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Big Publishing is the Problem

15 June 2014

From Hugh Howey:

Amazon isn’t the problem. Big publishers are. They are making decisions and adopting philosophies that are damaging to their authors, their customers, and themselves. What exactly are they fighting for? I speculated in a previous blog post that Hachette might be fighting for the power to price e-books where they saw fit.

. . . .

Hachette is strong-arming Amazon and harming its authors because they want to dictate price to a retailer, something not done practically anywhere else in the goods market. It’s something US publishers don’t even do to brick and mortar booksellers. It’s just something they want to be able to do to Amazon.

The biggest problem with Hachette’s strategy is that Hachette knows absolutely nothing about retail pricing. That’s not their job. It’s not their area of expertise. They don’t sell enough product direct to consumers to understand what price will maximize their earnings. Amazon, B&N, Kobo, and Apple have that data, not Hachette.

Beyond their ignorance of pricing strategy, Hachette also has a strong bias toward print books. Their existing relationships with major brick and mortar retailers gets in the way of their e-book pricing. This has been confirmed by my own publishers, who have admitted privately that they would like to experiment with digital pricing but don’t want to upset print book retailers. This puts their pricing strategy at odds with their investors’ needs, their authors’ needs, even their own profitability. In sum, they are making irrational decisions with their pricing philosophy. Hachette is making the same mistake that many publishers make, which is to think that harming Amazon somehow helps themselves.

. . . .

Many consumers aren’t even aware that Amazon isn’t the source of their e-book DRM. Publishers (and self-published authors) opt in or opt out of DRM as they see fit. Those of us who think about the paying customer first and foremost opt out, and we are rewarded with their repeat business and their advocacy. Those of us who don’t fret over piracy invest our time where it can actually achieve something.

. . . .

Publishers are waging a war here for higher prices and lower royalties. $14.99 is their ideal price for an e-book that costs nothing to print, warehouse, or ship. That’s twice what mass market paperbacks used to cost, which is what they are replacing. Reminds you of how cheaper-to-produce CDs suddenly cost twice as much as cassettes simply because they were new, doesn’t it?

Publishers are also colluding with one another to offer lockstep digital e-book royalties of 25%, which is indefensible. Their every actions, when it comes to DRM, to pricing, to selling direct, to offering abusive services like Author Solutions, screams to anyone with ears that they don’t care about the writers and they don’t care about the readers. It doesn’t matter what they say, it matters what they do. And what they do is charge as much as they can get away with and take as much of the split as they possibly can. And they work with their competitors and against their retail partners to pull it off.

. . . .

If the Big 5 had gotten together twenty years ago and DREAMED UP an ideal business partnership, one that would increase their distribution, provide excellent customer service to their readers, improve the livelihood of their authors, keep their backlists viable and books from going out of print, reduce their 50% return rate from bookstores to 4%, provide next-day and even same-day delivery, all while only costing them 30% instead of the 45% they lose to bookstores, they couldn’t have done better than what Amazon did for them.

. . . .

As a writer, the solution is to retain ownership of your rights. This has never been more important than it is today. E-book royalty rates are going to move to 50% of net. I know from some insiders that this is already happening for top-name authors and hot new acquisitions. Selling your manuscript now for half of what it will be worth in the very near future is a bad move. It takes years for books to come to market with a traditional publisher. If that is your publishing goal, exercise a bit more patience. Hold on to that manuscript (or self-publish it) while you write the next. Let the market come to you.

Link to the rest at Hugh Howey and thanks to Elka for the tip.

Amazon, Big Publishing, Hugh Howey

53 Comments to “Big Publishing is the Problem”

  1. Read this yesterday. Totally loved it.

  2. Hugh is doing a lot for fellow writers and I’m glad to see that with him is never “them against us,” and it’s always about educating writers, let those be self-publishers or trade-published.

  3. Great post.

  4. Another impressive HH post.


  5. You know what the absolute best part of this is for me? When anyone in the publishing industry tries to say, “Oh, what does Hugh know about selling books? He’s just a writer,” we get to come back with his years of working in a bookstore.

    That’s why they attack Hugh’s data. Because they can’t attack his bonafides.

    • His years of working in a bookstore…and also his four million copies sold as an indie. Not many traditionally published books sell that many copies, so that’s feet in mouths for them.

      • Yes, but I’m talking about the industry background that many indies do not have, not sales. Selling books as an indie doesn’t give you experience in the bricks and mortar retail bookselling industry.

  6. ETA: This is what I get for not gong directly to the source – d’oh! I should have known that Hugh wouldn’t make statements without source data — I just read his post and realized that I’d been working off incorrect assumptions so I’ve deleted my original comment. Apologies!

    • LOL And here I was about to point you to TPV regular Travis Hill’s 2:23 comment on Hugh’s post. Between the post and the comment, most of your concerns/questions are covered.

      Edit to add: I mean, Travis’ 2:34 pm comment. I really shouldn’t be allowed to type before the caffeine IV in the morning.

