
Plot Thickens as 900 Writers Battle Amazon - IBM
http://www.nytimes.com/2014/08/08/business/media/plot-thickens-as-900-writers-battle-amazon.html?ref=business
======
Elessar
Publishers are a dying species. With infinite shelf-space, online retailers
can stock any and all books. They do not need to be curated by some value-
added middleman in order to ensure only the likeliest successes will become
books.

I'm a big supporter for Amazon on this one. There are plenty of authors that
the publisher will deny the opportunity to even put a book on the shelf.
Amazon is not doing that, and it is not a personal attack on any author
despite what media spin they might try to put on this story.

~~~
IBM
Publishers are a dying species like music labels are, as in not at all and
only as a techie trope. They're in business because they provide value to the
authors and artists they represent and that will continue being the case as
long as authors and artists don't want to deal with the burden of the business
side of their craft and figuring out how to commercialize it.

Keep in mind that Amazon is also a "value-added middleman".

~~~
HelloMcFly
I know the tech crowd in general seems to correlate highly with the crowd the
endorses the future of self-publishing, and I get it. Yet, I cannot help but
think that many of these "let the people decide" self-publishing advocates
have not waded much into the work of the self-published author.

I'm an avid reader; honestly, given my nighttime reading patterns, I probably
read too much. I've been to the deep ends of reading self-published work (much
of it "acclaimed") and I'm not satisfied. Perhaps one day we'll arrive at a
place where crowd-sourced reviews adequately filter the wheat from the chaff
in an editor- and marketing-less world, but I'm not convinced we are there
just yet.

Short version: I've read many (i.e., 10+) self-published works, and few of
them have me looking forward to a world without publishers. I appreciate
"elitist" filters that still allow pulpy sci-fi and fantasy through. I'm not
ready to see them leave quite yet.

~~~
sheepmullet
"Perhaps one day we'll arrive at a place where crowd-sourced reviews
adequately filter the wheat from the chaff in an editor- and marketing-less
world, but I'm not convinced we are there just yet."

How do you find books to read?

My techniques are: Amazon suggestions, browsing at the library, blogs, forums,
and following my favorite authors websites.

None of these require a publisher.

~~~
ghshephard
The difference is - for every 1 book that a reputable publisher puts out, they
reject 1000. Now, perhaps 500 of those books might have OK, and maybe 50 of
them might have been quite good, and it's entirely possible that the 1 book
they _did_ chose to publish, was not as good as 10-15 others they rejected -
but, on the flip side, it's highly unlikely that the publisher is going to
chose one of the 500 dogs that never deserve to see the light of day.

The problem with Crowd sourced reviews, is that quite often, other people
might like quite crappy books. The job of a publisher isn't to just find a
book that _they_ like, but that the general reading population will love.

I appreciate and respect what the publisher does as part of their filtering -
I just suspect they are extracting more value than they are worth.

