And I’d toss an expletive in the title, too, but I’d probably get SEO-blackballed if I do that. There will be lots of swearing in this post, so click away if swearing is not your thing.
In the latest Amazon vs Hachette move, I just got this letter from Amazon KDP:
Dear KDP Author,
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.
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.
Well… history doesn’t repeat itself, but it does rhyme.
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.
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.
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.
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.
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.
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.
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.
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.
Hachette CEO, Michael Pietsch: Michael.Pietsch@hbgusa.com
Copy us at: email@example.com
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.
Thanks for your support.
The Amazon Books Team
P.S. You can also find this letter at www.readersunited.com
My first thought:
What bleeding heart fucking bullshit!
OK, I agree that $19.99 ebooks are ridiculous. I’d go a long way to avoid paying that. Actually, I’d go such a long way, that I’d buy the hardcover for $35. Are you listening Amazon? I’d fucking buy the hardcover. More money flows to the author!
Amazon would do well to stop pretending that their primary concern is ebook prices for the readers. Seriously, they’re in this business to sell stuff. Lower prices means they can sell more stuff. That’s all, people!
Then we have the bleeding heart buulshit trotted out by some self-published authors.
“Amazon gives me so many opportunities,” they crow.
Yup, sez me, and so does Google Play, Smashwords, Kobo and a whole host of other companies.
“Amazon provides all these services to us indies,” they crow.
Yup,and they charge 30% of the RRP for it. Fair enough. That’s a business relationship for you. And I fucking hate the term indies anyway. If you’re afraid to say SELF-PUBLISHED you shouldn’t be doing it.
“Amazon were the first to do this for us,” they crow.
Well, maybe they were. I don’t care. Maybe it was Smashwords who did this first. I still don’t care. Look, people, THESE ARE COMPANIES! Companies are in the business of making money. That’s totally OK. But do not, for one moment, confuse their making money with their loyalty to you. Because big companies have no loyalty besides trying to keep you as customer/provider so you can make them more money. This is totally OK, as long as you don’t let them pull the wool over your eyes. They are not emotionally loyal to you. They don’t feel anything towards you. This is OK. It’s a business relationship.
So please, people, stop it with the emotional bleeding heart fucking bullshit.
I am on Amazon, too, because I make money there. I decide whether to list my books there or not based on the economy of things. I have some books that are not listed on Amazon. When I bring out the Aghyrians series omnibus, it won’t be listed there because of the price cap. This is my decision.
I do not hate Amazon, but I have no mushy feelings towards them. I couldn’t care less about Hachette. I am certainly not going to play this dumb game and email their CEO because someone tells me that I should do this. In fact, I have emailed KDP (Amazon self-publishing) support to tell them that I do not appreciate my email address, which I have given them for business purposes, being used for this political game.
I think ebooks should be cheaper, but I also think that any publisher should be able to set whatever damn price they want and bear the consequences. I also don’t think that any reseller has any fucking business whatsoever telling other companies how to run their shop. If authors want to sign with Hachette and get 25% of ebook sales, that’s up to them. I don’t get it either, but it’s still up to them. It is not up to a retailer to tell people what to charge.
Regarding the above email, I am suspicious and am 50% thinking that KDP may have been hacked and that it’s a fake. I’m actually hoping so, although it would bring different worries. Part of me doesn’t want to believe that a company would send out something so daft. Because it is utterly daft, and utterly, utterly childish. And if they set up that readersunite site, why send the whingy email to authors? And why not slap the Amazon logo all over the site?
Why? Why? Why?