Tuesday, July 08, 2014

Amazon's Latest Proposal

Amazon has broken their silence on the negotiation dispute with Hachette and sent this letter to various Hachette authors, the Authors Guild, and the New York Times and Wall Street Journal.

Here's the letter:

“Dear XX,

I wanted to ask your opinion about an idea we’ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.

Our first choice would be to resolve a dispute like this through discussion only. We tried that already. We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.

We agree that authors are caught in the middle while these negotiations drag on, and we’re particularly sensitive to the effect on debut and midlist authors. But Hachette’s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.

Here’s what we’re thinking of proposing to them:

• If Hachette agrees, for as long as this dispute lasts, Hachette authors would get 100% of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit from the sale of every e-book until an agreement is reached.

• Amazon would also return to normal levels of on-hand print inventory, return to normal pricing in all formats, and for books that haven’t gone on sale yet, reinstate pre-orders.

Here’s an example: if we sell a book at $9.99, the author would get the full $9.99, many multiples of what they would normally get. We can begin implementing this arrangement in 72 hours if Hachette agrees.

We haven’t sent this offer to Hachette yet — we’re sending this to a few authors and agents to get feedback first.

What do you think?  Would this be helpful, especially for midlist and debut authors?

Can we talk on the phone later today or tomorrow once you’ve had a chance to digest?

Thanks and look forward to talking.”

Joe sez: So what have we learned?

1. Amazon reached out to Hachette in January. Hachette didn't respond.

2. As of March, when their contract ended with Hachette, Amazon extended the same terms until April. Hachette still didn't respond.

3. Amazon turned off pre-order buttons and stopped stocking Hachette titles, and then Hachette finally responded--by whining publicly in the media.

4. In May, Amazon offered to monetarily compensate Hachette authors during these negotiations. Hachette rejected the proposal.

5. Now, amid speculation that no one knows who is at fault, Amazon breaks their silence and explains they've been trying to get a deal done with Hachette for the last seven months, and Hachette has been the one dragging its feet. Amazon is also willing to give Hachette authors 100% of all monies from Hachette books, and can do this within 72 hours.

And once again Hachette rejected the proposal.

So why, exactly, is Hachette dragging its heels during these negotiations?

I have a pretty strong idea why. If Hachette can hold out until September, it can try to force the Agency Model back on Amazon. As William Ockham had discovered, last year Hachette told the federal court in their antitrust case that they intended to re-institute non-discount agency pricing as soon as possible. Which is in two months. And Hachette's own presentation to investors said it would retain control over ebook pricing.

Here was Hachette's reply to Amazon:

“Amazon has just sent us a brief proposal.  We invite Amazon to withdraw the sanctions they have unilaterally imposed, and we will continue to negotiate in good faith and with the hope of a swift conclusion. We believe that the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation.  We look forward to resolving this dispute soon and to the benefit of the writers who have trusted their books to us.”

Maybe I'm dense, but what does negotiating in good faith with Amazon have to do with Hachette authors getting 100% royalties right now? The authors are suffering. Let them get paid!

I love the last sentence ending with "the benefit of the writers who have trusted their books to us."

Hey Hachette! You know what would benefit those writers? 100% royalties while you continue to use delaying tactics! They trusted their books to you, and you're using them as pawns so you can control ebook prices. The best outcome for writers is agreeing to Amazon's incredibly generous, unheard of, extraordinary offer.

Certainly Hachette authors feel the same way, right? What does Douglas Preston think?

Mr. Preston said the Amazon proposal would be "devastating" to Hachette while "barely hurting Amazon at all." Mr. Preston also said he objected to the proposal because Hachette has supported him throughout his career. "There's something wrong with this," he said. "My publisher gave me a very large advance for the book they are about to publish. Morally, I would have to turn over that (Amazon) money to them."

Color me amazed. And people actual wonder why I use the term Stockholm Syndrome to describe certain writers.

What did the Authors Guild say?

“If Amazon wants to have a constructive conversation about this, we’re ready to have one at any time,” (AG prez Roxana Robinson) said in an email. “But this seems like a short-term solution that encourages authors to take sides against their publishers. It doesn’t get authors out of the middle of this – we’re still in the middle. Our books are at the center of this struggle.”

Hey, Roxana? Amazon's proposal gives Hachette authors between six times and twelve times the royalties they're currently making with Hachette. I'm betting some authors would LOVE that "short term solution".

Maybe Hachette authors SHOULD be taking sides against their publisher. Their publisher pays them poorly. Their publisher's reluctance to negotiation with Amazon forced Amazon to remove pre-order buttons and stock paper books. Their publisher rejected Amazon's first offer to compensate Hachette authors 50% if Hachette matched it, and now they rejected an off that ANY REASONABLE AUTHOR ON THE PLANET WOULD KILL FOR.

How did Amazon respond to Hachette's response?

“We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn’t be ‘suicide.' They can afford it. What they’re really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. All the while, they are stalling and refusing to negotiate, despite the pain caused to their authors. Our offer is sincere. They should take us up on it.”

Now we can watch the Internet light up with anti-Amazon nonsense. Here's some of what I expect:

This is just a PR stunt!

Amazon is trying to steal Hachette's authors!

Amazon is trying to control the industry!

Amazon is doing this to manipulate public opinion!

Amazon wants authors to turn against their publishers!

I agree with the last one. Authors should turn against their publishers. I hated it when morons were in control of my career. I hated suffering every time they made a mistake--and they made many. And if I were still with Hachette, and then just screwed me out of a chance to earn 100% royalties on Amazon, I'd be on the phone with a lawyer doing whatever it took to void my contract and get my rights back.

The reason I blog about this issue (and the reason I blog at all) is to help writers. I've been through a lot, and done a lot, and learned a lot, and been the victim a lot.

I hate seeing that happen to my peers.

Preston feels so indebted to his publisher he can't even make a rational decision. I get that. And that's okay, when you're making millions of dollars.

But if you're not making millions, you should take a long hard look at this entire situation and decide what is best for your career.