Amazon Tells Its Version of Hachette Ebook Battle Story on ReadersUnited.com Website

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In a long note directed at readers, Amazon tells its version of the story of its protracted and sometimes bitter negotiation with Hachette over ebook prices at a new website, ReadersUnited.com.

In the note, Amazon details its negotiating position, history of changes in book publishing that publishers have resisted, including the invention of paperback books and ebooks, and implores readers to write emails to Michael Pietsch, the CEO of Hachette, telling him to end the company’s resistance to doing a deal with Amazon.

It also showed its determination to get its way: “We will never give up our fight for reasonable e-book prices.”

Following the note is a list of recommended reading with links to articles that support Amazon’s position and way of thinking on the issue. The full note is below and the list of links can be found on the ReadersUnited.com website.

Amazon has not yet replied to request for comment.

See Amazon vice president of Kindle content Russ Grandinetti speak candidly on stage at Digital Book World 2015 in an unprecedented interview on all things publishing. More information

[Amazon Note]

A Message from the Amazon Books Team

Dear Readers,

Just ahead of World War II, there was a radical invention that shook the foundations of book publishing. It was the paperback book. This was a time when movie tickets cost 10 or 20 cents, and books cost $2.50. The new paperback cost 25 cents — it was ten times cheaper. Readers loved the paperback and millions of copies were sold in just the first year.

With it being so inexpensive and with so many more people able to afford to buy and read books, you would think the literary establishment of the day would have celebrated the invention of the paperback, yes? Nope. Instead, they dug in and circled the wagons. They believed low cost paperbacks would destroy literary culture and harm the industry (not to mention their own bank accounts). Many bookstores refused to stock them, and the early paperback publishers had to use unconventional methods of distribution — places like newsstands and drugstores. The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.” Yes, George Orwell was suggesting collusion.

Well… history doesn’t repeat itself, but it does rhyme.

Fast forward to today, and it’s the e-book’s turn to be opposed by the literary establishment. Amazon and Hachette — a big US publisher and part of a $10 billion media conglomerate — are in the middle of a business dispute about e-books. We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market — e-books cannot be resold as used books. E-books can and should be less expensive.

Perhaps channeling Orwell’s decades old suggestion, Hachette has already been caught illegally colluding with its competitors to raise e-book prices. So far those parties have paid $166 million in penalties and restitution. Colluding with its competitors to raise prices wasn’t only illegal, it was also highly disrespectful to Hachette’s readers.

The fact is many established incumbents in the industry have taken the position that lower e-book prices will “devalue books” and hurt “Arts and Letters.” They’re wrong. Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books. On the contrary, paperbacks ended up rejuvenating the book industry and making it stronger. The same will happen with e-books.

Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.

Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger.

But when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move. It was never in George Orwell’s interest to suppress paperback books — he was wrong about that.

And despite what some would have you believe, authors are not united on this issue. When the Authors Guild recently wrote on this, they titled their post: “Amazon-Hachette Debate Yields Diverse Opinions Among Authors” (the comments to this post are worth a read). A petition started by another group of authors and aimed at Hachette, titled “Stop Fighting Low Prices and Fair Wages,” garnered over 7,600 signatures. And there are myriad articles and posts, by authors and readers alike, supporting us in our effort to keep prices low and build a healthy reading culture. Author David Gaughran’s recent interview is another piece worth reading.

We recognize that writers reasonably want to be left out of a dispute between large companies. Some have suggested that we “just talk.” We tried that. Hachette spent three months stonewalling and only grudgingly began to even acknowledge our concerns when we took action to reduce sales of their titles in our store. Since then Amazon has made three separate offers to Hachette to take authors out of the middle. We first suggested that we (Amazon and Hachette) jointly make author royalties whole during the term of the dispute. Then we suggested that authors receive 100% of all sales of their titles until this dispute is resolved. Then we suggested that we would return to normal business operations if Amazon and Hachette’s normal share of revenue went to a literacy charity. But Hachette, and their parent company Lagardere, have quickly and repeatedly dismissed these offers even though e-books represent 1% of their revenues and they could easily agree to do so. They believe they get leverage from keeping their authors in the middle.

We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture. We’d like your help. Please email Hachette and copy us.