Hopefully established authors are able to negotiate increasingly more
lucrative deals as a reflection of both the reduced risk, as well as the
increased value they bring to the equation (as well as the reduced value that
the publisher brings. I can't tell you who Stephen King's publisher is...)

~~~
TheOtherHobbes
It's true that a whole lot of important filtering goes on.

Otherwise we'd have to put up with Twilight and Fifty Shades of Grey, when we
could be reading polished high-quality titles that twinkle with the elusive
literary aura that only publishers can add.

[snerk]

Here is The Thing: publishing used to be an educated middle class business
catering to educated middle class readers.

Self-publishing opened the market to less-educated writers producing work for
less-educated readers. Amazon basically reinvented the old Victorian penny
dreadful market in digital form.

Does this matter? Not really. The penny dreadfuls didn't kill literature. In
fact, in a round-about way, they eventually launched science fiction and
fantasy as genres.

Publishers gave up on real literature back in the 80s, when all the old small
semi-amateur publishing houses were swallowed by corporate sharks. So don't
look for not-crappy there.

There is some basic filtering to eliminate people who can't write _at all_.
But Amazon reviewers are getting pickier, so it's not obvious the can't write
at all crowd will survive for much longer.

Meanwhile, many not-quite-mainstream writers have pulled themselves out of
publisher-enforced poverty by selling direct.

Is this a bad thing? No, it really isn't.

------
brianstorms
Meanwhile, thousands of authors support Amazon, and question not only Hachette
but the "Authors Guild" which only protects the 1% of super-rich authors (who,
coincidentally, are mostly signers of the Preston letter.)

For a different viewpoint on all this, see the posts of Barry Eisler and JA
Konrath who've been covering this issue for YEARS.

[http://jakonrath.blogspot.com/](http://jakonrath.blogspot.com/)

------
joshkaufman
I'm a full-time working non-fiction author. I've worked with major publishers
on past projects with excellent results, have received multiple major offers
from major publishers for my upcoming projects, and have firm plans to self-
publish new projects in the near future.

Early in my career, I also spent time negotiating with retailers like Walmart
at a large consumer goods manufacturer.

I've been following this situation closely. I'm not personally affected (yet),
but it's an opportunity to collect information in the interest of making
better decisions about how to publish future projects.

In most ways, this is a pretty standard supplier/retailer negotiation. Most of
these disputes don't go public, and don't last this long, but they happen all
the time. Both sides are trying to use whatever leverage they have to
negotiate the best possible deal. That's normal.

What's atypical about this particular negotiation is that authors are the
counterparty that have the most at stake, but have no seat at the negotiating
table. They're directly affected by the dispute, but have zero leverage, zero
input, and zero recourse for losses incurred in the dispute.

The affected authors are, quite simply, the only real leverage Hachette has in
this dispute, and Hachette is using them for all they're worth.

Here's the part of the NYT story that stuck out to me. It's buried close to
the bottom:

 _" About half [of Preston's] book sales used to come from Amazon. But since
the retailer started discouraging orders, his paperback sales are down 61
percent and his e-book sales are down 62 percent."_

Hachette failed to come to mutually agreeable terms with their largest retail
partner by dollar and unit volume. That's their most important job as a
publisher, and they blew it, to the tune of permanently costing their authors
50-60%+ of sales they'll never recover.

Shipping books into retail distribution in a timely manner to minimize out-of-
stocks is a publisher's second most important job. Production and distribution
of physical finished goods inventory into retail is a hard problem, and most
publishers are reasonably well equipped to handle it at scale.

When Hachette's contract with Amazon expired, Amazon (rightfully) stopped
ordering advance inventory for stocking, but continued taking orders for
available titles and transmitted those orders to Hachette as they arrived.
From there, it's Hachette's responsibility to deliver the orders to an Amazon
distribution center. Once the books arrive, Amazon packs & ships them to
purchasing customers as normal.

That's why, when Hachette's contract expired, all of their books were listed
as "Out of stock: ships in 1 to 6 weeks" \- that's how long it takes Hachette
to deliver stock. That's slow as hell.

Amazon didn't "boycott" or "drop" or "betray" authors or "discourage" readers
from buying their books - it ceased offering retail inventory management
services to a supplier whose contract had expired, and made a rational and
defensible business decision when it became clear that the supplier was not
negotiating in good faith to establish a new agreement.

Preston has a right to be pissed off, but not at Amazon.

