Douglas Preston is doubling down on his pressure for Amazon to capitulate to his publisher, Hachette. He has written a letter proclaiming that his group, known as “Authors United,” is full of “the finest writers in English language,” the sellers of “billions of books,” that their readers “listen when they speak,” and that this “represents power.”

The problem is, Douglas Preston doesn’t seem to understand what Hachette is fighting for. It isn’t a secret; Hachette is fighting for higher prices for readers. They’ve said as much to their investors. We also know from this slide from HarperCollins that publishers are now making better margins on ebooks than on their hardbacks, a fact that agent Brian DeFlore says publishers have been lying to agents about for years.

The collusion and price-fixing case in 2010 was so much about the $9.99 price point, that when Publishers Weekly wrote an ebook about the trial, they entitled the book THE BATTLE OF $9.99. Amazon wants ebooks to cost no more than $9.99. I can see this very clearly in my own self-publishing contracts with them. If I price my ebooks over $9.99, they reduce my royalty from 70% to 35%. The reason Hachette colluded with its competitors a few years ago was to put an end to this price point and force Amazon to sell ebooks at $14.99 or even higher. Part of that reason is simply to retard the growth of ebooks and protect print.

The irony here is that Douglas Preston has been on the wrong side of this maneuvering in the past. In 2010, Hachette delayed the release of Douglas’s ebooks in order to protect their print sales, which angered his readers. They also priced his ebooks at $14.99, and Douglas heard from fifty or so readers who said they’d never read his books again. Preston lashed out at these readers, saying that they were acting entitled:

“The sense of entitlement of the American consumer is absolutely astonishing…. It’s the Wal-Mart mentality, which in my view is very unhealthy for our country. It’s this notion of not wanting to pay the real price of something…. It gives me pause when I get 50 e-mails saying ‘I’m never buying one of your books ever again. I’m moving on, you greedy, greedy author.’”

Techdirt took Preston to task for these comments, saying:

So, what’s a bigger sense of entitlement? The one where your customers tell you that you’ve priced something too high and that they’re going to spend their money with others who are offering something at a price point they like? Or the one where you insist that books have to be priced high because you want them to be priced high? I’d argue it’s the latter… Along those lines, $9.99 is areal price. Just because you don’t like what the market decides a book is worth, doesn’t mean that it’s not a real price.

Io9 covered the fallout, as did some bloggersPreston, to his credit, apologized and pointed out that he has no control over the price of his ebooks. He also seemed to eventually concede that $9.99 was a fair price for digital books.

I spoke with Douglas a few weeks ago, and stressed to him that these negotiations between Amazon and Hachette are over the price of ebooks, and that by urging Amazon to stand down and by emboldening his publisher with his PR moves, he is in fact fighting for a return to $14.99 ebooks. That’s not the solution we should want for ourselves or our readers. All it would take for Hachette to see the light and embrace sensible pricing for digital books would be for their readers and authors to express their disdain for the $14.99 ebook. Douglas Preston’s readers have done this in the past. I wish he and his handful of authors would unite with the rest of us in denouncing these unfair prices today.

All it might take for this terrible situation to be resolved is for both sides to hear our opinions on these prices. All it takes is five minutes out of your day. Preston and his united authors are going to spend around $70,000 on a NYT ad pressuring Amazon to cave to higher prices. Their campaign is bad for books, bad for authors, and bad for readers. We don’t have wasteful NYT ads at our disposal. All we have is social media, each other, and our passion for a vibrant book culture. If you believe in $9.99 over $14.99, let your voice be heard. Let these negotiating corporations and their authors know how you feel. You can make a difference.

Douglas Preston welcomes emails at his website. Here’s a link if you want to reach out to him directly and let him know how you feel about $14.99 ebooks. I have already sent him a copy of this blog post. I’m also forwarding every signature of this petition to folks at Hachette. You can email Hachette directly as well. I urge you to be respectful. And feel free to disagree with me and to send them your support for higher ebook prices.

But all authors are not united for $14.99 ebooks. $9.99 is a fair price for a digital book that publishers don’t have to print, warehouse, ship, and have returned to them. It’s a fair price for readers who can’t pass that ebook along to a friend or sell it to a used bookstore. $14.99 is NOT a fair price for these very reasons. Let your voice be heard. Let’s put an end to these negotiations by letting Hachette and its authors know that we won’t buy their expensive ebooks.

Edited to add: After this post went live, I read that Amazon has again offered a way to support Hachette’s authors during these negotiations. This time, the offer stipulates that all profits would go to literacy charities until both parties get to the table and agree to terms. Let’s urge Hachette to take this deal, to support their authors, and to stop harming the book trade with their stubborn fight for higher ebook prices.

171 Responses to “Authors United? I Wish it Were So.”

  1. Dustin says:

    I understand why Hachette is playing this cat and mouse game with Amazon, but their public image is being thoroughly destroyed right now. $15 for an ebook? No thanks. $9.99 is the upper limit for me, though my sweet spot for impulse buying is $5.99-7.99. I’m not saying all ebooks should be at that, simply that I am more inclined to buy an unproven ebook at that range.

    Kudos to Amazon, regardless of who is wrong in this situation, I must give credit where credit is due. Proposing to give 100% of profits, first to the authors, and now to literacy charities, speaks volumes.

    I will be emailing Preston and Hachette to let them know $15 for ebooks simply won’t work.

  2. That’s right! It’s something I see day after day, after day during my culture blogging in Polish. It became almost a tradition that people tend to pay no more than 20 PLN (around 6.50$) for a regular, fiction ebook.

    All right, we became the victims of some weird, very harmful lobby that decided that ebooks won’t be treated as books (5% VAT) but rather as a service (23% VAT) but I don’t think that it should be readers who must now leverage this problem by paying more for a fiction book.

    • Agreed. My foreign publishers are often more open to affordable ebooks, but they face so much regulatory pressure. People are trying to protect a format for reading, but reading itself is what’s suffering.

      • Randy Eberle says:

        Yet Amazon is the bad guy…I think not. I myself will not purchase a Hatchette title until this is resolved.

      • Mark A. York says:

        And yet Amazon choses to penalize these big name authors for no good reason. If the ebook is priced too high readers will order the paperback, which is discounted at around 16 bucks, so who cares what Hachette wants for ebook pricing? Either way everyone wins. This way readers and authors lose big time. It’s no way to run a railroad.

        • Clairelo says:

          I won’t purchase a book at all in paperback. I’ll just get it out of the library. But I’ll purchase an ebook I want very frequently, at $10 and below.

        • David Young says:

          I also don’t purchase paperbacks. I’ve had several incarnations of kindles, the latest being a paper-white (which I absolutely love), and I have purchased more e-books in the past 5 years than all the hardbacks and paperbacks combined in the 33 years prior. I don’t have the space for paperbacks, and I don’t believe in just throwing money away. The digital format allows for backup and archiving…I’ll never lose a book — AND, my children can read them without fear of ruining a cover or tearing a page. And when there’s a book I’d like to own that’s not available in an e-book format, I always email the publisher. Always.

          Pricing should be market driven. I don’t believe unified pricing models or companies colluding with each other to artificially inflate prices. Hatchette was found guilty of the latter in a court of law, so in my mind, it’s hard to hold Amazon responsible for doing what’s necessary to advocate for their customers and authors.

          Hatchette, on the other hand, is simply advocating for their own profit margins and to protect a dying business model. We’ve seen this movie before with the RIAA and the Music Industry vs. Digital Distribution of music.

        • Simone says:

          I agree completely. Leave it to the consumer to pay or not to pay.

  3. Hi Hugh,

    I’m in full agreement with 80% of your article. You have shown me already the documents proving that Hachette got together with Apple and other big publishers to keep ebook prices high, when Amazon wanted to lower them.

    Now, as a reader, and as a business person, there’s something deeply disturbing in the points you and Douglas/Hachette are trying to make. You both argue for a “fair price”. Douglas says he wants a fair price “for the author/publisher”, and you “for the reader” (or did I misunderstand?)