      • Thanks for pointing that out. It’s a great comment, but it does echo a point that I find frustrating which is a common one — that trad authors may be getting the shorter and shorter end of the stick, but it’s their fault for signing with trad publishers in the first place.

        This just makes me wary because it comes uncomfortably close to similar arguments such as “Well, what did you expect going out at night wearing that outfit?”

        It dismisses the whole host of authors who entered trad publishing when indie publishing wasn’t a viable alternative. Or authors who chose trad over indie for other, sound business reasons (perhaps because in areas indie pub isn’t as strong of an alternative). The reality is that Amazon paying less for ebooks will hurt trad authors and I don’t think the answer from the author community should be “that’s what you get.”

        All authors are in the same boat. We can advocate for and support the rights of indie authors while also supporting those of traditional authors.

        • I get what you mean, but there’s nothing that indie authors can do for traditionally-published authors. What indie authors, the leaders of them being Hugh and Joe, can do and are doing, is spreading information in hopes that authors, no matter what they decide for, would go into that with opened eyes, knowing very well, what they are about to gain and lose.

          The thing is, all authors are not in the same boats. Some traditional-published authors are in bad shape, but they should know that the only ones who can change the author-publisher relationship are themselves by demanding better treatment, and aspiring authors by refusing not only to sign a contract with publishers, but refusing to submit their work to them.

          I believe that if/when trade-published authors are hurt by their publishers, they should either hire an IP lawyer and try to get out of that publisher-author relationship (something that authors have been doing for more than three years, and most successfully, but I hear that is getting harder and harder to get your rights back), or suck it up because they were the ones who sighed a contract, and that has nothing to do with “Well, what did you expect going out at night wearing that outfit?”

          I’m not responsible for others people decisions, nor are other people for mine. Maybe my reply would be more generous a few years back, because there wasn’t so many information out there, but now, when such info is just a google search away and has been for a while, I say to all authors that have entered into author-publisher relationship in last three years and are now hurt by their publishers (like debut authors are by Hachette and Amazon’s negotiation) “that’s what you get.”

        • Lucy, I had this very same “discussion” with a friend in January of 2011. She became very angry with me because I said I was taking the plunge into self-pubbing. As I pointed out to her, I would have signed the same two contracts in 2006 that she had, but she felt I was dissing everything she had done. She didn’t want to acknowledge that the world she’d studied and mastered was cracking along the edges.

          But I have trusted my gut when it comes to business. I kept getting the same rejections from publishers (“We don’t know how to sell this”), and I took a chance that paid off. If it hadn’t, I would have taken full responsibility for my “mistake”.

          When it comes to supporting other writers, I say “read the contract” over and over again. This is a business after all. But so many writers don’t. Nor will they consult an attorney. And a lot of times when they do consult an attorney, they ignore the advice they’re given. There are some very specific, very ugly situations that I would love to warn writers about, but I can’t because of attorney-client confidentiality. (Yes, it still exists even though I’m no longer practicing.) So the best I can do is say “read the contract” over and over again.

          But what I can’t do, what you can’t do, what no one can do, is save someone from the consequences of the decision they make.

        • “The reality is that Amazon paying less for ebooks will hurt trad authors”

          This is, again, not our problem, and not our fault. In fact, this is between trad pub authors and their publishers, and has NOTHING to do with Amazon.


          Because when a trad pub ebook gets sold for $9.99 and the author only gets $1.00-ish, and I sell an ebook for $2.99 and get $2.05, Amazon isn’t to blame for a trad pub author getting a terrible royalty rate.

          Amazon isn’t to blame for trad pub authors signing bad contracts.

          Amazon isn’t to blame for any of the nonsense in trad pub contracts that trad pub authors continue to sign.

          Zero. Nothing. Nada. Zilch. Amazon isn’t to blame for this. If trad pub authors make less money because of Amazon’s discounting (and remember, trad pub books being discounted are still selling for $5+, not the ‘discounting’ that self pubs like me think of, which is $.99-$2.99), then trad pub authors need to take that up with their trad pubs, not Amazon.

          It isn’t an ‘us vs. them’ argument. If anyone makes it out to be that, they are incorrect. It is a wake up call for trad pub authors to let them know they are getting the [fecal] end of the stick in their contracts, and there are much better options beyond the cold gray walls of their publisher.

          As for ‘trad pub authors entering contracts before ebooks/Amazon blew up the industry,’ well, that’s not my problem either (nor yours, nor Amazon’s). That’s solely for the trad pub author to work through, and if the trad pub author is given enough information, the trad pub author can make a better decision the next time a contract finds its way onto his desk.

          “Or authors who chose trad over indie for other, sound business reasons”

          Can anyone think of a single reason why trad would be a better choice than indie? And let’s avoid the “because trad is the only ‘real’ way to be a professional author” tropes because we all know that selling 100,000 copies as a self-pub is no more or less shameful or embarrassing than selling 100,000 copies as a trad pub. In fact, selling 100k copies as a self-pub is far better (keep your rights, make more in royalties, final decision over editing and covers, pricing at your leisure, etc.).

