Authors Getting Screwed by Amazon-Hachette Showdown

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

shutterstock_77119981When I was in middle school, I remember being on the playground during kickball games and hearing the words that got everyone’s attention: “Fight! Fight!”  Those words would spread like wildfire and soon all the kids were standing in a circle to morbidly watch two boys duke out their differences. One was usually a bully trying to intimidate another kid.

Today, the media and publishing industries are circling around Amazon and Hachette with similar morbid curiosity to watch them duke it out over e-book margins. As their showdown continues, though, few people seem to notice a bigger problem: authors are being used as pawns and suffering collateral damage. And, few seem to care about the shrapnel they’re taking.

Amazon is hurting hundreds of Hachette authors by preventing pre-orders, depleting book inventory, and adding lengthy shipping delays to customer orders. These authors, including well-known names like James Patterson and Malcolm Gladwell, report that their Amazon book sales are getting cut in half. What did these authors do to deserve such negative treatment? Amazon could easily negotiate with Hachette without sacrificing authors in the process. Instead, they’re sticking it to everybody – even their own customers who want to buy Hachette books.

Likewise, Hachette is hurting its own authors by hoarding higher e-book margins. This problem was revealed when rival publishing house, HarperCollins, shared data at a recent investor meeting showing how e-books are more profitable than the print version. Unfortunately, that additional profit isn’t being shared with the author. Literary agent, Brian Defore, summed up the situation this way:

  • A $27.99 hardcover generates $5.67 profit to publisher and $4.20 author royalty
  • A $14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 author royalty.

At these average price points, every time a hardcover sale is replaced by an e-book sale, the publisher makes $2.20 more per copy and the author makes $1.58 less. If the author made the same $4.20 royalty on the e-book sale as he/she would have on a hardcover, the publisher would STILL be making an improved profit of $6.28.

Hachette is guilty by association in this situation, because they use the same agency pricing model as HarperCollins and other publishers.

What’s an author to do when they’re tired of getting screwed by these corporate giants? Do what kids do in middle school. Leave the playground bullies and start your own game.  Take matters into your own hands. Build your own audience of readers and sell books direct to the consumer. The best way to avoid feeling like a pawn is to take greater control over the problem.

When authors develop their own readership and sell direct, the following benefits occur: 

  • The author makes and keeps a lot more profit from their work.
  • The author is less dependent on retailers and publishers when they bully each other.
  • The author owns the customer contact info. He who owns the customer owns the sale.
  • The author develops a higher self-esteem and gains more control over their careers.

As a marketing consultant, I’ve taught hundreds of authors how to build their own platforms. I also partnered with Digital Book World’s sister division, Writer’s Digest, to write the bible on the subject called Sell Your Book Like Wildfire. Several of my author clients who invested to create their own large readership have gained newfound leverage like they never imagined. They receive higher advances from the publisher and experience preferential treatment from retailers. That’s because an author gains leverage when they possess their own reader base. In addition, they’re able to sell more books direct to readers and keep all of the profits.

I’m not jumping on the indie-author bandwagon and suggesting that retailers and publishers are irrelevant. To the contrary, I believe there will always be a need for value-adding companies like Amazon and Hachette to exist. My point is that content-creators need to even out the balance of power in order to maintain a healthy industry. Authors should not get screwed when retailers and publishers fight each other. Without authors, retailers and publishers can’t exist. But, if no one is going to look out for the author’s interests, then the author should look out for himself or herself.

What should authors do to protect their best interests? Three steps:

1. Build an audience of readers
Utilize public speaking, media interviews, friendships with influencers, social media channels, and an author website to build a list of fans. At minimum, ask for their email address. Stay in touch with these fans by providing value and updates on a regular basis. I’ve written extensively on this subject in other areas, so I won’t go into detail here.

2. Buy and resell books using your author discount
Purchase books from the publisher at a 60% discount and resell signed copies at booksignings, speaking events, and via an author website to the audience you build. At a $14.99 retail price, the author’s profit is $9.00 per copy sold.

3. Experiment with digital content
Explore ways to keep 100% of the revenue from your writing by selling exclusive content to your audience in a digital format. I have author clients who’ve made $50,000 – $100,000 from short e-books they wrote and sold direct to readers as PDF files. Examples include short stories, novellas, how-to reports, teaching guides, etc. When authors possess an audience of readers, new products can be created quickly, distributed freely, and sold directly.

Authors who feel disrespected by the Amazon–Hachette showdown have new options. Technology is the modern equalizer that enables individuals to become the creator, distributor, and seller of their work. As we watch corporate giants duke it out on the publishing playground, authors can take matters into their own hands. The only question that remains: Are you ready to ignore the playground bullies and start your own game?

 

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Expert Publishing Blog
Rob Eagar

About Rob Eagar

Rob Eagar is the founder of WildFire Marketing, a consulting practice that helps authors and publishers sell more books and spread their message like wildfire. He has consulted with numerous publishers and worked with over 400 authors, including several New York Times bestsellers. Rob is the author of Sell Your Book Like Wildfire, which is considered the new bible of book marketing. For more information, visit: www.startawildfire.com.

4 thoughts on “Authors Getting Screwed by Amazon-Hachette Showdown

  1. Michael W. Perry

    Sorry, but if this remark is a measure of the quality of WildfFire Marketings consulting, I’ll take a pass:

    \Hachette is guilty by association in this situation, because they use the same agency pricing model as HarperCollins and other publishers.\

    He’s referring to data that showing that HarperCollins makes more money from an ebook sale and the author less money in comparison to a hardback sale. That’s a result of existing publisher/author contracts. It has absolutely nothing to do with agency pricing.

    His other advice makes sense for some authors, but certainly not all. Some writers are either so successful they’re far better off working with a major publisher (even at a lower royalty) or they’re temperamentally not interested in self-publishing or with book signings and other forms of self promotion. Both groups of writers are often better advised to concentrate on their writing and leave the rest to a traditional publisher.

    In time, successful authors and their agents will wise up and demand better terms for ebooks.

    Reply
  2. Theresa M. Moore

    As a self-published author and economist I prefer to sell my own books, and the idea of buying books at wholesale from the publisher is not the way to do it. I sell direct from my own sit, and I get to order books from my printer at below wholesale. The problem is that one cannot do this with ebooks, since Amazon is loath to do anything right with the digital product. When it begins to respect the authors and cut a fair deal is when I will trust that my best interests are served. What we need to do is stop buying anything from Amazon. Then and only then will it sit up and take notice.

    Reply
  3. Becky Doughty

    Something to consider: Perhaps readers are choosing NOT to purchase James Patterson books in direct response to HIS very clear stance on this controversy. His sales drop might be because readers feel he’s standing on the wrong side of this. Amazon does not rule the world, no matter how loudly people accuse them of such, nor do they tell readers what they can and cannot buy. SALES would not be affected by slow shipping or delayed presale options. They would be affected by readers not purchasing at all.

    Reply

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