
A Message from the Amazon Books Team - ashdav
http://www.readersunited.com
======
jawns
Author here. My publisher is one of the "big five" (not Hachette), and
although my books are not affected by this dispute directly, it could be only
a matter of time before they are.

The problem, as I see it, is that Amazon has so much of the market share not
only for e-books but for regular books that they can dictate terms that are
highly favorable to them.

While you could argue that those terms also benefit the reader -- for now --
the fact is that ultimately, consumers aren't served when one monolithic
company gets to effectively call the shots. It may not be a monopoly in the
legal sense, but in practice, it has many of the same negative effects.

~~~
allworknoplay
You're entirely correct. The difference between their historical analogy and
the present case is that the present dispute has nothing to do with the
technology (e-books have already been pretty universally embraced), it has to
do with who benefits from its use.

They're using the domain "readersunited" to imply that it's readers who
benefit, which is only true in a very zero-sum way because Amazon is keeping
all the power to cut author/published margins so hard in the future, and not
at all true in the typical sense that a new technology can cut costs and
introduce benefits for everyone.

------
rgbrenner
_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._

This doesn't prove what Amazon wants to claim it does.

1) Authors don't just earn royalties from ebook sales. They also earn
royalties from hardcover/paperback sales.. and if dropping the ebook price
causes lowered paperback sales, then the authors could earn less.

So merely showing that lower ebook prices increase ebook sales does not prove
Amazon's claim that lower prices increase authors' royalties.

2) Amazon's test may not even prove that it would increase ebook sales.
Hachette earns money from the sale if the book is sold at BN, Amazon, or any
retailer. If only Amazon lowers it's price to $10, then Amazon may just be
getting additional sales that would have gone to other retailers. So the only
thing Amazon's test proves is that Amazon would be better off in a fictional
world where Amazon has the lowest price in the market -- 33% lower than any
other retailer.

~~~
finder83
The assumption here I think is that a book at $9.99 might attract people who
wouldn't buy it at $14.99. I'm probably one of those people, particularly with
fiction books (computer science books/math books/etc are another issue). There
are so many choices that are far below the $14.99 price, that unless it's from
a favorite author I'd happily pass up the higher price for another book, or
another form of media (like a game). It doesn't matter what other retailers
offer the price at, $14.99 is simply too high for an e-book, and I only read
fiction books as e-books. I might be the minority, but given the expertise of
Amazon at selling books, I think that Amazon probably has a valid point.

You're right though, that it doesn't completely prove the point, but I think
it definitely makes a point. People who wouldn't buy the e-book at 14.99 are
probably unlikely to go out and buy the same book from another retailer for
14.99. The question is if it really increases the market share of the book, or
if instead lowering the price on amazon makes everyone who would buy the book
would just go to amazon for the cheaper price. (Given that e-books cost nearly
nothing to distribute, I would think that the price drop would pretty easily
pay for itself though)

~~~
rgbrenner
You may be one of those people (where a price decrease would induce a
purchase), but your personal value judgement is not relevant here. Personally,
I don't read fiction, so the value of a fiction book is $0. Does this mean
that the appropriate price for ebooks is $0? Obviously not.

Amazon has put forth a number that is an aggregate.. it takes into account
your value judgement, mine, and 100,000 other peoples judgement of the value
of an ebook.

Which reminds of a 3rd case that could affect Amazon's test: people do not
purchase a generic ebook. They purchase a specific ebook, and the value of
that ebook very much depends on the content. A poorly written book is worth
less than a well written book.. and a book on a popular subject is worth more
than a book on an unpopular subject.

If the book (or books) Amazon tested were more mispriced than the typical book
(so they showed a larger increase in sales because $10 was closer to the
actual value of the book.. whereas maybe $12 (or $20) represents the value of
the average book).. then when all books are lowered in price, the result may
be a decline for Hachett and the authors.

So I've put forth 3 cases that may affect Amazon's test. If just 2 in 13
people are affected by ANY of these 3 cases, then Amazon's conclusions are
wrong, and the net result would be a decrease in revenue.

------
jcanyc
The movie ticket vs. book price example in the article above seems like it
comes from the article below. This is a great read regarding the history of
the paperback. I know this is a complex issue, but I really do feel Amazon is
on the consumer's side. $15+ for a non-transferable ebook is ludicrous.

[http://mentalfloss.com/article/12247/how-paperbacks-
transfor...](http://mentalfloss.com/article/12247/how-paperbacks-transformed-
way-americans-read)

~~~
rwl
> I really do feel Amazon is on the consumer's side. $15+ for a non-
> transferable ebook is ludicrous.

