An Author’s Perspective on the Hachette-Amazon Battle

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I was pretty sure Amazon and Hachette were in contract negotiations long before the announcement on May 9th when the New York Times broke the story. You see, on February 7th, the discounts for all my Riyria books listed on Amazon.com vanished, raising my ebooks from $8.59 – $8.89 to $9.99 and my print books from $11.41 – $13.80 to $16.00 or $17.00. What was even more disturbing, however, was the discounts on most of my fellow Orbit (the fantasy imprint of Hachette) author’s books disappeared as well. Even as I write this, I see the only paperbacks which are discounted are those in pre-release or books published in April or May. Also, the discounts are just 10% rather than the usual 25% – 30%. Even hardcover editions of front list titles such as Brian McClellan’s The Crimson Campaign (released May 6th), and James S.A. Cory’s latest book in The Expanse series (releasing June 17th) are currently full price.

The matter got worse in early March when I started seeing stocking issues. From March 9th until May 8th my wife, and business manager, was having constant emails and phone conversations with my editor, publisher, and Amazon over these issues. We were getting very mixed messages. On April 29th, during a phone call with Amazon’s Author Central, the Amazon representative indicated they had more than a dozen purchase orders placed from April 21st – 24th which had not yet shipped. At that time, Hachette was indicating ship dates of May 2nd – May 10th. Hachette has continually assured us all orders were shipping “in a timely manner” and Amazon was to blame for placing small orders. We’ve asked for copies of the purchase orders and confirmation of the shipment dates from my publisher but have been told, “It is not information we would like to be shared with any third party at the current time.” Hachette would be foolish to delay orders while simultaneously accusing Amazon of doing exactly that, but perhaps their definition of “in a timely manner” is not the same as it was before the dispute.

On May 7th I started alerting fellow Orbit authors about these issues. It didn’t take long for their agents to make their own inquiries. In an email sent to my wife on May 8th Orbit mentioned my communication with other authors and my frustrated wife responded with, “I have reached out to a few fellow Orbit authors, but I can’t help but wonder why you haven’t? … Do you plan on telling them now?” The next day, the news broke in the New York Times, and emails went out to all Hachette authors.

So how has this affected me as a Hachette author? Well, it’s difficult to know precisely as we only get royalty reports twice a year, and the royalties for January through June won’t arrive until October 2014. But Nielsen’s Bookscan system captures about 65% – 75% of the point-of-purchase print sales, including those bought at most bricks-and-mortar stores and the big online retailers like Amazon and BandN.com. From this data I’ve seen my print book sales drop to 54.8% of what they were before this all started. There could be many reasons for this, but I’m concerned the higher price of my books, and the lack of their availability, has led many fantasy readers to opt for a book from other authors that were cheaper and easier to get. It also seems to indicate a good portion of my particular readership buys print books from Amazon, as listings at other sites remained unchanged.

hachette_sales_fall_off

Impact to ebook sales (due to lack of discounting) is harder to judge, because I only have Amazon sales rankings to go by. In early February my sales ranks were running 5,000 – 8,000, nowadays I’m seeing 10,000 – 23,000. I don’t know exactly how many lost sales that equates to, but I do know my books are further down on the various best sellers lists and higher rankings mean I’m selling fewer books.

So where does this leave me? Well first off, it has me questioning the publishing path for my next series, The First Empire, which I just finished writing. This isn’t the first time, and won’t be the last, that publishers and suppliers have clashed. I felt bad for the authors at Macmillan, Simon & Schuster, and independent publishers distributed through IPG when they experienced similar issues. For a long time I’ve been concerned that I would find myself in a similar situation. The ironic thing is my self-published books (provided through print-on-demand) have always been available. Because I’m a hybrid author I could easily shift my next set of books to self rather than traditional.

Related: Understanding Hybrid Authors

Of course many people wisely point out that Amazon may apply similar pressure to self-published titles, and I have no illusions about the long term prospect of a 70% royalty. But even if Amazon cuts the self-publishing royalty rate in half, they would still be paying twice as much as I get under the current Hachette contract where ebook royalties are split 30% to Amazon, 52.5% to the publisher, and 17.5% to the author.

