Amazon's letter to all publishers - also of interest to anyone who reads books

[dsieg58]

I'm still not seeing anywhere that anyone ever suggested that all indie books are ecrap.

[QUOTE]What Amazon has done in the past several years is fill its virtual shelves with ebook spam, junk electronic tomes of zero worth that make wading through a subject laborious and surreal.[/QUOTE]

The barrier Amazon removed was to book quality, vetted author competence, subject expertise, filling their virtual shelves with inane, ignorant, incompetent ebook spam.

It's a massive flood of spam and ecrap where quality is no longer vetted.

When Amazon has so cluttered their book section with low quality publications that buyers are forced elsewhere to assess quality, search algorithms and content rejection must be employed to free itself from low quality prattle.

It sure sounds like generalizing to me. I don't see any qualifying statements indicating there is any books of worth on Amazon. The inference is that Amazon self published books are "eCrap" and only publisher vetted books should be allowed.

[Kay]

I don't see it that way at all, David. I often complain about Kindle's virtual shelves being full of ecrap. My complaints have usually been along the lines of being p!ssed off that books which have been well researched and written have to compete with it to be seen. Almost everyone knows that Amazon, and Kindle in particular, is being choked with crap. They lowered the barriers of entry and let the junk in to sit side by side with the good stuff. No one here is suggesting there isn't any good stuff. It's just that the good stuff is so much harder to find now.

[dsieg58]

But I doubt whether a win for Amazon will result in an open system either. Amazon aren't championing the rights of writers and artists; it looks to me as if they're seeking to supplant one closed system with another.

Good point Dave. I agree, Amazon is not championing the rights of the self-published, but in business to make a profit from them. Which is still no different than big publishing. I also agree they have a large amount of publishing power. (Not monopoly power though. If they did, the big 5 wouldn't be fighting them.) But they created, built, and paid for, a better mousetrap. And now they are profiting from it. I'm not going to fault them for seeing a hole in the market and filling it, or for being more successful than the big 5 combined. That is the point of business. They are doing what any business does. Are they perfect and on the side of angels? No. What the Amazon system evolves into is anyone's guess. But they are certainly no worse, and quite a bit better, especially in terms of royalties and IP rights, than the past system of the big 5.

[KenW3]

Unless you're the Great Karnac, I'm not sure you know what I'm for or against, nor think or feel. But it's a great blanket statement to create division in a discussion and a "Us vs. Them" mentality and close down all opposing thought.

...suppose I could state categorically the W3 is not completely beyond my ken, depending, of course, on the category. D'ye ken anyone who can say that? Prescience is not a held skill.

For or against? I never said -you- were for or against anything, just provided if-then rationale. Business requires free markets with pricing based on supply and demand. My stores and businesses cannot demand that my suppliers sell to me for less than their cost. Art and creativity have a cost that is not always as low as what consumers prefer to pay.

Johnny Carson as Carnac, "...and the answer is Wikipedia". The envelope please? What web site will kill Funk & Wagnalls?

Carnac the Magnificent video

Arte Johnson on Laugh-In, "Look that up in your Funk & Wagnalls".

Lili Tomlin as Ernestine the telephone operator, "'Fair'? Sir, we don't have to be fair. We're the phone company."

We don't care, we don't have to video

The answer is a South American river. The envelope please? Carnac rips open envelope. What company will be responsible for shuttering all brick and mortar book stores worldwide in the 21st century?

...and Jeff opens a Laugh-In wall door circa 1971 with a huge grin, "'Fair'? Sir, we don't have to be fair. We're the book store."

[dsieg58]

The answer is a South American river. The envelope please? Carnac rips open envelope. What company will be responsible for shuttering all brick and mortar book stores worldwide in the 21st century?

LOL...I LOVED Johnny Carson as Carnac! (Hence, the reference.) Late night has never been the same once he left. Lily Tomlin was pretty good on Laugh-In too. "One ringy-dingy. Two ringy-dingy..."

Hachette circa 2014 "'Fair'? Sir, we don't have to be fair. We're big 5 publishing."