Hachette CEO, Michael Pietsch: Michael.Pietsch@hbgusa.com
Copy us at: readers-united@amazon.com

Please consider including these points:

– We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.
– Lowering e-book prices will help — not hurt — the reading culture, just like paperbacks did.
– Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.
– Especially if you’re an author yourself: Remind them that authors are not united on this issue.

Thanks for your support.

The Amazon Books Team

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12 thoughts on “Amazon Tells Its Version of Hachette Ebook Battle Story on ReadersUnited.com Website

  1. It is interesting that those who use Amazon to self-publish their ebooks have received a passionate appeal from Amazon to assist them in their battle against Hachette.

    Yet when these very e-book authors have made passionate appeals to Amazon, to help e-book authors in their battles against…Amazon, all they have ever received is generic responses saying there is nothing that can be done to change the issue at hand.

    For example, have a look at the Amazon KDP (Kindle self-publishing) forums for discussions and issues of false, fake, and malicious reviews – which Amazon refuses to acknowledge, and which can instantly kill months or years of an author’s work, even though the reviews are illegitimate.

    I have personally made passionate appeals to Amazon regarding this and other issues facing those who self-publish e-books on Amazon. I have pleaded with them numerous times to create a much more interactive, transparent review takedown request process and work directly with authors in this matter.

    Yet nothing from Amazon but boilerplate replies.

    I may side with Amazon on this Hachette issue, or I may not. But one thing is certain – I will follow their example: Their appeals to me are going to fall on deaf ears just as my appeals to them always fall on deaf ears.

  2. Corporate American has become more oriented towards paying its employees poorly, illegally interfering with moves by employees to unionize, squeezing suppliers margins, and avoiding taxes wherever possible. Today, Amazon is a classic example of Corporate America, putting its agenda before others.

    Not too many years ago, Amazon seemed to do mostly what was in the best interests of all concerned. Perhaps the accumulation of losses since inception made it necessary in management to fight for Amazon first. I don’t know why for sure, but it became more self serving..What I do know is that I no longer feel like a valued customer. I now feel like an ancillary part of a large mechanized self centered machine that will do for itself whatever it wants to do with or without me. My interaction with them, once quick and easy, is no longer fun. Quality has slipped. Many venders are no longer familiar, Quality suppliers complain that will not honor agreed upon selling prices. Some have left Amazon because they are too difficult to work with. Shipments, even via Prime, were deliver to the post office five miles away, rather than to my home. They arrived in two to for days, not overnight.

    I like to shop with companies that I respect, that I admire for the way they run their businesses. Amazon is no longer a company I admire, or respect. In its dealings with Hachette, it seems to be very inflexible, acting somewhat like a bully. It’s all about Amazon now. Even the “fabulous new Amazon phone was hyped by Jeff Bezos for hours as a great phone from the great Amazon! ….more than good enough to compete with anyone, even Apple.
    Within days, evaluators opened our eyes to reality. It was a mediocre phone that was really made to make it faster for us to buy something on Amazon. The great phone was all about helping Amazon, not us.

    So Amazon and I have pretty much parted ways. As far as Hachette and Amazon are concerned, I don’t really know anything about Hachette. But, based on what I know about Amazon, my sympathies would go to Hachette.I wish them well.

  3. Corporate American has become more oriented towards paying its employees poorly, illegally interfering with moves by employees to unionize, squeezing suppliers margins, and avoiding taxes wherever possible. Today, Amazon is a classic example of Corporate America, putting its agenda before others.

    Not too many years ago, Amazon seemed to do mostly what was in the best interests of all concerned. Perhaps the accumulation of losses since inception made it necessary in management to fight for Amazon first. I don’t know why for sure, but it became more self serving..What I do know is that I no longer feel like a valued customer. I now feel like an ancillary part of a large mechanized self centered machine that will do for itself whatever it wants to do with or without me. My interaction with them, once quick and easy, is no longer fun. Quality has slipped. Many venders are no longer familiar, Quality suppliers complain that will not honor agreed upon selling prices. Some have left Amazon because they are too difficult to work with. Shipments, even via Prime, were deliver to the post office five miles away, rather than to my home. They arrived in two to for days, not overnight.

