Amazon Offers Authors 100% Of Ebook Sales To Get Them To Recognize Its Fight With Hachette Isn't About Screwing Authors
from the wake-up-authors dept
Last week, we had a post from author Barry Eisler, responding to a bunch of other authors who were attacking Amazon over its current contract dispute with Hachette. As Eisler noted, nearly all of their complaints were either misleading or didn't make sense. There's no doubt that there's a contract dispute going on, but claims of "boycotts" and other attacks seem really directed to people misunderstanding what's going on in the dispute -- and thus, those authors are defending the traditional gatekeeper publishing model in which Hachette gets to keep nearly all of the proceeds of book sales. Of course, the authors' main "complaint" was that they felt like they were being used as pawns in the fight, and that the dispute might impact their sales directly.To show how bogus that claim is, Amazon today went directly to Hachette authors with a proposal Amazon claims Hachette rejected: offering to give authors 100% of the proceeds on ebook sales.
The letter extends and develops a proposal Amazon made earlier in the dispute, which was dismissed by Hachette. It now offers Hachette authors “100 percent of the sales price of every Hachette e-book we sell.” Amazon also offered to suspend all its shipping delays and price adjustments, which it put in place in an effort to bend Hachette to its will.Of course, defenders of the publishers insist that this is all a ploy for Amazon in its never-ending mission to take over the world:
Roxana Robinson, president of the Authors Guild, dismissed the proposal.Once again, it's confusing to figure out which side the Authors Guild is really on here. Since we started covering that organization, it appears that it sides 100% with the publishers and rarely sides with what matters for the vast majority of authors.
“If Amazon wants to have a constructive conversation about this, we’re ready to have one at any time,” she said in an email. “But this seems like a short-term solution that encourages authors to take sides against their publishers. It doesn’t get authors out of the middle of this – we’re still in the middle. Our books are at the center of this struggle.”
The whole situation is quite bizarre when you think about it. At the same time you have Hachette and the Authors Guild insisting that they're trying to "protect the book" by keeping book prices artificially high, they're loudly complaining that Amazon won't discount their books. Notice some hypocrisy here? If you want to understand why this is happening, the best explanation I've seen so far comes from Hugh Howey, one of the super successful self-published authors who is firmly in Amazon's camp on this fight. Writing in the Guardian, he notes the perverse incentives of the traditional publishing world on Amazon:
Under the previous wholesale model, publishers might price an ebook at $14.99, and with the 50% discount, an online retailer like Amazon was able to discount to a more reasonable $9.99 to serve customers. Customers who expect digital books to cost less than the paperbacks with which they were familiar. With the new discount rate, Amazon stood to lose money by offering that same price. Publishers, meanwhile, were less than enthusiastic about lowering the offered wholesale discount.In other words, everyone really knows that ebooks should be priced lower, but the old publishing world wants to be able to set much higher prices, forcing Amazon to basically make no money at all on pricing the books lower. Given this scenario, it actually makes sense for Amazon to then make this offer to authors directly: it will hand over 100% of ebook revenue, because under Hachette's proposal, Amazon would make no money at all (or even lose money) on ebook sales anyway.
Publishers like Hachette now found themselves in enviable territory. They could price ebooks high – protecting their relationship with high-street booksellers – and rely on Amazon to cut their own margin to the bone in order to move quantities of ebooks. This new situation created the bizarre scenario where authors who once complained about Amazon's discounting are now complaining that they aren't discounting enough. And during these negotiations, parties from Hachette's side are accusing Amazon of raising prices by offering something close to what the publisher itself is setting.
In a presentation to investors, Hachette has stated as a primary goal the control of ebook pricing. Breaking their habitual silence just last week, a representative from Amazon confirmed that the sticking point in these negotiations is indeed price. So both sides have confirmed what's at stake. History would indicate that Amazon thinks ebooks should cost no more than $9.99. Their agreement with self-published authors supports this, as the royalty rate paid halves if the price exceeds this amount. Hachette, meanwhile, would very much prefer to offer ebooks at $14.99 or more and leave any discounting up to Amazon (or any pain up to their customers).
Update: Adding the text of the letter:
Dear XX,
I wanted to ask your opinion about an idea we’ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.
Our first choice would be to resolve a dispute like this through discussion only. We tried that already. We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.
We agree that authors are caught in the middle while these negotiations drag on, and we’re particularly sensitive to the effect on debut and midlist authors. But Hachette’s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.
Here’s what we’re thinking of proposing to them:Here’s an example: if we sell a book at $9.99, the author would get the full $9.99, many multiples of what they would normally get. We can begin implementing this arrangement in 72 hours if Hachette agrees.
- If Hachette agrees, for as long as this dispute lasts, Hachette authors would get 100% of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit from the sale of every e-book until an agreement is reached.
- Amazon would also return to normal levels of on-hand print inventory, return to normal pricing in all formats, and for books that haven’t gone on sale yet, reinstate pre-orders.