    I think that in today’s economy, there’s only one “fair” price, it’s the market one. The one that makes your profit the highest. I don’t like the “cost” logic: “a digital book that publishers don’t have to print, warehouse, ship, and have returned to them”.
    It shouldn’t be about recovering costs, it should be about registering the highest profit, and I think we all can agree on this.

    Now, if Douglas and Hachette are persuaded that the right price is $14,99, why not let them price it that way? They’ll see for themselves if it’s the right pricing strategy in the long term. I don’t think it hurts indies (it kind of helps them).

    Now, if trad. published authors were petitioning for lower prices and Hachette was denying them (and Amazon) that possibility, then we’d all have the right to be upset. But it seems not to be the case. It could be the case, but to know this we’d need a survey of trad. published authors, or a united voice for the trad. published author community, which we’ll never get. Traditionally published authors are quiet, only a handful speak, and we can only believe that they represent the others…

    Now, back to the pricing problem: if it doesn’t hurt trad. authors, publishers, and indie authors to have high-priced trad ebooks, who would it be hurting? Amazon. Else they’d not be negotiating against it (obviously). And why exactly are you/we supporting Amazon?…
    I get the sympathy towards Amazon, I feel it myself, but in this case I don’t think indie authors have a say in these negotiations.

    Only publishers, traditionally published authors, and Amazon do. Let’s leave them to it.

    • If the marginal cost of delivering something approaches zero (as is the case with eBooks), the best price is one that maximizes total revenue. A range of independent authors have found that lower prices result in higher total revenue, because readers buy more books.

      As Hugh Howey writes, the “right” price for Hachette isn’t one that maximizes total revenue for eBooks. It’s the price that protects revenue for print books, the model that they know and are most directly tied to. That may be a logical thing for Hachette to (try to) protect in the short term, but it doesn’t help authors build readership, and it probably costs them money as well.

      • I get this, but why should indie authors “revolt” agains this? If publishers want to protect print, they are engaging a fight that they’re going to loose, and loose lots of money in the process, as you point out. Let’s them do so. In a couple of years, they’ll be forced to change.

        I guess the point I’m trying to make is: trad. published authors are able to defend themselves if they want to. Indies don’t really have a say in this as long as it doesn’t hurt them, and I don’t feel it does…

        • John O'Donnell says:

          There are two points you are missing. One, writers are readers too and don’t want to pay 15 bucks for an ebook. And two, indie’s often dream of being succesful enough to have a ‘real’ book published too some day, and don’t want to see writers get used. If you wanted to be a painter, and saw painters mistreated, would you wait until you were a painter to complain?

          • Mr. O’Donnell, I wholeheartedly agree with your 1st point. As a reader, I’m not going to pay $14.99 for an eBook…I don’t care what it is or who it’s by. The only reason that I still buy Stephen King’s hardcover books at all now is for gifts for my dad on Father’s Day and his birthday. I buy them from my local Wal-Mart, because they’re discounted. Note: this is big for me, because King is my favorite author.

            Your second point, I believe, is wayyy off the mark. As an independent author myself, I enjoy the control of my content, control of my rights, control of my covers (that point is shared with my wife-she designs my eBook covers)…in other words, all aspects of my stories are controlled by me. If I signed with a traditional publisher, I lose pretty much all of that.

            It’s MY work, and I’ll publish it the way I want it…not the way some nameless suit inside a corporation wants. And, if it means that I’m not considered a ‘real’ author, so be it. I’m content.

        • Andy Jennsen says:

          This. The simple fact is that Trad Pub has an additional weight they have to drag around – the cost of printed publication and the associated distribution. I’ve seen it said elsewhere: In a few years Trad Pub will be the new vanity presses because they will cater to authors and readers that have to have a physical copy to put on a shelf to either stroke the author’s ego or satisfy readers who are dead set against moving to electronic.

          If anything, Amazon should apply the lesson they learned with music to break ITunes back – take the DRM/rights management out of it. To this day they are still holding onto their .azw3 or .mobi format in the face of .epub standards. They still are holding books in their cloud service and auto-delivering directly to Kindle. When the digital music revolution started ITunes used this model and Amazon nailed them after lots and lots of people had to figure out how to jailbreak their ITunes collection libraries (remember when you had to buy a special program to unlock the DRM and convert the ITunes files to .mp3? And it changed every few months?).

          Some customers are still hesitant to make the plunge to Amazon for books because they are treating their book service much as ITunes treated their music service – and they are also offering someone else an opportunity to come in and do it for them. But some customers still treat physical copies of books like others used to treat CDs. If I’m going to spend money on this product, I’ll spend an additional 25% to get something I can come back to (to rerip, in the case of CDs). With books, that isn’t so much a possibility because you can’t scan a physical book and honestly I think this conversion of content limitation is one reason why ereaders are still a debated topic when IPods were an instant adoption. No one ever said they were sticking with their discman because they loved the smell and the way the round case fit perfectly in their low rider blue jeans pocket.

          • Andy Jennsen says:

            Not a writer – I missed making the final point.

            Amazon is just as guilty of something as Trad Pub and Apple were before them. Companies always try to use the market viability of one item to prop up the market share of their item.

            Trad Pub is using expensive ebooks to prop up hardback and paper sales.
            Apple tried to use DRM music to prop up and maintain market dominance on the IPod.
            Amazon is trying to use exclusive file formats and cloud based storage to prop up the Kindle.

            In the long run the customer wants something very simple and they will keep looking until they get it. Ownership. They expect to spend money and be given a product in exchange. No “rights to use”, or a lease, or a limited time option “as long as you keep using my hardware” license.

            Trad Pub still has the edge because they – at root – are still giving the customer a square deal. Pay me this money and I’ll give you a copy of this book. You can read it, give it away, burn it, build a fort with it and seventy of it’s friends. Whatever. We don’t care.

            Amazon is – sadly – still playing games with ebooks. They put a stop to Apple playing games with music when they started selling DRM free .mp3 files. The customer could then buy them, download them to a hard drive and as long as the power stays on they “own” that music.

            Until the same service is available with books and customers can have a directory on their computer with “their books” on it, there will be unrest from customers that refuse to adopt electronic books because they inherently know that Amazon (or any other company) could, at any moment, yank the rug back out and make you pay for the same content again.

          • “In the long run the customer wants something very simple and they will keep looking until they get it. Ownership. They expect to spend money and be given a product in exchange. No “rights to use”, or a lease, or a limited time option “as long as you keep using my hardware” license.”

            Those customers are not going to get what and expect because nobody can make money giving it to them. Ownership means the owner can sell his stuff. It would allow anyone who bought an eBook to set up shop and sell it.

            Consumers may want something, but nobody has an obligation to give it to them. In a case like this, competition won’t work because there is no reason to compete. There is no reward.

            Try to limit that resale right so producers will have incentive, and we move back into the realm of the restricted license.

          • David Lang says:

            The amazon file format is dressed up mobi, which was around long before epub, and there are lots of utilities to convert between them

            Amazon doesn’t force you to use DRM, they offer it because the publishers demand it, but publishers that do not (Baen, Tor) sell their books without DRM through amazon

            While I wish that other devices supported the Kindle cloud, as I see it, those device manufacturers are the ones opposed to doing so, every single one of them creates their device to only work with their cloud service (and they all at least offer, if not push DRM)

            But by using Calibre, you can pull your books off of a kindle (or out of the kindle software for you nook, android, iphone, or PC) and convert it to epub and put it on devices that only support that format. With a few minutes of google fu you can even strip off the DRM for those books that are locked down by their publisher

          • Andy Jennsen says:

            That’s an interesting point Terrence. I hadn’t thought of the resale aspect, but probably should have considering the recent news about a website doing exactly that somewhere overseas.

            In my mind I equate digital books with digital music. At this point Amazon is offering .mp3 downloads and no one seems concerned about “resale” of those even though a pretty significant resale CD industry existed for a few years before digital really took of. But that was never as pervasive as the book exchange/used bookstore business so I see your point well.

