Monday, October 20, 2014

Amazon Will Slash Your Royalties!


Barry sez: There’s a meme afloat in the publishing world, most recently articulated by Kobo president Michael Tamblyn, to the effect that, "When Amazon kills all competition, it will lower royalties. So indie authors should support Hachette and legacy publishers generally."
Even beyond the obvious (why so worried about a lion possibly eating you next year when there’s a bear in fact eating you right now), the argument above has things exactly backward.

The underlying concern is legitimate: without meaningful competition, a publisher is free to lower royalties. We know this is true in no small part because a lack of competition is what has enabled the Big Five oligopoly to keep author royalties lockstep-low for decades. In fact, if the long reign of the Big Five has taught us anything, it should be that in the absence of meaningful competition, the dominant system will abuse authors. Given that the Big Five has long abused its power, it makes perfect sense that should it acquire similar or greater power, Amazon, too, could become abusive.
But then isn’t this an argument for getting Hachette to compete with Amazon’s far better royalties? How can it possibly be an argument for protecting Hachette and enabling it to keep its royalties low?

Distilled to its essence, the conversation on this topic goes something like this:

Legacy author: You indies need to side with the Big Five because if Amazon crushes its Big Five suppliers, its indie suppliers will be next.

Indie author: You mean that, in the absence of meaningful competition, Amazon is likely to start abusing its author suppliers?

Legacy author: Yes.

Indie author: Because if the alternative to Amazon royalties is effectively zero royalties, authors will have no choice but to take whatever Amazon offers them, no matter how low.

Legacy author: Exactly.

Indie author: So the lower the royalties offered by alternatives to Amazon, the more room Amazon has to lower its own royalties?

Legacy author: Correctamundo.

Indie author: In other words, without meaningful competition, the dominant player can be expected to offer authors only low royalties. Take it or leave it, because there’s no other game in town.

Legacy author: That’s what I’m saying.

Indie author: But then shouldn’t we all be pressuring the Big Five to increase its royalties?

Legacy author: Huh?

Indie author: I mean, right now, the Big Five typically pays somewhere between 12.5% and 17.5% digital royalties. Amazon typically pays at least double that. For self-published authors, Amazon typically pays 70%.

Legacy author: I don’t follow.

Indie author: Well, if a dearth of high-royalty alternatives is what could enable Amazon to lower its own royalties, it seems like the current legacy low rates are a real problem. That disparity is exactly what creates room for Amazon to lower its own royalties.

Legacy author: Still don’t follow.

Indie author: Okay, here’s a thought experiment. What if your legacy publisher lowered its royalties to 1%. Would you be tempted to publish your next book with Amazon?

Legacy author: Hell, yes.

Indie author: Of course you would. You’d want the high-royalty alternative. Now, what if your legacy publisher increased your royalty to 70%. Would you be tempted to publish your next book with Amazon then?

Legacy author: Of course not. Like you said, I’d want the high-royalty alternative.

Indie author: Right. Now multiply your calculus across thousands of authors. If the Big Five started offering 70%, what would happen if Amazon tried to lower its rates?

Legacy author: Authors would desert Amazon in favor of the Big Five. Amazon could never do it.

Indie author: Correct. Now do you see how the best bulwark against Amazon lowering royalties in the future is getting the Big Five to increase them today? How the greater the gap between Amazon’s high royalties and the Big Five’s low royalties, the more room Amazon has to follow the legacy lead and lower its royalties, too? Do you see how if we protect the Big Five and enable it to keep its royalties low, we worsen, not mitigate, the danger of Amazon abuse?

Legacy author: So you’re saying… you’re saying it’s crazy for authors to settle for low legacy royalties. Not just because low royalties suck for authors, but because low royalties from one player enable lower royalties from another player. So we should be pressuring the low-royalty system to compete with higher royalties, not giving it a pass.

Indie author: Yeah, that’s pretty much it. I mean, if you think about it, it’s pretty counterintuitive that between a high-royalty system and a low-royalty system, authors would reflexively protect the low-royalty system and attack the high-royalty one.

Legacy author: Because higher royalties across the board are better for authors, and the existence of higher royalties in one system discourages competing systems from lowering royalties.

Indie author: That’s the idea.

Legacy author: Holy shit, I can’t believe I didn’t see this.

Indie author: It’s okay. You’re deep inside that system and subject to all its self-serving propaganda. Makes it hard to see the forest for the trees.

Legacy author: I guess so.

(Joe sez: Or you're fully aware of it because you're a rich author and a shyster.)

Indie author: The main thing is, we both want the same thing: a healthy publishing ecosystem, which means publishers competing for authors, not being protected from having to compete.

Legacy author: I love you, man.

Indie author: Kumbaya, baby.

Barry sez: I know there are authors who might reasonably respond to this post by saying, “Barry, I get what you’re saying, but I’m afraid the Big Five can’t compete. I’m afraid that if we don’t support the Big Five, therefore, Amazon will crush them. At which point, we’ll have a new monopoly even worse than the old one. For this reason, I support the Big Five.”

While I don’t share this worldview, I do understand it, and don’t believe it’s an unreasonable or incoherent way of approaching events. In fact, I see it as a version of the “lesser of two evils” approach. Distilled to its essence, it could be expressed as, “I know my way is unlikely to make things better, but I’m more concerned about making them worse.”

I have a number of friends, for example, who consistently vote Democratic even though they know the Democrats are cynically screwing them with a version of, “Vote for us or we’ll turn the keys over to Mitt Romney and Sarah Palin.” These voters know voting Democrat no matter what means the party will never reform and better represent their interests. But they’re less afraid of things not getting better because they always vote Democrat than they’re afraid things will get worse if they divert their vote to a third-party (really second-party) candidate.

My own default personality settings are somewhat different. First, I tend to react badly when someone presents me with a fait accompli, or game of chicken, or other brinksmanship dynamic where I’m expected to blink first. My attitude in such circumstances tends to be, “You just chose the wrong contestant for your game.”

That’s the emotional aspect of my worldview. The more intellectual one is, “I’ll take the risk of things getting worse for the chance to make things better.” Which is why it makes me sad to see so many people throwing their votes away on the the Democratic and Republican wings of America’s duopoly. Sure, doing so arguably prevents things from getting worse. But it also ensures things will never get better. And naturally, the duopoly cynically exploits these fears, ensuring its continued monopoly on power.

Sound familiar?

When publishing’s chattering class frets about Amazon being a “monopoly,” what they really mean is they’re afraid Amazon could become a monopsony -- that is, “a market form in which only one buyer interfaces with many sellers.” With its lockstep crappy terms -- forever-term contracts, twice-yearly annual royalty payments, lockstep low digital royalties, outlandish rights grabs, and draconian non-compete provisions -- isn't that how the Big Five cartel has always functioned with regard to its author suppliers? We have ample evidence that, without competition, the dominant publishing player is free to present a “take it or leave it position” to authors. Don’t we want the Big Five to face competition for authors, rather than enabling it to  continue to exercise “take it or leave it” negotiating leverage?

(For a nice example of an otherwise learned columnist bleating about how Amazon could become a monopsony while ignoring the current, actual cartel that’s abusing its suppliers right now, today’s Paul Krugman column is a must. Like others more afraid of the future than concerned about the present, Krugman shows some understanding of the principles of monopsony (though curiously, he fails to mention any relevant law on the topic), but seems to assume those principles apply only to hypothetical future situations and not to real existing ones. Joe and I have more on Krugman below.)

Besides, where at all possible, I prefer to believe the best of people and even of institutions. So why insult the Big Five with automatically low expectations? Suggesting the Big Five can’t compete and therefore has to be coddled is to expect so little of it. I say, let’s believe in the Big Five, believe in its ability to innovate and adapt and compete, and let’s encourage the Big Five with our confidence to be better than it’s ever aspired to be before. If we demonstrate to the Big Five that we’re not going to be suckered with its pleas for protection, the group will realize it has no choice but to improve. And within that dynamic, is there any reason to believe it won’t improve? How can we know the Big Five can’t do better if we constantly indicate with our rhetoric that we don’t believe it can?

I’ve said many times: when someone is sick, you don’t want them to die; you want them to get well. Well, I believe the Big Five can and will get well. But not if we keep indicating to it with our policy prescriptions that we believe the organization is inherently sickly. The Big Five needs our confidence, not our doubts. A hand up, not a hand out. Our help, not our enablement.

How can we have a healthy publishing ecosystem with a sickly Big Five at its center? Competition is the definition of a healthy publishing ecosystem, as a single buyer is the definition of publishing pathology. Amazon is providing the first real competition the Big Five has ever seen. This is a good thing, not something to try to stop. So let’s not enable the Big Five to stay sick. Let’s help it get better.

Joe sez: I really like Barry's answer to the oft-heard Hachette apologist whine: "When Amazon kills all competition it will lower royalties. So we need to support Hachette."
This is a classic example of misdirection. While the magician directs your attention with theatrics, he's clandestinely pocketing your coin.
The problem is that in the absence of competition, Amazon has more cause to lower royalties and take a bigger cut for itself. As Barry points out above, a lack of meaningful competition is exactly how the Big Five (formerly Six) oligopoly has been able to keep its royalties uniformly low for decades. It's also how Amazon was be able to become a publisher; by offering authors things the Big Five didn't. Namely: no barrier to entry; full control over your intellectual property rights; higher royalties.
So rather than supporting Hachette's greed, authors should be demanding Hachette increase its low royalties to levels competitive with Amazon's high ones.
Right now, Hachette's major benefit over Amazon--getting paper books into physical stores--is being negated by the fact that their book sales are floundering in the LARGEST BOOKSTORE ON THE PLANET. It's easy to understand why uber-rich authors are sticking with Hachette; they can still plug into this paper network and make assloads of money. But why are midlist authors following the lead of the rich ones?

Because they are being misled.

If authors demanded higher royalties from Hachette, and Hachette complied, then Hachette would remain a vital, viable alternative to Amazon. This would force Amazon (Hachette's competition) to keep author royalties high.
And if bigshot authors really wanted to help their midlist peers, as they repeatedly claim, they would be in talks with Hachette to demand royalties comparable to Amazon’s. That would lessen the chances of Hachette authors leaving to self-pub on Amazon, and maintain pressure on Amazon to stay competitive by keeping its royalties high.
Wouldn’t what I just described be the quintessence of the “healthy competition” and “healthy publishing ecosystem” Authors United and the Authors Guild and their mouthpieces keep publicly insisting upon?