We haven’t sent this offer to Hachette yet — we’re sending this to a few authors and agents to get feedback first.
What do you think? Would this be helpful, especially for midlist and debut authors?
Can we talk on the phone later today or tomorrow once you’ve had a chance to digest?
Thanks and look forward to talking.
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Filed Under: authors, books, contractual fight, ebooks, self-publishing
Companies: amazon, hachette
Reader Comments
The First Word
“They seem to be putting the screws to their authors by refusing to even discuss things with Amazon, and if the letter covered a few days ago is any indication, at least some of those affected have fallen for it, and are blaming Amazon rather than Hatchette for the stalemate in negotiations.
Of course, with an offer of 'You keep 100% of the sales on your stuff' on the table, and the offer being made directly to the authors, rather than through Hatchette(who would likely try and spin it as their idea, or just 'forget' to mention it), Amazon seems to have come back with a brutal counter to Hatchette's silence.
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I suggest looking it up if you haven't seen it and are in need of a good laugh. The whole traditional publishing industry is farcical at this point.
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Storage and distribution costs that Amazon alone provides, not the publishers. My B/S flag has been thrown.
What Hatchette wants is Amazon to pay all the costs and Hatchette to get all the money (since they only pay a pittance to the Authors.)
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Here are some of the larger production printers
http://www.office.xerox.com/digital-printing-equipment/digital-press/enus.html
(Xerox is rather expensive though, you may look at other companies like Canon, Konica Minolta, or maybe even HP).
What's much cheaper is something you can run on a press where you're running the same page over and over (single color though they do have multi-color configurations as well). Then the cost of ink is very very low, a $30 can of ink can run about 250,000 pages or so (but you still may have to shoot film and make plates and there is the cost of developing film and you need to maintain your press and you need blanket cleaner and all sorts of things that go into it and you will invariably lose some pages as the press sometimes acts up and you need to readjust the press or rollers or whatever or else the printing will have problems. but it's still much cheaper than a printer). But that won't be practical for a book publishing company that prints multiple books with different pages.
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I am not sure on the original numbers either. Wholesale paper and ink and mass runs will bring the cost of printing down, but $2 does sound low.
However, for e-book distribution, $2 sounds really high, depending on the number of sales of a book. Storage is constant and very, very small (average size of my .anz files is about a MB each.) Distribution occurs only a couple times (maybe more if you go through devices like I do.) We are talking a couple pennies at most.
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FTFT
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They need to accept lower cuts of profits as they lose the distribution system. this they will refuse to do as then authors make more money and they make much less.
I see no reason why an author should sell his rights to a book fully and have to give 80% of the profits to publishers. Yes they do a great job for the authors arranging for their books to be edited and reviewed and changes made or advised to be made. This in itself is a job that should be paid for , but it is a job nothing more.
If authors are forced to use publishers they should have laws protecting them from publishers. No more massive costs and fees and losing copyright to their work. let the publishers charge and get their costs and a small profit from every book but nothing like they are getting now.
Established authors can churn out novels all day and make money , it is the new authors that need to be protected from publishers, like with music and video content creators should not be allowed to sell their rights away for more than a very short period , and then review their contracts with the middlemen.
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Substitute MPAA for Publishers, Amazon for Movie Theaters
We can't allow people who actually deliver the product to profit from our books or movies. They're ours!
As long as we get our cut, it doesn't matter who we starve,
and the public be damned.
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Re: Substitute MPAA for Publishers, Amazon for Movie Theaters
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Editors are actually kinda handy
Publishers aren't parasites, is my bottom line. They actually serve a function in producing good books, and the idea that any cent that doesn't go to an author is automatically wasted pisses me off as a reader and a writer.
(Also, here's that breakdown of costs. Read the comments too.)
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Re: Editors are actually kinda handy
The people who RUN the publishers are lawyers, accountants, and investors. Lawyers ask "Who can we hurt so they don't hurt us?" and the latter two ask "How you going to make money with that?" Product? Quality? Who cares?
There is NO major publisher that is run by book lovers, and it shows.
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Re: Editors are actually kinda handy
1. Nothing in this arrangement they're offering is about getting rid of the publisher. They're just offering a temporary deal while the negotiation plays out.
2. Nothing in any option means getting rid of editors. Even if you self-publish you can hire a professional editor.
3. That bit about "promoting" books? Having actually met with book publishers in the past, all they want to know is how *I'm* going to promote a book. They almost all rely on the authors to promote anyway...
Publishers aren't parasites, is my bottom line. They actually serve a function in producing good books, and the idea that any cent that doesn't go to an author is automatically wasted pisses me off as a reader and a writer.
No one has argued that.
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Three for the price of one
For paperbacks, $7-8 is generally my limits, whereas for ebooks, I could take that same $10-15 and pick up three or more books, just as good as the ones written by the 'professionals', elsewhere.
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Re: Three for the price of one
Personally, I prefer to buy my books used from yard sales for .25 to .50 each on the weekends, and then trade them in at a book swap for something that is harder to find.