~~~
frandroid
You kiiiiiiind of forgot the central issue of the story: Amazon trying to tell
publishers how much they can sell their books for. Amazon could continue
offering "retail management services" to these sellers, at a fixed percentage
cut, like it does to sellers of countless other goods where it does not try to
fix prices. Amazon and the publishers had a perfectly good agreement before,
and Amazon decided to play hardball upon renewal, punishing readers and
authors. That's unprecedented in the book business, and it is incumbent on
Amazon to justify this. The only reason Amazon can pull this off is that they
control half the retail book market, so it becomes an anti-trust issue.

~~~
joshkaufman
It's the other way around, actually: by law in the US and most countries
worldwide, suppliers are free to set whatever prices and terms they like, but
retailers have the final authority to set the price that's presented to the
retail customer. Suppliers can not unilaterally dictate to retailers the final
sales price the retail customer pays.

That's why "Manufacturer's Suggested Retail Price" (usually abbreviated MRSP)
is a thing. The manufacturer / supplier suggests a price, but the retailer
makes the final call. The only recourse suppliers have to this is pulling
distribution from that retailer entirely, as long as they apply the same
policy to all retailers - companies like Apple and Bose make credible threats
to do this to suppliers that violate their guidelines, which is why their
prices are so consistent across retailers.

Otherwise, retailers have the final call on retail pricing unless they waive
that right via negotiation: if they want to sell at a loss, or reduce their
own margin to use lower prices as a marketing tool, they can. That's why
Walmart and Target often sell bottles of Tide below cost - it's called a "loss
leader" strategy, and it's very common as a way to attract new business.

Amazon used loss leader pricing on bestselling titles to establish the Kindle
platform, which is a major reason why it's the dominant ebook platform now.

A big part of this dispute is that Hachette is demanding final authority on
setting prices, and demanding that Amazon gives up the right to discount and
use its ebooks as loss leaders - instead, they'd get a flat percentage (likely
~30%) of whatever Hachette decides to charge. This is a major part of what's
now called "agency pricing," and the big 5 publishers and Apple colluded to
force Amazon to adopt it several years ago. That's why the DOJ filed suit for
antitrust / collusion / price fixing, and the publishers each lost or chose to
settle.

As a condition of the judgement / settlement, publishers now have to
renegotiate their contracts with Amazon. Amazon, justifiably, isn't willing to
agree to agency pricing without major concessions. Hachette won't agree to
standard retail non-agency pricing. Hence the impasse.

EDIT: also to clarify, wholesale non-agency pricing isn't "unprecedented in
the book business." Barnes & Noble and independent retailers have operated on
wholesale pricing for print books for decades. Otherwise, B&N wouldn't be able
to place a "20% off" sticker on bestselling titles, or offer large discounts
to move remaindered stock. Hachette is asking Amazon to agree to something no
other book retailer has or would agree to. Retailers like Apple and B&N/Nook
_have_ agreed to agency pricing on ebooks in the hopes of shutting down
Amazon's ability to discount, with the understanding that publishers were
attempting to force Amazon to do the same. (Via collusion.)

The larger game is that Hachette (and other large publishers) are attempting
to protect their hardcover print sales by inflating the price of ebooks, which
makes them less attractive to readers. Ebooks are more profitable, but it's a
more difficult market to control, so publishers are fighting Amazon and doing
what they can to slow ebook adoption as much as possible. It's not a smart
strategy, IMO, but that's what they're doing.

~~~
growse
When Amazon decides to discount a product, who swallows the loss? Does the
supplier still get a fixed cut per sale regardless of sale price, or do they
get a fraction of whatever the sale price was?

I ask because I believe in things like grocery retail, the retailers have
immense power over the suppliers. If you see pasta sauce at 2-4-1, it's the
supplier picking up the cost of that. Favourable placement in store? The
supplier pays. The big retailers can hit the supplier over the head with the
threat of simply stopping selling the suppliers entire catalog, which would
cause massive revenue loss for the supplier. With this stick, the retailer can
ensure that they're getting a fixed income for every unit sold, regardless of
the actual unit sale price. They pretty much have the suppliers completely
over a barrel.

Seems like the balance of power between retailer and supplier is drastically
different between sectors.

~~~
ghshephard
Amazon swallows the loss. For example, with eBooks, they were purchasing
wholesale from the book publishers for $15, and then selling them to customers
for $9.99.

As much as I love my Kindle, and Amazon, and as much as I realize that the
publishers probably extract more value from the entire chain than is
reasonable given their contribution (as compared to the author, who I believe
should be rewarded a great deal more) - I realize that we will face dark times
in the future if Amazon is able to corner the eBook market.

~~~
pbhjpbhj
> _Amazon swallows the loss. For example, with eBooks, they were purchasing
> wholesale from the book publishers for $15, and then selling them to
> customers for $9.99._ //

What were the books selling for in paperback? I'm guessing less than $15 - I
know it's priced to the market and the utility improves the value, and thus a
higher price can be attained. But, I didn't think that Amazon would let
publishers rip them off in this way - paying more for something that costs
less to produce.

Amazon if ebooks are even marginally above paperback costs should just buy the
paperback, format shift to ebook, sell the paperbacks as pulp.

