Amazon Calls for Hachette to Cut E-Book Prices
From The Wall Street Journal:
Amazon.com Inc. on Tuesday described its dispute with the Hachette Book Group as a battle for lower consumer prices on digital titles and a bigger payday for writers.
In a posting on its website, Amazon said that it would be willing to accept 30% of digital book revenue, the same percentage it currently receives from Hachette, if the publisher agreed to lower digital prices on many of its titles to $9.99 from between $12.99 and $14.99.
. . . .
In the blog post, Amazon said that its internal data showed that when a book is priced at $9.99, it sells nearly twice as many copies as when it is priced at $14.99. It argued that, as a result, total revenue at $9.99 is more than when the book is priced higher. “At $9.99, the total pie is bigger,” stated Amazon.
A spokeswoman for Hachette didn’t respond to requests for comment.
. . . .
In its Tuesday posting, Amazon suggested authors should receive 35% of the e-book retail price. Many authors today receive 25% of net revenue on e-book sales, a point of contention for some who consider it too small.
. . . .
The Authors Guild, at least, didn’t appear to be mollified. It criticized Amazon’s suggestion for lower retail prices. “Lower e-book prices aren’t necessarily the best thing for writers,” said Roxana Robinson, president of the Authors Guild. “We get a percentage of the price as a royalty. You also have to take into consideration the price of the hardcover. Yes, it’s cheap to make a digital book but it’s expensive to present a book in hardcover.”
Link to the rest at The Wall Street Journal (Link may expire)
The Author’s Guild continues its never-ending quest to provide the most bewildered and unhelpful comments on the subject of Hachette/Amazon. PG wonders if they’re consciously trying to retire the Clueless Trophy.
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I wonder when the SFWA is going to weight in with its own inanity.
Ye gads, I hope they either sit this one out, or get feedback from affected parties before making a statement.
John Scalzi has already jumped up upon his soapbox:
http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/
The more he writes about this subject, the less I respect the guy, and that’s coming from someone (me) who attended a rather crappy SF convention a couple of years ago only because Scalzi was the Guest of Honor.
Alas, because he web-published his first novella decade ago, many folks consider him knowledgeable about present-day self-publishing.
He’s a nice person, truly. But I am weary of hearing “Amazon is not your friend!” directed at folks who are happy with the opportunity of KDP. I’m tired of the (projected?) notion self-publishers must indeed view their career options as emotional relationships rather than business opportunities.
It seems to be the other way around- the traditionally published are the ones injecting emotion and sentiment into their arguments. The self publishers just want to reach readers and pay some bills. It’s so condescending and uninformed to assume they think Amazon is their “friend”.
I agree. It has sucked as a fan to see it. It’s usually couched in terms of “not taking sides” but pretty obviously taking sides.
God, that was hard to get through, but this is a lowlight:
Until he can understand that Amazon is talking about a particular author selling more of a particular title at a lower price point, he should probably stop talking.
Also, he keeps harping on the fact that Amazon “can unilaterally change the terms!!!” (which we have yet to see) but his publisher can’t change terms without his agreement. However, he leaves out the fact that an author can opt out of KDP, whereas they’re stuck with their publisher.
These people so desperately want to believe that books are so much better than anything else on this Earth. That view is starting to annoy me, and I actually really like books. But they are just another form of entertainment. The funny thing is, if Amazon hadn’t come along and made this a viable industry again, we’d all have figured it out that books are just another form of entertainment. Trad pub would have kept raising their prices to compensate for the people not entering their bookstores (ironically due to their prices) and less and less people would see reading as a worthwhile activity. People would be playing video games, watching movies, on the vast Internet that provides so much entertainment…All the things Amazon acknowledges because it is part of the reality-based community. Trad pub’s elitism is what is doing in their business.
Before I started buying Kindle books, I got most of my books from the used book store. So low ebook prices mean that I now spend MORE money on books, and the authors are getting money.
If I see an interesting ebook and it’s $14.99, I go find something else. I’ve never paid that much for an ebook. If I have a gift card and it’s a favorite author or series, I might consider paying $9.99. Maybe.
If there’s an interesting book and it’s $5.99, I’ll probably buy it. This doesn’t mean ANY cheap book is a replacement for ANY expensive book. But I have a long list of books I’d like to read and higher prices make me move on to the next one. If I want to try author A and author B, and A is $12.99 and B is $5.99, I’m going to try the lower priced one and probably forget the higher priced one.