The Big Five and its enablers in Authors United and the Authors Guild are the parties who are actually stifling competition. After all, they’re in favor of the low legacy royalties that create a danger of Amazon lowering its royalties, too. Amazon is actually the first competition the Big Five has ever had. Amazon should be lauded for introducing competition into the publishing ecosystem, and for the higher royalties they're using to compete.

Authors should also be insisting that Hachette explain why it won't accept Amazon's terms. If the dispute is truly about discounting, with Hachette wanting to control the price of ebooks and keep them high, Hachette’s position doesn't serve the interests of the majority of non-bestselling Hachette authors who don't get the widespread paper distribution of Preston and Patterson. Hachette capitulating on both issues would ensure that most Hachette authors would make more money than ever before, and ensure Amazon royalties remain high. It would also force every other publisher to match those terms. That's what Authors United and the Authors Guild should be focusing on.
As it stands, they're enabling Hachette to remain greedy and self-serving and non-competitive. A handful of bestseller authors are saying, "We'll support Hachette because it made us rich, with the understanding that if Hachette gets its way, a few of us will stay rich."
If they truly cared about their peers, and competition, as they say they do, their stance would be; "We need Hachette to increase royalties and lower ebook prices, because that's the only way to deal with a tough competitor like Amazon--to actually compete."
That's the approach all authors should be taking. We want third parties to compete for our books. We want real choice. We want competition.

Authors United doesn't want competition. They've escalated their efforts to get Amazon to back down (recently Douglas Preston and Stephen King were on CBS repeating the same one-sided nonsense we've repeatedly debunked) while admitting they haven't even talked to Hachette.

Both Authors United and Hachette immediately rejected Amazon's three separate offers to compensate authors monetarily during this negotiation. Preston called the offer "blood money" because he believes it would harm his publisher.

Unfortunately, if Hachette is unwilling even to temporarily compensate its authors during this negotiation, I don't see it raising royalties, either. And allowing Amazon to discount ebooks means a quicker end to the current iteration of Hachette’s paper distribution oligopoly.

Hachette, and the other members of the Big Five, has to understand this. But they're acting as if they'd rather go down with the ship than try to restructure it, because restructuring would cost them too much money.

Let's delve a little deeper into that analogy. Once upon a time, the only way to get from Europe to America was via ship. People had no choice. Some, with money, travelled in style. Some were relegated to steerage.

Then the Wright Brothers obliterated that oligopoly. Now there was a new, faster way to cross the Atlantic. And now that travellers had a choice, many chose to fly. When it became cheaper to fly than sail, the balance of power shifted.

It isn't the job of passengers to keep that ship sailing. It's the ship owner's job to make the ship appealing to passengers, so they'll buy a ticket to board.

It also isn't the job of ship-loving passengers to launch a media campaign condemning the Wright Brothers, blaming them for being immoral and unfair, and asking for the government to intervene.

These days, people take cruises as a vacation, and cruise lines often partner with airlines and offer passengers package deals. The ship owners changed with the times and partnered with the enemy. Maybe they aren't making as much as they did in their heyday when they were the only game in town, but they survived because they had something different to offer: Shuffleboard.

Okay, I was kidding with that last line, but cruise ships remain popular because they do offer a lot that airplanes can't, such as gambling, entertainment, food, and activities. Most cruises are round-trip, bringing passengers to the same spot they departed from. Once ships only existed to get from Point A to Point B. They adapted and changed and survived.

If publishers want to survive, they need to offer authors something Amazon can't. Paper distribution, advances, editors with magic wands that bestow rich literary culture and nurturing, etc.

Authors worried about their own futures should be demanding that their publishers reform. If I were a Hachette author, I'd be mad as hell at my publisher for not being able to come to an agreement with Amazon, and even madder that Hachette rejected three separate offers to compensate me.

That's who I'd be going on CBS to pressure. It seems obvious.

Instead, perpetuating the "Amazon is harmful" meme is nothing but misdirection, and we've just revealed the trick. Authors United doesn't care about all authors. It cares about continuing a beneficial relationship that rewards the few and harms the many.

The sad part is, these celebrity authors could be using their wealth and vast media contacts to improve the health of the whole publishing ecosystem for the good of the vast majority of authors.
But instead, Authors United is shouting at airplanes. Which is about as effective as it sounds.

Now rather than fisk Paul Krugman's surprisingly naive NYT article, since Barry and I have already debunked most of its points and positions, I'll respond to four of the main ones..

Amazon is not hurting America. It may be squeezing its suppliers, which Americans are benefiting from. Consumers with more choice and lower prices. Authors with new opportunities. Middlemen… well, if you care about propping up an archaic, abusive oligopoly so it continues to exploit writers, by all means say Amazon is hurtful.

Amazon is not a robber baron. According to Wikipedia, the term was typically applied to businessmen who used what were considered to be exploitative practices to amass their wealth. Amazon amassed its wealth by innovating, not exploiting. The Big Five are the robber barons, controlling the paper distribution cartel, price-fixing, making hardcovers luxury items, windowing, and exploiting authors with unconscionable contracts.

Barry sez: Hachette books weren’t “banned outright” from Amazon’s site. Why is he using the word "ban"? If, for example, Wilson Sporting Goods can’t come to terms with Sports Authority regarding the proper price of Wilson’s tennis balls, and Sports Authority stops giving preferential aisle placement to Wilson's tennis balls, no reasonable person would claim that Sports Authority was in any way “banning” Wilson’s goods. The notion that in failing to offer preferential treatment to Hachette’s books -- when Amazon doesn’t even have a contract to sell them -- Amazon is in any way “banning” those books is an atrocity upon plain English and a violation of common sense. It's name game nonsense.

Joe sez: But the stupidest thing Krugman writes is; "And what Amazon possesses is the power to kill the buzz." No, Paul. Amazon cannot prevent consumers from finding books. It is a publisher's, and an author's, job to make books discoverable. They have done this, historically, by working with bookstores. Bookstores do NOT work for free. If you want preferential treatment in a bookstore--signings, discounts, end cap displays--you pay a coop fee for that. Bookstores have NEVER treated all books equally. Amazon, which has no contract with Hachette, is not "buzzkilling." Hachette has failed to reach an agreement with Amazon that give its titles greater visibility.

Krugman's comparison of the different treatment two Hachette titles received from Amazon is woefully ignorant. Paul, no two books EVER get the same treatment for retailers. Even the simplest understanding of the bookselling world would reveal this. Some books get special treatment. Mostly because publishers pay for it. Sometimes because booksellers like certain titles over others and push them.

Barry sez: Another thing that interested me about Krugman’s post is the lack of evidence behind his claim that Amazon is hurting America, authors, and readers. The only thing he really says in support of his whole argument is that “what Amazon possesses is the power to kill the buzz.” Well, if that’s true, it’s really bad news for legacy publishers. It means they’re totally powerless to do the primary thing authors pay them about 85% of revenues to accomplish. Krugman is arguing, in effect, that legacy publishers are nothing but vestigial appendages.

Of course, if legacy publishers really were that useless, it’s hard to imagine any author ever signing with one of the Big Five. And yet thousands of authors do indeed continue to sign their books with the Big Five in the belief that the Big Five will deliver the buzz and all that. If Krugman really believes the Big Five is as feckless as he claims, he ought to explain why so many authors continue to go that route.

Joe sez: An appeal to emotion, in lieu of facts or common sense, is a fallacy. Krugman claims Amazon abusing its power. Watch out, or they'll buzzkill you! (I hope buzzkill becomes adopted with the same derision as whale math.) And Stephen King says Amazon isn't fair or moral.

Well, I'm pretty sure the DOJ cares more about the law than how people feel about a particular company. Ask me how I feel about Hobby Lobby and Chik Fil A. At the same time, I defend their right to run their companies as they choose to. I endorse freedom, and capitalism, even if corporations do things I don't agree with.

Amazon isn't hurting America. But celebrity authors and so-called reporters with axes to grind are potentially harming authors with misinformation. At times, to me, it seems like Authors United has a monopsony on slanted media coverage; this one group can appear in any newspaper or TV show they like, while authors who oppose them get little press attention.

Authors United does have one indisputable monopoly: during the entire Amazon/Hachette negotiation, Authors United has held a monopoly on stupid. That the media wants to report stupidity as news is their right. Newspapers like the NYT are allowed to be wrong, just like I'm allowed to cancel my subscription and read something else, just like I don't have to eat at Chik Fil A or buy crafting supplies at Hobby Lobby, and just like Krugman doesn't have to shop at Amazon anymore, even though he says, "I have Amazon Prime and use it a lot. But again, so what?"

So what, Paul? If you don't see the hypocrisy of continuing to support Amazon with your dollars while writing a screed condemning Amazon, then I weep for the integrity of the modern journalist.


112 comments:

Jim heskett said...

you totally SLAMMED that Legacy Author. Game, set, match, my friend.

Jason Brant said...

Paul Krugman.

Just mentioning him makes me shudder. I stopped reading anything with his name on it, because I know that it's going to be lopsided and full of backwards logic. Krugman always pushes an agenda, not reality.

SpringfieldMH said...

So CBS does an all-punches-pulled fanboy piece on heroic Douglas Preston and brave/objective/concerned Stephen King warning about evil Amazon...

CBS owns Simon & Schuster, one of the big trad publishers found by federal court to be guilty of illegally colluding with the others in price fixing. Others in the group include Hachette and Apple.

Simon & Schuster are now apparently in negotiations with Amazon (reported to have started in June).

Yet CBS has the gall to state that Simon & Schuster "is not involved in this battle".

I would give CBS partial credit for acknowledging they own Simon & Schuster...

But the big lie about not being involved wipes them out. F for fail. And L for liar.

And King's publisher is Simon & Schuster... And he has two projects under way with CBS... Under The Dome and an upcoming pilot for a possible series based on another story...

Not one mention of the big trad publishers having been found guilty and required to cancel the old illegal contracts they forced on Amazon and required to renegotiate with Amazon if they still want to do business with it.

Journalistic integrity and objectivity and avoidance of conflict of interest. Not.

Rob Gregory Browne said...

I've said many times, Barry, that you need to stop making sense.

That said, I have a strong feeling that legacy authors support legacy publishing not because it makes sense, but because it's what they know and feel comfortable with and they're deathly afraid that any change in the ecosystem will result in the death of their careers.

For the rich guys this might not matter, but for the kids in the trenches it's a real fear and this newfangled Amazon way of doing things doesn't make them feel warm and fuzzy.

Even when our parents abuse us, it often feels safer to stay at home than it does to go live with the stranger down the street.

Anonymous said...

Yes, Jim. When it comes to imaginary Legacy authors and imaginary giant reptiles and primates, this is the place to come for a reality check on the publishing business. It was kind of Barry to credit a Nobel Prizewinning economist for having "some understanding" of the principles of a monopsony. That's rich.