          So… no, I’m not buying any excuses from authors who would still continue to choose trad pub over indie/self pub. They may have their reasons, but from all I’ve educated myself about the last year or so… there’s not a good reason unless somehow the author is getting a ‘special deal’ that no other authors get. And let’s be honest, if you aren’t Stephen King or Patterson or such, you ain’t getting those ‘special deals.’

          “All authors are in the same boat. We can advocate for and support the rights of indie authors while also supporting those of traditional authors.”

          I do advocate for and support the rights of indie authors. Why should I support and advocate for trad pub authors to keep taking terrible deals and signing bad contracts now that there is a very viable alternative? Any author who signs a trad pub deal that is the same as always (lose your rights, 25% royalty of whatever accounting funk the trad pub has flamboozled, no real marketing to earn out the advance, blah blah blah we all know the drill) deserves no sympathy from me.

          The only advocating for trad pub authors I’m interested in involves me informing them of the alternatives so they can have a real choice, have a real voice in their careers instead of being at the whim of a huge corporation that has screwed them over for their entire career (unless, again, your name is King, Rowling, Patterson, etc.).

          “This just makes me wary because it comes uncomfortably close to similar arguments such as “Well, what did you expect going out at night wearing that outfit?””

          Absolutely, positively NOT. It does not correlate to rape or rape culture at all. A publishing contract is a vastly different thing than a woman wearing a short skirt with her breasts nearly popping out of the top. If you cannot see the fallacy of comparing these two things, I really don’t know what to say.

          But please, let’s never compare sexual assault because a woman wore revealing clothing to not having the business smarts enough to get an attorney to look over a publishing contract.

          “I don’t think the answer from the author community should be “that’s what you get.””

          I disagree. We need to let trad authors know “that’s what you get” because there are viable (better) alternatives. I don’t feel sorry for anyone who signed a contract without having a lawyer explain to them exactly what the contract contains. I ESPECIALLY don’t feel sorry for authors who have a lawyer explain exactly what is in a trad pub contract and still signs it anyway.

          I do agree we don’t need to be jerks about it to trad authors. I’ve been preaching lately that we need to focus our efforts not in trying to change trad pub or win a PR war against them, but to informing trad pub authors how and why they are getting the [fecal] end of the stick, and what the alternatives are so they can get out from under such ugly, restrictive, anti-competitive contracts and take control of their career (and make a living at it).

          • I agree with much of what you’ve said, but I do disagree that Amazon is not to blame if the author gets less. It is — Amazon is taking a larger discount. Thus the publisher is getting less. Thus the author is getting less.

            Your argument is that authors have bad contracts with trad publishers — agreed. But even if trad publishers gave authors 100% ebook royalties, those authors would still end up getting less in this scenario. Because Amazon is paying less. This can’t have nothing to do with Amazon — it has everything to do with Amazon, because Amazon is the one making the change that is resulting in authors earning less. Amazon may not be wholly to blame for this, but the are part of the equation.

            Now, you can argue that Hachette can then take action to cover for that loss and pay authors more and you’re be right. I’m not arguing that trad deals are good or should be defended — this isn’t me being pro traditional in any way.

            Can I think of a sound business reason to choose traditional today? Yes — if you’re a childrens book author who has a deal in the range that would cause your publisher to put strong efforts behind your title. The kids book market is currently still print dominant and the library market plays a huge role (it too is print dominant, esp school libraries). I do think the kids book market will catch up down the road, but it’s not there yet. It’s definitely a trade off, though — there would be downsides to such a decision. But I do think it is a sound decision to take a deal that will have your publisher building your brand in the school/library market that you can then capitalize on down the road once the indie market is stronger for kids books.

            Granted, this is a very specific situation — in 90%+ instances I’d say an author is better off going indie.

            • I’m still unable to grasp how Amazon is the cause of authors getting less money.

              In your scenario where authors might get 100% of royalties from the big publisher yet Amazon still hurts them because they take a cut… my question would be: and?

              Someone is going to take a cut to sell those books unless the author sells the books direct from his/her own website. Amazon charges to sell books. B&N charges to sell books. iTunes charges. Wal-Mart charges. Everyone who sells a book that isn’t the author selling direct is going to get a cut.

              From what I can gather, all the retailers are taking pretty much the same cut.

              So… I ask: how does Amazon end up the one hurting trad pub authors?

              Amazon doesn’t write or enforce the contracts that trad pubs have with their authors. Amazon charges a % to sell a product. If Amazon wants lower prices for ebooks, then the trad pub authors needs to band together and demand they get a bigger royalty cut from the publisher, NOT Amazon. Amazon is simply a distributor.

              I’m not trying to be rude or mean, but blaming Amazon for trad pub author woes is misguided. Trad pub authors and trad pubs themselves are to blame (the authors for continuing to sign such bad contracts, and the publishers for forcing their authors to sign such bad contracts + having unwinnable public fights with an online retail giant that has customer loyalty that creeps into zealous worship).

              Again, Amazon is not forcing any author to make less money. The publisher is the one forcing its authors to make less money by having such bad contracts. Amazon is not a publisher. Amazon is a retailer.