This is what they don’t get, mostly because they NEVER ask any readers to comment on the subject. There are maybe 3-4 books a year that I’ll spend 15 bucks for and that’s it. I buy 40-50 books a year and I’m not wealthy, so that’s just realism. There are too many other choices out there in Indy and backlist under 10 dollars. But they’ve spent years and years marketing to those people who buy 3 blockbusters a year at a bookstore, so they just can’t wrap their brains around what Amazon is trying to tell them.
They keep wanting to push this idea that books are so special too. I’m sorry, I don’t believe that. A lot of the books I’ve seen in bookstores aren’t that different from the ones being self-published. Same kinds of covers, same topics. That doesn’t mean that every writer writes the same or that every book is the same, but it does mean that I can pay a hell of a lot less than $15 to get my fix of paranormal romance or spy thrillers. It doesn’t *have* to be a $15 title. There are actually very few trad pub authors that I’ve been that loyal to. One of them was Stephen King, but honestly his stuff hasn’t even been that good lately (meaning the last several years) so I wouldn’t even pay that much for him. I hear former James Patterson fans feel the same. Who is going to keep paying $15 for titles of decreasing quality from trad pub, exactly?
So, it’s better for authors to be paid less royalties on ebooks that sell less because they cost more? That’s the position of The Authors Guild?
Aha ha. Yeah, I don’t think I’ll be bookmarking their website any time soon…
I can’t for the life of me understand how they think that’s going to work out for them. Do they really believe they’re going to sell more copies at higher prices?
They don’t have to sell more copies at higher prices. Amazon’s sell twice as many for a lower price doesn’t work for them because they’re already effectively getting paid twice for each high price sale with the low ebook royalty. The money being left on the table from high ebook prices is coming 100% out of the author’s pocket.
It’s so interesting that Amazon decided to go completely public with this, knowing what kind of attention it would get. Now the average reader will know exactly why they’re having to pay ridiculous prices for books coming out of trad pub on Amazon’s site. I just wonder why Amazon is only know letting people know. Were they trying to protect Hachette before? Or maybe they thought the issue could be resolved and now it’s obvious that Hachette is never going to budge?
They’ve been saving their bullets.
Unlike Hachette, they have plenty of ammo left.
What moves does Hachette have other than pulling out of Amazon or calling for a general boycott and getting kicked out?
Maybe they’ve been trying to stay professional and confidential as much as possible, but have been pushed to come out of confidential negotiations because of Hachette’s exposure.
I’m more inclined to admire a company that keeps such things out of the limelight than one that plays PR tactics (aka Hachette) to bully its way at the negotiating table.
I agree with you and Felix.
I visit this site everyday and have never commented before, but this quote from the Author’s Guild has me a bit bewildered:
“You also have to take into consideration the price of the hardcover. Yes, it’s cheap to make a digital book but it’s expensive to present a book in hardcover.”
Is that suggesting that they have to have higher prices on ebooks to make up for the high cost of producing the hardcovers?
Uh-huh.
That is exactly their position.
Dang! I tried to gloss over that line, but now that you’ve forced me to look at it, all I can say is Dang! (Well, I’d like to say something stronger, but this is a public forum.) The cluelessness continues to astonish me. I knew that was their position, but really, does no one think before stupid words fall out of their mouths?
They don’t think it’s stupid. But they’re also obviously not that confident in what they say because most of them make absolutely no attempt to back up their points. So they’re just opinions.
I get that they don’t think it’s stupid, but it’s not too smart to put out there for all the readers/buyers of books: “Hey guys. You know those ridiculous ebooks prices you keep complaining about? It’s to prop up those hardback things you don’t really want anyway.”
It’s one thing for us to read between the lines and figure it out, and another for them to hit us over the heads with it.
I see what you mean. Preston already said that stuff about readers being entitled though, so I guess after that if you haven’t ticked off the American book-buying public than either they’re not paying attention or they don’t care. I think most people probably just aren’t paying attention…for now. When they see the higher book prices though, they’ll simply move on to cheaper books and that will be the end of that. I doubt most people really notice until it’s one of their favorite authors. And even then, they just find a new favorite. That’s how it happened for me. I remember being in the bookstore and thinking “oh, these are getting awfully expensive. Oh well, maybe I’ll go for that marathon of that TV show I’ve been meaning to watch…” Trad pub thinks they’re so special that that doesn’t happen, but it does. Everyday. That’s why they spent the the last several years before the ebook revolution complaining about how no one buys books anymore. They’re clueless.
