And so, the Gloves Come Off - Amazon on the Offensive

[Rafellin]

Smashwords: Amazon's Hachette Dispute Foreshadows What's Next for Indie Authors

 

[Ursa major]

In the article, I noticed:

The publishers viewed agency as a better model. The US DoJ viewed the united front as collusion.

Which may be the correct decision, in general. But when dealing with a single business, in this case Amazon, there isn't so much a monopoly (in effect a single seller) as a Monopsony (a market form in which only one buyer faces many sellers). As Charles Stross (who wrote a blogpost in 2012 mentioning this) said then:

It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only or majority purchaser of a good or service, the "monopsonist" may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers.

It seems to me -- and I haven't yet read Mr Stross's most recent blogpost (which is on this very issue) -- that if the publishers were able to agree on a single position in regard to a single monopsonist, they could hardly be accused of skewing the negotiations (if there are any) too much in their favour, because they would simply be creating a level playing field: of one company against one united group of companies.


EDIT: Here's the new Charles Stross blogpost on the issue; it includes a link to the blogpost from which I quoted.

Spoiler

.

 

[psychotick]

Hi,

I like Mark, but I can't help but feel that he's trying too hard to push this one. Not about Amazon vs Hachette - I'm sure that's going to be a blood in the water battle of the sharks. But about the effect of this battle on indies.

Yes, Amazon could start lowering royalties, but I don't see them doing this any time soon. At least not until they are a true monopoly which should be a few more years away. (Had never heard of a monopsony before by the way - so good education there.)

My guess is that they will start tinkering with them again in time, but mainly to increase sales - and sales require motivated authors. Squeeze the indies too hard and you'll start finding less books arriving, and perhaps though I hate to say it, a lowering of standards. After all if an editor costs thousands, cover design hundreds, and then there's promotion etc, and your income from each book gets cut in half, the economics of publishing start to shift. You'll start losing indie authors, and if someone down the road opens up a 70% royalty scheme in competition, you'll get more competition as well.

On top of that while Mark pushes the Agency model, lets be honest. Authors haven't done that well out of it - publishers have.

But it'll be interesting to see who wins.

Cheers, Greg.

 

[ctg]

"Last week we heard that Amazon was withdrawing Hachette books from its virtual shelves including allowing preorders of the new JK Rowling book. Amazon has responded to these allegations, and confirms that yes, they are purposefully preventing pre-orders and lowering stock in order to get a better deal from Hachette. Amazon recommends that in the meantime, customers either buy a used or new copy from their zShops or buy from a competitor. Amazon admits there is nothing wrong with Hachette's business dealings and that they are a generally good supplier."

Amazon Confirms Hachette Spat Is To "Get a Better Deal" - Slashdot

Amazon said on a Kindle forum that it had been unable to come to “mutually-acceptable agreement on terms” with Hachette. Although the site is restricting sales of physical books, it’s negotiating for how big a cut it gets from ebooks. Publishers currently make up to 75 per cent of the price of a digital novel and Amazon wants a greater piece of that pie.


“Hachette has operated in good faith and we admire the company and its executives. Nevertheless, the two companies have so far failed to find a solution. Even more unfortunate, though we remain hopeful and are working hard to come to a resolution as soon as possible, we are not optimistic that this will be resolved soon,” the ebook superstore said.


But it defended its negotiating tactics as normal for any book business, equating it with bricks-and-mortars stores deciding whether or not to feature certain titles in adverts or stack novels at the front of the shop.


“When we negotiate with suppliers, we are doing so on behalf of customers. Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term,” the firm said.


Hachette spokeswoman Sophie Cottrell has said that the publisher is doing its best to come up with a solution to the dispute.


"We are doing everything in our power to find a solution to this difficult situation, one that best serves our authors and their work, and that preserves our ability to survive and thrive as a strong and author-centric publishing company."

Amazon did acknowledge that the dispute could affect writers. The firm offered to fund half of an “author pool”, with Hachette in control and funding the other half, to “mitigate the impact of this dispute on author royalties”. The firm said it had run a similar pool during a dispute with Macmillan a few years ago.

Hachette first complained that Amazon was delaying delivery on its books earlier this month and authors and publishers have since spoken out about the company’s tactics.
Prolific writer James Patterson said in a Facebook post that there was a war going on between Amazon and publishers.


“What I don’t understand about this particular battle tactic is how it is in the best interest of Amazon customers. It certainly doesn’t appear to be in the best interest of authors,” he wrote.
“More important - much more important - is the evolution/revolution that’s occurring now in publishing. Small bookstores are being shuttered, book chains are going out of business, libraries are suffering enormous budget cuts, and every publisher - and the people who work at these publishing houses - is feeling a great deal of pain and stress. Ultimately, inevitably, the quality of American literature will suffer.


“If the world of books is going to change to ebooks, so be it. But I think it’s essential that someone steps up and takes responsibility for the future of American literature and the part it plays in our culture. Right now, bookstores, libraries, authors, and books themselves are caught in the cross fire of an economic war. If this is the new American way, then maybe it has to be changed - by law, if necessary - immediately, if not sooner.”