What do I think should happen? Well first off, publishers have to realize that getting $3 for every $1 that an author makes on ebooks just isn’t fair. Ironically, they are feeling the same pressure from Amazon that they apply to authors—requesting a higher share because they hold a strategic advantage. I’m sure both Amazon and authors look at the publisher’s 52.5% and can’t help but think more should come their way, but unlike Amazon authors are powerless. The big-five publishers are remarkably uniform in paying 25% of net on ebooks, so the author has to either accept that rate or go the route of self-publishing. If I could set the terms, I would suggest 30% to Amazon, 35% to the publishers, and 35% to the author.

What can authors do in such an environment? I suggest we each develop a direct sales channel with our readers. In my Hachette contract, I was able to negotiate the ability to sell signed copies of my print books from my website. Since I buy the books from my publisher at a discount similar to what they receive from bookstores, they get their share. I would love to sell my Hachette ebooks as well, and I would willingly pay my publisher their cut from any money I brought in. I’ve not been successful getting this provision from Hachette, but for my latest novel, Hollow World, I retained the ebook rights, so for that title I sell both ebook and print versions. The problem is readers don’t know I sell directly, but if this became more common, it would solve any disruptions when the publisher and retailer are battling.

Related: What Advantage to Traditional Publishers Offer Authors? | DBW Author Research Bundle

Both Amazon and Hachette are huge multi-national, billion-dollar companies. It’s unfortunate that when they play hardball it’s the writers and readers that suffer the most. I know the stakes are high for Hachette, and all the other publishers, but no one has more risk than authors who are caught in the middle and wield no power to shift royalties toward us. At the end of the day, it’s the big boys that will get the lion’s share and we’ll have to be content with whatever is left over after their bickering is done. It’s a sad situation, as when it comes right down to it the only two absolutely essential people in the publishing ecosystem are the writer and the reader…the exact two that seem to be overlooked each time the titans clash.

About Michael Sullivan

Michael J. Sullivan is a publishing veteran, using a wide range of tools including: self, small-press, big-five, Kickstarter, print-only, foreign translations, and audio. His best-selling debut series, The Riyria Revelations, (published through Hachette Book Group's Orbit imprint) has sold more than half a million copies, been translated into fifteen foreign languages, and appeared on more than eighty-five “best of” or “most anticipated” lists including those compiled by Library Journal, Barnes & Noble, Goodreads, and Audible.com. His most recent work, Hollow World (print version published through Tachyon Publications) is classic social science fiction reminiscent of Asimov, Wells, and Heinlein. Michael posts about the business side of writing for Amazing Stories Magazine.

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6 thoughts on “An Author’s Perspective on the Hachette-Amazon Battle

  1. Presumably what we are seeking in this dispute between Hachette and Amazon is the end of ‘Agency Contracts’.

    If you recall, the agency contracts were the invention that came with the agreements between Apple and the Big Five trade publishers, which meant that the publisher set the price of ebooks.

    The Judge attempted to create modified Agency Contracts to allow some price variation, but, one imagines, Amazon will never have wished to have to accept them at any time. Now that the case of Apple and the Five is more or less concluded and the publisher fines paid, Amazon are now able to pick the publishers off one at a time, without them being able to rally. “don’t offer us an agency contract – we won’t accept it”

    It makes sense to go for Hachette first – they are an overseas company, they aren’t the biggest and they aren’t the smallest.

    This will be the first and then, presumably, Amazon will decline to accept Agency contracts from anyone else. Other ebook retailers want to make sure they don’t end up with agency contracts when Amazon don’t have them, because in those circumstances they will be prevented by contract from competing on price… and Amazon really will have 100% of the market.

    Not hard to foresee this happening – since about 18 months ago.

  2. Ah yes, as authors we’re learning what some say is a powerful Chinese curse: \May you live in interesting times.\ In book publishing, our times are the most interesting since Gutenberg lived over 600 years ago. Professional scribes no doubt hated what he had done.

    Change is always difficult because it brings new choices that are fraught with new risks. Twenty years, few authors could take the risk of going independent. It meant a garage filled with books that the author himself had to distribute. Most had to go traditional and take perhaps 10% royalties. They had no choice.

    But choice bring opportunities. With POD, authors with a little tech skills can send a book’s interior and cover files to Lightning Source and CreateSpace. In perhaps two weeks, they have virtually worldwide distribution with no need for a costly inventory. With my POD titles, I take both an author and a publisher’s slice, earning about 20-25% of retail.