And Joe, you still haven't let us know if that's a PC you're working on in your banner pic. If so, I hope, unlike Krugman who buys from Amazon, you're avoiding the hypocrisy of supporting Microsoft or Apple, given your strong condemnation of companies that violate antitrust laws.

James Scott Bell said...

There is an extremism in the meme that is naive, because it wants to see only good and evil. It fails to understand that this is business, not a Manichaean struggle, with many components.

In that regard, let’s posit the doomsday future so many are wringing their hands over. Suppose Amazon becomes the “only game in town” (an unlikely scenario in any case). Will it then slash royalties to paltry levels? I don’t think so. Why not? Because one of Amazon’s cornerstones is client good will. If it were to take such drastic action there would be rebellion in the book corner of Amazon’s universe that would reverberate throughout the cosmos. That would be flirting with good will disaster and a massive exodus, and incentivize alternatives.

Barry suggests believing in the “best…even of institutions.” Yes, so long as we are not ascribing “best” to motives of the heart, but real-world business calculations. In that regard, I willingly lean toward the belief that the doomsday scenario is a chimera.

Anonymous said...

I completely agree with Joe and Barry that Legacy authors should use this moment to push for higher royalties, especially ebooks. It's a missed opportunity for them, even if they aren't buying into Amazon's offer to compensate Hachette authors.

Joe Konrath said...

I love my blog. Bless the anonymous pinheads, for without them life would be so much less entertaining.


It was kind of Barry to credit a Nobel Prizewinning economist for having "some understanding" of the principles of a monopsony.

Actually, it was silly of a Nobel Prizewinning economist to write that article without the vaguest understanding of how publishing and bookselling works.

A common logical fallacy is called the "argument from authority". Look it up.

And Joe, you still haven't let us know if that's a PC you're working on in your banner pic.

I still haven't let you know? Apparently this is a question I've been asked repeatedly and have dodged? Can you point out where?

The thing I'm holding in my banner pic is called a Kindle.

you're avoiding the hypocrisy of supporting Microsoft or Apple, given your strong condemnation of companies that violate antitrust laws.

Can you point out my posts criticizing Microsoft and Apple? Or can you point out any blanket statements I've made about antitrust laws?

The Big 5 is a cartel. An oligoply. It directly harms authors with unconscionable deals. You do understand this is A Newbie's Guide to Publishing, right? So this is where I talk about the publishing industry, not what Microsoft is doing.

Why be anonymous? You don't want to publicly own your stupid comments? You lack conviction? Or do you know they're dumb, and are just trolling and flaming?

I'm curious. It amuses me, but what does it do for you?

Patrice Fitzgerald said...

Thanks for your continued plain talking on these issues, Joe and Barry. Keep telling the truth.

Patrice Fitzgerald said...

Joe, perhaps Anonymous can't remember how to spell his name.

Anonymous said...

Joe, Barry credited Krugman with "some understanding" of a monopsony. You deflected with hyperbole of your own, so I assume you're just having fun. Fair enough.

You'll have to explain why Krugman is being hypocritical by admitting to buying products on Amazon but criticizing Amazon for its tactics in the book business. It's the last line of your post. Is it because he shouldn't continue to support a company that he accuses of unfair business practices. Maybe I am stupid or a pinhead. A lot of what you write makes good sense. But not everything. I hope you'll clarify.

Talin said...

Krugman has been publicly wrong about Economic predictions quite a few times recently. Personally I've yet to read anyone who's close to 100% and wonder how they can confidently trash others(calling them liars, deluded, derping, etc) on economic theory.

Linda Hall said...

I was always a mid-list author with my 18 legacy pubbed mysteries. (Is there such a thing as low-list?) My books were never promoted and when I called the company I always got the feeling of, "remind us who you are again?'

Amazon allowed me to retire from crappy contracts and enormous stress and still make some money. I am thrilled.

What I wish is that Kobo would step up to the plate and offer some decent competition to Amazon (instead of telling its authors to side with Hachette! where does THAT come from??)

Amazon has been good to me, but I don't love it. I live in Canada and Amazon is very American. Certain programs like ACX aren't even available to me. Why doesn't Kobo come up with something similar and something international?

Early on - as a reader - I tried to order an early Kindle and was treated very rudely by customer service. No, it was not available in Canada, and if I went across the line and tried to buy one, they would know and my account would be shut down. I vowed then and there never to own a Kindle. I have two Kobos, one a tablet with the Kindle app. Go figure.

Amazon and I have a 'consumer' relationship. I use them and they use me and I will continue to use them until a better game comes along. Why can't that better game be Kobo?

Anonymous said...

The very existence of the internet means Amazon is unlikely to ever be an exclusive monopoly. If they slash royalties it would take less than a few thousand dollars to start another website that sold digital books at better royalties. Ten decent authors, better royalties, and the rest would follow.

Joseph Ratliff said...

Big 5 Publisher: "And I'd get away with raising ebook prices and low royalties if it wasn't for those meddling customers and those indie authors."

Scooby Doo: "Ruh-roh Regacy Rublishing."

Anonymous said...

And Joe, I"m not trolling. Honestly, I've been reading this site for years because I learn a great deal about the book business here. I have a ton of respect for the way you and Barry take on traditional publishing and manage your own writing careers. I just don't agree (or understand) everything, so I'm questioning. Thanks for indulging.

Joe Konrath said...

Is it because he shouldn't continue to support a company that he accuses of unfair business practices.

Yes. He's riled up enough to write a NYT piece about Amazon being a bully, but not enough to stop supporting them as a customer? Which is the more extreme thing to do?

If I say, "Hachette is the great satan and they eat men's souls" and then sign a deal with Hachette, is that not hypocritical?

I don't buy people's crummy arguments because they have a Nobel or a Pulitzer. Obama won the Nobel peace prize, and he's authorizing drone strikes--unauthorized by Congress--that kill civilians. Does that seem hypocritical?

Joe Konrath said...

I just don't agree (or understand) everything, so I'm questioning. Thanks for indulging.

Then I apologize for being overly snarky.

Anonymous said...

Two points, First, in his first paragraph on Krugman's column, Barry misrepresents what Krugram said. He never said Amazon "banned" anything. Here is the full quote from Krugman's essay: "Hachette books weren’t banned outright from Amazon’s site, but Amazon began delaying their delivery, raising their prices, and/or steering customers to other publishers."

Second, Joe and Barry claim that Amazon's treatment of Hachette is no different from any other retailer's disparate placement of titles on its shelves. You can't be serious. Book stores make shelf placement decisions based on anticipated reader interest, staff favorites, and promotional fees. Although promotional fees play a role, the goal is to serve the customers' interests by promoting books they are likely to want. Amazon, in contrast, is (performing the internet equivalent of) removing books from its shelves to punish a publisher (Hachette) in an attempt to gain the upper hand in a negotiation over how much money Amazon can from Hachette's pocket.

Are you telling us you can't see the difference between a book store helping its readers find books they might like and a retailer trying to strong-arm a supplier by decreasing its sales? Someone is "woefully ignorant" here, but it isn't Paul Krugman.

Alan Spade said...

"How can we know the Big Five can’t do better if we constantly indicate with our rhetoric that we don’t believe it can?"

Because the Big Five are evil? Rotten to the core?

Sorry, an emotional response. I'd love them to prove me wrong, though.

Another thing: when the inheritors of Gutemberg's press began to replace handwritten manuscripts, was it competition?

Were airplanes really competing with boats?

I mean, Amazon is a whole new system. Isn't it like to compare apple to oranges to say that Amazon is competing with the Big Five?

I would agree to say that Thomas&Mercer is trying to compete with the Big Five.

I would agree to say that Kobo is trying to compete with Amazon's KDP.

For instance, when you say:

"Indie author: Right. Now multiply your calculus across thousands of authors. If the Big Five started offering 70%, what would happen if Amazon tried to lower its rates?

Legacy author: Authors would desert Amazon in favor of the Big Five. Amazon could never do it."

Even with better royalties from the Big 5, authors could only try to publish with the Big 5. Because big publisher's game is not the same than Amazon's KDP game, they are incomparably more selective and restrictive.

As an indie author, if Amazon was squeezing my royalties, my only hope would be that a real competitor to KDP, a competitor much more enlightened than Kobo or Apple arose. In the meantime, I could only try to handsell more paperback copies.

I think that's an illusion to believe that the Big Five could compete on royalties. Of course, it would be a good thing for legacy and hybrid authors if they fought for better royalties rather than losing time targeting Amazon, but the best course of action would be for the legacy authors to encourage their publisher to build a competitor to Amazon: in my opinion, it could only be a website with powerful algorithms and an electronic company with an ereader, and this company would have to do exactly what Amazon does, allowing everybody to self-publish and to have a chance.

A fish cannot compete with a bird.

Anonymous said...

In fact, I will go further on the point about shelf placement, and argue that it illustrates the cultural blind spot obscuring Konrath's and Eisler's view of these issues.

Books are part of a larger, ongoing cultural conversation. If Jonathan Franzen writes an insightful and popular essay in Harper's about the tension between accessible novels and the pretentions of high literary art, and then follows that up with a blockbuster literary novel, it means his next novel is going to be a big deal, because it is likely to be a great book (his first one was) and to have something worthwhile to say about the public conversation he started ten years earlier. Naturally, book stores and on-line retailers are going to feature it in their stores, because they know it's the book everyone is going to be talking about.

Of course there are barriers to entering that conversation, and they can be daunting and frustrating. Very few people can write a story that shines brightly enough to gain attention in a saturated market. Publishers sift through thousands of manuscripts to find something special. Not everyone can write a book worth reading. But for the talented and hard-working writer, those barriers are not insurmountable -- writers overcome them every day. That's how new literary voices emerge.

The point is that, like book shelf placement in your neighborhood book store, the public conversation is ultimately driven by ideas, not by the profit motives of corporations. Also, it is ultimately open to everyone, that is, on equal terms. The barriers to entry may be daunting, but they are equally daunting for everyone.

This is, in essence, what it means to have a democracy and a vibrant literary culture. It's what every writer should want -- a culture driven by the currency of thought and creativity, rather than by corporate profit.

By hiding Hachette titles and forcing customers to wait weeks to receive them, Amazon is directing the cultural conversation according to its economic interests rather than the ideas and stories in the books themselves.

This, in a nutshell, is why their actions are so offensive.

The fact that Konrath and Eisler don't see any difference between a book store's placement of titles on its shelves and Amazon's predatory, profit-driven suppression of an entire publisher's offerings indicates that they don't understand this fundamental point about literary culture. It's like they don't even see the conversation taking place around them, and so when voices that have earned a place in that conversation get squelched, they don't notice.