[dsieg58]

Very interesting, balanced, article in Publisher's Weekly about the current dispute between Amazon/Hachette.
Hugh Howey on Hachette/Amazon

Amazon has said, repeatedly, that what is at stake in its sales terms dispute with Hachette is e-book prices. Amazon has also said that it is lobbying to keep e-book prices low. Hachette described the situation as a battle to preserve a healthy bookselling environment, that includes physical retailers. Do you think this is really about e-book prices or a healthy bookselling ecosystem? Isn't it ultimately about two companies that are each attempting to maintain a better operating margin?



I think it's all of those things, simultaneously. Amazon believes it can sell more books and please more of its customers at a price range of $4.99 to $9.99. Hachette believes e-books cannibalize print sales to the detriment of its longstanding relationship with brick and mortar stores. Hachette has also expressed worry over how much of the book market Amazon controls, and any increased share of e-books strengthens that dominance.


It is also about better operating margin, as you suggest. Amazon is currently discounting e-books at the expense of their own margin, while paying Hachette the full amount based on list price. Hachette needs Amazon to do this discounting, otherwise their readers shop for other e-books. Douglas Preston, one of the authors vocally in support of Hachette's control over e-book prices, has felt this wrath from his readers in the past, which is why one of his complaints today is that Amazon is refusing to discount his e-books enough! Which is a strange argument. It tacitly agrees with Amazon's position, which is that Hachette's e-book prices are much too high.

Of course, Hachette wants to maintain its current deal with Amazon, where it makes 70% of the list price, Amazon takes a hit by discounting down to sane levels and makes perhaps 5%, and Hachette enjoys record profit margins. Look at News Corp's latest earnings report; under "Book Publishing," you can see the increase in earnings due to e-books and a clear admission that this format enjoys much greater degree of profitability. As a reader and a writer, I would love to see those record profits more evenly distributed in the form of higher royalties to authors and lower prices for readers. Hachette disagrees. They want to keep it all. From what I understand, they aren't even currently negotiating with Amazon to settle this dispute, as they can't possibly get a better deal than the one they currently enjoy.

Do you think the letter from Authors United, that ran as an ad in Sunday’s NY Times (and was signed by over 900 authors), was off base? If so, how?


I think the letter and the complaints are horrifically inaccurate. This group continues to use the word "boycott" when all of Hachette's current titles are available for sale.
Can it get more misleading than that? Amazon has removed pre-order buttons for titles that aren't yet available. They have also stopped stocking many Hachette titles at their warehouses. For all we know, Amazon is planning for the eventuality that they can no longer sell Hachette's books. So why promise readers today that they will in the form of a pre-order? And why stock up on their titles in warehouses if they'll just have to return them?


What these authors fail to appreciate is that Hachette is using them as shields. There is absolutely nothing Amazon can do to harm Hachette that doesn't harm its authors. Hachette knows this. That's why they have not only rejected three offers by Amazon to make author royalties whole during these negotiations, they haven't even bothered to make a counteroffer. Hachette is content to kick the current contract down the road indefinitely, daring Amazon to remove all links for their website and suffer the public relations fallout that would ensue.


What's really striking about the letter is that a real boycott is in effect, and that's of Amazon-published titles at brick and mortar stores. No one is crying foul there, and it's a genuine boycott that affects hundreds of authors. I write dystopian novels for a living, and even I wouldn't dare make up this kind of doublespeak and bizarre behavior. It boggles the mind.

Full article here

[KenW3]

Thanks for the link to the article.

Hachette has also expressed worry over how much of the book market Amazon controls, and any increased share of e-books strengthens that dominance.

Amazon is currently discounting e-books at the expense of their own margin, while paying Hachette the full amount based on list price.

Should a retailer sell products below cost, thereby appearing to devalue a brand? When the supplier objects to this perceived harm, should a campaign be mounted against their supplier to force their stance in the court of public opinion? Does this damage the reputation of the supplier? Has your opinion changed for this supplier after Amazon publicized this issue? Hachette either did not have (or could not enforce) a MAP Policy.

Minimum advertised pricing (MAP) policies are particularly critical to manufacturers who sell their products for online resale
<clip>
MAP policies are also established to help small businesses compete and sell on service and value, rather than entering into a price war with cost-cutting big box stores.

