people are diverse and have different wants and needs. And it’s almost like businesses can target different niches and support those differing wants and needs!

We recognize that writers reasonably want to be left out of a dispute between large companies. Some have suggested that we “just talk.” We tried that. Hachette spent three months stonewalling and only grudgingly began to even acknowledge our concerns when we took action to reduce sales of their titles in our store. Since then Amazon has made three separate offers to Hachette to take authors out of the middle. We first suggested that we (Amazon and Hachette) jointly make author royalties whole during the term of the dispute. Then we suggested that authors receive 100% of all sales of their titles until this dispute is resolved. Then we suggested that we would return to normal business operations if Amazon and Hachette’s normal share of revenue went to a literacy charity. But Hachette, and their parent company Lagardere, have quickly and repeatedly dismissed these offers even though e-books represent 1% of their revenues and they could easily agree to do so. They believe they get leverage from keeping their authors in the middle. Basically Amazon made a number of PR moves that would have meant Hachette would not have been able to pay their editors, cover-designers, proof-readers and everyone else involved in bringing a traditional-published ebook to market. But let’s get this straight, this is a contract negotiation. Nobody ‘has’ to give in. Both companies can choose to walk away and deal with consequences to their business. Both parties can choose to accept and deny terms. 

We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture. We’d like your help. Please email Hachette and copy us. Wait, wait, are you asking me to troll a work-email? 

Hachette CEO, Michael Pietsch: Michael.Pietsch@hbgusa.com

Copy us at: readers-united@amazon.comApparently you are. Great job. A multibillion dollar, international corporation has just taken the disruption tactics of people who genuinely don’t have voices, and used them against another corporation.

You know when it’s valid to call for mass emails? When you’re emailing a political party claiming to represent your interests or when it’s consumers speaking against damaging corporate behaviour. NOT when it’s one corporation negotiating with another corporation. 

Please consider including these points:

– We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive. 
– Lowering e-book prices will help – not hurt – the reading culture, just like paperbacks did.
– Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.
– Especially if you’re an author yourself: Remind them that authors are not united on this issue. You just asked your authors to ask Hachette to stop using their authors as leverage? Ummmm. Pot, kettle? 

Thanks for your support.

The Amazon Books Team Did you just make up a ‘Books Team’? 

P.S. You can also find this letter at www.readersunited.com

So there it is. A complete clusterfuck of an email, that has completely undermined any respect I once had for Amazon.

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