              As for the argument that “but gee, Amazon might do really bad things in the future” is also misguided. Amazon MIGHT do bad things in the future, but as a self-pub author who has taken the time to learn how the business works, I, like any others who have learned how the business works, will see the signs of the coming apocalypse and have plans to ride it out or set up shop with other retailers who aren’t doing bad things.

              I simply can’t buy the argument that Amazon MIGHT do something bad to authors in the future so we should rank them out and call them the bad guy as much as possible NOW.

              • It’s not that Amazon takes a cut — of course they do. It’s the size of the cut that’s at issue. Currently they’re taking a 30% cut. As are most retailers (as you pointed out). Amazon is now advocating for a 40-50% cut. So they want to take a larger cut. That will mean less money for publishers and less money for authors.

                Think of it this way: Amazon currently takes a 30% cut for distributing your ebooks. Tomorrow, they decide they’re going to take a 50% cut. You are now making less money.

                Another example: Hachette sells Amazon a $10 book. Today Amazon, because of the 30% discount, pays $7 for it. Tomorrow, after prevailing in negotiations with Hachette, Amazon pays $5 for it. No matter what royalty rate the author receives from the publisher, they will be getting less money. Because of Amazon’s actions.

                Also, I’m not advocating calling out Amazon and calling them evil or a bad guy now. This is what frustrates me — this needs to stop being an either/or situation. I can still support Amazon and be a huge fan of theirs and everything they’ve done for indie pubbing while taking a critical look at their actions. Wanting to discuss the possibilities of actions Amazon might take isn’t me calling them the bad guys as much as possible.

                • Don’t print retailers take around a 50% cut? On hardbacks that cost several dollars to print, so the publisher gets much less than 50% of the cover price?

                  And don’t publishers push contracts that say they’ll cut the author royalties if they have to give larger discounts to print retailers to sell their books?

                  So, how does Amazon end up being the bad guy?

                • Yes. The retailer gets 50% and the distributor gets 10% in the pipeline to brick-and-mortar bookstores.

                • Who says Amazon is now advocating for a 40-50% cut? Is this just a speculation? If not, source please.

                • Yes, it is speculation, the same way everything is speculation since both sides are under a non-disclosure. But it’s what I’ve heard from most sources (on the ground at BEA and via news). Here are a few articles talking about it:

                  “If informal reports are accurate and Amazon is seeking to turn their ebook commission from 30 percent to 40 percent or 50 percent, that would “cost” HBG between $16.5 million and $33 million just for Amazon, based on last year’s results. And that doesn’t take into account any additional discount Amazon might be seeking on the print book side.”

                  Article on why the current negotiations are unlikely about the agency clause:

                  “In the talks with Hachette, Amazon is seeking a higher percentage split, said an industry executive. ”

                  “Because Hachette and Amazon have signed confidentiality agreements as part of their negotiations, the particulars of their dispute have been kept secret. But inside the publishing world, the consensus is that Amazon wants to offer deep discounts on Hachette’s electronic books”

                • The fight is over who controls the retail price of ebooks. All the sources you cite are spewing Hachette propaganda. Amazon raising their “commission” to 40-50% means Amazon wants to go back to wholesale pricing. Hachette would be able to make more, not less. This was shown conclusively at the antitrust trial.

                  I went into some detail over on Konrath’s blog about why the negotiation is about agency. The Publishers Marketplace article addresses none of my arguments, preferring to obfuscate the situation with non-germane assertions.

                • What William said. Your sources have no idea what’s going on. Meanwhile, Hachette’s presentation to investors clearly states that they are using their size to fight for agency pricing.

                  Amazon would LOVE to make 30% from publishers. Right now, it’s less than 10%, because they have to discount to a reasonable price in order to keep customers from balking.

                • Hachette presentation lists proactive actions they have taken since 2007. That period includes the price fixing collusion, trial, loss, fine, and court supervision.

                  It is a bit odd they included such a fiasco.

                • William – thanks for letting me know about your post. I went looking for it and didn’t find it (granted, I’m under deadline and only glanced, I apologize for not being more diligent in my searching). By any chance, do you mind providing a link? I’d really like to read it. Thanks!

                • Hugh – I’m glad you posted Hachette’s investor slides because I think you’re right that it clearly states their intention to return to Agency pricing. It’s caused me to rethink most of my positions on the issue and for that I’m grateful.

            • By all accounts, for the nth time, this is mostly about Hachette wanting to control the retail price, not the wholesale price.

              Hachette can ask for ten dollars for an ebook, and Amazon will pay it, or they won’t. The author then gets paid on what Amazon paid for the book. If Amazon discounts it from $14.99 cover to $10.99, that affects the author’s royalty not at all. But it pisses off Hachette, for reasons which remain unclear to me. In any event, it harms the author not one jot. Not one tittle.

              (Actually I understand them: that was rhetoric. I just think they’re stupid. And more to the point, I think they’re wrong.)