The article from SBA.gov linked above may be about small business, but compare Amazon revenue to every commercial book publisher worldwide. Of course, Self-published authors are also brands and a source of supply for retailers. Could you be next? Do you believe in free markets or prefer single company control over pricing and distribution? Considering what is public for both company's objectives, I believe all 3 sides lose on this one, supplier, retailer and customer

=====

All opinion aside and back to what is important - Rhetoricals for all self-published authors:

How many means of profitable independent distribution do you have for your intellectual property?

Of these separate means of distribution, does any one sales venue account for over half your net profits?

How many separate sources of income do you have set up to protect against loss of a large source of profits?

If large publishers can have their work devalued by a retailer with pricing (seemingly) beyond their control, could your small publishing company survive the same battle? Could your work be deemed worth 1.99 or less with pricing beyond your control?

Could there be a next area where you need protection for IP distribution? Will this eventually translate to other media? 1.99 CD downloads? 29 cent MP3s? 2.99 movies whether a blockbuster costing a hundred million or an independent film spending a few thousand to produce?

Last, but not least, Do you have your own store to sell your products direct to avoid selling at wholesale, to avoid paying commissions or fees?

No one company can take more than a small percentage of my profits if they stop my sales or lower their payments. Make certain you can say the same - take steps to protect yourself and your income.

[dsieg58]

Should a retailer sell products below cost, thereby appearing to devalue a brand?

The operative word here is "Appearing." Since it doesn't, in reality, devalue the brand. Stephen King is still Stephen King and his name has nothing to do with Hachette. People don't buy "Hachette" books, they buy Stephen King's books. At the end of the day, Stephen King can still sell his books, with or without Hachette, and he has. It is Hachette who needs Stephen King, not the other way around. Without Stephen King, Hachette has nothing to sell. His "brand" isn't devalued in the slightest.

When the supplier objects to this perceived harm, should a campaign be mounted against their supplier to force their stance in the court of public opinion?

It was Hachette (The supplier) who mounted the PR campaign against Amazon, not the other way around. You're changing the facts to suit your argument.

Does this damage the reputation of the supplier? Has your opinion changed for this supplier after Amazon publicized this issue?

Once again, it was Hachette who rolled out the best selling authors and publicized the issue, bought the front page ad in the New York Times, had Steve Colbert do his skit on late night TV, not Amazon. Amazon has only communicated on their forum. It damages the reputation of the supplier in that the world sees the whiny BS for what it is, a bunch of New York elitists, struggling to hold on to their dying way of life in the face of technological change, yes.

Who sold the product in the first place? The supplier. The supplier sets his price, not the retailer. If I buy a widget for $10, it belongs to me. I have the right to do whatever I want with it, including selling it for $5. If I go out of business, that's my problem, not the suppliers. How do my actions in this regard damage the reputation, or the product, of the supplier? The product is still the same. The supplier was still paid the price they set, and agreed on, and make money on, for the product. The only harm is to the retailer, who bought a $10 product and sold it for $5. If the supplier sold a $10 to the retailer for $5, and the retailer sells the product for $5, once again, who is being hurt? The supplier STILL set the price, still made the amount of money they agreed to. Hachette has no business telling Amazon what it can charge, when it can charge it, and how to charge it. If Amazon legally bought the product at the agreed upon price, a price which Hachette determined, made money on, then that is the end of Hachette's involvement in the business deal.

Could you be next? Do you believe in free markets or prefer single company control over pricing and distribution?

Once again, get your facts straight and quit manipulating them to suit your argument. Amazon isn't controlling my prices, or my distribution. I control both. ONLY big 5 publishing does that. I still have 100% control of my distribution, and price. In addition, I still keep 100% of my intellectual property rights. (Copyright) Something that Big Pub takes away from me and keeps for 70 years after my death. Amazon is as close to a free market as it gets. Big pub was nothing more than an old boy's club, who decided who got published, and who got famous, and when. They are middlemen who got dealt out of the game by their own foolishness in deciding not to change with the times.

How many means of profitable independent distribution do you have for your intellectual property?

At least a dozen. The only ones I don't have are bookstores and big box stores which big pub controls. But that isn't a problem because the prices they charge are forcing them to close anyway. People aren't stupid. They have a choice now (before Amazon they didn't) to not pay $14.99 for an eBook. The big 5 were CONVICTED in a court of law, of artificially inflating the price of eBooks. Amazon hasn't been convicted of market manipulation or price collusion. The Big 5 have. The PUBLIC (the market itself) is choosing where they shop and where they spend their money.