            You define ownership as the right to resell and I can’t dispute it. In my mind ownership has always indicated I would have MY copy if I legally paid for it and I’ve always been leery of any cloud based content allowances for fear that the source would disappear at some point in the future. In reading comments in other places from readers who refuse to adopt digital books, I’ve heard that sentiment echoed and have always thought it was the driving force behind some of the adoption hesitation.

            And yes David – Google Fu and Calibre were the tools I finally used to get over my fear. But I’m a geek and I know a lot of people aren’t.

          • Peter Villevoye says:

            Your suggestions about Apple trying to hold on to DRM in the past are wrong. Apple used DRM to at least get the “Big Five”in the music industry to move into the digital era and towards a decent distribution, on their (not Apple’s) terms. It took them a few more years to adopt the idea of DRM-free distribution. Jobs never liked the idea of DRM, but knew this was necessary to make a start.

            http://web.archive.org/web/20080517114107/http://www.apple.com/hotnews/thoughtsonmusic

      • Steven Zacharius says:

        Why would a publisher care if they were making their money from ebooks or traditionally printed books? It doesn’t make a difference to us. Profit is profit, no matter where it comes from.

        • A publisher may care if his eBooks get a promotional push from the paper books. If those bookstore displays promote the paper, they also promote the eBook. So, if paper disappears, so does a powerful promotional force for eBooks.

          A publisher may not care where his money comes from, but he may recognize his profits are a function of the relationship between paper and eBooks. Losing paper could result in a loss of paper sale

        • Alexvdl says:

          That’s a good question. Maybe you should ask your peers that?

    • Matt says:

      Almost, but not quite. You’re right that price should be about maximizing profit. However Amazon with all their data (that the publishers don’t have access to) believes that ebooks under $9.99 will make the most profit. That’s not just for Amazon, that is also the greatest profit for publishers and hence authors.

      Publishers want higher priced ebooks to protect the print book industry where they have the power. They want the ebook price for a title to be higher than the print book. They want this even though they will make less money from ebooks, and as a consequence so will their authors. And that’s insane.

      The reason indie authors want to be heard in this discussion is that we are pro-author. Higher ebook prices will hurt traditionally published authors. We can’t sit back and watch these authors get screwed yet again. Even if they argue against us. And we know there are plenty who can’t publicly criticize Hachette’s position as, you guessed it… they’d get screwed again. So yes, indie authors have a dog in this fight, because we care about other authors.

      • “So yes, indie authors have a dog in this fight, because we care about other authors.”
        That’s most honourable, and I totally side with you if you are defending the hidden community of authors who are afraid to speak against their publisher.

        But as a reader, it’s hard to understand if this “hidden community” really exists or not. I know Hugh has told me he keeps receiving emails from trad. pub. authors thanking him. But come on, if there’s a majority of trad. authors who feel this way, it’s not that difficult to get together and speak against the publisher… We’ve seen uprisings where people had much more to fear…

        • Mark says:

          But the traditional authors we are discussing here are all under contract to their publishers and could probably face repercussions should they speak out against them.

          • Yes, but again, we’ve seen uprisings in situations where people had much more to fear…
            I will say this though, I think it’s important that Hugh, and all the people who comment here, actively contribute to an environment where trad. published authors understand the problem, and maybe feel a bit safer if they raise their voice. Such an environment is vital is there has to be an uprising.
            But the change must come from within the Big 6, from their authors. Not from outside.

    • Kirk Jolly says:

      Ricardo,

      I get what you are saying. From a logical stand point, it seems like self published authors should just let the trad published authors have enough rope to hang themselves. Better for us right? Except for the fact that it is better for every author, trad or self, if the reading market is healthy and vibrant. Yes, at the end of the day, every author is in it for themselves and they want every sale to be theirs, but as an entire market, we are in constant competition with other forms of entertainment such as movies, music, etc. If we let bone-headed publishers make moves that put upward pressure on pricing and drive the price of reading up for the whole market (it will drive it up too, don’t fool yourself into thinking it won’t), then more and more readers will opt to go to a movie instead of buying another book. That person who buys 3 new books a month may go to buy the third and decide that $10+ would be better spent seeing the latest movie. Now the entire market has lost a sale to our real competition because a book is overpriced. Sure, sometimes that same reader will opt to buy a cheaper book instead, but can we say for sure how often this will happen?

      All I know for sure is that I am a voracious reader and I was an early adopter of the Kindle and when I first got my shiny new Kindle I bought tons of books and I was so happy at how cheap they were because I could afford to read so many more books. When they Big 6 succeeded in forcing Amazon to raise their overall prices for books up to the ridiculous price point of 14.99, guess what happened? I was mad as a reader and I stopped buying as many books. My joy of pressing that “buy” button over and over again because everything was reasonably priced, turned into a chore of making decisions about which books I really wanted to read, what I could afford, and what was a good deal or not. That’s the environment Hugh and others are trying to avoid.

      As writers, we often fall into the trap of thinking that everybody thinks of books the way we do. That they can’t live without them. That we will do whatever we have to, pay whatever is asked, to continue to be able to read. This is what the pubilshers are banking on. They see books as a commodity, something that the public can’t live without, instead of the consumer product it is. Oil & Gas companies can gouge at the gas pumps and get away with it because gas is a commodity and without some drastic changes for the entire population, people couldn’t go without gas. This is not true for books no matter how much we love them. If the market becomes over priced, readers will find an alternative.

      • Kirk,

        I must admit you make a good point. I get you’re not arguing for your own good, but for traditionally published authors, and for the greater good.

        However, I still think traditionally published authors are able to defend themselves, as I told Matt in my comment above.

        Regarding the greater good, I’m not convinced that, if publishers win this fight, they will drive the price of reading up for the whole market. What I think will happen is:

        1- people will read less, yes, but not much less, for a limited time
        2- indies, and small publishers will sell more
        3- Big 6 publishers will get hurt
        4- Big 6 published authors will get hurt
        5- Big 6 published authors will start an uprising (that could actually happen sooner…)
        6- Things will change, and we’ll get to the “fair deals”, “fair pricing”, etc. that we all want and that you are petitioning for

        It’s a cynical view, where trad published authors get hurt, yes. And I’m not saying I don’t care (I’m a reader, not an author), I’m just saying that it’s their fight.

        • Kirk Jolly says:

          I actually agree with what you are saying, but I think we are still only looking at the readers who are already converted to e-readers and e-books. The real battle here is for the readers who aren’t converted yet, and there seems to be a lot of them out there. Publishers know the best way to keep these readers buying paper books is to keep e-books priced so high that they are not an attractive option, because that is the last piece of value that a publisher can provide a writer. Widespread paper distribution. If they lose that, they have no real value to add for the writer. They’ve missed their chance for the most part, to innovate and find a new way to stay attractive to writers.

          But it’s foolish for us to see them as a pathetic, sick creature in their death throes. They still wield A LOT of power over the market and right now they are using their power to first damage the way readers view Indie Authors, and second how they view Amazon. We take for granted that the future will be as you describe it, because it seems painfully obvious that is they way we are heading. What if it doesn’t? What if the writing community decided to lay down and let the publishers have their way and their campaigns to control the market gain some traction? What if, as James Patterson has campaigned for, they succeed in convincing the government that Amazon is being predatory, that traditional publishing is necessary, and the government starts protecting and bailing out big publishing like they did with the auto and banking industry and putting sanctions on Amazon? Suddenly that future that we all think is inevitable slips away or at the least gets seriously delayed.

          I get that the stakes aren’t the same, but it would be as if the colonies had decided that eventually Great Britain would overstep their bounds enough to force a revolution on their own and that they didn’t really need to do anything to assist that revolution in happening. Eventually the entire population of the colonies would figure it out on their own, so why should we bother writing or sending the Declaration of Independence? Sorry I realize what a dramatic sounding statement that is, but it makes sense for the point I am trying to make.

          • It definitely makes sense Kirk, and I get your point.

