Shatzkin Takes on Shirky in Amazon-Hachette Debate

After a month of few angry words over the Amazon-Hachette contract dispute from either party or key observers, author and technology thinker Clay Shirky and industry consultant and Digital Book World conference chairman Mike Shatzkin traded pieces on the subject.

In an essay on the blogging platform Medium titled “Amazon, Publishers, and Readers,” Shirky writes:

Back in 2007, when publishers began selling large numbers of books in digital format, they used digital rights management (DRM) to lock their books to a particular piece of hardware, Amazon’s new Kindle. DRM is designed to transfer pricing power from content owners to hardware vendors. The publishers clearly assumed they could hand Amazon consolidated control without ever having to conspire with one another, and that Amazon would reward them by passing cost-savings back as inflated profits. When Amazon instead decided to side with the customer, passing the savings on as reduced price, they panicked, and started looking around for an alternative conspirator.

Starting in 2009, five of the six biggest publishers colluded with Apple to re-inflate ebook prices. The model they worked out netted them less revenue per digital sale, because of Apple’s cut, but ebooks were not their immediate worry. They wanted (and want) to protect first editions; as long as ebook prices remained high, hardback sales could be protected. No one had any trouble seeing the big record companies as unscrupulous rentiers when they tried to keep prices for digital downloads as high as they had been for CDs; the book industry went further, violating anti-trust law as they attempted to protect their more profitable product.

In a response this weekend, Shatzkin contends, “Almost every sentence of this is subtly or blatantly wrong.”

In a post on on the topic titled “Big publisher bashing again with fictional facts,” Shatzkin goes on to dispute many of Shirky’s points, including his characterization of ebook history, the economics of book publishing, the effects of digital rights management software and more.

Read the entire post here. Read Shirky’s post first.

One thought on “Shatzkin Takes on Shirky in Amazon-Hachette Debate

  1. Michael W. Perry

    I’ve got too many projects going to read both articles right now, but I can say right off that, even in the limited quote given above, Clay Shirky, is, as Mike Shatzkin claims, \blatently wrong.\ It’s a remark that reveals, at best, an almost incredible ignorance of the ebook market as it was a few years back.

    This is Shirky’s remark: \Starting in 2009, five of the six biggest publishers colluded with Apple to re-inflate ebook prices. The model they worked out netted them less revenue per digital sale, because of Apple’s cut, but ebooks were not their immediate worry.\

    Less revenue per digital sale from Apple? That is insane, utterly insane.

    I forget precisely what royalty Amazon offered at the time that the iBookstore launched, but it was well underneath the 70% that Apple was offering. I do recall that Amazon was (most unhappily) forced to raise their rates and even then they still fall far short of Apple’s flat 70% at all price levels. Today, Amazon only pays 70% for ebooks that retail between $2.99 and $9.99 and that rate is reduced to about 60% by a grossly inflated download fee. Outside that range and in the over $10 price range that most bestsellers inhabit, Amazon only pays 35% today, half what Apple pays for the same ebook.

    I’m constantly telling authors that, if they care about their income, they need to release the ebooks on both the Kindle store and the iBookstore but do everything they can to steer readers to the iBookstore. You will always get more per sale from Apple and sometimes twice as much.

    With a mistake that outlandish and about a point that’s critical to much of the debate, I’m not even sure I need bother to read what Shirky says.

    Oh, and this remark reveals Shirky’s woeful lack of understanding of technology: \they used digital rights management (DRM) to lock their books to a particular piece of hardware.\

    Where to start. DRM is added by the retailer to lock-in their sales. Send an ebook to Amazon and it’ll get Amazon’s DRM. Send it to Apple and it gets Apple’s DRM. The publisher isn’t locking their ebooks in \to a particular piece of hardware.\ Having an ebook sold by Amazon with Amazon’s DRM in no way precludes selling it with DRM provided by Apple or Barnes and Noble. It’s readers who’re getting locked in by retailers not publishers locked into anyone’s hardware.

    In short, Mike Shatzkin is right, Clay Shirky isn’t much of a \technology thinker.\ He’s probably writing for Amazon fanboys that, as I have discovered to my frustration, are so poisoned by their hatred of large publishers that they are almost immune to facts and reasoning.

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