This is a fantastic article written by David Streitfeld for the New York Times on July 12 that explains in great detail Amazon’s beef with Hachett Publishing, the industry’s fourth-largest publisher, that has been going on for several months now.
In a nutshell, Amazon wants a larger piece of Hachett’s e-book sales profits, which Hachette was unwilling to give, and more control over Hachette’s e-book pricing. Hachett essentially tells Amazon to fuck off, and so begins the epic publishing pissing contest for the ages.
Amazon doesn’t like being said “No” to, and decided to get its way by delaying delivery of Hachette books, which pissed off Hachette’s authors. At this point, Hachette is losing sales and Amazon is reaping a considerable amount of bad publicity.
According to the article: both parties have declined to say exactly what Amazon is asking; the general belief is that it wants to increase its share of revenue on every e-book to 50 percent from 30 percent. Amazon believes that publishers take too much of the money in producing a book and add too little value. In traditional publishing, the highest royalty a writer could get was 15 percent of the book’s price. With e-books, the royalty is 25 percent of net revenue, but Amazon feels that is still not enough. So writers should get more and publishers less, an assertion with which few writers would disagree. But Amazon also believes that books should be cheap. This makes the pie smaller for everyone; Amazon argues that the publishers will make up on volume what they lose on each sale.
Amazon tends to favor a $9.99 retail price on average for e-book titles, while large publishers typically charge around $14.99 per title. Less money means less royalties for authors under the traditional model. But Amazon says that authors should get a higher percentage, and consumer should be able to pay less for e-books.
Hachette says Amazon is merely trying to make more money for itself and improve its bottom line at authors’ and publishers’ expense.
Recently an unhappy group of established writers got on the bandwagon and issued a petition, signed by big-name authors like Stephen King and Robert Caro, which portrays Amazon as misleading its customers in the dispute and states, “This is no way to treat a business partner.”
Smaller publishers and independent authors are watching the standoff with anxiety, wondering how all of this is going to shake out and what it will ultimately mean for them and the future of publishing.