        • I appreciate both of your responses Elka and Suzan, and agree. Authors need to know what they’re getting into and need to make sound business decisions. I’ve been counseling several friends to go indie, though I do feel like sometimes, the better decision is traditional publishing (though I’d also argue this is getting rarer and rarer). Every author needs to know what they are gaining and what they are losing by whatever decision they make.

          I think my concern is this – I’m worried that indie authors are afraid of being critical of indie pubbing out of fear it will lend credence to those who are against it. Indie authors have had to fight hard against naysayers for years, countering their arguments. I think that’s led some to automatically see criticism of one aspect of indie pubbing as criticism of indie pubbing as a whole.

          I think a perfect example is Amazon. Right now, they take the same wholesale price discount from publishers and indie authors: 30%. This puts indie authors and publishers in the same boat in many ways. So I think it’s arguable that Amazon may try the same thing with indie authors – taking a larger discount. They’ve already done so with ACX. They’ve already said that “your margin is my opportunity.”

          When I’ve raised this argument in various places, the response tends to be to shrug it off or be vehemently against it. Some say so what, it’s still better than trad (true). Others say it just won’t happen or Amazon would be stupid to try that.

          I’m worried that few are willing to give credence to this issue out of fear that it will somehow undermine their “pro indie pub” stance. I think this is a mistake. I don’t see how someone can say in one breath, “If Hachette can’t sell their ebooks on Amazon, they’re toast” and in the next say, “But I as an indie author won’t have any problem if Amazon lowers their rates because I’ll go elsewhere and be fine.”

          I’m not saying that indie authors should suddenly become anti-Amazon, that would be absurd. Amazon has been fantastic for indies! I’m just saying that indie authors should be looking at this Amazon issue and wondering what they might do if the same thing happens to them (or to use since I’m also indie). Saying, “Oh that won’t happen,” isn’t a good solution. We shouldn’t be afraid that having this discussion is somehow akin to being anti-indie or showing weakness in the “trad vs indie debate.”

          • In my country, agents don’t exist, nor do vanity press, and self-publishing was never looked down upon. Self-publishing is quite well received and self-published book can be found in bookstores. Even one of our editors, when she was let go, self-published a book. But the downside of it is that there’s no money in it, actually there’s no money in being an author either, well, except if you harness enough of prestige that you fall under the wing of Ministry of Culture. That’s the reason I never felt a stigma where self-publishing in considered and felt the need to prove myself to anybody.

            What I found troubling in your comment is: shouldn’t we as authors focus on something that is already happening: publishers squeezing authors, than something that might or might not happen in the future?

            But like I have already said in one of previous thread where Amazon and what it might do is considered:

            That’s why smart self-publishers are actively working on their new release email lists and on expanding their fan base. With enough true fans, who would follow them everywhere where their book are available, and buy it directly from author’s web site if need be, how large share of the market retailer holds, doesn’t matter that much.

            • “What I found troubling in your comment is: shouldn’t we as authors focus on something that is already happening: publishers squeezing authors, than something that might or might not happen in the future?”

              This is a good point. But what I find interesting is that publishers squeezing authors doesn’t really affect indie authors. It affects authors as a whole in a global “we should stand against pubs screwing over authors” — but what kind of contract a pub offers an author under what terms… that affects my indie career not at all.

              However, the potential of a distributor changing their terms? That affects my indie career greatly. So yes, I do think I should care about it. Putting my head in the sand isn’t sound business planning.

              • Yes, you are right, how publishers squeezes authors doesn’t affects your indie career at all, and yet, it was you who said:

                All authors are in the same boat. We can advocate for and support the rights of indie authors while also supporting those of traditional authors.

                It sounded a lot as if you want for self-publishers to do something about trade-published authors.
                This is not us vs them, at least for me, that’s why I feel that right now it’s more important to point out what publishers are doing, since it’s a practice that is happening right now, not focus on something that Amazon might or might not do. And how is that, with addition on my above comment, putting my head in the sand?

              • And when a major distributor changes its terms, as a good, knowledgeable indie author, you will already be putting PLAN B and/or PLAN C into play, which is to find distributors that aren’t doing bad things to you.

                But again, just because you believe they MIGHT do bad things in the future doesn’t mean anything right now. Might as well say “Microsoft will begin charging you a percentage to use MS Word for any public documents (teaching materials, books, school assignments, etc)”.

                One day Apple might lock everyone’s iPhone/iPad and tell all customers they have to now sign a very restrictive usage agreement that costs $20.00/month.

                Sure, MS might start charging everyone to use Word to publicly display text/pics created with the program. Apple might turn evil and make every customer sign a bad ToS and pay $20/month to continue using the service/product.

                Should I announce the sky is falling because they might do this?

          • Lucy, I shrug when people bring up this “What will Amazon do?” argument because Amazon hasn’t done anything yet.

            To worry about what they may or may not do at some point in the future is only to borrow trouble. Should we have contingency plans? Yes. Should we explore alternatives? Yes. This is just sound business practice.

