From Vanity Fair:
When Amazon first appeared, in the mid-90s, mailing books out of the Seattle garage of its founder, Jeff Bezos, it was greeted with enthusiasm. The company seemed like a useful counterweight to the big bookstore chains that had come to dominate the book-retailing landscape. In the late 1990s, the large chains, led by Borders and Barnes & Noble, controlled about a quarter of the adult-book market. Their stores were good. They may have lacked individuality, but they made up for it in inventory—a typical Barnes & Noble superstore carried 150,000 titles, making it as alluring, in its way, as the biggest and most famous independent bookstores in America, like Tattered Cover, in Denver, or City Lights, in San Francisco. Now a person on a desolate highway in upstate New York could access all those books, too.
The big chains were good for publishers because they sold so many books, but they were bad for publishers because they used their market power to dictate tough terms and also because they sometimes returned a lot of stock. People also worried about the power of the chains to determine whether a book did well or badly. Barnes & Noble’s lone literary-fiction buyer, Sessalee Hensley, could make (or break) a book with a large order (or a disappointingly small one). If you talked to a publisher in the early 2000s, chances are they would complain to you about the tyranny of Sessalee. No one used her last name; the most influential woman in the book trade did not need one.
The success of Amazon changed all that. It has been said that Amazon got into the book business accidentally—that it might as well have been selling widgets. This isn’t quite right. Books were ideal as an early e-commerce product precisely because when people wanted particular books they knew already what they were getting into. The vast variety of books also allowed an enterprising online retailer to leverage the fact that there was no physical store in a single fixed location to limit its inventory. If a big Barnes & Noble had 150,000 books in stock, Amazon had a million! And if Barnes & Noble had taken its books to lonely highways where previously there had been no bookstores, Amazon was taking books to places where there weren’t even highways. As long as you had a credit card, and the postal service could reach you, you suddenly had the world’s largest bookstore at your fingertips.
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When Amazon started meeting with publishers about the Kindle, its future e-book reader, in 2006, the device may well have seemed to them like just another goofy Amazon idea. E-readers had been tried, and had failed. Nonetheless, by 2007, publishers agreed to digitize a worthwhile selection of their books. But as one told the journalist Brad Stone for his book about Amazon,The Everything Store, none of the publishers spent much time thinking about how much e-books should cost. When, finally, at the press launch of the Kindle, Bezos announced that new releases and best-sellers would be priced at $9.99, the publishers had a fit. Then they checked their freshly inked contracts with Amazon and realized that they had forgotten something. They had no control over the price.
What was the problem with $9.99? The heart of the matter was that it was so much less than $28, the average price of a new hardcover book. Another problem with $9.99 was just how close it was to $7.99 or $6.99. Publishers believed that Amazon would eventually go even lower, putting intolerable price pressure on print books and the places that sold them. With print gone, what exactly would publishers be left with? They could still select and edit and market books, but their chief task, getting the books into stores across the land, would be eliminated.
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In the U.S., revenue from e-books is now about $3 billion annually. Amazon controls about two-thirds of this market. It also controls about two-thirds of all print books sold online. It is the biggest bookseller in the world. And no one complains about Sessalee Hensley anymore.
In the early years of the Kindle, the thing that made publishers most nervous was Amazon’s insistence on selling many e-books at cost or even at a loss. Initially, publishers set their e-book list prices at a few dollars off the print price, and then gave Amazon a 50 percent discount, meaning that Amazon was receiving new books at an average wholesale price of about $12—and was selling them for $9.99 and below. When publishers raised their wholesale prices in order to pressure Amazon to raise its resale price, Amazon didn’t budge. When publishers started “windowing” some new titles—that is, delaying their release as e-books for several months after the hardcover release—Amazon showed no inclination to change its practices, and publishers lost e-book sales. The publishers wanted to sell e-books, and they wanted to sell them when people were most likely to buy—when a book was new. But they also wanted to set the price.
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Amazon’s self-published authors’ books were particularly inexpensive, and also something else: they were a particular kind of book. In publishing terms they were known as “genre” books: thrillers, mysteries, horror stories, romances. There were genre writers on both sides of the dispute, but on the publishing side were huddled the biographers, urban historians, midlist novelists—that is, all the people who were able to eke out a living because publishers still paid advances, acting as a kind of local literary bank, in anticipation of future sales. Some pro-Amazon authors boasted of the money they’d earned from self-publishing, but the authors of books that sometimes took a decade to write knew that this was not for them—that in an Amazon future they would be even more dependent on the universities and foundations than they already were. When, in turn, pro-Amazon authors lashed out at traditional publishing, they often spoke with the passion of the dispossessed. The publishing houses made a lot of money on their own genre best-sellers, but the Amazon backers were not wrong to think that some of the institutions associated with American publishing—such as The New York Times, which has reported on the Hachette-Amazon standoff in great detail—did not take self-published genre writers all that seriously, and probably never would. (But get yourself on the Man Booker Prize short list and your call to the Times will go right through.) And perhaps the pro-Amazon writers also preferred the Amazon executives—Grandinetti, who talks about defending regular customers from the big “media conglomerates” (though he went to Princeton and worked for Morgan Stanley), and Bezos, who comes across as an excitable mad inventor (though he also went to Princeton)—to the buttoned-up representatives of the “legacy publishers,” such as the soft-spoken and impeccably articulate Michael Pietsch, who had gone to Harvard. In this way, the Amazon-Hachette dispute mirrors the wider culture wars that have been playing out in America since at least the 1960s. On the one side, super-wealthy elites employing populist rhetoric and mobilizing non-elites; on the other side, slightly less wealthy elites struggling to explain why their way of life is worth preserving.
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“If the Kindle didn’t have any books on it, guess how many Kindles would be selling,” [agent Andrew] Wylie said, putting up his fingers to indicate zero Kindles. “They want the books, and they want the publishers’ profits, too? They should get nothing. Zero.”
I pointed out to Wylie that his willingness to take the fight to Amazon partly on behalf of the publishers was a curious position for the famous scourge of publishers. He said, “It’s the first time since I got into the business that the interests of print publishers and authors have been closely aligned. And the reason is that, like ISIS, Amazon is so determined to wreak havoc on the culture that unlikely alliances have been formed.”
The next morning I got an e-mail from Wylie. In eight years of being a client at his agency, I had never received an e-mail from him, much less a mass e-mail prompting me to action. In it, an impassioned Wylie urged all his authors to sign the Authors United petition, the one organized by Douglas Preston. A few days later, The New York Times ran an article reporting that Philip Roth, the estate of Saul Bellow, and Milan Kundera, among other Wylie clients, had joined the Authors United campaign.
Link to the rest at Vanity Fair