            You are certainly right in that the outside must put pressure on publishers to accept the inevitable change that they are desperately trying to delay. They’re not dying creatures, but they are creatures who have understood that 80% of their power is doomed to disappear over the next decade.
            To carry on your analogy, they act like France did with its colonies at the time.

            I guess that what I’m trying to insist upon, is that I, personally, as a reader, need to hear his from a traditionally published author. Or better, by a majority of them. It’s their fight, and even if they cannot do it alone, they should take part in it. And the only ones who are taking part right now are the pro-publishers…

            You, Hugh and the indie community in general are laying the groundwork for such a voice to come out. To not fear the publishers and speak for itself. But you cannot do more than that.

      • Kirk, I agree with you 100%.

        I’ve made those exact same choices and I get irritated sometimes when I have to. Of course, I’m faced with wasted time when I have to scour through the plethora of $.99 offerings as well (still haven’t figured out exactly how to maneuver through those and mine for those hidden gems). I rarely go to the movies (maybe twice a year), I prefer buying the video after it’s release. I mostly loathe television, with few exceptions. And, like you, I was an early Kindle adopter. The first in my writer’s group to ‘see the light.’ I told them this was the future of books, they all disagreed. Now, we are all publishing on Amazon, and I couldn’t be happier.

        I emailed Mr. Preston this morning. Not sure how much impact my, or a thousand other emails will be for our cause. But this is our cause, as readers first, and as writers.

        Best, Laura

      • Liz says:

        You make good points, but what can we really do? If the publishers want to keep their prices high and put themselves out of business, they’re going to find a way to do it because they really believe books should be highly priced. I think at some point you just have to let it go. I don’t think you’re going to be able to convince them, since most people arguing with them are coming at it from a logical/economic standpoint and the publishers think it’s some kind of ego trip or moral crusade.

        Besides, I do think that as long as Amazon and similar competition have books for reasonably cheap and they have plenty of books, people will gravitate towards the cheaper prices. Movies aren’t exactly getting that much cheaper. The selection is being splintered by the many different services out there that are also having a hard time getting content for reasonable prices (so hard that they’ve decided to make their own content as a hedge against the prices the studios want for content). I stopped going to the movies years ago because the prices were going too high for me to justify and the content wasn’t getting any better. So now I just watch movies at home, on Netflix, Hulu or Amazon Prime (I cut cable because it just wasn’t worth it anymore). And I still don’t have access to all the content I want. So I watch what I can get and I spend the rest of that time online (usually on Youtube) or reading.

    • Drew Gideon says:

      “Only publishers, traditionally published authors, and Amazon do. Let’s leave them to it.”

      We’d like to, but people like Preston and Patterson keep presenting themselves as if they represent *all* authors; as if their words would be echoed by every author, if only each of those authors had the opportunity to speak.

      Preston, Patterson, and their handler at Hachette know that this is what they’re inferring; otherwise they’d say “Hachette authors” in their slam pieces and use the name “Hachette Authors United” for their petition. But _Hachette Authors_ is not what they want to convey – as evidenced by proclaiming that the SFWA-in it’s entirety-had signed on, when all the news coming out of the SFWA shows that the authors represented there are deeply divided on this issue.

      When Hachette and its stable of indentured servants being paraded to the public want to make the public think that ALL authors support and echo the tsunami of crap that they’re spewing-higher ebook prices, government intervention, etc- it makes ALL authors look bad.

      • Ok, that’s a good point Drew.
        But do people really believe them when they act as if they represented “all authors”? Everyone knows it’s an Amazon vs Hachette (or Amazon vs Big6) struggle I think.

        In any case, you and others here have convinced me that indies do have a dog in the fight here.

    • Gib says:

      The way I understand it, if Hachette succeeds they can force Amazon to raise the prices of e-books (including indies) to $14.99. No more 99 cent e-books for anyone. This being the worst-case scenario. Were it to happen, you can imagine how many indie authors this would screw over. I myself am planning to self-publish later this year and I know this would devastate my current release plan.

      • Liz says:

        How could Hachette get Amazon to raise its prices for indies? They don’t have that kind of clout. If Amazon decides to encourage indies to raise their prices, it will be because it benefits Amazon. So far Amazon knows that’s not in their best interest.

  4. Mars Dorian says:

    Hugh,

    I signed up for your and Joe’s petition, because i believe there was an imbalance in the media coverage.
    I think Douglas and co. will only realize their questionable choices when the ‘market’ punishes them by not buying their books. And even than, I doubt they’re going to change. Once you get too entrenched in your belief, you try to justify every decision, no matter how bad. Plus, based on personal experience, you can’t change people who don’t want to change.

    I think the trads should go for their high $14.99 prices. It makes every indie book like an insanely good price alternative. If a trad. author dislikes that, they should think about dropping out the trad. route and start creating their own path in the longterm.

    • Liz says:

      Yep. They can raise their prices. Even the most well-meaning readers will start to balk when they realize they can’t afford as many of their books and there’s really no reason to pay so much for an e-book anyway. Then you’ll have the publishers again complaining that people just don’t buy books like they used to or they can’t sell certain types of books anymore because the readers don’t want them.

  5. Ron Estrada says:

    I’m as free-market capitalist as they come. Which means I believe that the market is a natural force, not one that can be controlled. It’s my job to sell my product at a price point that will get me the largest possible profit. That does not mean–for all of us who stayed awake in Econ 101–that we set a high price on our product. Our maximum profit may come at 99 cents or 99 dollars. That lovely point at the peak of the fiction graph seems to fall right around $4-$7. If you try to force it to a higher point, you slide down the right slope and profits diminish. Where are these authors not getting the clue? They are trying to control the market, and will be about as succesful as a sailor trying to control the tides. The market will win. Every. Single. Time. My friends, I prefer to ride the wave than fight it. These guys who continue to do so will eventually drown and be forgotten.

    • Then we should let them do so. Why fight the stubbornness when the market, as you point out, will decide in the end?
      If they want to price $14.99, then they should be able to do so in my opinion. Everyone should be entitled to price however they want.

      • Matt says:

        Spoken like someone who doesn’t care about the authors getting screwed because of Hachette.

        • I’m sorry if I’m not a humanist. I believe that when a majority of people gets screwed and knows it, an uprising almost always happens (see my answer above).

          Plus, there’s two discussions in one: the deal between authors and publishers, and the deal between publishers and Amazon.
          The problem you are talking about is in the first one: by signing with publishers, authors leave the pricing to the publisher. That is what’s fundamentally wrong in the industry.
          Now, that publishers then fight for their own interest (or what they believe their own interest is), I find normal.

          I support Hugh Howey 100% in his campaign for fairer deals between authors and publishers. I don’t support the meddling in the Amazon-Big5 negotiations. Hope that’s clearer.

          • Bardic says:

            Ricardo – While I don’t like to see fellow authors get screwed over, I completely agree with you. Until a large enough group of tradpub authors publicly revolts against their corporate masters, it is meaningless. The publishers know that if their authors are too scared to speak out, they are still in control. Indie authors trying to speak on tradpub authors behalf essentially becomes an echo chamber, because publishers don’t care what we think: we’re not part of their stable.

  6. Gray says:

    Dear Mr. Howey,

    I kind of understand what you are talking about, but I don’t think it’s fair to let Amazon dictate what should be the price for ebook. We don’t let customer or Amazon dictate what should be the “fair” price for Iphone. We don’t let customer or Amazon dictate what should be the “fair” price for Mercedes Benz. We don’t let customer or Amazon dictate what should be the “fair” price for Diamond, and so on so on.

    So, if Hachette and other 5 big traditional publishers dictate that 15$ is the right price for ebook, then so be it. No one force customer to buy their ebooks. There are many great ebooks at low price. At the end of the day, market will decide whether 15$ is the right price for customers. If market decide the price is too expensive then it will correct themselves or die. Actually it should be the opportunity for self publishing authors because the don’t have to compete with traditional publish authors. I would be more scared when every ebooks have the same price because then I would be reluctant to try new authors.