It's ironic because they want to contribute to the culture, and its public conversation -- they want to be culture makers. But by seeing all books (ALL books) as homogenous economic objects, and failing to appreciate the role a book or an idea can have in starting or contributing to a public conversation, and above all by failing to see the denigration of literary culture in Amazon's practices, they reveal that they fundamentally don't understand how literary culture is made and, more importantly, the conditions necessary for it to flourish.

All of which makes them unreliable narrators in the story of Amazon's battle with Hachette. Ha! I switched up my metaphors. But you get the point.

Joe Konrath said...

Hachette books weren’t banned outright

Did you follow the Name Game link? Why did Krugman use the word "ban" at all, other than to provoke an emotional response?

It's purposely misleading. Why use the word ban? It's like asking someone, in court, when they stopped cheating their spouse, and then withdrawing the question after an objection, and the judge telling the jury to disregard it.

There's no disregarding it. Jurors heard "cheating." Readers read "ban."

Although promotional fees play a role, the goal is to serve the customers' interests by promoting books they are likely to want.

I worked in a bookstore. I also have met several thousand bookstore workers. Booksellers display what corporate tells them to, based on coop. Yes, indies and some booksellers have some leeway in what they'd like to push, but placement, reorders, number of copies shelved, return rates, and so on are corporate rules.

The best booksellers I know had to find ways to work around corporate mandates, which often impeded their ability to sell what customers want. The real life situation, at least in the chain stores I've visited (over 1000), it that they sell what they're told to sell.

Are you telling us you can't see the difference between a book store helping its readers find books they might like and a retailer trying to strong-arm a supplier by decreasing its sales?

I'm telling you that the front of store table at Barnes & Noble, selling hardcovers for 40% off, is bought by publishers and has nothing to do with what an employee wants.

I never had coop at Borders or B&N. I was never on that front table, because my publisher didn't pay for that space.

Was my publisher being strong-armed? No. That's business. You could find my books, spine-out in section. Just like you can find Hachette's books on Amazon, with long shipping times.

That's the analogy I'm making.

Alexander Mori said...

I'm no soothsayer. I have no gift for prophesy. I can't tell you what is going to happen in the future. But, when questions arise of Amazon's ability/desire to lower royalties in the future, writers who publish directly through Amazon will have the choice to raise ebook prices to offset the drop in royalty rate. If their writing is good enough, consumers will pay $4.99, $5.99, $6.99 for a book. The line on what a reader is willing to pay will shift. This exploration will affect sales. Both Amazon and writers may suffer lower sales through this process. But both may benefit in the end when the sweet spot is discovered. It's this exercise in supply/demand that will dictate the working market, instead of publishers dictating the supply and demand by who they choose to publish, who they choose to distribute (and how many units) and who they promote. At least with Amazon, authors have decisions and opportunities to affect their own livelihoods.

As it stands with legacy publishing, the big 5 have control of pricing paper books and they have trained writers to accept lower royalties. Readers and writers, who are the ones trying to dance together, had no say in the music they were listening to.

If the big 5 wish to adapt and stay strong, they will need to convince good writers to sign with them. Right now they aren't offering much incentive. They use scare tactics to keep the world as they like it.

But there are some of us who won't be scared.

Anonymous said...

Joe, thanks for your response. I will make one point: No one in this debate is asking Amazon to be more like Barnes & Noble. They are asking Amazon to stop suppressing the titles of one publisher as a negotiating tactic.

There are undoubtedly unpalatable aspects of the book selling business. The Barnes and Noble example you give is a good one. But that doesn't lessen the harm caused by Amazon's conduct.

Also, it matters that Amazon has such a huge share of the market, and is strong-arming Hachette in a larger effort to corner the book selling market.

Anyway, thanks for the discussion.

Joe Konrath said...

and argue that it illustrates the cultural blind spot

Before I forget, thank you for chiming in with an alternate point of view, and doing so thoughtfully and civilly. I sometimes knee-jerk in respond to disagreements on my blog because often they're thinly veiled insults, or trolling. But you're posing some interesting points that are adding to the discussion.

The "culture" meme is an appeal to emotion, and a fallacy. There is no objective standard of what constitutes culture. But I'll play along.

Naturally, book stores and on-line retailers are going to feature it in their stores, because they know it's the book everyone is going to be talking about.

You're putting the horse before the cart. It will only be talked about because of a big coop campaign.

I can't think of any book that just "took off" without a push. If it took off, there was a push.

I remember when Water for Elephants hit the NYT list, and everyone said it was a grassroots effort from indie bookstores. Nope. The title was preprinted on the NYT list form prior to it hitting the list. I actually had the form as proof. Before she became a bestseller, her publisher got her on the preprinted form. That took a big push.

If you aren't familiar with how the NYT works, check out my post http://jakonrath.blogspot.com/2006/06/to-be-nyt-bestseller.html

And don't get me started on the big push Lee Child got...

Craig Hansen said...

Joe:

This article needs your special fisking touch:

http://www.usatoday.com/story/money/columnist/wolff/2014/10/19/amazon-and-the-book-business/17376253/?AID=10709313&PID=6150044&SID=1l2sc5g3vj9ku

Joe Konrath said...

The point is that, like book shelf placement in your neighborhood book store, the public conversation is ultimately driven by ideas, not by the profit motives of corporations. Also, it is ultimately open to everyone, that is, on equal terms. The barriers to entry may be daunting, but they are equally daunting for everyone.

I admire your idealism, but find it to be optimistic at best.

Neighborhood bookstores are great. But they don't make bestsellers. Publishers and coop make bestsellers. Just like the media is driven by corporations (or the government). The anti-Amazon coverage in the press reeks of bias and lacks substance. That's driven by a specific agenda which has everything to do with profit and little to do with ideas.

Joe Konrath said...

This is, in essence, what it means to have a democracy and a vibrant literary culture. It's what every writer should want -- a culture driven by the currency of thought and creativity, rather than by corporate profit.

Which is why all bookstores and publishers are subsidized by the government and operate in the red? For the sake of culture?

The idea of thought as currency is quaint. Perhaps I need to stop writing genre and write the Great American Novel. Then, when ComEd wants me to pay my electric bill, instead I'll send them a copy of the book, which is a scathing rejoinder against 21st century hipster cynicism disguised as a coming-of-age tale.

I'm betting they'll prefer money to my spot-on depiction of disenfranchised youth forced to participate in a society with values they despise.

Also, there is an entire chapter describing a sunset, which is actually a metaphor for the dusk of a bygone age.

Anonymous said...

Simon & Schuster just signed a contract with Amazon!

Anonymous said...

http://www.businessinsider.com/amazon-closes-multi-year-deal-with-simon-and-schuster-2014-10

Joe Konrath said...

It's ironic because they want to contribute to the culture, and its public conversation -- they want to be culture makers.

I don't want to be anything. With my blog, I am a defender of authors. With my writing, I am an entertainer.

The public conversation of culture interests me in the same way philosophy does. It's mental masturbation.

But by seeing all books (ALL books) as homogenous economic objects, and failing to appreciate the role a book or an idea can have in starting or contributing to a public conversation, and above all by failing to see the denigration of literary culture in Amazon's practices, they reveal that they fundamentally don't understand how literary culture is made and, more importantly, the conditions necessary for it to flourish.

I'll happily argue that consumerism and creative media are enormous sections of culture, and they intertwine and overlap often. We pay for entertainment, whether it is to visit a museum, read a book, or see Skrillex. More high school kids know Tony the Tiger than Anna Karenina.

We could argue (ie masturbate) over whether that is good or bad, whether genre fiction contributes to literacy or is dumbing down the populace, whether Franzen is more important culturally than Dean Koontz.

It still comes down to publishers being corporations, not altruistic charities or defenders of ideas.

All of which makes them unreliable narrators in the story of Amazon's battle with Hachette.

So Hachette is holding out for higher ebook prices because it wants to protect culture, not its paper oligopoly? You do realize that's silly, right?

Alan Spade said...
This comment has been removed by the author.
Alan Spade said...

Publishing is a business, but a business driven by men and women with personal tastes. There are objective standards of quality, but it's difficult to me not to believe that one of the most basic standards is the author's malleability.

And the main thing to test the author's malleability is to provide her with an unconscionable boilerplate contract: if she signs it, she has proven to be malleable.

Joe Konrath said...

They are asking Amazon to stop suppressing the titles of one publisher as a negotiating tactic.

Amazon isn't suppressing titles, anymore than B&N suppressed by books because they weren't featured on the 40% front table.

But that doesn't lessen the harm caused by Amazon's conduct.

You mean the harm caused by Hachette's conduct.

My Jack Daniels stories have sold about a million books. There are readers out there who like them. But I was only able to find the majority of those readers when I self-pubbed.

If Hyperion had given me that 40% coop, would I have reached those readers through bookstores, rather than through Amazon? We'll never know. But I don't blame Barnes and Nobel or Borders for not discounting my books. I blame my publisher for not paying B&N and Borders for not discounting my books.

I'd argue that my publisher harmed my sales. Just as Hachette is harming its authors sales.

Also, it matters that Amazon has such a huge share of the market, and is strong-arming Hachette in a larger effort to corner the book selling market.

Isn't Hachette also strong-arming Amazon to keep ebook prices high?

I don't want Amazon to the the only retailer, or publisher, left standing. I want competition.

Hachette isn't competing. That's the entire point of this blog post.

Joe Konrath said...

Simon & Schuster just signed a contract with Amazon!

So apparently 1 of the Big 5 can negotiate successfully with Amazon.

Maybe Amazon is demanding more from Hachette than it did from S&S. Or maybe S&S had a stronger bargaining position.

We'll likely never know. But this might put the onus on Hachette to make a deal happen.

Anonymous said...

"Then I apologize for being overly snarky."

Ha. That's part of what makes this site worth coming to.

You're right about "push" for the bestseller list. Aside from the coop money and the preprinted NYT list, there are other factors in motion right from the signing of a book contract. And they can crush the hopes of any writer who thinks a traditional publisher is the answer to their dreams. Get the kind of low advance for first novels that publishers usually pay, and they are barely invested. Unless there's hype, sales reps will come back from B&N and the other sellers with the usual small orders for unknown first novelists, and those small orders dictate the novelist's budget for publicity and coop money. (Minimal to none)

At that point, they're mostly at the mercy of advance reviewers, hoping to get raves of genius. Plain old "great" reviews from Kirkus, etc., won't even spur the publisher into increasing print runs much. Advance orders have already set the tone in the majority of cases.