    I like to shop with companies that I respect, that I admire for the way they run their businesses. Amazon is no longer a company I admire, or respect. In its dealings with Hachette, it seems to be very inflexible, acting somewhat like a bully. It’s all about Amazon now. Even the \fabulous new Amazon phone was hyped by Jeff Bezos for hours as a great phone from the great Amazon! ….more than good enough to compete with anyone, even Apple.
    Within days, evaluators opened our eyes to reality. It was a mediocre phone that was really made to make it faster for us to buy something on Amazon. The great phone was all about helping Amazon, not us.

    So Amazon and I have pretty much parted ways. As far as Hachette and Amazon are concerned, I don’t really know anything about Hachette. But, based on what I know about Amazon, my sympathies would go to Hachette.I wish them well.

  4. “We recognize that writers reasonably want to be left out of a dispute between large companies.”

    “We’d like your help. Please email Hachette and copy us.”

    As we noted in a detailed breakdown of this desperate measure by Amazon, in which Amazon reminds everyone Hachette is “part of a $10bn media conglomerate”, you couldn’t make it up…

    http://ebookbargainsuk.wordpress.com/2014/08/09/amazon-begs-indie-authors-to-help-fight-10bn-media-conglomerate-you-couldnt-make-it-up/

  5. I simply do not want to be involved in this dispute. I am not a Hatchette writer. I felt it was unprofessional of Amazon to try to enlist their KDP authors in a situation that has nothing to do with us. Let Hatchette set their own price. If no one wants to pay that much, they’ll reduce it. But please don’t ask me to assist in your negotiations.

  6. I only wish I could have summarized my feelings as well. I read Amazon ebooks on my iPad, only after two Kindles with an early demise of less than two years. My response from Amazon quoted warranty and repair prices period.

    I’m up to speed with regard to the Hachette dispute, and while I’m always looking for a bargain, it seems illogical to treat all e-books with some sort of \commodity\ like pricing. There are authors whose artistry I would spend more to sample. On the other hand, I’ve read my share of trash for 9.99.

    In summary, let the market and publisher set pricing. If the title doesn’t move and the publisher needs to move it, guess what happens to the price?

    Better yet, visit a book store and sample the bargain tables. There’s plenty of great literature there available for lower prices than Amazon. Books are literature, not shampoo and tv’s. There IS a difference..

  7. This \war\ to impose prices is about margins and profits, which Amazon as a public listed company is expected to produce, that is what investors expect and management offer.

    To squeeze profits and margins from suppliers is not the answer. The letter is disinginios arguing that Amazon is acting infavor of customers, when in fact is about market share, control, profits and margins.

    Now that Amazon has invested in major infrastructure to hadle all kinds of merchandise, including lettuces, shouts, etc. books are less and less relevant and is in desperate need of profits (last Quarter show another loss)

    A Book is not a commodity or a common merchandise that can be ruled by supply and demand. Books are unique products of individuals that dedicate time and passion to research and write. Most publishers curate to select texts and invest in editing, typesetting, design, translate, etc. assuming all the Risks, Amazon risk nothing is only a channel.

    As a distributor Amazon should let publishers set freely the price their books and please let readers decide if they are willing to pay or not for high quality books.

  8. Amazon does some things very well that helps it generate sales. A few years ago, when publishers weren’t playing nice, Amazon did some tweaking to their algorithms that benefited self publishers. Those benefits are gone except for the outlier self publishers.

    The last thing I want is for trade publishers to lower their ebook prices. It’s bad enough my bestseller is in the 99 cent range, (which we only make 30% on.) My history mystery used to sell well at 5.99 (which you make 70% on.) The rest of my series are now priced in the $2.99 to $5.50 range to keep sales going. There’s enough downward pressure without convincing trade publishers to join in.

    The last thing I want is competition from publishers with big promotional budgets.

    I have one series in movie development, and my agents are working on securing a trade deal. I have no desire to tell publishers how to run their business.

    Amazon has never made an altruistic decision on behalf of self publishers. It’s always been about getting more market share for Amazon, and for a while that favored self publishers.

    I’m not going to help decrease my sales by encouraging publishers to stoop to my level.

  9. As a writer I admired the style and composition of the letter. As a self-publisher I found its twisted logic to be very unpleasant. Why doesn’t Amazon have a spokesperson, a symbol of their support for \reading culture\? Instead, we have the Amazon Book Team to \look up to\. I reacted to the letter, line by line: http://www.blacksteps.tv/?p=31185

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