Won't be long before dead tree books are outlawed and you won't be able to resell or trade them any more... the industry is starting to wise up to those of us who legally get our entertainment for nearly free.
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While there are plenty of "lightning strike" rarities like Hugh Howey, there's plenty of people who rely on one word: conversations. Either they say thought-provoking things on social media (blogs, Twitter, Facebook, etc. etc.), or contribute to someone else's thought-provoking topics.
People notice the source (the author), and get interested. They dig further, and might even buy a book after looking around. Rinse, repeat to grow reach, while releasing quality material worth buying.
It's much slower than getting lucky, but it's consistent and builds income over time from a growing audience that enthuses about both you, and the books you write.
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I'm kinda already doing the conversation game on Twitter, but I've been finding my words alone don't generate much interest. Instead I've found some initial success making action figures of peoples' Minecraft avatars and I have a book up for free called "Tales from the Creature Keeper: Survival Critters". I wrote it as a stand-alone side story to its parent episodic novel and you can download it for no cost whatsoever on Smashwords.
https://www.smashwords.com/books/view/445045
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Added full text of the letter
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I'm confused
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They seem to be putting the screws to their authors by refusing to even discuss things with Amazon, and if the letter covered a few days ago is any indication, at least some of those affected have fallen for it, and are blaming Amazon rather than Hatchette for the stalemate in negotiations.
Of course, with an offer of 'You keep 100% of the sales on your stuff' on the table, and the offer being made directly to the authors, rather than through Hatchette(who would likely try and spin it as their idea, or just 'forget' to mention it), Amazon seems to have come back with a brutal counter to Hatchette's silence.
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Some thoughts on Amazon's offer
If you've already got a publishing agreement covering paper books, the contract may also cover e-book publishing. If it doesn't, then you're free to accept Amazon's offer. Of course, this WILL poison your relationship with your publisher. Think about it. Will you want to continue publishing through that publisher? CAN you publish through another publisher?
If you DO have a contract that covers e-books, you have all of the above relationship poisoning, PLUS you then either have to break the contract (with attendant penalties), or risk going to court over the rights of your own books.
One final question, then...
You've heard of the App-Store deals where your app gets promoted, popular, even, and you-the-author get nada because the Store set the price to zero during the promo? In this case, who is setting the price of the e-books you're offering through Amazon? Remember, 100% of zero is still zero.
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Re: Some thoughts on Amazon's offer
Sounds like bitter grapes to me.
All I can say is, suck it, you deserve it
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Re: Some thoughts on Amazon's offer
Amazon is not offering any deal to the authors. They are telling the authors what deal they are offering to Hachette, to try to help the authors during the period of negotiation, and encourage both Amazon and Hachette to get moving on the negotiation.
Sure Amazon is using disclosing this as a promotion ploy, but they aren't offing anything to the authors. They are just informing the authors.
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The key word here is "guild".
Note that it's called the Authors Guild. A guild is a protectionist trade organization. As such, this one is controlled by authors that "made it" and works to exclude the vast majority of others from joining that club. Hence their support of the publishers' gatekeeper behavior: the publishers are their gatekeeper, their way of effectively limiting the labor supply in their field.
Of course, Amazon's anyone-can-publish-anything-and-see-what-price-the-market-will-bear model completely short-circuits the guild protectionism and breaks the back of the established authors' price-fixing oligopoly, so of course they hate it and are fighting it tooth and nail...
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Wtf ?
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Re: Wtf ?
Read the letter. Amazon has made a proposal to Hachette that the authors get 100% of the eBook revenue during the negotiations. This is not about cutting out Hachette, it is an attempt to provide relief to the people Hachette and the Author's Guild have been claiming are being hurt during these negotiations.
Hachette and the Authors Guild have been jumping up and down complaining that Amazon is using it's power to force Hachette to settle by putting the screws to authors during the negotiations. The brilliant response from Amazon is 'Ok, let's take the hostages out of the equation while we negotiate'. Hachette and the Author's Guild complaining about the move just highlights that THEY are the ones that want the authors held hostage.
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Re: Wtf ?
Hey authors! Be aware that it is not amazon that is screwing you, we are willing to give you 100% of the income, until our disagreement with Hachette is resolved. It is Hachette that is unwilling to do this. Don't blame us, blame Hachette.
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In Germany several publishers reported delays and were recently been told to deliver their books for the germna market to Amazons distribution center located in Poland.
I guess this doesn't make it anymore efficient than using the existing Amazon locations in Germany.
But it could be because of allegations about Amazons treatment of its workers and several strikes that occured.
Anyway in Germany a fixed book price agreement is ensured by law (since 1888).
Books count as cultural goods and prices shouldn't fluctuate wildly over the whole market depending on where you buy them.
So german books cost the same all over Germany. At least if they are new.
So Amazon can't lower prices for german books and getting a new agreement with publishers won't lower any prices for the customers, it would just increase Amazons profits.
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