
Hachette/Amazon Business Interruption - Rylinks
http://www.amazon.com/forum/kindle/ref=cm_cd_tfp_ef_tft_tp?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdThread=Tx1UO5T446WM5YY
======
incision
_> 'We also take seriously the impact it has when, however infrequently, such
a business interruption affects authors. We've offered to Hachette to fund 50%
of an author pool - to be allocated by Hachette - to mitigate the impact of
this dispute on author royalties, if Hachette funds the other 50%. We did this
with the publisher Macmillan some years ago. We hope Hachette takes us up on
it.'_

Wonderfully slick move.

It makes Amazon look good, Hachette look bad and builds good will with the
authors and spectators while turning the screws on the economic pressure that
Hachette is already facing.

~~~
conanbatt
Does it? For me its a strong-armed position (my 50% hurts less than your 50%),
which is why they are in this battle to begin with.

~~~
pooper
Hachette [...] is part of a $10 billion media conglomerate. I think it is
Hachette which is trying to strong arm the up and coming Amazon.com

~~~
dragonwriter
A $10 billion media conglomerate is small potatoes next to $143 billion
Amazon. Plus, Hachette is not the dominant player in its industry, while
Amazon is.

So, nice try, but no.

~~~
pooper
I didn't realize Amazon.com's valuation was $143 billion. I thought the 10
billion figure was relevant since they included it...

------
brisance
Amazon conveniently sidesteps the fact that eBooks from Hachette are not
subject to supply chain constraints.

Or that deliveries were purposely delayed due to contract negotatiations,
which Amazon itself admitted.

Citation: [http://bits.blogs.nytimes.com/2014/05/23/amazon-escalates-
it...](http://bits.blogs.nytimes.com/2014/05/23/amazon-escalates-its-battle-
against-
hachette/?_php=true&_type=blogs&_php=true&_type=blogs&_php=true&_type=blogs&ref=business&pagewanted=all&_r=2)

~~~
jpatokal
_" But with such an online structure as pursued by Amazon, a book market is
being destroyed that has been nurtured over decades and centuries."_

Yes, that's called "disruption". Adapt or die.

[http://gyrovague.com/2012/06/18/eat-yourself-or-be-eaten-
a-t...](http://gyrovague.com/2012/06/18/eat-yourself-or-be-eaten-a-tale-of-
two-travel-publishers/)

------
patio11
Hachette: "They're using leverage on us in a negotiation to get us to agree to
terms!"

Amazon: "Well, yeah."

~~~
001sky
This trivializes everything interesting about this case. Because this argument
was previously had with Microsoft & Netscape. And Comcast and Netflix. And
Amazon has a huge stake in two major policy issues upon which this touches:

(1) Monopolistic collusion in e-books; and

(2) Net neutrality

~~~
yaur
To play the devil's advocate... couldn't Hatchet just pull out of selling
ebooks through Amazon and roll their own and/or start an distribution platform
for ebooks structured like Hulu? If the rest of the big 6 publishers got on
board that would be pretty catastrophic for Amazon and they wouldn't be able
effectively retaliate without crippling themselves.

~~~
ghshephard
The (only) issue is the Kindle (which I love, and own four of). Amazon sold
e-books at what some called "predatory pricing", using their large profits in
other parts of their business, to allow them to sell below cost on their DRM-
encumbered reading device. I would guess that close to 90% of e-book reader
who purchase books, do so on a Kindle capable device (iPad, iPhone, or E-Ink
reader).

These people (and I am one of them) - _only_ purchase e-books from Amazon.
Because it's DRM encumbered, we need to make sure we purchase content from a
supplier who is going to be around 10-20 years from now.

Only Amazon (and _possibly_ Apple) has any strong probability of being in that
category right now.

This gives Amazon an outsized ability to negotiate with vendors - Amazon is
close to being a Monopoly for both the ebook purchasers, and Monopsony for the
ebook sellers.