Of these separate means of distribution, does any one sales venue account for over half your net profits?

Yes. My own website has consistently sold more (At least 5X more) than Amazon since 2006.

How many separate sources of income do you have set up to protect against loss of a large source of profits?

At least half a dozen with more coming online every day. We could compare that to one source of income, Big Pub, if I signed away my rights to them, which I have absolutely no control over, including pricing, distribution, and my IP rights, who pays me 10% of NET (5% actual) profit every 6 months, with no transparency or accounting, as opposed to Amazon which pays me 70% of GROSS every month with total transparacy. It's a no-brainer, in my favor, any way you look at it.

If large publishers can have their work devalued by a retailer with pricing (seemingly) beyond their control, could your small publishing company survive the same battle? Could your work be deemed worth 1.99 or less with pricing beyond your control?

Yes, and it has. Once again, my pricing is in my total control. I can charge any price I want. I have books for $0.99 cents all the way up to $200. I'm in complete control of the pricing for them all.

Could there be a next area where you need protection for IP distribution? Will this eventually translate to other media? 1.99 CD downloads? 29 cent MP3s? 2.99 movies whether a blockbuster costing a hundred million or an independent film spending a few thousand to produce?

How should I know what the future will bring? Anything is possible. But what you are suggesting is to fear that the bear in the woods that MIGHT attack you some day, while ignoring the crocodile chewing on your legs right now.

Last, but not least, Do you have your own store to sell your products direct to avoid selling at wholesale, to avoid paying commissions or fees?

Answered above.

What your post is showing, and proving, respectfully, is that you have no idea how self-publishing works, how you can price your own work, what rights you keep, and how an independent author can distribute, and market their work. That you get to keep all of your IP rights, set up your own distribution channels, determine your own pricing, sell any place you want, and completely cut out the profit destroying middleman of Big Pub. You are manipulating the facts, while completely ignoring the actual events. You have swallowed Big Pub's propaganda hook, line, and sinker. Open your eyes. History is in the making and unfolding in front of you. At no point in history have authors had so much freedom to write, and get paid a living wage for their work. Big pub can completely destroy Amazon and it won't change a thing. You can't put the toothpaste back in the tube. Publishing will never go back to the way it was. You are living on the wrong side of technological change.

[KenW3]

It appears there may be difficulty in understanding the concept of venture capital, angel investing, and the basic constructs of the publishing business. Maybe I can help? Companies take financial risks in production, distribution, and marketing that self-published individuals often cannot underwrite. Publishing is a service in demand by artists, including authors who prefer representation. Publishing companies which are larger are simply more successful and represent more individuals.

The way it works is a publisher takes risks based upon their analysis and market research. They know their niche. Sometimes they're right, sometimes not, but do their best to avoid investing in works without wide enough appeal. A publisher then recoups their investment from the sales of -all versions- of a published work. This includes every distribution method for selling a product, including electronic.

Let me try an example to help clarify: What if Amazon told Microsoft their costs for production and overhead are not a consideration when their software is downloaded instead of delivered in a box, because Amazon says it can sell more copies if the price is ten dollars? Would / should Microsoft permit Amazon to do this while paying full price to Microsoft? Let's say Amazon does sell Office for ten dollars and takes a loss, would this then cause harm to Microsoft's sales made in other distribution outlets? Could this cause other retailers to stop stocking Office because the product won't sell if they too won't offer it for a loss? Then, do customers no longer consider Office as having the value of a premium suite now that it is cheap? Is the Office brand devalued?

Publishers commission work, provide advances against expected royalties, pay employees as needed for fact-checking and reference research, cover costs of editing and production, and they undertake the expense of the processes for, and hire experts in, marketing and distribution. They recover the costs of this investment risk from sales of the product they have underwritten. This is All Sales in all formats which are sold.

Therefore, the pricing for ebooks does not fit quite so cleanly into Amazon's quest to lower ebook pricing. VC firms, private equity partners, investors, are not behind the times. The business model is still valid. Does this help you see the other side? Does it make sense?