Meanwhile, Dennis Loy Johnson, co-founder of the Melville House publishing group, was quoted by the New York Times earlier this week accusing Amazon of employing mafia tactics.


"How is this not extortion? You know, the thing that is illegal when the mafia does it,” he said.
But others have accused the larger publishing houses of using PR spin to smear Amazon in an attempt to preserve the traditional status quo. Amazon linked to a post from Martin Shephard, co-founder of The Permanent Press, praising the website for helping independent publishers.


“We’ve been publishing literary fiction for 35 years, and in the past found that the chain bookstores took few if any of our titles, that distributors like Ingram demanded bigger discounts from us than they charged the conglomerates, or that despite winning more literary awards per title than any other publisher in America we could not match the print review coverage afforded to authors of the five big conglomerates,” he wrote.


“But we’re not calling these other organisations mafia-inspired or asking for government intervention. Surely one must come to recognise that all these companies are - and should be - free to set their own terms based on their bottom-lines, and publishers like Hachette might consider tempering their complaints about Amazon’s discrimination or restraint of trade.”

http://www.theregister.co.uk/2014/05/28/amazon_hachette_profit_margin_dispute/

 

[ctg]

Even Reuters (and New York Times) are putting their fingers in this soup. This is getting interesting.

Ordinarily I’d ignore this scrimmage between two capitalist antagonists and go find something random on Amazon to buy while drinking a strong cup of joe, reading my newspaper, and swearing randomly. But Amazon’s silence has made me madder than an anaconda stuffed into a black garden hose and left to cook in the Arizona sun, to paraphrase Ed Anger of Weekly World News.

If Amazon thinks I don’t care about its silence, it’s wrong. I take it personally that the company doesn’t think it owes me even a half-baked explanation for why I can’t buy some books from it.

http://blogs.reuters.com/jackshafer/2014/05/27/why-im-ditching-my-amazon-account/

 

[ctg]

Amazon wants to dictate book prices, and even print copies of publishers' books itself, a report in trade mag Bookseller suggests. UK publishers are, we're told, none too happy.

Over in the US, Amazon is already locked in battle with Hachette, the first publisher whose terms with Amazon are coming up for renegotiation: Amazon has stopped taking preorders for Hachette titles, citing delivery times of weeks or months. It's also kneecapped German publisher Bonnier Media the same way, prompting a complaint to the German competition authority.

We're told the new contracts demand payment for strong placement on the website, and Amazon also wants to dictate the price for the books industry-wide by forbidding suppliers from offering rival retailers lower prices.

Bookseller editor Philip Jones told the BBC that if supply contracts were accepted on such terms, it would be "a form of assisted suicide for the industry".

Amazon's reported demand to control the right to copy, when it wants, is regarded as the equivalent of coming for your first-born. In practical terms, publishers fear readers will blame them for any ****-ups caused by Amazon's print-on-demand machines pumping out tomes.

Publishers are on watch by competition authorities for five years following the settlement of the Apple e-book price-fixing case. Apple had merely promised publishers not to sell books at a loss, and retail prices briefly rose from $8 to $10 before falling back. The Cupertino giant and the publishers involved were later accused of harming consumers.

The settlement effectively granted Amazon a distribution monopoly – or monopsony – which it can now use for further leverage.

Meanwhile, some independent music labels have accused Google of attempting to control music royalties using its dominant YouTube service. Contract details emerged earlier this week.

Amazon has not commented on the Bookseller's report. ®

Amazon offers Blighty's publishing industry 'assisted suicide'

 

[Brian G Turner]

All this from Amazon and Google - companies that evade Corporation Tax, and funnel their profits into shell companies in the Caribbean.

 

[JonH]

I don't understand what's going on here. If the publishers are being squeezed by Amazon, why do they supply through them?

Wouldn't it be better to forego the short term advantage of access to Kindle and the Amazon shop window, than be in thrall to someone who is trying to take you for a ride?

 

[Venusian Broon]

Article about this from the guardian today and the consequences for us authors...

As Amazon slugs it out with the big publishers, authors are left cowering | Adam Fletcher & Paul Hawkins | Comment is free | theguardian.com

 

[Vertigo]

I don't understand what's going on here. If the publishers are being squeezed by Amazon, why do they supply through them?

Wouldn't it be better to forego the short term advantage of access to Kindle and the Amazon shop window, than be in thrall to someone who is trying to take you for a ride?

I sort of agree with you there. I think the problem is that they would need all the publishers to boycott amazon together otherwise Amazon's dominance of the market means their sales would be totally stuffed

I am deeply worried about the current trend where Amazon is concerned. The way I see it they are openly and actively trying to make publishers extinct (book publisher at least, but watch out all other publisher including film and tv). They want everyone to be self published. Then their suppliers are all small indie authors who will never be strong enough to stand up to them. At that point they can help themselves to what ever cut they want from those indies. End result is that it will become impossible for novelist to actually make a living from writing and we will only have novels from people for whom writing is a hobby.

Not good. We need a serious competitor to Amazon. Without that, ultimately, we the consumers will be totally stuffed.