There was a small chance to correct this back when Apple attempted to
negotiate agency and MFN rights for their book selling business, but they did
it in heavy handed and clumsy way that appeared to the DOJ to be collusion.
Some have argued that what Apple did with the book publishers was not that
different than what Apple did with the Music publishers - the key difference,
of course, is that there was no "Amazon" to complain about their market
position being disrupted by a new business model.

I'll still continue to purchase books from Amazon, as distasteful as I find
their current negotiating strategy, but I would be (very) happy to see the
book publishers decided that DRM encumbered books will ultimately be their
downfall because of the negotiating leverage it gives the DRM platform owner.

See: [http://stratechery.com/2014/publishers-deal-
devil/](http://stratechery.com/2014/publishers-deal-devil/) for a nice
literary analysis of the situation.

~~~
kemayo
I'm one of these Kindle-owners. I want to correct a misconception: it's not
inherently DRM-encumbered.

Books you buy __from Amazon __can have DRM or not, depending on the
publisher[1].

Books you buy from other stores will work fine on Kindle so long as said other
stores aren't using DRM themselves.

Admittedly, if you buy a book in EPUB format from another store you'll have to
convert it to one of the formats Kindle supports. Amazon provides a program to
do so, and independent stores like Baen[2] tend to give you a choice of
formats anyway.

(Kindle not supporting EPUB natively seems pretty blatantly designed to avoid
competition, since it's the non-Amazon industry standard at this point. No
argument there.)

[1]: [http://www.niemanlab.org/2010/01/amazon-quietly-lets-
publish...](http://www.niemanlab.org/2010/01/amazon-quietly-lets-publishers-
remove-drm-from-kindle-ebooks/)

[2]: [http://www.baenebooks.com/](http://www.baenebooks.com/)

~~~
ghshephard
Thanks - I had no idea that I could purchase books from Amazon.com that did
not have DRM. This even _more_ strengthens the responsibility for DRM to be on
the publishers hands - simply by eliminating the DRM from their books, I could
purchase their books from _any_ publisher, and read them on _any_ device -
which would eliminate my need to go to Amazon for a new book.

I wonder how much discussion has gone on with the publishers about eliminating
DRM on their content. The music publishers certainly went that way...

~~~
swetland
To the best of my knowledge (I'd love a pointer to details if I'm wrong), the
reason Kindle has DRM at all is entirely due to publisher demands for it.

------
tptacek
_This topic has generated a variety of coverage, presumably in part because
the negotiation is with a book publisher instead of a supplier of a different
type of product. Some of the coverage has expressed a relatively narrow point
of view. Here is one post that offers a wider perspective._

[http://www.thecockeyedpessimist.blogspot.com/2014/05/whos-
af...](http://www.thecockeyedpessimist.blogspot.com/2014/05/whos-afraid-of-
amazoncom.html)

Apart from the amusing optics of "this topic has generated a lot of coverage,
but here's a blog post that sees our side of the story", it's worth knowing
that this "wider perspective" is that of a very small literary indie publisher
that basically says two things:

* Hachette is gigantic

* Selling books online is great for indies

Neither of those points has much to do with the issue at hand, and, in
particular, I'd suggest that selling books online is great for indies so long
as Amazon sees the dollars involves as a tiny rounding error.

------
jpatokal
Charlie Stross (cstross here on HN) has an interesting post on this:

 _By driving down the unit revenue, Amazon makes it really hard for
publishers—who are a proxy for authors—to turn a profit. Eventually they go
out of business, leaving just Amazon as a monopoly distribution channel
retailing the output of an atomized cloud of highly vulnerable self-employed
piece-workers like myself. At which point the screws can be tightened
indefinitely._

[http://www.antipope.org/charlie/blog-
static/2014/05/amazon-m...](http://www.antipope.org/charlie/blog-
static/2014/05/amazon-malignant-monopoly-or-j.html)

~~~
tygorius
Well, by that logic the record studios were proxies for musicians. Sorry, not
buying that argument.