Hmm. I agree that that price is in many cases too high. But as you say, that's
because ebooks are non-transferable. Is creating and selling the devices and
marketplace that make those ebooks non-transferable also on the consumer's
side?

Amazon could have adopted EPUB for the Kindle instead of making their own
ebook formats, and they could have pushed for higher-priced-but-transferable
ebooks without DRM. They haven't done either at any point. It looks to me like
Amazon is only on the consumer's side when they can strongarm the consumer
into spending more money at Amazon.

------
clickok
It's regrettable that some of the authors are losing sales, but I think that
Amazon is basically in the right, for the following reasons:

1\. Their arguments with regards to price elasticity are supported by
(admittedly, Amazon's) data, and are intuitively plausible. Cheaper books sell
more, yielding more revenue. The cost of production is substantially lower for
ebooks, so passing on some of the savings to consumers seems fair, and
further, so long as a literate public is seen as a good thing, there's
intangible benefits to consider as well.

2\. It's a dispute between two businesses, and Amazon has a legal right to not
list/stock books. Honestly, it's like a caricature out of _Atlas Shrugged_ \--
you have to sell our books at these prices (of which authors get < 10%) or
you're somehow the villain... as opposed to a business that just does not want
to sell on those terms. Further, their contribution to the livelihoods of the
authors is probably greater than the "value-add" of a publishing house. If
sales and distribution from a website is such an easy thing to do, then how is
it possible that a single company feels reasonably secure with delisting so
many supposedly desirable books? The amount of effort necessary to make 2-day
delivery so much cheaper than going to Borders is immense. They also built the
Kindle (as well as its ecosystem) and sold the device at a loss, which has
helped make the ebook market so big.

3\. The "authors" are the only really sympathetic characters in this drama,
but they appear to have no agency of their own. Why not move to a different
publisher, or publish on Amazon? Because Hachette won't let them out of their
contract? I can see why they would want to group together to avoid getting
trampled between the two companies, but why side with Hachette? Unless their
objective is "fewer books sold, higher prices, and smaller royalty payments",
their collective bargaining power would seem to be better put towards forcing
Hachette to either agree to terms or release them to find other
representation. Agitating on Hachette's behalf is probably the easiest way to
get money flowing again, but it's hardly the right thing to do.

Given that Amazon's suggested model could be more profitable for all parties,
why are the publishers resisting? I suspect that it comes down to the fact
that if ebooks become the main method of book distribution, the value of being
a publisher would decrease substantially. Amazon (or similar businesses) could
handle the printing and distribution, marketing, editing, type-setting, and
similar tasks could be passed to firms whose sole purpose is that task.

Regardless of how this shakes out between Hachette and Amazon, I can't really
see a future for monolithic publishers.

~~~
rjknight
It could just be bad writing, but Amazon's point about elasticity reads like a
sleight-of-hand trick to me. They say:

> 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.

So, 74,000 people choose to buy the cheaper book. Great! But without the price
cut, those people might have bought other books. Maybe some other $9.99 book,
maybe some $12.99 book, maybe none at all. Growing the market _for an
individual book_ is only impressive if you're selling the book to people who
would not have bought a book at all, not if you're competing with other books
on price.

> The pie is simply bigger.

The 'pie' they're referring to here is not publishing revenues in total, but
revenues for a _single book_. This feels sneaky because when people refer to
the 'pie' as an economic metaphor, they generally mean the total across a
sector or the economy as a whole. That's probably not codified anywhere, so
it's not possible to say that Amazon's usage is definitively wrong, but it's
something that can be easy to misinterpret in a way very favourable to
Amazon's argument.

Now, maybe Amazon really does mean that revenues across the whole industry
would go up if prices were lower, as books take market share away from other
sources of entertainment and information. If so, their example case is a bad
one, because it doesn't demonstrate this. It feels a bit like they're talking
a big talk about promoting books against other forms of entertainment, but
when talking facts and numbers they're giving a subtly different story.

EDIT: I should say that I broadly agree with the rest of the OP. Ebook pricing
does look high to me, and I would like to see lower prices. The general
'vision' that the OP puts across is one that I like, I'm just not sure how
much it aligns with the reality of what's happening.

~~~
baddox
I think what you're missing is that Amazon's point, that lower ebook prices
are generally good for all parties, applies to _all_ ebooks. They do use the
phrase "a particular e-book" in their example, but I assumed that the real
desire is for all ebooks to get a similarly proportional discount.