Write a first novel with a small initial print run with decent sales, and there's still no guarantee you'll get a second book deal. Publishers see little upside in that investment. They are looking for big sellers and they use those books to fund surprise, breakout books. There's no surprise in midlist numbers. This side of traditional publishing is a depressing reality for novelists, and just as much a threat to literary culture as anything AU complains about.


Nirmala said...

Boy, now that Simon and Schuster has reached an agreement, it sure makes Hachette look kind of foolish for being unable to come to terms. And I wonder if now Authors United will question if there might be some responsibility on Hachette's part for this long drawn out affair. Oh wait, I don't really wonder about that. AU seems incapable of questioning their own positions.

Joe Konrath said...

At that point, they're mostly at the mercy of advance reviewers, hoping to get raves of genius

Assuming their publishers even get their books to the reviewers...

Judy Goodwin said...

So apparently 1 of the Big 5 can negotiate successfully with Amazon.

Maybe Amazon is demanding more from Hachette than it did from S&S. Or maybe S&S had a stronger bargaining position.

We'll likely never know. But this might put the onus on Hachette to make a deal happen.


This makes me wonder how noisy Stephen King will be, now that his publisher has signed with Amazon.

kaonevar said...

Wow. That was a slam dunk.
Been saying something similar to that for months, but you said it way better.
I'm off to tweet your post now!

Anonymous said...

According to Publishers Weekly, Simon & Schuster have reached an AGENCY deal.

http://publishersweekly.com/pw/by-topic/industry-news/industry-deals/article/64458-s-s-to-go-agency-with-amazon.html

Anonymous said...

According to Publishers Weekly, Simon & Schuster have reached an AGENCY deal with Amazon.

http://publishersweekly.com/pw/by-topic/industry-news/industry-deals/article/64458-s-s-to-go-agency-with-amazon.html

Peter Spenser said...

Simon & Schuster also recently announced that they were starting a new science fiction e-book imprint called SAGA PRESS and, à la TOR, the books would be published without DRM.

http://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/64321-saga-press-e-books-to-be-drm-free.html

Could this possibly be the beginning of a new era in publishing? Has S. & S. seen the future and decided to be the first of the Big Five to meet it head on?

Broken Yogi said...

By hiding Hachette titles and forcing customers to wait weeks to receive them, Amazon is directing the cultural conversation according to its economic interests rather than the ideas and stories in the books themselves.

Well, first of all, Amazon isn't "hiding" Hachette books. They just aren't promoting them. A big difference. They still turn up on search engines. They aren't discounted, and they don't have presale buttons, but they aren't at all hidden. They aren't forcing customers to wait weeks for delivery either. Customers can order them elsewhere, or go to a physical bookstore and buy them there, as they always have been able to.

You seem to confuse Amazon with some sort of public utility that everyone has a right of access to. They don't. They aren't stopping anyone from buying Hachette books. Obviously they are withdrawing their full support from Hachette's titles, because they don't like the terms Hachette demands that Amazon sell them under. They aren't stocking Hachette titles in their warehouses, but only ordering them as orders come in. If Hachette could fulfil those orders quickly, then Amazon could ship them quickly. But Hachette doesn't do that? And that's Amazon's fault? As if Amazon's warehouses somehow belong to Hachette, and they are being denied the right to be stocked there?

Who is denying the country its cultural conversation by making these books not so easily available on Amazon? It sounds like Hachette is, by refusing to negotiate with Amazon. And refusing to compensate authors for their lost royalties, as Amazon has offered to do. Why is Hachette doing that? Don't they care about their authors? Don't they care about the cultural conversation they are trying to contribute to? Why is the burden on Amazon to provide a platform for Hachette's authors, when Hachette itself doesn't seem to care? Could it be that Hachette is putting its own economic interests above that of it's authors? And above that of the literary culture? Wow, wouldn't that be scandalous? You'd think authors would be outraged about that.

Joe Konrath said...

According to Publishers Weekly, Simon & Schuster have reached an AGENCY deal.

Amazon has an agency deal with me, and every KDP author. The split doesn't interest me.

What I'm curious to know if Amazon can discount S&S titles. Media outlets seem to conflate agency pricing with no discounting. In the KDP author agreement, Amazon reserves the right to discount.

No one knows the details, but I can make a few guesses.

1. Amazon doesn't discount any S$S titles, including paper. I proposed this solution a while ago.

http://jakonrath.blogspot.com/2014/08/amazon-vs-hachette.html

2. Amazon can discount.

3. Amazon can't discount.

If #3 happened, I'd be interested to know why Amazon's business strategy has changed?

Do they have so much of an installed customer base with Kindle that they're no longer trying to lure late adopters with low priced ebooks from major publishers?

Could be.

Or maybe Kindle Unlimited, with 500,000 exclusive titles, is playing a part...

Broken Yogi said...

According to Publishers Weekly, Simon & Schuster have reached an AGENCY deal with Amazon.

http://publishersweekly.com/pw/by-topic/industry-news/industry-deals/article/64458-s-s-to-go-agency-with-amazon.html


Wow, that is a big deal. A really big deal. It means Amazon is caving on the whole Agency business. Just as I predicted here not long ago. A deal with Hachette and the others is probably soon to follow.

Lots of fallout from this, no doubt. I suppose we should wait for official confirmation of course. But Publisher's Weekly is a pretty reliable source for this sort of thing. It's back to the future, 2010 style.

Rob Gregory Browne said...

They are asking Amazon to stop suppressing the titles of one publisher as a negotiating tactic.

Although I think this is a mischaracterization of what Amazon has done with Hachette's titles, if they had actually done this, my response would be: so what?

Amazon is a business. If you can't get one of your suppliers to come to the bargaining table, you do what you can to entice them to do so.

I don't understand this mindset that insists that Amazon is evil for dropping pre-order buttons. Amazon isn't a charity, and neither is Hachette. Neither have a moral or societal obligation to do jack shit.

Businesses outright refuse to carry certain products every single day. It's called life. Get over it. If you want to do business with Amazon, then get to the bargaining table and do business with them.

All this high and mighty books aren't widgets nonsense slays the hell out of me. Books ARE widgets because big publishing MADE them widgets. Widgets that have a limited shelf life and are of no use to the publishers once they're past their prime.

Broken Yogi said...

I"m guessing that, as in 2010, this agency deal allows some discounting, but not below certain levels. I'm curious to see what the margins are too. I'm guessing that S&S made some concessions on margins and promotional fees to get agency pricing.

I'm hoping that the other side of my advice/analysis comes true. Which is that rather than fighting the Big Five on agency pricing, that they fight them by making KDP even more attractive to the current Big Five midlist authors, and try to lure them away from the Big Five's monopsonist grip on the author market. One can at least hope.

Joe Konrath said...

It means Amazon is caving on the whole Agency business.

Agency was never the problem. Amazon has said they're okay with Agency.

But they wanted to retain the ability to discount.

If they no longer feel they need to be able to discount, what does it mean?

We'll see.

Broken Yogi said...

Joe, the whole point of Agency pricing has been to limit discounting, so that ebooks remain expensive. If Amazon said that, they were either lying, or merely wanting a much lower agency pricing model. I suppose theoretically Amazon would favor Agency pricing if that limited ebook prices to 9.99. But I doubt that's what's happened. We'll need confirmation, but the reports thus far indicate Amazon gets only limited discounting rights.

What this means is, I think, exactly what I said a while back here: that Amazon can't buck the whole major publishing industry, because they need them more than the Big Five need Amazon. It's the same thing that happened back in 2010, when Amazon caved to Agency pricing. This time, negotiations with S&S made it clear that they, and all other major publishers, were going to stick to their guns on Agency pricing. Which means Amazon would have to cave again. Because they can't do without them.

Joe Konrath said...

The Amazon Books team says:
(AMAZON OFFICIAL)
We are pleased to announce that Simon & Schuster and Amazon have reached a multi-year agreement for the sale in the US of both print and digital books.

We are very happy with this agreement, as it allows us to grow our business with Simon & Schuster and help their authors reach an ever-wider audience. Importantly, the agreement specifically creates a financial incentive for Simon & Schuster to deliver lower prices for readers.

Thank you,
The Amazon Books Team

http://www.amazon.com/forum/kindle/ref=cm_cd_fp_ef_tft_tp?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdThread=Tx3N830PYH9BY82

Joe Konrath said...

Joe, the whole point of Agency pricing has been to limit discounting, so that ebooks remain expensive

When the 5 publishers colluded, yes. There was no discounting.

The DOJ ruled that agency pricing could continue, but Amazon could discount to a certain point (William Ockham will be able to cite it).

Back in July, Amazon said they were fine with a 30% cut. They weren't fine with high prices.

http://www.amazon.com/forum/kindle/ref=cm_cd_tfp_ef_tft_tp?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdThread=Tx3J0JKSSUIRCMT

I'd like to know if the agency deal Amazon and S&S made allows Amazon to discount. Per Amazon's statement, it looks like they're giving S$S incentives to deliver lower prices to readers. Is that the same as discounting?

No. When Amazon discounted, it cut into Amazon's profit margin. If Amazon is encouraging S&S to lower prices, customers get lower prices while Amazon keeps the entire 30%.

Broken Yogi said...

Look at it this way. Say S&S prices an ebook at 14.99. Amazon wants to discount that book to 9.99. So maybe this deal allows them to discount it to 12.99. That seems like a reasonable compromise. But it means other ebook retailers can also discount to 12.99, but not any further. So Amazon's competitive disadvantage goes away, on price at least. They have other advantages, however, including perhaps in marketing charges. So Amazon's business can still remain healthy, and people won't run to other retailers instead. But it won't be able to keep undercutting the competition. Which may not be such a big deal now that Amazon is already so big and offers so many other advantages.

But none of this affects KDP, so perhaps Amazon can do things to help promote KDP. All that money they might have spent on discounting the major publisher's books, they can spend on making KDP more attractive. Or at least I hope so. It would be a smart move, because KDP is the only mechanism Amazon really has for undermining the Big Five's bargaining position in the long run.

Joe Konrath said...

Which means Amazon would have to cave again. Because they can't do without them.

Amazon has 500,000 exclusive Kindle Unlimited titles. None are Big 5.

I'd hazard a guess that Amazon is looking at Kindle Unlimited and perhaps figuring out it doesn't need the Big 5 after all.

Or not. We'll know in 2015, when we see what S&S titles on Amazon are priced at, and how they rank.

Broken Yogi said...

When the 5 publishers colluded, yes. There was no discounting.

My memory is foggy there. No discounting at all? I thought there was some, but maybe I'm thinking of after the DOJ swept in.