I don't think anyone wants to hand over the ebook market entirely to Amazon;
all the publishing houses needed to do was not be evil and not try to squeeze
the system dry ... oh well. Death and taxes and human greed can always be
relied upon.

~~~
ghshephard
I remember when "Under the Dome" was selling wholesale (Hardcover) for $13 and
I ended up buying it from Walmart for $6.99 - because (A) it was $3.00 less
than the eBook, and (B), well, I then could, in theory, resell the book.

It's odd watching two book sellers compete with each other to sell a book at
loss.

But, your comment, "Amazon would let publishers rip them off in this way -
paying more for something that costs less to produce." brings to mind Scalzi's
comment,

[http://whatever.scalzi.com/2014/07/30/amazons-latest-
volley/](http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/)

"(This is where many people decide to opine that the cost of eBooks should
reflect the cost of production in some way that allows them to say that
whatever price point they prefer is the naturally correct one. This is where I
say: You know what, if you’ve ever paid more than twenty cents for a soda at a
fast food restaurant, or have ever bought bottled water at a store, then I
feel perfectly justified in considering your cost of production position vis a
vis publishing as entirely hypocritical. Please stop making the cost of
production argument for books and apparently nothing else in your daily
consumer life. I think less of you when you do.)"

Think about the software that I purchase online that costs $0.001 to deliver
and I pay $595 - it costs 1/10,000th what the old version with paper books,
and CDs, and nice glossy boxes.

I agree with Scalzi - the argument about "it costs less to produce" is bogus.
Something should be worth whatever value it has to the person buying it
intersecting with whatever price the person willing to sell it wants, plain
and simple. The cost of creation is not particularly interesting.

~~~
cwyers
There's two costs at work here -- marginal cost and absolute cost. eBooks
don't reduce the absolute costs of any of Scalzi's books -- the work he and
his editor put into it and the marketing expense, principally. But they do
reduce the marginal cost, and so if you sell eBooks at the same price as
physical books, that's more profit, split up however the parties involved
agree to.

Scalzi's comparison to fountain sodas missed the mark -- the reason those cost
so much more than the cost of the good itself is that the soda needs to cover
the costs of owning, maintaining and providing utilities to the building where
the fountain is, and the employees who work in that building. Amazon doesn't
HAVE that kind of overhead, and they want to pass the savings on to the
consumer. The publishers want Amazon to hold onto those savings (or share them
with the publishers), so that Amazon can't undercut the other retailers who DO
have that kind of overhead.

~~~
deegles
> Amazon doesn't HAVE that kind of overhead ...

Apparently servers, bandwidth, electricity and developers are free now?

~~~
pbhjpbhj
What do you think the relative costs of distributing 1,000 [one thousand]
ebooks vs. distributing 1,000 paperbacks are? We're talking after all
production costs, the book has been typeset and rendered to a print/ebook file
on a publishers computer system.

Once set up what's the additional cost involved for the publisher in shipping
the next 10,000,000 ebook files vs the next 10,000,000 paperbacks. Just the
act of transferring the book from the computer system to the ebook reader or
the owners bookcase.

I personally distributed > 50,000 computer files this month so far for a
marginal cost of < £1. Getting 50,000 DL flyers printed would cost me about
£1000 without distribution. It's not entirely comparable but I think it gives
the flavour of the savings in production costs available to publishers.

------
WhitneyLand
On this subject it's hard to tell if the NYT pieces are reporting or
editorial. It's ironic they are painting romantic pictures of content creators
toiling in sheds (who are actually wealthy) when they haven't even figured out
how to secure their own long term existence as newspapers struggle. The leaked
documents about their digital efforts and strategies show they are shockingly
out of touch with technology, yet apparently we should assume they have the
credibility to arbitrate how free markets are affected by disruptive
innovation.

~~~
fpgeek
Admittedly, this is a low bar, but at least they mentioned the pro-Amazon
petition in passing. More than a few pieces covering the anti-Amazon petition
completely forget about the other one.

------
facepalm
What kind of journalism is that? They don't even say what the dispute is
about. All they say is "some authors, who have no clue what is going on
because they are not involved in the negotiations, think that Amazon is evil".

------
funkyy
I think Amazon will go with "Dont like it, dont publish to it" strategy.
Amazon is platform that allows common folk to get access to whole library in
their own home.

I love when writers say they would love for people to have better access to
literature, but when Amazon shows up with their accessible platform it turns
out its back to basics - all about money. Top writers maybe dont get paid as
much as with regular publishers, but:

a) they do not need to publish to Amazon

b) if they are really about art and accessibility they will be happy with it

c) I know bills in cities like NYC are high, but hey - you decided to write
books for living. You took this route with all pros but also with cons...