Someone with money sticking out of every nook and cranny of their life has some nerve calling middle income and struggling folks “entitled” cause they want affordable entertainment. I’m so glad I only see him/hear him on the internet. If I was nearby and he said that entitled crap, the old Cuban broad would kick him hard in the ass.
I think that’s what she’s implying. One is subsidizing the other. I don’t think she’s understanding that perhaps people just don’t want hardcovers like they used to because ebooks are available.
I asked this on Twitter this morning, why in the world would anyone sign a contract with a company so stubbornly tied to a legacy expense structure that it has to actively handicap a much more profitable emerging growth market just to survive?
At this point, I don’t understand why either. I know some people think they currently have a lot of reach, but I just keep thinking when this ship finally capsizes and takes those authors who didn’t even get their books out in time down with it that it’s going to be ugly. There are going to be a lot of lawsuits. I would be terrified of that inevitable day. They’re doing everything they can to put themselves out of business and their authors and cheerleaders are steadily cheering them on. Amazon claims to have data to back up their decisions, but Hachette and trad pub openly disregard the data. Doesn’t that bother any of these authors?
It would amuse me to no end to see the rights to some of those authors’ books show up in a bankruptcy auction. I would be more amused if the rights to some of those authors’ books were purchased by J. A. Konrath or Barry Eisler…
Absolutely true. The last hardback book I read seemed too large, too heavy, too spiky and hurt my hands. I went back to my Kindle with relief. A straw poll among friends revealed that I’m not alone – and yet we’re all voracious readers. We just don’t want to read fiction in hardback any more.
The only books I read in hard copy form anymore are manga because I don’t feel the pictures translate as well in e-form.
Honestly, this whole debate about pricing e-books high “because hardcovers” is like charging $20 bucks for a glass of Yellowtail Chardonnay simply because champagne exists.
I read 99% of my manga on the internet. Scanlations. But you’re right. They don’t tend to look right on the small readers. The couple I bought e-version, I read on the desktop.
I cannot believe the AG just brought in the cost of hardcovers. OMG, no they didn’t.
face palm
Yes, you can believe it. Liar!
Damn. You guys are too sharp. A girl can’t even get away with a widdle white one round here.
If you tell fibs around these parts, people may end up thinking you’re a publisher.
The AG sees the print book market as their true domain and see high eBook prices as a way to preserve that market.
Even though… even though…
Let’s do the math. (please correct me if I’m wrong)
On a $14.99 eBook, they get currently 25% of net, which = $2.62 less 15% to the agent = $2.23.
On a hardcover priced at $29.99, their royalty would be $2.99 per copy less 15% to the agent = $2.54.
If Amazon prevailed, they would get 35% of the list price of $9.99, which would be $3.495 less 15% to the agent = $2.97.
They would make more off a $9.99 eBook with Amazon terms than either an eBook priced at $14.99 or a hardcover at $29.99!
If we accept Amazon’s claim of selling twice as many copies at $9.99 than $14.99, the author would potentially make a whole lot more than if Hachette has its way and preserves the old system.
If they sold 10,000 eBooks at $14.99, the author would earn $22,300 under the old legacy system.
If they sold 20,000 units at $9.99, and EVEN if they earned the old royalty split (25% of net) they would earn $29,720. Which is more than the old legacy system.
If they sold 20,000 units at $9.99 under the Amazon 30-35-35 split, they would earn $59,400.
That would mean doubling their income from sales of the book and would mean potentially doubling their audience which could mean more readers for their next book.
Seems like a no-brainer to me. Except for a little thing called Stockholm Syndrome…
ETA: What kills me is that I currently sell my eBooks for $4.99 and make $3.493 per book. When I sell 10,000 copies, I make $34,930.
I make more than a legacy author at one-third of the list price of their eBook…
ETA2: Amazon’s new price analysis service suggests that I am not making maximum earnings at $4.99 and suggests I raise my price to $5.99 – $6.99. I would gain an appreciable increase in revenues with a small loss in numbers. But at this point in my career, I am going for more readers than maximal revenues.
The flaw in your thinking is that authors would ever get 35% of cover price under a Big Five contract. They know their real percentage of sales is closer to 17% per ebook, so the higher the price…
Rather than fight for better terms for authors, they’d rather accept the status quo and fight for higher prices.