    Just sharing my 2cents.

    • K.C. May says:

      The price of a car is determined by the dealership — the retailer. That’s why you can get a better deal by shopping around. The dealership pays $X for a car and wants to sell it for $X+Y to cover expenses and profit, but that $Y amount is somewhat negotiable. It’s that $Y amount that Amazon wants — and deserves — control over.

    • John O'Donnell says:

      Let’s say you grow roses, and you want me to sell them, you determined you want 50 dollars for each rose… according to you that is fine, no one gets hurt, the market will correct itself? I, as the seller, get hurt because i am wasting my time trying to sell overpriced roses, and my regular customers get hurt because they can’t afford a rose anymore.
      There is one VERY important point many people miss, Hachette is FREE to sell all the ebooks at any price they want, but if you want Amazon to sell your stuff on THIER kindle devices and apps, then Amazon has a responsibility to work for a good price for their buyers.

      • Gray says:

        First of all, I want to say sorry if I offend anyone. Let me clear it, I for one not against 10$ ebooks nor against Amazon negotiation tactics nor I support overpriced ebooks. What I want to say is this is matter between trad authors, trad publishers, and Amazon, there’s no reason for customers and self publish authors to meddle or dictate how much big trad publishers SHOULD sell their own ebooks. If they want to sell their overpriced ebooks and die, then so be it. No one forced customers to buy “overpriced ebooks”. It’s called freedom. At the end of the day, market will decide whether 15$ ebook can survive or not.

        And you are right, if they want to sell at Amazon, they should follow Amazon rules. Hence I am glad that Amazon don’t sell Hachette books because it means opportunity for other books stores to profit from it.

      • Well said, John. You are absolutely correct. Great analogy too!
        Best, Laura

    • Steven Zacharius says:

      As a publisher, I agree with you 100%. If readers don’t want to pay the price that a publisher wants to sell the book for; they won’t buy it. Nice and simple.

  7. AD Starrling says:

    Wow. I just read that linked Bookseller article you added at the end. It seems clear to me that the group of traditionally published authors behind Authors United will accept nothing except complete capitulation from Amazon on this subject. Which will not happen. Their ad in NYT is going to be as effective as Patterson’s was.

    That Amazon has come up with so many offers and they keep saying no means they are not willing to listen. If I remember correctly, Hachette hasn’t brought any such offers to the table.

    Thank you for being such an ardent advocate for ALL authors, Hugh. I admire you for it. These are interesting (and dangerous) times indeed for people involved in this industry.

  8. Robert Kent says:

    The real cost of a book is time. An author may get my money once, but if they hope to get my money again, they have to provide value for my time. I paid over 9.99 for Stephen King’s newest, but I didn’t care for it and I regretted spending the money that could have gone to multiple books by other authors. I would’ve been more forgiving of my favorite author if I’d paid less. On the other hand, I’m reading Brilliance by Marcus Sakey and loving it. The fact that I paid less for a book I’m enjoying more makes me appreciate it’s value all the more. Marcus Sakey has earned my money and my time for future books.

    I am tired of this Amazon/Hachette dispute, though. It seems to me market forces will sort this out, regardless of author hand wringing. I feel bad for the writers caught in the middle and I do wish Hachette would accept Amazon’s offers to release the hostages. But I think I’ll have a greater impact on the situation by voting with my wallet for quality content at a fair price.

    For 14.99 I can get two movie tickets (matinee), a video game on Steam, or Five or more indie books. If you want to charge that kind of money, you’ve got to be Stephen King. If you’re a debut novelist, I’m going to wait until your book goes on sale or you indie publish your next title and set a reasonable price since publishers are presently fighting so hard to keep me from giving you my cash.

    • John O'Donnell says:

      For 14.99 I can wait until the library are selling books at 50 cents a pound and get all of Hachette’s books at once, lol.

  9. K.C. May says:

    As an older reader, my eyesight has deteriorated to the point where ebooks are the only way I can read, because the text is crisper and I can change the size to suit me. The notion of punishing me for that is irksome. From my perspective, they don’t value me as a reader and want me to GTFO of their store.

    If an author’s royalty is higher on a $9.99 book (25% of net, which is what, around $1.75?) than on a paperback of the same price (around $1.50), then they just end up looking greedy by siding with the publisher on this.

    If I were in the authors’ position, I would support whatever price point maximizes sales. After all, obscurity is an author’s worst enemy, not low prices on books.

  10. frank zubek says:

    I don’t understand why the Paper Boys (Traditional Print) are so reluctant to embrace this medium. Well, they ARE but only to hang onto the paper format. It’s ironic that – from the data I’ve read– that they actually have more people reading their books now than before ebooks existed. And they’re doing everything to turn those readers away with 15 dollar prices.

    • Steven Zacharius says:

      I don’t know where all of these non-sensical comments that traditional publishers aren’t embracing ebooks. We’ve spent loads of money converting backlists.

      • Steven -Kensington is a great publisher known for nurturing authors. I live in Manhattan and you have a great reputation here. (The kind of publisher I’d be honored to work with) I think the bad apples that spoil the barrel are publishers like Hachette’s Conde Nast that spend 30 million dollars on their Time Square cafeteria Gehry and then cry foul because they don’t want to pay for there pre-order buttons. The big houses twist perspective for the little guy when we could never have pre-order button paid or not. Amazon of course is not a hero. Kindle unlimited filled amazon pages with free major titles (if only for the 30 day trial). The product may help a mid list indie like me in the long run yet you can image where my US sales have gone the past week. Anyway – absolutes are always bad. Not all publishers are equal, in fact we could use more like you. I think what makes your brand and others like yours special is that you are not limiting the field as some publishers do. Converting backlists and bring on new authors and genres, and doing this for art, not money, is what separates your ilk for the better.

  11. John O'Donnell says:

    E-books should be priced so the authoir makes the same money as he would from a printed book. If the paperback sells for 8 bucks, and Hachette wants 15, what does that make them? If an author makes three bucks for a paperback, then the ebook should be about five bucks, simple math, but Hachette wants to earn eight bucks for themselves.
    I understand when the hardcover comes out the ebook should be higher, if hardcovers are 15 bucks and ebooks are 5, that will kill the printing business. The solution is a limited run. When a new book comes out and the hardcover is 15, the ebook should be no more than 9.99, so everyone makes the same profit, but when the hardcover is replaced by an 8 dollar paperback, the ebook should drop down in price too.
    Nothing will ever replace a printed book for some of what i read, but that is barely 10 percent, the rest is ebooks. Can’t HAchette see they are hachetting their own throats here? They are using already successful writers to fight for them, doesn’t Stephen King realize he can switch to Amazon and triple his income? As soon as one famous author realizes it, the war will be over as everyone abandons the sinking Hachette.

    • Liz says:

      I honestly don’t think Stephen King cares all that much about tripling his income. He doesn’t strike me as a really greedy guy. I think it’s more about loyalty and a misguided sense of fighting for the people who fought for him.

  12. M.R. Lambert says:

    In my opinion, publishing needs to base their prices on the cost that goes into producing the work. If it is print, you add the cost of printing the media. If it is audio, you add the cost of production and voice actors. If it is ebook, most of that cost should have been already covered before it even reached the print stage (editing, formatting, etc.). Therefore, there is really no reason why an ebook should be ever priced higher than a print version of the same work. Even print on demand supports this logic.

    It can only be reasoned that the Big 5 are trying to protect their paper divisions, at the cost of the “99%” authors.

    Meanwhile the elite are so busy trumpeting that they’re “for the authors” in this battle, they don’t even see that they’re trampling over the average foot soldier to get a better whiff of what the Big 5 are holding in front of their noses.

    Small wonder that writers with potential can become so disenchanted.

    Thank you Mr. Howey, and the various other authors out there (Konrath, Smith, Penn, Rusch, etc.) for helping to point out alternatives to this fiasco.