I'd like to know if the agency deal Amazon and S&S made allows Amazon to discount. Per Amazon's statement, it looks like they're giving S$S incentives to deliver lower prices to readers. Is that the same as discounting?

I don't think that's the same as discounting. It would change the margin/profit picture, but I don't think it would necessitate lower retail prices, unless the publishers took advantage of it. Sounds voluntary on the publisher's part, not Amazon's, to lower prices. But we'll have to see.

The basic sense I get is that the publishers are still able to keep prices as high as they want, but if they lower them, they get some better margins. But they are still in control of that, not Amazon. So it looks like a huge cave-in by Amazon.

Broken Yogi said...

Amazon has 500,000 exclusive Kindle Unlimited titles. None are Big 5.

I'd hazard a guess that Amazon is looking at Kindle Unlimited and perhaps figuring out it doesn't need the Big 5 after all.


If that were the case, then they wouldn't have made a deal like this. But they did, and I think that's because they know they need to be the retailer that carries all titles, not just KDP or KU ones. That's Amazon's business model. They tried to put the squeeze on their suppliers, but they failed, because it turns out they're not a monopsony after all. You can't be a monopsony when you're up against what is essentially still a publisher's monopoly-cartel. KDP is great, but it's still a pretty small slice of the total trade publishing market.

Or not. We'll know in 2015, when we see what S&S titles on Amazon are priced at, and how they rank.

That will be fun to follow up on. But I anticipate higher prices. Will be interesting to see what the JD thinks of that.

Broken Yogi said...

The Big Five will probably come around when KDP and KU grow big enough to swing the balance of power in Amazon's favor. In which case it will be the Big Five who cave, not Amazon. I don't anticipate a time ever coming when Amazon won't carry the Big Five's books. But when the Big Five's market share falls below a certain level, there's not much leverage for them to keep demanding Agency pricing. Too many authors may have switched over to KDP by then. That's why I think Amazon's best long-term strategy is to do even more to build up KDP and KU through more and more prominent authors moving over. Which will require more incentives to speed up.

Joe Konrath said...

But it won't be able to keep undercutting the competition.

Do you think the Big 5 care about competition?

Let's say you sell widgets to five different retailers, for $5 each. Some retailers price them for consumers at $6-$8. One retailer, trying to undercut the competition, sells them for $4.

That retailer will likely sell more than the others. Which means they'll order more from you, for $5 each.

What supplier wouldn't love that deal? Would you care about the other 4 retailers who were struggling to compete?

That's what Amazon did with paper books. Sold them at a slim margin, or a loss lead. Publishers LOVED this. They didn't give a hoot that Ma & Pa Books in Sheboygan couldn't compete. Why would they? They were making a killing with that one retailer.

Then ebooks came along. When Amazon began doing the same kind of discounting, publishers freaked out. This was threatening their paper oligopoly. Suddenly they were whining about predatory pricing and unfair competition. They tried raising prices, windowing, and eventually colluded.

Unlike Amazon, publishers have never competed on price. Prices are printed on books (what other product has prices printed on them?) and all publishers priced comparatively.

Amazon's mission statement is to be the most customer-centric company in the world, and that includes offering the lowest possible prices. It seems to have found a way to do that with S&S.

I think we need to know more before anyone can say who caved.

Broken Yogi said...

I'm guessing Hachette will come to similar terms with Amazon soon enough, probably before the holiday season begins.

Rob Gregory Browne said...

It's my understanding that Amazon will be allowed "limited" discounting. So it sounds as if it's a win for both parties.

You know, that thing everyone used to do in the past called a compromise. Remember those days?

Broken Yogi said...

Do you think the Big 5 care about competition?

If all the major publishers cared about was maximizing their profits from ebooks, you'd be completely right. But they don't. They want to keep ebook prices high to protect their print distribution monopoly. So they want to limit competition in ebooks, by preventing discounting. They also want to prevent Amazon from using discounting to gain even more market share, so that Amazon can't use that power to demand concessions from them. So they want to make sure that those widgets can't be discounted below a certain level, so that other retailers can stay in business and compete with Amazon. If no one has enough power to force them to lower prices, they continue to control the market, and protect print distribution. And also control windowing.

Publishers don't mind if Amazon discounts on print books. They like it. Of course, we'll have to see if the do in this new deal. It's discounted ebooks that scare the bejesus out of them.

And you're right that publishers don't compete on price. Which is why they want agency pricing, and why Amazon opposes it. We don't know the details of this deal, but we do know that publishers get Agency pricing. Which means they won, and Amazon caved. Maybe I'll have to eat those words as the details come out, but at first glance, it seems pretty obvious.

Amazon doesn't need to have the lowest possible prices. We saw that in 2010, when they caved to the Big Five on agency pricing. Their market share didn't fall apart then, when they couldn't underprice the competition. So it won't fall apart now.

I can't see the point of an agency pricing program that allows Amazon to offer the lowest possible prices. Unless by that you mean the lowest price that S&S will allow their books to be sold, which is probably not that low at all, and which is an oxymoron to boot. And I am going to assume it's a price that others can match.

William Ockham said...

I am starting to wonder if Big Publishing's defenders are from an alternate reality. A reality where the Big 6 didn't engage in predatory pricing in the early '90's in an effort to drive indie bookstores out of business. A reality where they didn't engage in price-fixing to ensure that no small app builders, ereader makers, or online bookstores could compete with Amazon, Apple, or B&N.

William Ockham said...

A few quick comments about the Amazon-S&S deal. It is too early to know who 'won'. Watch the price differential between hard cover and ebook for S&S bestsellers. If it is more than $3, Amazon won. The length of the contract suggests Reidy believes Apple will lose their appeal.

None of the pro-pub pundits distinguish between retail and wholesale prices in their reporting. This suggests that Amazon is controlling the retail price, which is what Hachette will not accept.

Anonymous said...

So wait...if Amazon lowers its rates, all the self-publishers will run to the Big Five? Um, no.

95% of self-publishers couldn't get arrested for writing a book. They're terrible writers. And I say that as a self-publisher, too. But even I realize most of my fellow indie writers should never be allowed to publish anything, much less a "book."

No, Barry, I'm sorry, authors won't be running to the Big Five. They'll continue to publish with Amazon and take the low royalties. You, on the other hand, might be able to make it back at the Big Five, but 95% of us won't have that option and will take whatever crumbs Amazon deems to give us.

I'm sorry to bring some reality here. I know Joe's blog is populated by almost all indie writers, but let's be realistic. The people writing werewolf threesomes ain't gettin' no Big Five contracts.

Jim Self said...

William,

To misquote the Good Book: "Ignorance covereth a multitude of sense."

Anonymous said...

When Amazon discounts a bestseller like All the Light We Cannot See by Anthony Doerr, for $4.99, as it's doing now, how is this discount arranged with the publisher? I know publishers love these low price, one month only-type offers because they actually do make more money, and the halo effect increases paper sales, and even ebook sales after the discount expires. I"m curious if this may be where the S&S compromise was reached, given that two pretty big S&S books were discounted today.

w. adam mandelbaum esq. said...

Here is a reason amazon might not be so quick to screw indie writers in some dark future:those millions of writers buy stuff from amazon, both with royalty money and other income. Piss those millions off, and they can shop for non book items in a shitload of other online retailers. Losing the goodwill of millions of consumers who just happen to indie publish probably isn't part of the Bezos five year plan.Let's think outside of the margins on this issue.If you like red herring try it with sour cream.

Michael Blackbourn said...

The way to win at chicken is to throw your steering wheel out the window of the car.

Hachette needs to send as strong a signal if they expect Amazon to flinch. I just don't expect them to pull their books. I expect a deal will be announced within a month that probably matches whatever S&S did.

Anonymous said...

Email from CEO Carolyn Ready

TO SIMON & SCHUSTER’S AUTHORS AND THEIR AGENTS

I am pleased to inform you that Simon & Schuster has reached a multi-year agreement with Amazon for the sale in the US of both print and digital books of Simon & Schuster and our distribution clients. Our new deal assures that your books will be continuously available for sale at this major retailer through this year’s holiday book buying season and well beyond. It is not our usual practice to announce such agreements, but our publishers and I feel that the high level of public speculation over the status of these talks made it important to let you know about this positive development.

We are very happy with this agreement as it is economically advantageous for both Simon & Schuster and its authors and maintains the author’s share of income generated from eBook sales. It addresses our mutual concerns about preserving the value of our intellectual property in the marketplace, as it is a return to a version of agency pricing that, with some limited exceptions, gives control of eBook pricing to Simon & Schuster, while providing us the flexibility to deliver great prices for readers.

The digital transition of the last few years has presented us with many challenges as well as opportunities. Yet through it all our primary focus has always remained how we can best publish your books so that they reach the maximum possible number of readers, and we look forward to working with you and all our retailers to fulfill that mission.

Hairhead said...

Hey Joe, congrats on getting up on Salon's front page. Rob Spillman was there to be your punching bag (seriously, it was like Mike Tyson gently cuffing Richard Simmons around the ring) and you came out of it looking good!

Barry Eisler said...

Anonymous said:

"Barry misrepresents what Krugram said. He never said Amazon ‘banned' anything. Here is the full quote from Krugman's essay: 'Hachette books weren’t banned outright from Amazon’s site, but Amazon began delaying their delivery, raising their prices, and/or steering customers to other publishers.’”

I think you’re missing the point, which is that even to speak of a retailer “banning” a supplier’s goods is incoherent. Granted, it would be even more incoherent if Krugman claimed Amazon *did* ban Hachette’s wares. But implying that a “ban” *could happen *at all* is the problem, not whether Amazon “outright” went ahead with one.

"Are you telling us you can't see the difference between a book store helping its readers find books they might like and a retailer trying to strong-arm a supplier by decreasing its sales?”

Our point is that when a retailer stops giving preferential treatment to goods for which it can’t come to terms with a supplier, it’s not a “ban.” It’s business. I don’t think this is a difficult point to grasp and I’m not sure why you’re trying to twist it into something else.

"Someone is 'woefully ignorant' here, but it isn't Paul Krugman.”

Agreed about that.

As for the rest (“ongoing cultural conversation,” “vibrant literary culture,” "Amazon is directing the cultural conversation according to its economic interests [gasp — publishers SIMPLY DO NOT DO SUCH THINGS!],” are you suggesting Amazon has become a Public Conversation Utility and should be regulated accordingly? Why not just say so?

(Ah, reading on, I see Broken Yogi has asked the same thing.)