~~~
x0x0
Selling ebooks is just not that complicated; it's an open question what value
amazon brings to the market (in that sense, it's the exact same problem as
Spotify.) If the top publishers jumped ship and started selling ebooks
directly, I'd follow. The vast majority of the self-published stuff on amazon
is utter shit, demonstrating both the value of a publisher as a filter and the
value of editors. Obviously there are gems, but the majority is awful. Also,
to be blunt: if you think that, were amazon to put the publishers out of
business and therefore gain direct publishing control over most ebooks, they
wouldn't take a hatchet to writers' pay, you're incredibly stupid.

Thinking that (1) writers wanting people to have more access to literature,
and (2) working in their self-interest to be paid are incompatible is silly.
Unless you're voluntarily giving up your salary so that more people can have
access to software (or whatever else it is you do).

~~~
cbr
If you think that selling ebooks is simple and Amazon doesn't bring anything
to the market, then why _aren 't_ publishers just selling ebooks directly?

~~~
chc
Doesn't Amazon make it relatively difficult to use alternative stores with its
e-readers (particularly the non-Android ones)?

~~~
x0x0
Sure, but here's the thing: Spotify is still the best parallel. Amazon's
weakness is they don't own the content everyone wants; they have to license it
and there is no mandatory licensing. The big 5 publishers could up and stop
letting amazon sell ebooks, form their own ebook selling consortium, and
switch the vast majority of customers over. Or hell, buy B&N for the same
reason.

~~~
chc
I'm pretty sure that kind of organized industry-wide boycott would run afoul
of antitrust laws — and if it weren't organized and industry-wide, the
publishers who defected would probably just be shooting themselves in the
foot, because they would not be able to get everyone to buy a new e-reader
that couldn't read any of their existing books.

~~~
x0x0
Yet Spotify exists. Are you aware of who owns a big chunk of it?

You can also put non-amazon books -- in formats such as pdf -- on kindle. It's
not as simple as buying through amazon, but it's very doable. Further,
everyone who owns a smartphone or a tablet can just download a reader app.

------
abc123xyz
We the end buyers should come together and make ourselves heard:

1\. Cheaper ebooks (many reasons vs pbooks) 2\. No fracking DRM

This whole hachette vs amazon thing is bullshit with the consumers and authors
being left on the side while these middlemen argue.

------
sambrand
There's a lot of talk that Publishers are a dying breed, but I don't really
think there is a status where publishers don't exist. Middlemen with more
perfect information will always prosper.

This is a valiant cause. There is no bad guy, it's just economics. Though I
have particular respect for anyone that can and does write a book.

------
lnanek2
I still haven't seen any reply by Hachette that counters amazon's point that
they will all sell more books at amazon's suggested price and make more money
overall - amazon, Hachette, and authors. Article just seems a lot of silly
side taking instead of logic.

~~~
BryantD
I recommend [http://whatever.scalzi.com/2014/07/30/amazons-latest-
volley/](http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/) (from
John Scalzi), which engages directly with the math. Many relevant points.

~~~
taeric
Granted... his point one falls off if you, as he does, completely neglect the
marginal costs of the books.

That is, if I shouldn't consider the costs of paperback books in comparing
physical books to ebooks as to why they should be cheaper, than you can't do
the same for why they should be more expensive. No reason the books at the
local store couldn't also be 9.99.

------
clarky07
i was thinking i should buy this guys books in support. then i realized i'd
want to get them from amazon. that won't work

~~~
ars
I just checked and he has lots of book listed with Amazon. Some for immediate
shipping, some for delayed shipping, but you can get them that way.

Then you can support all three parties at the same time :)

------
minusSeven
Question: is amazon paying any money to the owners of the books every time it
is being viewed.

one important analogy is that the first time the library is made it has to pay
to buy all the books for lending later. But an online library probably can
just distribute copies instead.

Can anyone highlight what laws are going to be followed here and how the
authors are going to paid for using this service ? Also will authors have the
right to put their books out of bounds of amazon?

------
alexyes
Publishers are also corporations

~~~
keithpeter
But authors and other cultural producers tend to be individuals who enter into
contracts with corporations to 'outsource' the routine stuff (publishing,
distribution) and to smooth out income variations (advances against
royalties).

As a first gen post here has pointed out _authors_ have no control over what
is happening in these essentially corporate negotiations.