    • Karen Myers says:

      The reason why cost-plus accounting isn’t the complete answer is two-fold:

      1) There are costs (for ebooks or print) and they need to be recouped, even for indies, since author labor time is part of that equation. How you should price to recoup that cost is a combination of per-unit (tiny for ebook, larger for print) and amortized per-title (labor to write, edit, print setup, etc.). HOWEVER, cost alone is insufficient. You need to know volume in order to recoup the amortized per-title cost. If you sell lots of copies, the per-title cost becomes negligible. If you don’t, it matters.

      2) Who says cost-plus is a moral imperative for setting price? Why not the time-honored “what the market will bear”? If you want a lower price for the sake of the customers, it will take competition to make that happen, the great corrective of all market-based systems.

    • Steven Zacharius says:

      As a publisher I don’t want ebook prices to be higher than print prices. I don’t know where you’re getting that information from as to that’s what publishers want.

  13. It appears that not all publishers—in the same way that not all authors—are in lock step to constantly and unwaveringly “protect” the high prices of hardback books.

    I got my weekly eMail from Simon & Schuster today listing 15 “Beach Reads” that I might be interested in. Almost all of them are bestsellers and they are all available in a variety of print, eBook, and audio formats. I’ve listed three of them here as examples. What’s especially interesting are the prices. All of them have significantly LOWER eBook prices than hardback prices. I don’t know, nor care, if these are permanent or merely a temporary sale. The point is that Simon & Schuster, at least, seems to realize that a little flexibility on this whole price “thing” might be a smart move.

    The Rosie Project
    By Graeme Simsion
    Bestseller
    Hardcover $24.00
    eBook $11.65

    Revenge Wears Prada
    By Lauren Weisberger
    Bestseller
    Hardcover $25.99
    eBook $11.65

    Queen’s Gambit
    By Elizabeth Fremantle
    Hardcover $26.00
    eBook $11.65

    • DaveMich says:

      fwiw, I read the Rosie project and liked it a lot. It’s a love story told from the point of view of someone with aspergers who does not understand feelings at all – the voice was perfect and very relate-able for someone who usually reads sci-fi.

    • John O'Donnell says:

      I think the point is….
      The Rosie project paperback is less than the ebook, so why would anyone pay for the ebook? If it were me i would buy a used copy for 4 dollars on Amazon, and the author gets nothing. That is the point, if the ebook was 7 bucks, everyone still gets paid, and paid better than they would for the paperback at 12 bucks. If a hardcover for 26 bucks makes an author 5 dollars a copy, then a 7 dollar ebook would make him the same money.

    • Matt says:

      The debate is about ebooks costing more than paperbacks. Hardbacks are a different story.

    • Steven Zacharius says:

      These comments as to publishers wanting ebook prices higher than print prices are ludicrous. The entire agency model was based on ebook prices being set at fixed prices which were way below printed prices. There is a strict formula stating what the maximum price could be in relation to the printed price. This is just constant misinformation being spread on blogs and people accepting it as fact.

      • Bardic says:

        Steven – Tradpub eBooks are usually much higher in price than paperbacks during the so-called “windowing” period. There is no good reason for this, other than to protect hardcover sales. What is ludicrous is that a book in digital format should list for twice as much as a paperback.

      • Do we have examples of thriving markets governed by strict formulas?

      • Andrew says:

        Steve,

        Look at the following authors books on BN.com

        Douglas Preston
        David Baldacci
        Stephen King
        Lincoln Child

        Why are the majority of the ebooks for those authors more expensive than their paperback versions? Why isn’t BN able to pricematch those books against Amazon?
        Nook readers paying more for…what? DRM? I mean, the paperback version of Carrie is $7.19 on BN, and the epub is $7.99. Did the time and effort it took to type the book out (if it didn’t already exist in an Indesign or Quark file somewheres) really add that much more value than the time and effort it took to make a paperback version?

    • And yet, if that ebook price is for Amazon, they would actually *earn more* by pricing the ebook at 9.99 than at 11.25 because Amazon pays 70% of list price up to 9.99, and only 35% on ebooks priced higher than that.
      This only shows that S&S doesn’t understand the ebook market at all.

  14. Publishers have gone insane with ebook prices when they insist that they be more than the price of a mass-market paperback. And they know better. They don’t try to sell their mass-market paperbacks for higher prices than the hardcover.

    The only advantage of a ebook is that it can be cheap, since there is no cost for printing and for shipping the printed book around. If publishers insist on high ebook prices, shoppers will go elsewhere.

  15. Nirmala says:

    Hugh, It might be good to also include a link to email Jeff Bezos so we can let him know that we support Amazon’s position.

    • Josie Litton says:

      “Just over 39 percent of respondents indicated that they were aware of the standoff…Among those book buyers aware of the dispute who have an opinion on that disagreement, 19 percent said they were buying fewer books from Amazon…”

      There’s a number missing here: 39% of the sample are aware, X% of them “have an opinion”, and 19% of those with an opinion are buying fewer books. Without knowing how many of the 39% actually give a damn, everything that follows is meaningless. Or more correctly, skewed to produce the desired result, namely the “Book Buyers Leaving Amazon” headline.

      Shame on Forbes. Perhaps their new owner, an Asian-based investment group, will strive for higher standards of “journalism” or whatever it is they’re trying to do. (Not holding my breath).

      BTW, I’m a recovering trad author soon to make the leap as an indie. This has quickly become my go-to site for information, insight, and encouragement. I’m really glad to have found it!

    • Smart Debut Author says:

      It’s by Jeremy Greenfield. It can safely be ignored.

      He’s associated with DBW — the same folks whose last “author income survey” involved polling aspiring writers with zero books for sale about how much they were earning from their books.

      Take a look at this instead.

      http://www.fool.com/investing/general/2014/07/21/why-the-amazon-hachette-battle-didnt-cost-the-reta.aspx

  16. Too much focus on “the number” here.

    $4.99, $15.99, heck $99.99 … so what? The market of readers won’t buy something they do not value in e-format. The traditional publishing companies, if they don’t realize that, and are too hung up on the “price” … will suffer a greater loss as competition “prices” them out of the market.

    But this price argument turns these books into commodities if that’s the only argument being made, though. Are books commodities? I hope not.

    I hope they have some value beyond price alone.

    But the reader (like me) will determine that. I don’t make that decision based on the format of the book, though. I make that decision based on content value in the book. The author themselves doesn’t play much of a role, unless it is an author that has earned my trust and hard earned money.

    Do you want your books to become Milk at the grocery store?

    But in the end, when we realize the market (readers) has likely already spoken, and that is why Amazon is setting the price at $9.99 or lower (because it understands the digital market better than any company I’ve seen thus far) … we can realize this “fight for prices” has already been “won.”

    Traditional publishing companies are in quicksand right now, the more they fight, the more they sink. And I hope Mr. Preston and his friends all realize that THEY do not set the market, the market sets the market.

    If they think they are something special, they’re about to get a serious wake up call. There is WAY too much content available, competing for the limited attention of the readers.

    The way I see it, content (supply) is high, and reader attention (demand) is low … therefor the price will go down. Basic economics. The platform (Amazon and e-readers etc…) only accelerates the price race to the bottom (IF books are thought of as a commodity).

    • Steven Zacharius says:

      Readers have not spoken. Amazon has spoken. There job for their shareholders is to build their companies bottom-line. They’re doing this by capturing marketshare by discounting prices and eating the difference when they want to. They can afford to do this because of their size. They can absorb taking a loss to capture readers into their proprietary system because they’re making money from other things like distributing other products and their many service….Amazon Web Services, which hosts websites.

      • Joseph Ratliff says:

        Ahhh Steven… Amazon isn’t saying anything, that influences why I buy from them or not. It’s what they DO that influences why I buy books from them.

        They take care of the customer, they provide good shipping options, and they know how to pack a book. Then, there is their selection, I can find any title (just about) that I want from them.

        Yes, Steven, the readers “speak” with their dollar.

        But let’s address a few of your points, one by one…

        1. You said: “There job for their shareholders is to build their companies bottom-line. They’re doing this by capturing marketshare by discounting prices and eating the difference when they want to.”