 

[Stephen Palmer]

Not good. We need a serious competitor to Amazon. Without that, ultimately, we the consumers will be totally stuffed.

You got it in one.

At the moment - as readers, but especially as authors - our choice is Hobson's.

 

[Vertigo]

You got it in one.

At the moment - as readers, but especially as authors - our choice is Hobson's.

Indeed, though I would say we're not quite at Hobson's yet but that's certainly where Amazon wants us to be!

Actually in fairness that's where pretty much any retailer wants us to be but few get as close to it as Amazon now is.

 

[tinkerdan]

That seems to be a common business model here for retail... If you want shelf space to put your product before our customers you have to make these concessions...

It creates dynamic shelving where a product might consume an entire shelving unit one day and the next; be reduced to little or nothing.

Usually this drives a small percentage of customers to another outlet; but by some madness it doesn't seem to impact the retailer that much.

As an aside though I recently ordered several books from Amazon [I wait until I have enough for free shipping because I'm not in the free shipping club.] One of my choices was an Orbit publication and that one did extend my delivery from 5 to 6 days to 5 to 6 weeks. I think they expected I might either unlump my delivery or order something else. But in the past when this has happened I've waited until it got so unreasonable that I canceled everything.

This time I watched the delivery every day until about the tenth day when they suddenly noted that the order was ready to ship the next day so I got lucky. But this might be an indication that Orbit is also suffering from this unless there were some other logistical problems with that book.

 

[Jo Zebedee]

This has really stepped up in the last day or two. I can't really see any winners for writers: for those trad pubbed, or hoping to be, it will mean the end of advances (which are already slim-pickings) and make earnings per book much lower. For those self-pubbed, it gives Amazon more power over list price etc which means, should you become successful, you could expect them to cut your price to promote, and therefore your money.

Interesting that many of those opposing it, and analysts, believe the move may be because Amazon is losing so much money (which doesn't surprise me given how diverse they've become, so quickly).

Either way, I think it's coming to the stage where the writers may have to vote with their feet and go find someone else to support, be it online like Smashwords, or a local bookshop. I rarely buy books on Amazon - I'll be doing it not at all if I can help it in the future, no matter what they offer. The same for dvds/videos etc - I'll source them elsewhere. It's hard enough to make it in this game without it being to feather Amazon's pockets.

 

[psychotick]

Hi,

I'm surprised no one's mentioned the latest chapter in this Amazon Hachette battle - the one where both sides are busy using their authors as battle fodder.

I just got a letter from Amazon about Hachette

Cheers, Greg.

 

[Jo Zebedee]

Hi,

I'm surprised no one's mentioned the latest chapter in this Amazon Hachette battle - the one where both sides are busy using their authors as battle fodder.

I just got a letter from Amazon about Hachette

Cheers, Greg.

Hi Greg, that's sort of what I was referencing above. Badly. It's ridiculous (although my sympathy lies mostly with the publisher, to be honest.)

 

[Ursa major]

Here is John Scalzi's view of the latest manoeuvring. (And here's his response to those responding to him around the web.)

 

[Karn Maeshalanadae]

It's a shame authors can't be their own retailers...I don't mean be their own publishers, that's what self-publishing is, of course, but their own retailers, their own distributors.

 

[psychotick]

Hi,

Karn: Authors can be their own retailers - easily in the case of ebooks. You can sell from your own website if you set it up for that. Many do. It's just that most authors don't get the traffic they need to their own websites.

Springs: My sympathies lie with all the authors - bar perhaps the best sellers who really don't care. The rest of us, trade or indie are really like road kill staked out in an arena while two monster trucks duel it out around us.

My analysis: If Amazon wins then Hachette's authors end up forced to take a lower price for their work - which is counter to the principle of a free market. But they may perversely make more money out of it if Amazon is right. Indies suffer too because as Scalzie points out, their competitive price point advantage gets washed away a little.

If Hachette wins - and my thought is that the law is on their side - their authors may be stuck with higher prices on ebooks which may translate to reduced sales. Readers of course get screwed. And indies win a little as they get to dominate the cheaper prices. But indies lose a little as well since the point of this is to increase Amazon's market share of readers by largely being able to promote themselves as sellers of $10 books, and most indies have Amazon as their primary sales outlet.

By the way - this exact battle was being fought long before now. Amaon did it through royalties previously. Under the kindle system an author gets a royalty of 35% for an ebook priced below $2.99. 70% for an ebook priced above that but below $9.99. And 35% for an ebook priced at $10 and more. Strangely that means trade published authors selling ebooks through Amazon at over $10 were being screwed anyway. They lost half their income instantly, but hoped that increased sales of paperbacks etc, more than made up for it.

Cheers, Greg.

 

[Karn Maeshalanadae]

See, that was exactly my point. To get any kind of income at all, it's just a shame one really has to go through places like Amazon.


One could only hope that someday authors are able to completely cut out all the middle men. I realize that would mean time and expense on their part, and so to start one might need to go through a publisher until one gets enough income-from various sources if need be-to be able to deal with expenses themselves.


And if one could cut out the retailer and still do well, then, that would be something.