Of course, even if we just consider a price drop on a single ebook, it's still
a valid point that this helps that ebook compete against other ebooks that
don't change their prices, and there's nothing wrong with that.

~~~
wiredfool
Lower e-book prices are certainly good for Amazon. It's unproven if they're
good for everyone else.

------
spbaar
"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. "

And the solutions they then present are very admirable. However, it was still
amazon that took the unilateral action to punish authors, and it was likely
the backlash from that that motivated those three noble solutions. It's a
shame amazon had to poison the well with that move, because everything else
points to Hachette being dumb and making bad decsions that hurt authors.

"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."

Hachette stonewalled. Amazon took action. Sales of Hachettes' titles. Out
store.

Clearly, the authors did not factor into these moves.

"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."

That's great, but it's not a justification to hurt authors. It may be more
revenue and customers for amazon in the long run, but these are authors who
have put their souls into their art and worked for years. Jeopardizing their
release window and sales for a percentage is evil and out of touch.

~~~
kjksf
You keep propagating the myth that it's all Amazon's doing.

"Amazon took unilateral action to punish authors" ?

The contract between Amazon and Hachette expired.

They started negotiating a new contract. They can't agree to terms hence
Amazon limiting Hachette's stok because, well, they no longer have a contract
to sell Hachette's books on Amazon.

There was nothing "unilateral" about it. Amazon doesn't agree to Hachette's
term. Hachette doesn't agree to Amazon's terms.

Amazon didn't "punish" authors. It didn't even "punish" Hachette. 2 giant
companies failed to agree on distribution terms.

It's regrettable that authors are collateral damage here but how do you put
the blame fully on Amazon and none of it on Hachette?

Especially given that Amazon is the party that proposed a way to compensate
the authors during negotiations. 3 proposals, actually, all of which Hachette
rejected. Because Hachette cares about their authors so much.

~~~
mcintyre1994
I'm not doubting that's the case, I honestly don't know - but Amazon could
have been much clearer about that. Using the language "when we took action to
reduce sales of their titles in our store." makes it seem like a deliberate
and voluntary action on their part and seems really dumb if your claim is
accurate.

~~~
berkay
It does not seem all that even. As I understand it Amazon is demanding
Hachette to sell their books at a certain price. This is highly unusual.
Amazon can demand higher percentage of the sales, etc. but controlling the
price of your product? As a business I would never agree to such conditions.
And due to Amazon's massive reach, this starts smelling like blackmail. Why do
author's side with Hachette? I'd speculate that people are concerned with
having a single player with such massive power, and this episode confirms
their worst fears.

~~~
abhimir
"As I understand it Amazon is demanding Hachette to sell their books at a
certain price. This is highly unusual"

how is this different from Walmart deciding at what price it sells its
suppliers' product. Almost all the retailers decide the final selling price of
suppliers' products, that is the reason they are able to undercut mom&pop
retail stores. Only exception on supplier side is Apple and to some extent
Bose who have the brand leverage to dictate their prices to retailers.

------
BryantD
John Scalzi comments further: [http://whatever.scalzi.com/2014/08/09/amazon-
gets-increasing...](http://whatever.scalzi.com/2014/08/09/amazon-gets-
increasingly-nervous/)

I particularly like the point that self-pub authors ought to be happy that
Hatchette is at higher price points, since it leaves the more lucrative
markets for them. This is a tribal dispute for most authors on both sides.

------
mark_l_watson
As an author I support Amazon's position because as they say, books compete
with the video game, TV, movie, etc. markets, and keeping consumer book prices
lower helps grow the book market relative to other forms of entertainment, and
I would argue that books benefit society more than video games and TV (but not
necessarily movies).

~~~
blumkvist
Please look a little but further than your own self interest. Do you really
want one entity having a monopoly on book distribution?

~~~
mark_l_watson
I agree that long term, there is a danger in Amazon becoming even more of a
monopoly. That said, I find it ridiculous that a non-transferable eBook can
sometimes cost very close to the cost of a hard cover print book.

I was not making my previous comment out of self interest, BTW. In 25 years of
being a published author I have only made chump change (less than $150K) on my
writing. I earn my living as a software developer. I write because I enjoy it
and through writing I have met some very interesting people who I would not
have had a chance to meet otherwise.

------
ashdav
This was also sent as an email to people with a KDP account

~~~
blumkvist
lol, and they dare to mention Orwell? Are you kidding me?