And lower sales volume, less readers, and no followup contract because of poor sales. Less competition for Patterson and co, too.
Maybe trad pub is trying to shake off all the authors that don’t make them enough money (you know, like fleas) so they can keep the Stephen Kings and James Pattersons of the world.
They’ve been trying to do that ever since they went into business. The trouble is, the only way they can make an adequate profit off the Kings and Pattersons is to grab them while they are still young and unknown, and exploit them with one-sided contracts until the writers gain enough clout to demand better terms. And they have absolutely no clue which new writers are the future Stephen Kings and which ones are the future fleas.
They’re also lucky that the Kings and Pattersons are allowing them to take so much profit when they’re the ones keeping trad pub in business. I suspect this new generation of authors will increasingly want the money, especially as trad pub becomes less and less stable. When it starts looking like their publisher might go under within 5 years, the big authors will get antsy and negotiate terms that pay off quicker.
Of course, I believe publishers would only accept 30-35-35 when pigs fly…
So yeah, it is highly unlikely that legacy published authors would publicly support Amazon in this dispute. They’re trapped. Legacy is not going to give their (captives) authors better terms.
Have any of these authors standing by the high prices ever sat in an econ class? You don’t make higher profits through higher or lower prices. You make higher profits finding the sweet spot on the price-profit curve that returns you the most dollars on your investment. I think we’ve found the 1%. The rest of us can wait in the slush pile.
They don’t want their authors to make more money if it means their middlemen don’t get a large cut.
Yes. Why doesn’t Hachette release their findings on what price maximizes book sales? Oh, right, because they probably have no idea.
Guys, guys… Hachette et alia are not startup companies on the wrong side of obvious (to us) economics. They are entrenched corporations with rigid business models defending what they know because, if they try to match the evolving changes, they will break.
Like Peter Lorre’s character says in “M”, “Ich kann nicht anders”. Change or die is how it works in market capitalism, and there’s a lot of death, which tells you how common change is.
The public statements are full of denial of course, but behind the scenes there will be managers who understand the “right side of history” economic predictions. Those folks are no doubt busy networking, looking for a career fix somewhere else. No one within those companies is trying to save them — can’t be done. If they were independent firms then, well, maybe a leader could come along to force them thru a transition. But as wholly owned subsidiaries, ain’t gonna happen.
You’re right. People just quietly start sending out their resumes and waiting for the demise, hoping they won’t be around when it finally happens. It’s just sad to see so many authors who don’t get it. They’re hampering their own careers by their arguments to cut their own pay, not to mention they’re risking still being around when Hachette files for bankruptcy and they can’t get their rights back. If *we’re* smart, we just keep working through this period and taking advantage of the deals we can get because we’re not locked into contracts.
Hachette et alia are not startup companies on the wrong side of obvious (to us) economics.
This is true. They are old, terminally tired companies in which the blind are leading the blind. I have seen people in the industry try to make economic arguments by citing Karl Marx as an authority. That’s rare, but a complete ignorance of the subject, and especially of microeconomics, is depressingly common among people you would expect to know better.
It would be a terrible mistake to think that we are dealing with competent people here. People with first-rate abilities seldom go to work for dying businesses – partly because they have better job offers elsewhere, partly because the people running those businesses don’t know how to recognize the kinds of talent that they actually need to hire.
If you are no longer needed, there is nothing you can do to survive in a free market. There is no new strategy, no pricing structure, no management change, and no product mix that will make you needed.
I just had the most frustrating Twitter conversation with a big name writer who thinks adapt or die is ‘brute commercial Darwinism’. He sees absolutely no problem with pricing ebooks high in order to protect paper, because…special, I guess? And actually thinks staggered release dates is a great idea. Cripes. Did the scroll people act like this when the printing press came along? I officially give up now, they’re all too emotional.
Actually, the codex took over from the scroll in Roman times. Early Christianity was an early adopter of the codex format.
No, I’m serious. Yes, I’m nerdy.
LOL!! Well, I’m sure there were a lot of scribes screaming about how they were special and needed to be protected, trying to get people to smash up those presses. Maybe passing around hand lettered petitions.
Why are you arguing with the entitled in the first place? They’ll figure it out when their books stop selling like they used to.
I don’t know why I can’t stop myself. But I really am done now, I swear. It’s too disappointing.
Maybe the title of this article should have been:
Amazon Calls for Hachette to Stop Committing Business Suicide