            But to take action based on a non-existent problem is counterproductive, and a person could end up going in entirely the wrong direction if s/he makes the wrong guess. There are far too many variable at play both in the publishing world and in the wider world to make taking action on a “maybe” reasonable. Business decisions have to be made based on solid information, not on fear and guesswork.

            William Ockham put forth a great rationale on why Amazon is unlikely to cut their percentage to indies, basically boiling down to the fact that such a move wouldn’t be in Amazon’s own best interests. William, if you’re reading, I don’t remember on whose blog you made that comment, but if you can restate it here, I think it’s valuable.

            • I remember reading his post and it was useful. I guess it’s just a difference of opinion. You look at the situation and say, “Amazon hasn’t done anything yet.”

              I look at and say, “Yes, they have.” They’ve already lowered royalties on ACX. They’re actively trying to change the terms of their contracts with publishers. And as an indie author, I am a publisher. It is reasonably foreseeable that they might take the same action against me.

              To borrow Travis’s response above, I’m not concerned that Microsoft is going to start charging a percentage of any documents I create with Word because there’s nothing out there pointing to this as a remote possibility.

              I dunno. I guess I’m just not as trusting of Amazon as many other indie authors. I was in the past – 6 months ago I’d have been the one arguing all the reasons Amazon wouldn’t lower royalty rates. The ACX thing shocked the heck out of me. The Hachette issue only caused me to take a more critical look at my interactions with Amazon and how dominant they are to my bottom line.

              It made me wonder if indie authors should be throwing more support behind Nook and iBooks to ensure there’s a robust, competitive marketplace. I’m guilty of this — Amazon is so easy to use on all fronts that I upload to them first, I link to them first (with my affiliate link), sometimes I go Select with them. I’ve been (a teeny tiny) part of what’s made them so dominant and I need to examine what impact that could have down the road.

              At the very least, I’d been thinking it’s a valuable discussion to have. I should re-think that position. Almost across the board the response I’ve gotten is, “Why worry about what might happen in the future?”

              • Lucy,

                We all interpret the world through a mental model that places the information we perceive into a context. I have found that the best way to evaluate likely courses of actions by large corporations is compare their actions with their strategic plans. Unlike other companies, Amazon has stayed laser focused on their goal, pleasing customers with the widest selection and lowest prices. Let’s examine the Audible action and the Hachette negotiations in that context because it well help us predict the likelihood of a future cut in the KDP terms.

                The Hachette negotiation isn’t about Amazon “actively trying to change the terms of contracts with publishers”. You have the cause and effect reversed. In January 2010, five publishers and Apple used illegal means to change the terms of those contracts. Amazon apparently wants to return to the status quo ante. That is perfectly in line with their strategy.

                The Audible changes are a little more on point. Are there any differences between KDP and Audible? I think there are some big ones. The most important are that the barriers to entry in audiobooks are substantially higher, the market is much smaller, and the business is much less strategic for Amazon. But the real question to ask is would an Audible rate cut result in higher prices or less selection for Amazon customers. I suspect Amazon looked at the data and decided the answer was no.

                Ask the same question about a KDP rate cut. I am convinced that a KDP rate cut would lead to higher ebook prices or less selection. Amazon can surely see this with their data. Moreover, competing with Amazon on ebook distribution would be much easier if Amazon made substantial cuts.

                I would never say that writers should ignore the future. Rather, I would encourage you to plan for likely futures.

                • I think you’re exactly right — Amazon is unlikely to cut rates for indie authors if it will result higher prices and less selection for readers. I think they were able to with ACX not because that market isn’t strategic for them (having spoken to several ACX reps, I’ve heard the opposite – they’re quite aggressive in that market and see huge gains to be made), but because they could. I’m not arguing it was evil or anything of the kind, it was a calculated business decision. I think they looked at the market and realized that them cutting rates wouldn’t lead to a decrease in selection or an increase in prices because what other option to indie authors have? Time will tell if they’re right.

                  My takeaway from that is that it’s important for indie authors to ensure there are several vibrant market for their ebooks. Frankly, for indie authors to not fall into the trap that I did and put too much of an emphasis on Amazon, but to ensure I’m also focusing on Nook, iBooks, Kobo, etc (which I think many indie authors are, but I do think that Amazon is still most indie authors’ go to first choice — mostly because Amazon does the best job at indie pubbing on almost all fronts).

                  The only hesitation I have with the rest of your argument is the position that Amazon has stayed laser focused on their goal of pleasing customers with the widest selection and lowest prices. My first concern is that, at least in the short term, Amazon is okay with not pleasing customers. They’re okay telling customers “you can’t get that Hachette title at our site at the price you want, please go elsewhere.” This is interesting to me because it seems like such a departure from their norm of customer satisfaction being a priority.

                  I do think their thought is that in the long term, it will lead to customer satisfaction because it will ultimately lead to lower prices for them. But it does tell me that Amazon is willing to go through a bit of customer discomfort in the short term if it leads to long term gains.

                  So then my second question is, if Amazon lowered royalty rates on indie authors, would it in fact lead to higher prices and less selection. I think this can go either way and would likely depend on what they changed the royalty rate to. Do you think indie authors would pull their titles from Amazon if it decided to go to a 40/60 split? I don’t know, though I doubt it.