        Okay, and? They are a for-profit business and not a charity, correct?

        2. You said: “They can afford to do this because of their size.”

        Okay, and? They have built their business to that “size,” which has nothing to do with monopolizing a market (if the market is big enough, and the book market is). Also, I don’t think Hachette is exactly “small,” right Steven?

        And, in terms of pricing, which people seem to keep using as a point towards the supposed “Amazon bullying” theme … if pricing is all you can compete on … then Amazon will win the battle, and that’s business plain and simple.

        Oh yeah, and low price for a title, all other things being equal in the value equation for a product like a book, is what a customer will pick… IF there is no other value to exchange for their dollar.

        3. You said: “They can absorb taking a loss to capture readers into their proprietary system because they’re making money from other things like distributing other products and their many service….Amazon Web Services, which hosts websites.”

        Okay, and? So, Amazon built their business by correctly placing business “bets” in various areas, and their results shine. I would have to ask is Hachette competing with Amazon as a whole, or just doing the “book business” better than Amazon (hint: Hachette’s trying to bite the whole elephant)?

        Do I want just one company providing me everything in certain categories, like Amazon does? Well, if that’s the best option for my money, the best “value” … then yes.

        BUT … the reason Wal-Mart hasn’t killed off every single business in the categories they sell within their stores … and the same theory will apply to Amazon…

        … is there are businesses who add unique value where they can differentiate FROM the behemoths like Wal-Mart and Amazon.

        I shop them (hint: I don’t go to Wal-Mart, ever, for anything … and it’s because I’ve found the businesses that do it “better” because price isn’t my first consideration).

        So let’s get back to this pricing thing…

        Hachette wants to sell ebooks at a higher price point, Amazon wants to sell ebooks at a lower price point (remember, this is the digital world).

        Do you think that Amazon is trying to keep those prices down “because it can” or perhaps because they’ve recognized that they can sell more units, “turn” more ebooks that way?

        Digital provides profit continuously, because of the unlimited shelf space.

        Hachette wants to raise prices on ebooks because it wants to maintain the price point (or justify the price point) of their print versions.

        There really isn’t another reason to try so hard and keep prices closer to the rest of their product line, when the market (the readers, who speak with their dollars) wants to pay much lower prices for the digital product in the first place.

        I’m not saying print will die, or anything like that … but I am saying that print had better find a way to price itself closer to the digital market IF Hachette wants to keep that business running smooth.

        Because in the end, you’re right, Amazon is a mighty big company who has a proven track record of successfully placing the right “bets” in business, especially when it comes to online selling.

        Does Hachette, even at its size (and profits, they aren’t poor either) want to compete with a giant like Amazon on what has prove to be THEIR battleground (digital business)?

        If I were Hachette, I would start by listening to guys like J.A. Konrath, Hugh Howey, and Barry Eisler … and listen to them very closely.

        Because time is running out for outdated publishing business practices, and Amazon figured that out a LONG time ago.

      • I think we can safely say the big publishers’ parent companies make lots of money from other stuff, just like Amazon does,

  17. Douglas Preston is apparently another rich author that screams free market on payday then socialism for shelf space. That is the biggest irony I find with these cats. As an indie author living in Manhattan I am not accosting nearby publishing houses demanding they publish me yet these authors and their houses feel they are entitled to be shelved and provided premium ‘services’ that are the equivalent of illegal ‘payola’ in the music industry. Disgusting.

  18. Scott says:

    I emailed Mr. Preston and told him I was inspired by this blog entry to do so, but also that *I* didn’t need this blog entry to have already made a decision to not pay what I consider is too much money for an ebook. Often for me, $9.99 is “too much”. I’d rather pay $7.99 for a mass market paperback or wait for a Preston book (or a Lippman book, or a Child book or a Connelly book – sub in the name of any of your favorite authors here) to be remaindered. I told him that I have not in the past and will not in the future buy an ebook at $14.99. (I guess if the idea is to protect these authors’ paper releases, then they’re succeeding – except that I’m buying Howey and Robertson and Konrath and Steven M. Moore and other indies’ Kindle offerings instead.) I likened it to going to a baseball game with my family of four. I’m a Cubs fan but really, they’ve priced their in-person experience out my range, and now I’m content to watch on TV. They’re losing me as a customer slowly, and my kids are probably already lost. Will books go that way? Well, purchasing them might, if the price is out of reach. Alternatives have already cropped up…

  19. Liz says:

    I don’t see evidence that Hachette is going to budge much on this issue. So why not just let them run themselves into the ground? From my point of view, either readers will pay their prices or not. As long as Amazon and its competitors have a supply of books at lower prices, the readers will work out what they’re willing to pay for and everyone should be happy. (Spoiler: I’m sure as hell not going back to paying $15 for any ebook. I just won’t buy those books at all. There are plenty of other good books to read.)

    Also, my main problem with Hachette is their silly little one-sided campaign against Amazon when they can’t even defend their ridiculous arguments and practices. I want indie authors to keep railing against that. It’s probably a more productive use of our time.

  20. Avatar of Rick Chapman Rick Chapman says:

    I think before you fight for lower prices on books, a process I would think would occur naturally due to market forces and competition, it would be nice to know how much the overall market for books has expanded. Because if increased book readership is not expanding at a very healthy rate, then there are problems.with prices dropping lower.

    I would think Amazon would be willing to disclose its overall E-books sales. It’s not hard to obtain information on print sales:

    +++ Total print units this year were 620 million; for the first time, that total includes sales from Walmart, which became part of BookScan’s mass merchandiser and other channel in 2013, the addition of which skews year-over-year comparisons. The retail & club channel includes all bookstores plus Amazon and accounted for approximately 81% of units sold through outlets that report to BookScan. Retail & club unit sales fell 11.4% between 2011 and 2012; the 2011 total includes sales from the liquidation of Borders. Between 2011 and 2012 total units (which do not include Walmart figures) fell about 9%.+++

    Of course, it would be useful to have info from some of the other players, but the Amazon data would be enough to do some useful extrapolations. But unless significant expansion of the overall market is occurring, prices will have to rise or people will stop writing. And maybe they should but that’s not the argument Amazon is making. And before anyone makes it for them, Amazon should release the sales figures.

    +++ Amazon wants ebooks to cost no more than $9.99. I can see this very clearly in my own self-publishing contracts with them. If I price my ebooks over $9.99, they reduce my royalty from 70% to 35%.+++

    There are a lot of points to be made here. First, is it even accurate to call 30% taken from your hide a “royalty?” Amazon is not truly a publisher. They are a distributor and a reseller. In terms of your indie relationship with them, they are operating in one tier mode. They receive your book, they list in their catalog, it is bought and their margin on the sale is 30 points. In the software industry, which is analogous to the book industry in some respects, distributors typically operated on 6 to eight point margins. At 30% points, Amazon is printing money. They do not produce. They do not have to pick, pack and ship. Transmission costs are paid by the author. They also enjoy a nice float on your money during the between royalty payment periods. Their customer service for authors is minimal. They do have to maintain a computing infrastructure to deliver, track and catalog the books, but this cost is trivial compared to maintaining a warehouse that ships physical items. At an 85/15 split, Amazon would still be making nice money and maybe some more people can eat.

    +++ Amazon wants ebooks to cost no more than $9.99. I can see this very clearly in my own self-publishing contracts with them. If I price my ebooks over $9.99, they reduce my royalty from 70% to 35%. +++

    And this is completely indefensible and one day Amazon will end up in court on anti-trust. And they know it. They’re close to achieving monopoly status in online book markets and the feds are taking increasingly closer looks at them.

    At a 65/35 split, Amazon is attempting to grab margin from you as it were a publisher. But it provides no services to justify this. It’s nice that Amazon thinks that all ebooks should be $9.99 or under, but there are many, many markets where no volume exists to justify 70% of $9.99. I know; I’ve written books for them.