"No, Barry, I'm sorry, authors won't be running to the Big Five. They'll continue to publish with Amazon and take the low royalties. You, on the other hand, might be able to make it back at the Big Five, but 95% of us won't have that option and will take whatever crumbs Amazon deems to give us.”

Then why are Amazon’s royalties not already lower?

Remember, the argument Joe and I are responding to is that when the Big Five fold, Amazon will lower its royalties. Our point is that if this is true, it follows that authors should be agitating for higher Big Five royalties to reduce the size of the gap into which Amazon could offer lower ones.

Respectfully, I’m seeing a pattern here where you “respond” to things no one has actually said. FWIW, I don’t think you do it on purpose.

Anonymous said...

Is this Amazon/Hachette fiasco ever going to end? Whatever the outcome I'll just self publish on whichever platform offers the best royalties. So even if Amazon lowers royalties indies still have other choices.

Rob Gregory Browne said...

We are very happy with this agreement as it is economically advantageous for both Simon & Schuster and its authors and maintains the author’s share of income generated from eBook sales.

So does this mean that the author's share would have been smaller if S&S hadn't gotten what they wanted?

I've been in the business many years now and I still fail to understand why the author gets the smallest part of the pie and is the first to suffer when "adjustments" are made.

Alan Spade said...

@Rob: because authors have no such leverage than a retailer or a publisher. Authors act individually (except for the Writers Guild).

Broken Yogi said: "I'm hoping that the other side of my advice/analysis comes true. Which is that rather than fighting the Big Five on agency pricing, that they fight them by making KDP even more attractive to the current Big Five midlist authors, and try to lure them away from the Big Five's monopsonist grip on the author market. One can at least hope."

So far, you have been true. I believe that in the great scheme of things, Amazon agreed to make a compromise with S&S in order to put more pressure on Hachette: "here is Simon & Schuster, a publishing company acting with a sense of responsability toward its authors". But Amazon's terms toward Hachette were not necessarily the same than what has been granted to S&S.

As I already said, we have to look at author earnings and at the Big Five's gross sales each year. For the moment, most of the money is where the Big 5 are, so Amazon will follow the money.

I think that Amazon is already making efforts to improve the advantages of self-publishers,but the best advantages are gained if you go exclusive with them AND have already a good sale history: Select isn't very useful if your books are beyond #3000, in my opinion.

The advantages Amazon has recently granted to all self-publishers are the preorders buttons and the ability (still in beta) to calculate the best price range for your ebooks.

With Kindle Scout (see my blog post here: http://alanspade.blogspot.fr/2014/10/what-to-think-about-kindle-scout-que.html), Amazon is providing a better contract than any contract you could sign with a Big Five if you are a newbie author. The more Kindle Scout will be an efficient way for the authors to find readers, the more competitors like Kobo and Apple with suffer, because when you sign with Kindle Press, you become an exclusive Amazon author.

So, yes, Amazon will improve things for self-published authors provided it does hurt its competition. Amazon is in its right to do so. So, the competition had better wake up.

Eden Sharp said...

Regarding Anon's quote: 'people writing werewolf threesomes ain't gettin' no Big Five contracts,' I personally find it astonishing that the argument that the B5 are somehow upholders of an esteemed literary canon is still being perpetuated. It may sound crass to some but it's really simple, trad pub is interested in sales. As a university lecturer I can tell you first hand that even my first year lit students get this 101 concept. If market forces dictated it thus, 'Fifty Shades of Werewolf Threesomes' would have the B5 in a bidding war.

Alan Spade said...

Oops: I meant "so far, you have been right."

stevevernonstoryteller said...

Aside from the whole royalty-gap difference there is another VERY telling difference between Amazon and traditional publishing.

Let's say the worst has happen.

Tomorrow morning Amazon is found beaten to death in an alleyway outside of a Tuscaloosa Barnes & Noble outlet.

Nobody knows how it happened.

Lieutenant Columbo is baffled.

The Big 5 (Big 6? Big 8? Who the hell is counting?) steps in and says "I will save the day!"

So - all of a sudden the Big 5 is back in the game and calling ALL the shots.

Do you think they are going to open up the gate and let ANY author publish ANY amount of ANY kind of book they want to?

Why?

They never did before.

They're going to go back to publishing Stephen King, James Patterson and maybe the CEO's brother-in-law who needs some sort of a break, doesn't he?

That is a huge freaking difference.

Traditional publishing says "We will publish the books that WE want to publish, WHEN we freaking want to publish them."

Amazon, on the other hand, says "You want to publish a novella of dinosaurs gangbanging King Kong? Sure, go ahead. Just mind the cover, would you? No naked stegausuri - them bared spinal plates are just too hard on the eyes."

Amazon offers a river of indie writers.

Traditional publishing offers you two choices - either a straight and narrow gate where only a select few can pass through - or a chute right straight down into the abattoir.

It IS theoretically possible that come tomorrow we'll all wake up and it will be the Big 5 and Kobo and Nook and all of those others lying in that alley, clubbed to death with a volume of vanity press poetry. It is possible that one day Amazon is going to become the Skynet of the indie-writers and we are ALL going to wind up having our royalties stolen by a bunch of death-ray wielding Terminators.

It is possible.

Anything is freaking possible.

But running around and trying to make an intelligent decision about your future based upon Chicken Little fear-mongering is about as sensible as somebody saying "Well, I might as well not go to work today because we're all going to die by global warming in a year or two."

yours in storytelling,
Steve Vernon

Luke 2Feathers said...

It seems to me Anonymous is saying that the Big Five--their personnel, corporate structures, and current strategies--ARE Literary Culture. But they are not. Literature, and a distribution channel for literature, may be important, but particular players in the channel are not important. Even if books are special snowflakes, no particular company has a divine right to shovel them. If the Big Five disappeared tomorrow, "literary culture" and its impact on public conversation would continue to exist. Authors would still write books and readers would still buy them. Why do the Big Five have a right to be the middlemen between the suppliers and consumers? If particular publishers go out of business, but the services they provided were essential to consumers, then the marketplace would quickly reinvent them.

Drew Gideon said...

Hey Joe - another fisking target has appeared!
None other than Paul Krugman, bashing Amazon.
Looking forward to seeing your take on this one.
http://mobile.nytimes.com/2014/10/20/opinion/paul-krugman-amazons-monopsony-is-not-ok.html

Luke 2Feathers said...

Along with the Big Five and Amazon, there's another 800-lb gorilla in the arena that, AFAIK, has been left out of the conversation: the literary agent. Debaters who argue that the quality of books will decline without the Big Five in place as gatekeepers are forgetting the agents. Agents, not publishers, are the primary screeners for quality writing. If the Big Five died out, agents would establish ties with Amazon. Amazon may always permit anyone to publish anything, but the company will increasingly stratify their promotional push. Better authors (meaning more likely to generate sales) will increasingly get better promotion, placement, and deals than the hacks. Literary agents already have expertise in sorting authors; Amazon will find that expertise as valuable as do the Big Five. Amazon's profit motive ensures the company will continue to find ways to differentiate the great books from the trash. They're smart like that.

Anonymous said...



Gosh, this is just SO SWEET. You mean, like 50 SHADES OF GREY and the newest huge deal for another piece of TWILIGHT fan fiction? Publishers care about money. When they say "we want good writing," what they mean is "writing that will make lots of money" -- it's as simple as that. And as infuriating. Ask any of us who've sold a book, frequently for enough money that you'd think the publisher would, like, y'know, PUBLICIZE it, and watch as brilliant reviews are ignored and not enough copies of the book are printed to let it go anywhere, let alone to best-seller-dom.

This is why my next books are going to be self-published via Amazon. Amazon doesn't even PRETEND to care about my book. I'll settle for honest indifference and high royalties any day.

Anonymous said...

Sorry, I was responding to Anonymous who posted about publishers looking for books that shine brightly -- as opposed to ones that make a gazillion dollars. Yeah, right.

Nirmala said...

@Drew Gideon: Joe did fisk Paul Krugman a little in this post.

@Luke2Feathers: I am not sure Amazon wants or needs to work with agents. They are already successfully using readers to sort what books are worth reading by promoting books according to which books are selling well. And with the new Kindle Scout program, they are moving into also using readers to find new books.

I think agents may be in the same sinking boat as the publishers unless they can reinvent themselves as small epublishing advisors that take people through the process of self-publishing

Charlie Steel said...

Interesting and mind boggling.

Werner said...

This is thunderous. The new S&S deal with Amazon makes Hachette's arguments, all the media Amazon hate-heaping, and the elitist author petition irrelevant.

Werner said...

http://www.businessinsider.com/amazon-closes-multi-year-deal-with-simon-and-schuster-2014-10

Werner said...

Perhaps NOW Hachette authors will turn their attention to their publisher instead of Amazon. This is going to be fun to watch...

James F. Brown said...

Of course, the Zon will slash your royalties, uh, a some undetermined future date. Big Pub and Snowflakes United sez so.

Wonder if they'll slash author royalties down to the meager percentage Big Pub pays... twice yearly, less reserve on returns, etc.

Anonymous said...

I am really stupefied that Anonymous invested time and effort in trying to argue that traditional publishing's pay-to-play arrangement with bookstore chains actually constitutes meritocracy.

Meritocracy cannot contain any element driven by personal relationships. This means that the entire courtier structure of agent / editor / publisher / reviewer / publisher can't possibly qualify. The very fact that agents are able to represent that their relationship histories add value to their service definitely establishes this.

Also, it is ultimately open to everyone, that is, on equal terms. The barriers to entry may be daunting, but they are equally daunting for everyone.

Actually, publishing on Amazon via KDP is actually open to everyone, on equal terms.

Anonymous said...

Some of us who have been in the business a while remember when the Amazon royalty was 30%. It was then upped to 70% Why? Because the Apple store came alone and offered 70%.

It's doubtful that Amazon would ever go below 70%. There are too many mega-corps (Google, Apple, etc.) that could put together an Amazon-type book store. Sure, not overnight, but eventually if they set their minds to it.

There's no such thing as a monopoly of digital distribution in this digital age. There will be shifting players of prominence, but no one can force the suppliers of content (authors) to forever be relegated to a certain percent. As soon as another player sees a profit above that percent,age the competition will be back on.

So, relax and enjoy your 70%. As to Amazon versus Hatchette, it's just a business dispute. Authors opted out of having a voice in that when they sold their rights. You can't sell them and simultaneously try to keep them.

RJJ

Patrice Fitzgerald said...

Joe: Looking forward to hearing your reaction to the fact that Simon & Schuster managed to make a deal with Amazon rather efficiently, and on terms that satisfy both entities. Negotiations between businesses... who knew they could be handled privately and without hand wringing from the legacy literati? Surely Doug Preston is sitting in his charming writing "shack" on his 300 acres and is in real danger of spilling his tea.