    But print limited my pricing choices. The retail price is what driven by the cost of printing and the various cuts that wholesalers and retailers insist upon. I found that with POD making retail four times the print cost made the most sense. A $15 paperback earned me about $2.50.

    Ebooks have changed that. There’s no need for a wholesaler and the cost of distribution is low. Amazon, I suspect, is concealing the fact that it is making huge profits even on ebooks in its 70% price royalty range ($2.99-9.99) and a robber’s profit for those outside that range where it only pays 35% royalties. If Amazon is able to achieve the near-monopoly status that it (and Obama’s DOJ) want, it may be able, as Michael Sullivan warns, to pay only 35% royalties. But unlike the markup for print books in brick-and-mortar stores, it doesn’t have to do that. It could do well enough with only 30% of retail. With the proper pressure, it could be forced to pay what Apple pays.

    That makes pricing ebooks much more complicated. I just did the numbers and I can earn about as much per sale pricing and ebook at one-fourth the price of that print copy. But should I? With print books, I didn’t need to squeeze my slice below 20%. Someone who’d pay $12.95 for a book would probably pay $14.95. But with the much lower ebook prices, a few dollars difference makes a big difference. An ebook might sell twice as many copies at $2.95 as at $4.95. By pricing it a little cheaper, I might increase sales by a large amount. But should I? Choose wrong and my never-too-high income goes down.

    Of course, unlike Michael Sullivan, my choices are simpler. With the exception of three translations, which involved no more than signing a contract and cashing a check, I have no interest in dealing with the hassles of traditional publishers.

    Some bad experiences with one of the big six publisher about a book they wanted me to do left a bad taste in my mouth. Its editors had my book for six weeks. I heard nothing from them during that time until one Friday when I got a box shipped overnight. Inside were various changes three different editors wanted me to make. They’d not bothered to coordinate their changes or bring any of them up with me in advance. None of the changes were that significant, but between Friday afternoon and first thing Monday morning, I was expected to make their numerous and often inconsistent changes and email the revised changes in a Word document back Monday morning. They’d obviously screwed up and I was to be the fall guy for their mistakes. I told them to \Get Lost\ and haven’t looked back.

    Michael Sullivan has already offered some excellent advice. I’d add one more. If the opportunity arises, cultivate direct relationships with your readers. That’ll allow you to steer them to the best sources of your books, particularly the sources that treat you best. Amazon may or may not try to force 35% royalties on authors at all price levels. But I doubt Apple will ever change their flat 70% rate. 70% is consistent with what they pay app and music developers.

    Having direct contact with your readers means that you can tell readers, \If it’s all the same to you, buy from Apple rather than Amazon. The ebook is the same, but I earn twice as much. Twice as much means I can contract out the laborious, non-writing stuff and give you the books you enjoy more often.\

    In short, the counter to the sorts of power retailers like Amazon and publishers like Hachette have is to develop your own power base.

    That, incidentally, is what J. R. R. Tolkien did in the mid-1960s, when copyright issues made it possible for a mass-market publisher to release a version of The Lord of the Rings in the U.S. without paying him royalties. Tolkien countered by including a short note explaining that in letter to his American fans. They spread the word and that publisher was soon facing a boycott not just of their bootlegged LOTR, but of all their sci-fi and fantasy books. They relented, paid Tolkien money in lieu of royalties, and Tolkien’s primary publisher, whose screw-up had led to that loss of copyright, was able to get his copyright reinstated by creating a revised edition.

    What I’ve suggested works well for fiction writers and self-help writers who do a series of books with a common theme. But not everyone can do that. If you visit http://inklingbooks.prosite.com you’ll see that what my books have in common is that their topic interests me. Finding fans with tastes that eclectic wouldn’t be easy.

    –Michael W. Perry, Inkling Books

  3. All well and good if you write for adults. Authors for kids have a very rough time, due to COPPA regulations, reaching out to kids under 13…which leaves that author marketing to adults, who may not choose the books for their children and students that the kids would have chosen if left to their own devices.

    Really? I have to see a commercial to comment. Thanks. I won’t bother again.

