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.
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