                  Do you think indie authors would raise their prices to recoup the lost income? If they did, they’d have to raise prices at the other distributors as well, so it would lead to an across the board ebook price increase. And I do think this is a likely scenario. Though at the same time, indie authors are so savvy and nimble with pricing, it’s hard to see the majority raising their prices just to recoup that 10%. I admit I could very easily be wrong on that though. But it doesn’t matter what I think would happen – only matters what Amazon thinks would happen.

                  I promise I’m really not intending to be argumentative — please don’t take anything I’ve said that way. I find this discussion interesting! This is the discussion I’ve wanted to have with fellow indie authors! I really appreciate your taking the time to respond — it’s given me much to think about and caused me to alter my take on things.

          • We shouldn’t be afraid that having this discussion is somehow akin to being anti-indie or showing weakness in the “trad vs indie debate.”

            We’ve had this discussion so many times that it’s just become tedious and boring. Yes, Amazon might cut royalties to 35% across the board one day, but trade publishers, right now, are setting royalties at around half that level.

            If Amazon cut royalties, we have other options. If the Big Five suddenly decide they’re cutting author royalties to 1%, what are trade-published writers going to do?

          • So I think it’s arguable that Amazon may try the same thing with indie authors – taking a larger discount. They’ve already done so with ACX. They’ve already said that “your margin is my opportunity.”

            Sure it’s arguable. And Bezos did indeed make the comment about margin.

            But remember that by increasing its margin, Amazon’s margin becomes someone else’s opportunity.

            • An excellent point. So far it seems that no one is willing to try to actively compete with Amazon on indie ebooks. None of them are offering higher rates, and all of their platforms are much *much* less user friendly. From my perspective, it seems like they’ve all conceded that Amazon is the king in that domain, and I agree with them.

              One of thing that I admire about Amazon is that they’re not satisfied resting on their laurels – they continue to innovate. Whispersync is brilliant, and Matchbook is something pubs should have thought about a long time ago.

        • Amen, Lucy. Setting writer against writer just helps publishers divide and rule.

          Ten, maybe even five years ago, there wasn’t really a choice, let alone an obvious one. But it still isn’t 100% clear-cut now, because everything depends on an individual’s circumstances. Some people have reasons to take a bad deal, odd as that might sound to anyone who’s never had a trad pub contract. I’d rather give up writing than ever have to deal with BPHs again; it’s a toxic industry. But it’s naive and ignorant to dismiss all trad pub authors as self-destructive fools.

          Writing has been my livelihood for 40 years, and I’ve lived wholly off fiction for the last ten. There are two issues that spring to mind: cash flow, and whether a contract is worth the paper it’s written on anyway. YMMV, but what follows is not uncommon for full-time writers.

          Choosing the guarantee of money by a specific date when you have survival-level bills to pay and no other income, instead of an unknown sum over an indefinite period, isn’t a decision you take because you’re stupid or ignorant. It’s not for validation or any arty nonsense like that, either. You do it because you need to secure the roof over your head and food on your table right now. You know you’re being conned, stuffed, and had over backwards, but you have no other choice *at that moment.*

          And I found out the hard way that it actually doesn’t matter a damn whether you’ve signed the best contract in the world if you can’t afford to take the publisher to court to enforce it. They know that: they know they can win a war of attrition, because a writer will run out of money long, long before they do. All they have to do is sit tight and starve you out. One publisher rode roughshod over my contract and still owes me money. I had just enough funds to get a legal opinion and confirm they were in breach, but actually suing them in a US court to recover the money would have cost me my home.

          I paid a lot to get out of my trad pub contracts and go indie. My main motivation wasn’t that I thought I’d be much better off (I think I will, but it’s early days yet) but that the publisher at the time (yet another one – it’s endemic) was running my business into the ground for me, and I had no way of stopping that unless I jumped overboard. I don’t regret it, because just being free of the daily **** has improved my quality of life, and I try to steer colleagues to at least look at publishing direct and peel these leeches off their legs. But I’d never presume to judge why they signed trad pub contracts unless I knew their personal circumstances.

          • I try not to judge anybody or call a self-destructive fools, nor are my fellow self-publishers, but you are the one who sighed the contract (for whatever reasons) and you are the one who has to suffer the consequences of it. That’s the point. I feel that trade-published authors shouldn’t blame others for situation in which they found themselves because of signing a contract with a trade-publishers. If they those authors have problems with how their work is treated, they should address their publisher about them, not point at Amazon.
            How people publish is not my, or any other self-publishers’ or trade-publishers’ business. You did what was right for you and when it wasn’t right for you, you changed the direction of your career and despite difficult situation in which you found yourself you took your career into your hands.

            • I didn’t think I mentioned Amazon or authors blaming the company, because I was actually responding to Lucy’s general point about broader attitudes to trad pub authors.

              But the balance of power doesn’t get much more asymmetric than the Big Pub/ individual author scenario. I’m hazarding a guess that some authors may well worry what might happen if they’re not seen to be robustly on-message.