------
bryanlarsen
The best source of 'cheap' books is the library. The only cost is a little bit
of inconvenience. Yet library usage is dramatically down over the last few
decades. This suggests to me that there is little demand for cheaper books.

The biggest 'cost' to reading a book for many is not the money spent to
acquire the book, it's the several hours of leisure time required to read the
book, time that could be spent doing something else.

This suggests to me that the overall book demand curve is fairly inelastic.

That Amazon sees more elasticity is not surprising: they're conducting
experiments on part of the market. Price has a big influence on what book
people buy and where they buy it; but I hypothesize that it has little effect
on whether or not they actually buy a book.

~~~
dbecker
If you include the value of your time, the library is a more costly option to
acquire a book than Amazon for many affluent readers. And most libraries have
a small fraction of the books one might want.

The fact that people are choosing an efficient way to get the books they want
is hardly evidence of inelastic demand.

~~~
bryanlarsen
You're saying that time is valuable. The cost of the book is the dollar price
+ the time to acquire + the time to read it.

You're saying that the middle cost is significant. That suggests that the
latter cost is also significant. Therefore lowering the dollar price of the
book has little effect on the total in the above equation.

~~~
cek994
Grossly misguided equation. The cost of the book is the price + the time to
acquire. The benefit of the book is in the enjoyment of reading it -- which
implies that readers don't see time spent reading as a "cost", unless you
believe they're seeing reading as a benefit and a cost at the same time.
Believe it or not, people actually enjoy the process of reading and seeing a
work unfold, not just checking a completed book off the reading list.

~~~
bryanlarsen
The cost is the movies, video games, time with family etc that you didn't
enjoy because you spent time enjoying the book.

Let's put it another way. When do avid readers start reading a new book? When
they finish or get bored of their previous book.

------
ratsbane
[http://screwpulp.com](http://screwpulp.com) has a solution to the ebook
pricing problem based on market economics. New books start out as free, then
as more copies are downloaded the price goes up.

~~~
dublinben
[https://unglue.it/](https://unglue.it/) works in the opposite direction, by
releasing books as free Creative Commons works after a bounty has been raised.
You can buy your own DRM-free copy for a few bucks, while helping the book
reach a free release.

------
blazespin
Authors should be allowed to price their IP as they see fit. End of story.

------
DanielBMarkham
Amazon is solving a problem that the individual author or reader does not
share: they are making the delivery of books more efficient to the
marketplace.

Books are in a strange place because the time invested consuming them far
outweighs the equivalent cost of purchasing the book. I am not limited by
price to the number of books I can consume each month; I am limited by time.
Already many readers end up buying more books than they can read. In addition,
free books are available at this place called the library.

Music, movies, and the rest of digital content is not like this. You can pick
up a video game and play it for an hour, then put it down. (In fact, the stats
show most apps are only used a few times, then never used again)

In an author-reader relationship, the author is trying to provide enough value
for the reader to spend dozens of hours and many days consuming the material
-- and more to the point, the express purpose is to somehow change the
mindscape of the consumer. Good books require lots of time and change the
reader forever.

So what Amazon is effectively doing is destroying the concept of reading by
making it nothing more than an extended version of an mp3 song. But since you
can't just consume a book in 3 minutes, more books will be sold and more books
will remain unread. Books -- long form content -- will become superfluous.
It's all low attention span, immediate pleasure consumption now. I imagine
we'll see more and more readers buy an ebook and read a few pages and stop.
The nature of reading will change.

And while this might result in more _overall_ book sales, it doesn't do much
for the individual relationship an author has with a particular reader.

There's nothing wrong with making books like every other form of digital
content. Everything is bits, and bits gotta be free. But as a consumer of good
books, Amazon does not have my best interests at heart. It's just playing a
numbers game. My best interests actually might be books that cost 100x what
they currently do: make me feel some pain and spend some careful thought about
what I'm going to spend my time on.

I am not interested in delivering the maximum number of unread ebooks to the
most number of non-readers. I am interested in choosing those 5 or 6 books
each year that are worth my investment in time to experience. And as an
author, I am not interested in maximizing sales. I am interested in maximizing
_impact_. Amazon is friend to neither of us.

------
jamesbritt
There are more comments on this here:
[https://news.ycombinator.com/item?id=8156303](https://news.ycombinator.com/item?id=8156303)

------
gprasanth
Pfft! Amazon using godaddy to register a domain! Seriously? What happened to
route53? Too expensive?