If I were Stross I'd certainly be peeved at the loss of access to customers
and, by extension, income. Especially if I were obligated by contract to stay
with a publisher on the outs with Amazon. But arguing that Amazon's endgame is
to put him out of business seems a stretch. We're still in the early stages of
the ebook publishing disruption and I suspect that as with music, direct
commercial channels between producers and consumers is the future.

------
ternaryoperator
I'm an Amazon Prime subscriber, and have been for years. For most of that
time, I've automatically bought stuff from Amazon, aware that occasionally I'm
paying more than elsewhere. The reason is convenience. Order almost anything,
get it fast, with no extra shipping cost.

This spat has forced me to occasionally shop at Barnes & Noble. And I gotta
say, if I have to go to two stores to get items, Amazon's convenience edge is
much smaller. Just the other day, since I was on B&N I bought things there
that I would normally have gone to Amazon for. Again, it's the pure
convenience.

I have no idea whether I'm typical or not, but if I am, then I think this will
hurt Amazon more than Hachette.

~~~
akiselev
Even if you are a typical user, how much would it possibly hurt Amazon? If
this becomes a regular occurrence I can see Amazon's leverage eroding but the
company regularly goes toe to toe with many different industries and holds it
own against half trillion dollar a year giants like Walmart. Amazon's core
competencies are growing and the network effects are difficult to quantify.

I suspect encroaching on Amazon's market dominance would be a hard task even
for Google, let alone B&N

~~~
wmeredith
If the typical behavior of their current multi-year Prime subscribers is to
shop around because they no longer like the company that is a BIG problem for
Amazon.

------
bowlofpetunias
The day publishers like Hachette start selling their publications directly and
unencumbered by DRM is the day Amazon will slowly start losing their leverage.
(And get me as a customer.)

Sure, it will take a while, but that's only because these publishers have
spent the last two decades sitting on their asses counting their money whilst
Amazon ate their lunch.

I don't subscribe to the doctrine "disruption = good", but publishers are part
of the fat and lazy copyright exploitation industry that truly deserved to be
disrupted.

If Amazon tried to stop Hachette from competing that would be a different
matter. But they are handing Amazon this leverage simply because they still
can't be arsed to innovate themselves.

~~~
pkaye
Amazon already allows DRM free publications to be emailed into Kindle devices.

~~~
dublinben
That doesn't help much when only a handful of smaller publishers sell their
books in DRM-free formats. I read a lot, and really like e-books. I don't buy
very many e-books though, because the condition in which they're sold is so
hostile to the consumer.

~~~
pkaye
I have gotten DRM free books from O'reilly's, Informit, Peachpit and Apress.
Although all technical books, they are all major publishers.

------
cperciva
_We also take seriously the impact it has when, however infrequently, such a
business interruption affects authors. We 've offered to Hachette to fund 50%
of an author pool - to be allocated by Hachette - to mitigate the impact of
this dispute on author royalties, if Hachette funds the other 50%. We did this
with the publisher Macmillan some years ago. We hope Hachette takes us up on
it._

I have to say, this is a classy move on Amazon's part.

~~~
neil1
I wouldn't call it "classy", it's a public relations ploy, meant to turn
public opinion in Amazon's favor.

~~~
cperciva
Sure, it's a public relations ploy. But it's a public relations ploy which
helps out the group which is most negatively impacted by the current
situation.

They may be doing it for cynical reasons, but I still like it.

~~~
Flenser
It fixes a short term cash-flow problem for authors so amazon has the time and
goodwill to negotiate making things worse for them in the long term.

------
joshreads
“A word about proportion: this business interruption affects a small
percentage of Amazon’s demand-weighted units.” -a normal thing a human would
say

------
001sky
Confirms what has otherwise been in the press for 2 weeks. However, it's
helpful to hear it from Amazon directly. Sidesteps the need to "shoot the
messenger"\--An unfortunate direction of earlier discussions on HN.

