Amazon Fights Back Against Hachette and Authors United

If you are a Kindle owner and/or KDP Author you probably found this “Important Kindle Request” from the Amazon Books Team in your inbox Friday night in response to the anticipated full-page ad running today in the New York Times, funded by 900+ authors calling themselves Authors United, who are rallying behind publisher Hachette and its ongoing slap fight against the online retail giant.

An online retailer originally known for selling books.

And if you’re like me, you probably found the email a little heavy-handed and desperate. “Why are you dragging me into this?” I thought as I started reading the rather lengthy email at 9:49PM with my tired eyes. And as I read further, “Holy crap. This is getting ridiculous.”

Authors United is a group of authors (many of whom are not published by Hachette and include names like Stephen King, William Adler, Michael Chabon, Daniel Handler, James Patterson, Valerie Plame, Daniel Preston, of course, (which is where this all started from),  and about 900 others.

The united authors published the following well written letter online this week at www.http://authorsunited.net, which I believe will also be the content of the full-page ad scheduled for today, which reads:

A Letter to Our Readers:

Amazon is involved in a commercial dispute with the book publisher Hachette , which owns Little, Brown, Grand Central Publishing, and other familiar imprints. These sorts of disputes happen all the time between companies and they are usually resolved in a corporate back room.

But in this case, Amazon has done something unusual. It has directly targeted Hachette’s authors in an effort to force their publisher to agree to its terms.

For the past several months, Amazon has been:

Boycotting Hachette authors, by refusing to accept pre-orders on Hachette authors’ books and eBooks, claiming they are “unavailable.”

Refusing to discount the prices of many of Hachette authors’ books.

Slowing the delivery of thousands of Hachette authors’ books to Amazon customers, indicating that delivery will take as long as several weeks on most titles.

–Suggesting on some Hachette authors’ pages that readers might prefer a book from a non-Hachette author instead.

As writers–most of us not published by Hachette- we feel strongly that no bookseller should block the sale of books or otherwise prevent or discourage customers from ordering or receiving the books they want. It is not right for Amazon to single out a group of authors, who are not involved in the dispute, for selective retaliation. Moreover, by inconveniencing and misleading its own customers with unfair pricing and delayed delivery, Amazon is contradicting its own written promise to be “Earth’s most customer-centric company.

Many of us have supported Amazon since it was a struggling start-up. Our books launched Amazon on the road to selling everything and becoming one of the world’s largest corporations. We have made Amazon many millions of dollars and over the years have contributed so much, free of charge, to the company by way of cooperation, joint promotions, reviews and blogs. This is no way to treat a business partner. Nor is it the right way to treat your friends. Without taking sides on the contractual dispute between Hachette and Amazon, we encourage Amazon in the strongest possible terms to stop harming the livelihood of the authors on whom it has built its business. None of us, neither readers nor authors, benefit when books are taken hostage. (We’re not alone in our plea: the opinion pages of both the New York Times and the Wall Street Journal, which rarely agree on anything, have roundly condemned Amazon’s corporate behavior.)

We call on Amazon to resolve its dispute with Hachette without further hurting authors and without blocking or otherwise delaying the sale of books to its customers.

We respectfully ask you, our loyal readers, to email Jeff Bezos, CEO and founder of Amazon, at jeff@amazon.com, and tell him what you think. He says he genuinely welcomes hearing from his customers and claims to read all emails at that account. We hope that, writers and readers together, we will be able to change his mind.

Sincerely,

(all 900+ authors)

Not be be outdone, Amazon fired back with its own “mine is bigger than yours” bitch slap response to its readers online at http://readersunited.com (get it?) and sent directly to our lovely in-boxes, which I’ll also share with you now in its entirely, complete with extremely helpful links, talking points, and everything, in the interest of fair and largely unbiased reporting:

A Message from the Amazon Books Team

Dear Readers, (or KDP Author if you received the email direct),

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: readers-united@amazon.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

Further Reading

  1. The Industry View – Amazon vs Hachette (If you read just one piece, we recommend this one)JJ Marsh/David Gaughran | July 30, 2014
  2. Amazon-Hachette Debate Yields Diverse Opinions Among Authors (We recommend reading the comments on this one)Authors Guild | July 23, 2014
  3. Change.org: Petitioning Hachette: Stop fighting low prices and fair wagesWriters and Readers | July 3, 2014
  4. Authors United? I Wish it Were So.Hugh Howey | July 23, 2014
  5. The Seattle Times: The publishers, not Amazon, keep authors downFrank Schaeffer | July 21, 2014
  6. The Heart of the MatterBarry Eisler | July 30, 2014
  7. Let’s Get Visible: Amazon v Hachette: Don’t Believe The SpinDavid Gaughran | May 26, 2014
  8. Winning at MonopolyHugh Howey | May 31, 2014
  9. The Huffington Post: Sympathy for the Devil: In Defense of AmazonMishka Shubaly | June 5, 2014
  10. GigaOm: If you love books then you should be rooting for Amazon, not Hachette or the Big FiveMatthew Ingram | July 2, 2014
  11. Could it Be any ClearerHugh Howey | July 30, 2014
  12. The Cockeyed Pessimist: Who’s afraid of Amazon.comMartin Shepard | May 27, 2014

Ultimately I personally think both sides have a point. Amazon shouldn’t get away with employing bullying, monopolistic tactics in order to get its own way and publicizing its disputes with publishers to the general public in order to gain favor (they did start it). And publishers (especially the larger ones) and authors should be more realistic in keeping e-book prices low for consumers. After all, while there is indeed value in the intellectual property of an author’s work, and they need to earn a living too, it is far cheaper to produce an e-book than a paper bound one, and charging $14.99 – $19.99 typically for e-books to cover traditional publishing costs isn’t really fair to readers.

So maybe there’s a happy medium ground that these folks can land on soon so we can put this all behind us and all get along, and get back to reading things that actually interest us, written by people we actually care about, in our books and e-books and not our in-boxes.

About Thomas Kelleher

Ad Man | Author : www.tomkelleher.com
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