  4. Thanks for a great update Michael. I was wondering about the book shipping. Everyone was insisting it had to be Amazon but that doesn’t match their business model. Removing pre-order buttons and discounts yes. I suspect one of the things Hachette is asking for is less discounting so let them see what it looks like. Pre-order buttons are not available to everyone – many small press & self-publish authors can’t do pre-order buttons and they haven’t canceled orders placed to date.

    It would be interesting to see what Hachette is asking for. It would give everyone a better idea of whether Amazon is being reasonable or not.

    You have great insight into the world of publishing by working with a big 5, a small press, and self-publishing, as well as having a print only deal. I’m always amazed by the things authors don’t think to do/ask and how fast people are to jump in and scream without first checking facts.

  5. A letter to our customers:
    Amazon has found itself involved in a commercial dispute with the book publisher Hachette, which owns Little Brown, Grand Central Publishing, and other familiar imprints. These sorts of disputes happen all the time between companies and they are usually resolved in a corporate back room.
    But in this case, Hachette has done something unusual. It has directly targeted Amazon’s customers in an effort to force the retailer to agree to its terms.
    For the past month, Hachette has been:
    –Boycotting the online retail platform, refusing to allow pre-orders on its books, forcing Amazon to state that they are “unavailable”.
    –Keeping the prices of many of its authors’ books so high that they are unattractive to customers.
    –Slowing the delivery of thousands of its books to Amazon, forcing the retailer to state that delivery will take as long as several weeks on most titles.
    As a retailer – which is only too willing to sell books published by Hachette – we feel strongly that no publisher should block the sale of books or otherwise prevent or discourage readers from ordering or receiving the books they want. It is not right for Hachette to single out a retailer, which does not want to be involved in any dispute, for selective retaliation. Moreover, by inconveniencing and misleading its former readers with unfair pricing and delayed delivery, Hachette is forcing Amazon to contradict its written promise to be “Earth’s most customer-centric company.”
    All of us supported Hachette from when we were kids. We cheered Hachette on. Many of our literary choices have made the publisher richer. We have made Hachette many millions of dollars and over the years have contributed so much, free of charge, to the publisher by way of cooperation, joint promotions, reviews and blog contributions. This is no way to treat a business partner. Nor is it the right way to treat your friends. Without taking sides on the contractual dispute between Hachette and Amazon, we encourage Hachette in the strongest possible terms to stop harming the livelihood of the authors on whose backs it has built its business. None of us, neither readers, authors, or retailers, benefit when books are held captive. (We’re not alone in our plea: both Techcrunch and Techdirt, which rarely report on the same things, have roundly condemned Hachette’s corporate behavior.)
    We call on Hachette to resolve its dispute with Amazon without further hurting authors and without blocking or otherwise delaying the sale of books to its readers.
    We respectfully ask you, our loyal customers, to email Tim Hely-Hutchinson, Chief Executive of Hatchette UK, at tim.hely-hutchinson@hatchette.co.uk, and tell him what you think. He says he genuinely welcomes hearing from readers and claims to read all emails from this account. We hope that, retailer and customers together, we will be able to change his mind.

  6. Thanks to Michael and all here who have contributed to this discussion. For myself and I’m guessing a lot of other newly published writers, this battle of the titans is as interesting as it is confusing. While it’s certainly true that \times they are a-changing\, its hard for new authors to make informed decisions when so many are saying so much from their own POV. Personally, I wish authors were more respected for their immense contribution to the literary world. It’s no stretch to imagine that readers really don’t care who publishes a writer’s work. They care about the words the writer has penned, and will follow that writer wherever they go. Before becoming a full time writer, I worked in commissioned real estate and mortgage sales, and we were taught that as independent contractors, we had to respect our own time and build our own brand within whatever brokerage we worked for. Same here. I keep reading all the various posts and articles to become better informed about the industry I’ve chosen to join. That being said, after a while, it seems like a lot of finger-pointing. I’d love to see a day when the writer is the most respected participant of the entire publishing industry, since nothing is done without us, and that everyone learns to play nice in the sand box by operating from a standpoint of partnership and co-operation. In the meantime, we newbies are watching closely, listening attentively, and hopefully making informed business decisions based on all the gathered information we have at the time. The truth is, if authors truly banded together on a global scale and demanded fair and equitable treatment by all publishers and retailers, then there’d really be a shift unlike any seen before.

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