[dsieg58]

It does make sense, and I thank you for it. It clarifies the publisher's side, which truthfully, self-publishers are blind to. The same as publishers are, for the most part, blind to the realities of self publishing. I'm not "Pro-Amazon" but I am pro author and pro reader. Anything which creates more books, more reading, reaches more readers, or creates a better marketplace for writers and readers, I'm for. If Big publishing would do that, I would be for them too. But their history has been one of closed doors, back room deals, elitism, price-fixing, and holding the writer down in order to maximize their own profits. I'm not pointing that at you personally, but at Big 5 publishing.

Publishers commission work, provide advances against expected royalties, pay employees as needed for fact-checking and reference research, cover costs of editing and production, and they undertake the expense of the processes for, and hire experts in, marketing and distribution. They recover the costs of this investment risk from sales of the product they have underwritten.

I think, for the most part, or at least in my experience, that only happened in a perfect world, or in the old days. I've had (Big name) publishers contact me. I would have been a total fool to give up the freedom and 70% profits simply to say "I'm published by Random house." Yet when I read the terms of the contract, I had to do most of the above myself anyway. As do most writers. For example, the advance was miniscule, (One month of normal profit) in exchange for my copyright (Life + 70 years) I had to do the editing, marketing, fact-checking, etc. I had to build my own "brand." (Which I had already done anyway, they were freeloading off the work I had already done as far as I was concerned and expecting 85% of my profit for the pleasure of doing so) There was language when it came to their responsibilities to me which was so broad as to mean legally nothing, yet extremely specific, to the last detail, as to what was expected from me. In short, the contract subtext said "We're going to screw you as hard as we can." It was the most one sided legal contract I had ever seen. It was literally so bad I didn't even bother to counter-offer (not that it would have done any good) I simply threw it away. So I'm to believe they actually CARE about me? Or am I to believe they care about themselves more?

My experience was by no means unique. In fact, I can't think of one author that I know who has been offered a publishing contract, who didn't receive the same treatment. Yes, there are exceptions. Stephen Kings' and Douglas Prestons' come from somewhere, but they are the 1%. The other 99% get screwed. The worst part is, writers everywhere are in on to the game and most are opting out of it to self-publish. Big Pub's game is to throw a plate of spaghetti against the wall and only support the few strands (writers) that stick.(Become best sellers) The rest get swept up and dumped in the garbage. What's NOT being discussed is the number of mainstream writers that are now throwing big pub's contracts into the garbage instead. The truth is, I bet you're concerned about it too, because you are also seeing it as well. You're finding you can't compete and your way of life is dying along with big pub's. I feel for you. But like I said, you're on the wrong side of technological change. YOU can change that. You don't have to go down with them.

As a writer I don't care what the problems of big publishing are. They created them. They can live with their decisions. I care about writing, and my readers. If I go to a doctor, I care about getting my health right, I don't care about his business model. Nor should he expect me to. His business decisions, past and present, have nothing to do with me, nor am I responsible for them. I'm running my own business as a writer, and I'm going to do business with the company that offers me the best chance to profit from my work and effort. I don't understand why that concept is so difficult to grasp for so many in publishing.

What Big Publishing has to fear, and what they are starting to feel, is when the big name authors start moving away from them to self-publish. Mid-list authors already are moving away from big publishing. It is only a matter of time. Maybe Stephen King won't, but I bet his children, or grandchildren will. Tablets, Kindles, and eBooks aren't going away. They are growing. So is self publishing. But bookstores, as much as I'll miss them, are going the way of the dinosaur. I can't do anything about that. But I can adapt to the changing (writing) environment.

Self publishing isn't for everyone, agreed. But neither is Big Pub. As I've said before, I think both can co-exist in the same (writing) universe. But to say that only real writers get published, or that quality writing only comes from big pub, simply isn't a valid argument anymore in my opinion.

What big publishing needs to do is realize that writers no longer need them. That writers see them as expensive, profit-draining middlemen who bring very little value to the process in exchange for a ridiculous price. Instead of working against writers, they need to work with them, and offer their services on a competitive, flat-fee, basis. They need to offer their editing, cover design, PR and marketing expertise in a way that benefits writers....not by grabbing 90% of the profit for life + 70 years.

Publishers need to get with the program and quit working against writers, and readers, and ultimately themselves.