------
eugenez
The 1.1% of Amazon sales (by item count) for Hachette is an interesting metric
if only to determine overall sales volume for Amazon should someone happen to
have the approximate Hachette numbers.

~~~
ben336
they made it clear that was "weighted demand" though, so items sold, not items
provided. You'd need "Hachette sales through Amazon", a number unlikely to be
available beyond Amazon/Hachette employees/execs.

~~~
eugenez
I wonder if the combination of total Hachette sales weighted by the portion of
overall book sales via Amazon would be a reasonable approximation.

~~~
julien_c
I think it would, but then what would be the portion of overall book sales via
Amazon?

------
mwsherman
Anyone know what an author pool is, how it functions? A bit of Googling didn’t
reveal anything.

------
werid
This is a lengthy piece that makes the point that these publishers aren't
entirely innocent (there's delays on both sides, and the publishers are owned
by some pretty big companies themselves)

[http://davidgaughran.wordpress.com/2014/05/26/amazon-v-
hache...](http://davidgaughran.wordpress.com/2014/05/26/amazon-v-hachette-
dont-believe-the-spin/)

------
paulhauggis
I will never do business with Amazon again.

As a book seller:

1) Customers aren't mine. I'm not allowed to send any of the people that buy
from me a link to my website or collect any of their data. This means that
this income channel can be taken away at the whim of Amazon.

2) Amazon regularly uses your sell data to undercut you and put you out of
business. I regularly would sell rare books with no other listings. As soon as
I had any sales, Amazon would popup with their own listing at half price. My
sales would go down when this happened.

3) Strange things would go on with their listings. I was in business for 5
years. I saw patterns and know when my sales would be up and down.

None of these rules applied on Amazon. I would be going strong for weeks at a
time. One day, I would have no sales and this might last for a month. From 100
sales/day to 0 just seems to be a bit funny to me.

Customer support would of course deny everything. However, after running my
own tests, I could see that from certain IP addresses and on some Amazon
servers, I would get random errors on checkout of my own listings.

Amazon eventually banned me. I had near 100% feedback and 1 complaint from a
user that I sold them the wrong book. Before the user complained, I even paid
to have it shipped back to me. This wasn't good enough. The customer wanted to
keep the >$200 book and not send it back. I nearly went broke because I
couldn't access my money for 3 months.

It took me a year to get my business back to where it was, but I am now in a
better place (with many sales channels).

Amazon is an evil company and anyone that does business with them is risking
everything for short-term gains. It's the destroyer of small businesses.

~~~
leorocky
> I will never do business with Amazon again.

Every other day it's someone saying they'll never use Facebook again, they'll
never use Amazon again, they've quit Dropbox, they'll never use Google again.
People in HN are quitting startups, quitting established companies,
forswearing this and that, and getting angry at all kinds of shit day in and
day out, and to be honest, I'm not sure it's ever made any bit of difference
ever.

Even GoDaddy is still alive and strong and not one of these other companies
has a founder go and shoot elephants and post about it on their official blog
with pictures, after supporting SOPA and demeaning women on national
television. Boycotting does nothing, and crying about it even less.

~~~
joallard
What about Paypal? I've heard complaints against them time and time again, and
alternatives have popped up in competition because they sucked too much.
Stripe, Square?

~~~
leorocky
I use PayPal every day nearly. I like Stripe, Square not so much. I don't
know, the people that seem to complain about PayPal are people who take
donations but aren't registered non-profits and even if PayPal was evil, I
doubt any of these boycotts have made a difference.

Stripe exists because they have a really awesome API and they make refunds
super easy without penalties.

Square exists because Jack Dorsey is able to drum up a lot of VC money and
engineering talent from followers of his personality cult. Not a lot of
profitable business though, apparently.