Peter Spenser said...

O.K., Joe, now you’re just being stupidly insulting. I’m referring to your flippant retort to Anonymous:

“The public conversation of culture interests me in the same way philosophy does. It’s mental masturbation.”

Merely because a subject does not interest you does not make that subject worthless, whether it’s brought up here in these discussions or even in the New York Times. You are generally more polite to people who hold views different from yours but who express those views with a civil tongue. They deserve civility in return. You were anything but.

Smart Debut Author said...

Surely Doug Preston... is in real danger of spilling his tea.

Uh, Patrice... that wet stain spreading on Doug Preston's pants?

It isn't tea.

Terrence OBrien said...

Hachette needs to send as strong a signal if they expect Amazon to flinch. I just don't expect them to pull their books. I expect a deal will be announced within a month that probably matches whatever S&S did.

It's time for Hachette to sign the S&S deal, and then have AU declare a great victtory in their struggle to save culture, literature, and literacy itself.

Joe Konrath said...

Merely because a subject does not interest you does not make that subject worthless

Don't put words in my mouth, Peter.

I didn't say the subject was worthless. I said it doesn't interest me. Philosophy, religion, politics, and culture are all mental masturbation--in other words, an intellectual activity that serve no purpose. Ideologies, and ideas, in and of themselves are fun to think about, but they aren't productive. Just as masturbation is fun, but not productive (at least in the sense that intercourse is).

I'm married, so I jerk off as much as anyone. I'm not against it. But I prefer my blog to have a practical purpose. Arguing that there is inherent objective culture in works of art is masturbation, and not fruitful, and I don't find it interesting. That's no more insulting than saying, "I don't want any of your apple pie because I dislike apples."

As another anon nicely summed up: I am really stupefied that Anonymous invested time and effort in trying to argue that traditional publishing's pay-to-play arrangement with bookstore chains actually constitutes meritocracy.

Which is the point I was making. We can argue the merits of Franzen vs. Koontz, but that's inconsequential and subjective. In order for both to have gotten where they're at, they needed coop money behind them. Their shelf placement has nothing to do with culture.

Joe Konrath said...

It's time for Hachette to sign the S&S deal, and then have AU declare a great victory in their struggle to save culture, literature, and literacy itself.

Well it was obviously the pressure Authors United exerted that made Amazon sign the S&S deal. Probably. Somehow.

Revisionist history works because people forget. Preston could very well be remembered as a brave proponent of change, who marshaled a group of rag-tag underdogs against a ruthless monopoly, sacrificing themselves so that others may reap the rewards of their efforts. After all, as long as Hachette/Amazon eventually come to any sort of deal, AU can take credit for it. "We forced their hand! We hastened the outcome! We prompted them to act!"

Even if it takes until 2017 for Amazon/Hachette to reach an agreement, AU can take credit.

Nirmala said...

I already saw some comments on David Streitfeld's piece from people who saw the S&S settlement as Amazon capitulating and seeing the error of its ways. But of course they, like the rest of us, have no idea what the settlement actually says.

Streitfeld himself speculates that, "Perhaps Hachette’s refusal to commit helped inspire Amazon to make an agreement with Simon & Schuster." But at least he admits he is speculating.

SJArnott said...

Nirmala said: "I think agents may be in the same sinking boat as the publishers unless they can reinvent themselves as small epublishing advisors that take people through the process of self-publishing"

I think some editors might be in a position to benefit from these changes. I can imagine a business model where an editor waived their normal fees in return for a small percentage of the cover price. They'd also have their name on the cover alongside the author (the relationship between the two would be explained in the inside pages). If an editor's name became associated with quality books it could become a powerful brand. You could call it micropublishing.

Tracy Sharp - Author of the Leah Ryan Series said...

Very interesting story about a fellow who mistakenly received an interoffice email from a publishing intern and how it changed his life for the better.

Also a nice piece on self-published authors. http://www.simonowens.net/why-zombie-novels-written-by-indie-authors-do-so-well-on-kindle

Anonymous said...

From what I've read, it's an agency deal that allows S & S to set the prices of its books with a few limited exceptions. We don't know, but the "financial incentive" for S & S to lower prices is probably a slightly reduced margin on prices above a certain point.

It appears, then, that Amazon began negotiations with Hachette wanting the right to set prices and a larger share of that price, and got neither of those concessions. Instead, it agreed to the same agency deal the big 5 had with Apple, albeit but with some concessions by the publishers.

The public pressure created by Authors United probably had some influence on Amazon, but it seems likely to me -- and here I'm speculating, of course -- that S & S told Amazon it was going to stand with Hachette. Amazon's only choice was to make books from two of the big five less available during the holidays, and lose more sales to its competitors. Instead it did the wise thing agreed to S & S's terms.

This is a win for writers and readers. It means writers can choose to run the gauntlet of big publishing, or self-publish on Amazon. Readers win because the big 5 will stay profitable.

Hopefully the other big five will follow suit on similar terms.

Smart Debut Author said...


Readers win because the big 5 will stay profitable.


Maybe it's just me, but I don't see how you can say that with a straight face.

Talin said...

My understanding is that Amazon had previously stated they don't have a big problem with Agency as long as they can discount and price match. And blame publishers for higher prices (boxes saying price is set by publisher).

The DOJ also stated there's nothing wrong with Agency, just the 5 getting together with Apple to force it on other retailers was the issue. Part of the final statements by the DOJ was about Agency with limited discounting being one acceptable deal.

Anonymous said...

I think the publishing model of screening submissions, editing manuscripts, designing paper books, and marketing them professionally produces quality books. So I think it's good that a publisher in that business negotiated favorable terms with Amazon so that it can continue its business, as S & S did this week.

I'm hoping the deal will also help indie presses (like Coffee House, which published Ben Lerner's books, two of the best books in the past few years) work out sustainable agency deals with Amazon and other online retailers, although that's obviously speculative and wishful thinking.

I've been trying to figure out why self-published authors of e-books are so invested in seeing the big 5 fail. They get to continue publishing under their existing favorable terms no matter happens to anyone else, so why do they care? Can anyone explain this?

I can only imagine that they want cheap e-books to leverage changes in the terms of traditional publishing contracts. Then a mid-list author would enjoy the same support and reap the same financial rewards as the writers getting the best deals. When J.A., when you complain about your mistreatment at the hands of your former publisher, what I hear you saying is that you liked big publishing, you just didn't like the way you were treated by it.

I'm sympathetic to this critique -- heck, I agree with it! But I think it depends on the simplistic assumption that the terms offered by traditional publishers are dictated solely by greed, rather than by such other factors as, in the case of the big 5, the need to please shareholders, to compete for skilled managers and executives, to overcompensate likely blockbuster authors (all inefficiency of the free capitalist market), etc. -- and, in the case of the indies, the brutal fact that indie publishing is either a labor of love or a gift of philanthropy, and there just isn't the money to pay more than tiny advances and royalties.

What I'm saying is, I want to believe in this idealistic goal, I just have no clue about how you do it in our economy.

But even if you could achieve the dream, or knew how, I wouldn't bet on Jeff Bezos to deliver it. He's the biggest capitalist of them all!

Anyway, that's why I said I think the survival of the big 5 is, on balance, a good thing.

Alan Tucker said...

@ Anon, 3:05

For me at least, and I think I speak for many others, it's not about seeing the Big 5 fail. It's about them treating authors better than cattle at a slaughterhouse. Authors create what the Big 5 sells, yet they are the least appreciated and compensated party in the process. Everyone working for the publisher earns a living wage except most of their authors — especially the new ones. How is that fair or equitable? Pittance advances, awful royalty rates, semi-annual payments, reserves for returns, agent fees, life of copyright licensing, non-compete clauses, the list goes on and on regarding how bad standard contract terms are at the major publishers. These are the things that need to change. Unfortunately, many of us don't see that happening without the fall of those publishers, but stranger things have happened.

Anonymous said...

Thanks, Alan. That makes sense, and it helps me understand the issues better. I appreciate it.

Anonymous said...

I always thought the answer might lie in the successful formation of a big name ebook imprint or two. Traditional print imprints don't mean much to anyone; whether Stephen King publishes with Penguin or Doubleday--no one cares when they buy his book because the brands don't represent anything. But what if a few power agents decided not to sell ebook rights to traditional publishers and, to make the deal more palatable to publishers, negotiated smaller advances for print only deals? Maybe it would enable a household name ebook imprint to form, with these big authors leading the way, and the imprint could be more creative about publishing mid-list, genre, non-fiction and new novelists. Or maybe publishers make a serious effort at forming their own ebook imprint, offering better royalties to authors, knowing they were advancing less for their print deals.

Roger Raffee said...

Time to support GEMM.com . Read about their connection to Amazon here: http://gemm-ayudahelper.blogspot.com/2009/10/interview-with-gemm-ceo-roger-raffee.html

Joe Konrath said...

When J.A., when you complain about your mistreatment at the hands of your former publisher, what I hear you saying is that you liked big publishing, you just didn't like the way you were treated by it.

That's like saying I like my dog, but I don't like it biting me. There comes a point where you don't like your dog anymore.

I'm not anti-Big 5. I'm pro author. It would be great if they became pro author.

I was thrilled to break into publishing, and quickly became unhappy at how they treated authors. So I warn authors.

Luke 2Feathers said...

Nirmala: True, it's possible that Amazon will not be interested in working with agents. But I doubt Amazon dismisses any potential market edge out of hand. If (say) Peter Rubie or Russell Galen rang Thomas & Mercer and said, "I've got the best manuscript of the year in my inbox--want a look?" I suspect they'd respond with interest.

Whether that happens or not, I agree that the agents' most fertile field for future revenue will be the indie authors themselves.

Bill Peschel said...

Have to fix this for you, Joe:

Indie author: Right. Now multiply your calculus across thousands of authors. If the Big Five started offering 70%, what would happen if Amazon tried to lower its rates?

Legacy author: Authors would desert Amazon in favor of the Big Five. Amazon could never do it. Except you're math is wrong.

Indie author: Huh? What do you mean?

Legacy author: The Big Five are limited to publishing only so many books a year. How many self-published thriller writers are out there? 5,000? 10,000? A tsunami? They can all approach the Big Five, but they won't make it into the door. They'll have to go back to Amazon and accept the lower rate. Half a bagel is better than no bagel at all.

Nikki Vanderhoof said...

I love you guys...

Bob said...

Boudreaux does a great job of taking Krugman apart:

http://cafehayek.com/2014/10/krugman-and-amazon-and-antitrust.html