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The Effects of the Amazon-Hachette Negotiations

27 May 2014

From The Author Earnings Blog:

A lot of ink is being spilled over the ongoing negotiations between Amazon and Hachette.

. . . .

At AuthorEarnings.com, we find ourselves in the rather unique position of having taken two data sets of e-book sales from the time period of these negotiations, so we thought it might be interesting to look at what effect the standoff has had on Hachette e-book sales. It’s worth noting that this dispute between Amazon and Hachette goes back at least to November, so we may only be capturing a portion of the overall drop in sales.

. . . .

Our data set on the 85,000 best-selling Kindle e-books includes 1,363 titles from Hachette. A comparison of our February and April data bears out what these authors are reporting: Hachette-published e-books are on average slipping in Amazon sales rank and falling off the charts much faster than works published by the other Big-5 publishers.

Hachette’s total estimated unit sales dropped from 47,000 in the February dataset (5.9% of the total pie) to 38,000 in the April dataset (4.4% of the total pie), despite the latter dataset capturing more books overall (85,000 vs 54,000).

Between February and April, Hachette’s Kindle e-book unit sales have fallen 20% – 25%, depending on whether we are looking at relative market share or at absolute numbers.

. . . .

Between February 8th and April 24th, the average price of a Hachette e-book on Amazon went up 5.5% (versus an average of 2.8% for the rest of the Big-5). That’s twice the increase, which must be partly due to Amazon no longer discounting Hachette’s e-books as steeply as before.

. . . .

Our focus on Amazon Kindle sales prevents us from seeing any possible corresponding increase of Hachette sales at other digital retailers to offset these declines, but we can say that the increase in the average price of Hachette’s e-books is having an effect on sales. It could also be that various Amazon algorithms and recommendation tweaks are contributing to the decreased sales. The big lesson is this: Across the Big-5 publishers, lowering average e-book prices correlated with higher per-title revenue. Increasing e-book prices correlated with lower per-title revenue.

This bears repeating, and it’s a lesson publishers could take from self-published authors: Lower prices means earning more money. We understand that this is counter-intuitive, but our data bears this out. And it’s a truth that many authors have seen for themselves as they experiment with prices. Which raises the question of whether or not publishers would even benefit from control over e-book prices. It could be that the worst thing for Hachette’s bottom line would be to get what they’re asking for in these negotiations.

. . . .

Side Note: Why are newer Macmillan authors faring so poorly, relative to their Big-5 peers?

As we looked at these churn charts for “New” authors versus “Old” authors, we were primarily focused on Hachette. But one other peculiarity jumped out at us from the chart and begged for a deeper examination.

When we compare the churn of bestselling titles from all Macmillan authors to those from other Big-5 publishers, on average the Macmillan’s titles perform in the middle of the Big-5 pack — better than Hachette & HC, but slightly worse than PRH and S&S. However, looking at only “New” authors, with Kindle debuts after 2009, reveals a very different story.

. . . .

On average, titles by Macmillan’s more recent authors are churning down and off the Kindle bestseller charts significantly faster than those of their Big-5 peers.

Link to the rest at Author Earnings

Amazon, Big Publishing, Ebooks, Pricing

7 Comments to “The Effects of the Amazon-Hachette Negotiations”

  1. Well, publishers seem to want higher book prices at every turn. There you go.

    • Elements within Kodak management wanted to keep digital photography more expensive than film, too.

      That wound up not working out so well for them in the long run.

  2. On average, titles by Macmillan’s more recent authors are churning down and off the Kindle bestseller charts significantly faster than those of their Big-5 peers.

    How much do y’all want to bet Macmillan will blame Amazon for sabotaging their sales (assuming anyone from Macmillan looks at the AE reports).

    • Given that they and their authors have been single-minded in their predetermination that this whole thing is Amazon’s fault that’s a fair guarantee.

  3. Nothing has ever made me gladder to be an indie author than this particular report.

  4. I’m pretty sure posting this would get me disemvowelled at you-know-where, even though it gives the lie to the entire “author-centric” assertion, and I find it utterly believable.

    While Hachette’s margins will no doubt rebound rapidly once the negotiation ends, the impact on their individual author’s careers might be longer lasting, especially as Hachette won’t hesitate to drop many authors for failing to meet sales expectations.

  5. It seems to me what’s happening is as contracts end and negotiations begin again, the publishers want to pretend that the DOJ ruling never happened.

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