              When I see a closed shop like Big Pub meeting its match, I admit I think, “Karma, baby.” But the rational business-minded side of me would be satisfied to see it de-fanged and suddenly aware that it’s just an optional packaging and distribution service that has to treat its clients much better if it wants to survive.

          • Choosing the guarantee of money by a specific date when you have survival-level bills to pay and no other income, instead of an unknown sum over an indefinite period, isn’t a decision you take because you’re stupid or ignorant. It’s not for validation or any arty nonsense like that, either. You do it because you need to secure the roof over your head and food on your table right now. You know you’re being conned, stuffed, and had over backwards, but you have no other choice *at that moment.*

            Wouldn’t it make far more sense to get a job to provide the necessary income in this situation? Particularly when the alternative (a bad contract) can impact your writing career for the rest of your life.

            ETA: I totally understand being in this situation, since I do the day job thing to keep the roof and the food and all that.

        • This isn’t so much “us against them” as “your cause is not my cause.”

          I personally think that Amazon is, right now, the best friend authors and readers have. I am both of those things. Whatever helps them, within reason, I support. Whatever disadvantages them, within reason, I oppose.

          Tradpub authors may feel that my supporting Amazon in the agency pricing argument means I am somehow opposing them. I am not, any more than I am opposing the receptionist, the janitor, or the guy who waters the plants in the lobby at Hachette’s headquarters. I wish them all well. And it’s not that I feel that the negative impact on their livelihoods is somehow just desserts for supporting the wrong side/being on the wrong team.

          I just don’t care about it.

          Again, personally, I like authors (I are one, and I are married to one, and I have many friends who is one.) When I say I don’t care, it’s not in the negative sense. It’s just that it’s not possible to support the cause I believe in (non-agency pricing/greater availability and affordability of a wider variety of books) and simultaneously support their cause (allowing Hachette to make more money in hopes they will get some of it.)

          As Count Roldero put it:

          “Ah, you seem to think I hate Eldren individuals. I do not. For all I know they may be kind to their own children, love their wives and treat their animals well. I do not say that they are, as individuals, monsters. It is as a force that they must be considered – it is what they do that must be judged – it is on the threat of their own ambitions that we must base our attitude towards them.”

          Granted, Roldero was in error as to the ambitions of the Eldren, but I think I have a pretty clear picture of what it is Hachette wants to do, since they are not shy about declaiming it.

        • Or authors who chose trad over indie

          It must be nice to be in a situation wherein that’s a choice. I hope one day we all get to make that choice.

  7. I really should know better, but I still manage to be surprised at the stupidity of big organizations. Big Publishing reminds me of a man jumping off the Empire State Building, and on the whole way down, denying that anything bad could be about to happen.
    Hugh spelled it out in his post so that even a suicidal BigPub should wake up to reality.
    Yeah, Right. Sure they will.

  8. Hugh Howey knocked it out of the park with that one.

  9. We keep hearing that Amazon will change in the future.

    Is there some reason to expect it will remain the same? Some reason is should not change? When all around it is changing, is it reasonable to think Amazon will remain unchanged and unresponsive, no longer innovating as it has?

    Is there some reason to think authors should remain sheltered and unaffected in the midst of all this change? What? Why?

  10. “And what they do is charge as much as they can get away with and take as much of the split as they possibly can.”

    To be fair, this is what businesses are supposed to do–make money. The problem isn’t that they want to charge as much as they can and take as much of the split as they can, but that their strategy in doing so is going to harm their long-term well-being by driving away new authors and excluding themselves from core distribution streams.

    I can’t blame publishers for trying to do what they’ve done, which is to capitalize on a new market in every way they know how. What baffles me is that they haven’t figured out yet that it’s not working, and that their attempts at controlling this market are, in fact, having the opposite effect. It’s plain to anyone looking in from the outside. It’s plain to authors (providing they aren’t trapped in the old-line publisher’s contracts). It’s self-destructive and silly. They should be leveraging their creative talent and infrastructure against Amazon. But it’s probably too late for that–Amazon is gearing up, and all that publishing talent is waning with every passing day.

    Big Publishing just can’t hear. It’s maddening and sad. It didn’t need to be this way.

  11. Because someone asked, here is a link to Konrath’s blog wherein I make a guest appearance:

    My part starts about half way down.

    I want to make a point about methodology. When I come up with a theory about what is going on behind the scenes in a situation like this, I ask myself what are some other things I could verify that would confirm or deny my theory. If Hachette is trying for a return to agency with Amazon, they must be doing the same thing with other retailers. Apple cannot make that move with their antitrust case still pending. B&N could. So I took the list of ebooks affected by Amazon’s removal of the preorder button and looked them up at the other two retailers.

    I had a prediction that B&N would show prices close to the agency list prices dictated by Apple back in Jan 2010, but Apple’s would show discounts. Guess what? B&N prices matched exactly to the old agency formula and Apple’s were discounted. Is there any plausible explanation for that, other than mine? Until some provides a better explanation, I will stick with mine.

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