    And I also think that before everyone swoons too much over Amazon’s battle with Hachette is to look to the future. I posted up a quick and dirty analysis of the impact of inflation on your royalties’ purchasing power at http://www.rule-set.com/blog. If Amazon becomes a monopoly, I will guarantee you that your royalties will not stay at 70%. Amazon knows all about the MDF (marketing development funds game) and when it’s safe, will start to play it. They may leave the 70/30 structure in place (nominally), but they will skin you in other ways.
    “Storage fees.” “Under minimum sales fees.” Fees for ‘promotions” that are part of what they do know (like the free pomo). The list is potentially endless. I suspect that down the road, you will hand over an additional 15 points in margin before you have a hope of moving a title.

    Now, just as a thought experiment, plug THAT into my little model and see what you think.

    I have a hard time seeing any reason to advocate for either side, and I know what Amazon will do as it tightens its grip on the market. They’re a business and maximizing profits is what they do. And they will do it.

    The more competitive restraints on all the major players, the better.

    Rick Chapman
    http://www.softletter.com
    http://www.saasuniversity.com
    Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
    Read Excerpts from all 10 chapters at http://www.saasentrepreneur.com
    Author “Rule-Set: A Novel of a Quantum Future.” Just Released

    • Andrew says:

      “And this is completely indefensible and one day Amazon will end up in court on anti-trust. And they know it. They’re close to achieving monopoly status in online book markets and the feds are taking increasingly closer looks at them.”

      If that were true, the Feds would have brought them to heel in 2008, when the had 90% of the ebook market. Now their share is about 55-60%, and it’s falling every year. Thats not how you achieve a monopoly.

      Dav

      • Steven Zacharius says:

        Where did you get your stats from that their marketshare was dropping every year?

        • Andrew says:

          Depending on where you look, the numbers vary. Google “Amazon Ebook Marketshare” and a variety of sources will have numbers. I’ve seen as low as 50%, and as high as 70%, and in some countries its a larger share.

          But with the entry of Smashwords, Kobo, BN.com, Apple and Google, Amazons Market share is falling every year. In 2008 they had 90% of the ebook market. Now they have 60%. How exactly is that maintaining a monopoly?

      • Avatar of Rick Chapman Rick Chapman says:

        The feds are slow to move on anti-trust. It can take years for them to make up their minds on a case, and years to resolve one. I forget how long IBM fought the US in 70s/80s, May have been a decade or longer.

        +++ If that were true, the Feds would have brought them to heel in 2008, when the had 90% of the ebook market. Now their share is about 55-60%, +++

        I’m sorry, but do you have a source for these numbers? I don’t believe they’re at all accurate. Amazon is picking up e-pub marketshare from B&N, which is on life support. Nook is about dead. I don’t believe Apple reports iOS books sales and if they do do they attempt to breakout direct sales from their iTunes stores vs sales via the Kindle reader? I don’t think anyone has a clue what’s going on with Android; too fragmented. I do know I buy my books for my Android table from the kindle app; ditto for my PC desktop.

        I believe the E-book market, in the US, is Amazon and everybody else. I would be surprised if their marketshare, based on some very shaky indirect analysis, is less than 65%+ and rising. If Kobo, Smashwords, Oyster etc. released their sales figures we’d know more, but right now, we don’t.

        Once a company achieves 50%+ markeshare, they are on the way to monopoly status. Amazon may end up being a beneficent overlord, but I’d, personally, like to see a balance of power maintained between the content providers (publishers) and the channel (Amazon.). Again, it is a major mistake to think of Amazon as a publisher. They are not, They are channel.

        • Andrew says:

          “Once a company achieves 50%+ marketshare, they are on the way to monopoly status.”

          Random House Penguin is the largest Publisher out there, and controls at least 50% of the Publishing market when considering the various imprints under its roof.
          Are they in danger of becoming a monopoly then?

    • Steven Zacharius says:

      Very good points made from a self-published author who seems to really understand what’s going on.

  21. Mari says:

    You seem to forget that the authors are the pawns in this battle. The sales of my books are down 60% since Amazon began this game. And I’m not a long-time author with tons of royalties under my belt. Just a new author, who depends on my book sales to produce a modest retirement income. And I don’t have forever to make up for these lost sales.

    • Dropping sales is alway sad yet there is no game. Hachette did not want to renew a contract with a bookstore and this is America not a communist country. Amazon is not obligated to purchase pallets of Hachettes books and give them preorder buttons any more than they are obligated to shelve them at all. I used to work for WaldenBooks and one of the things that killed them was that publishers made them buy pallets of books that did not sell. (They were able to return only later after the money was upfront). Amazon’s entire business fulfillment model for every product (not just books) involves just in time inventory. They have algorithm predicting what customers normally buy and stock accordingly. Filling warehouses with pallets of books that are only going to have the front covers ripped off (that was my job twenty five years ago) is not good business. Hachette already killed Borders and Waldenbooks and here in Manhattan two of B&Ns largest stores including their oldest have shuttered.

      • Avatar of Rick Chapman Rick Chapman says:

        Amazon is not fighting with Hachette over print books. They’re fighting over E-book pricing. E-books do not involve pick, pack and ship. The cost of managing E-inventory is minimal compared to physical operations. The cost to Amazon of storing information, files, and transmitting them is, maybe, pennies. (Oh, you pay the transmission costs. Never mind. It’s less.)

        Discussions of JIT and similar issues is meaningless. We’re talking digital.

        What is happening is a battle between suppliers and their channel. Suppliers and channels are always battling for pricing control. Suppliers like higher prices, channels always like lower.

        BTW, each and every indie is a supplier. That means me, and you, and Hugh Howey. I don’t know about you, but I like the ability manage my pricing strategy. If I get it wrong, does Amazon suffer? Hardly. They’re already printing money. Maybe $9.99 is a great price point, but maybe for you, $10.99 just may work out.

        Oh, you can’t do that, can you. You’ll be slaughtered. That’s right, you, the supplier, are now the supplicant to the channel. Boy, I can tell, when that happens, tempers get short indeed over time with suppliers. In other words, you.

        And again, Amazon is NOT a publisher. They are part of the book reseller channel. In the case of E-books, they almost operate in one tier mode.

        As the market shifts to E-books, Amazon sees an opportunity to grab control of the pricing structure of a vibrant new market segment. Hachette wants to maintain control of their pricing flexibility. Neither is right nor wrong, and you, the author, are probably the least of both’s concerns.

        Hugh is making a big mistake to view either of these forces as the white knight vs. Malificent. They’re both Malificent. Each wishes to optimize, in the long term, their profitability. Each will sob big tears for the poor reader and the starving author and neither means it.

        I guarantee that if Amazon succeeds in gaining pricing control, that 70/30 split will inexorably be nibbled away. It will eventually be forced to stop the 35/65 split (on paper) because it’s economically ridiculous to turn over 65 points to the channel (Amazon is NOT a publisher!), but they will do their best to recover via MDF.

        As I said, the best thing that can happen is a balance of power between supplier and channel is maintained. It tends to keep both honest.

        I’m a bit busy right now, but over the next week or so I’ll post up on my blog some more info Amazon has a channel and the MDF game. If everyone here is going to root for Amazon, you’ll need to understand what you face in the future.

        Rick Chapman
        http://www.softletter.com
        http://www.saasuniversity.com
        Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
        Read Excerpts from all 10 chapters at http://www.saasentrepreneur.com
        Author “Rule-Set: A Novel of a Quantum Future.” Just Released

        • Alexvdl says:

          So I should go for the person that might hurt me int he future over the people that are hurting me now?

          • Avatar of Rick Chapman Rick Chapman says:

            I’m not sure how Hachette is hurting you, unless you’re one their authors and they’re not paying you your royalties?

            I would suggest a dispassionate view of the dispute between the two. Both parties have a particular agenda. You, as an author (supplier), hardly figure into the financial calculations of either, except in so far as you are revenue source. Anyone who thinks books are all about good writing hasn’t read “Fifty Shades of Grey!”

            It is not in your best interests for Amazon to be able to have a deathgrip on your pricing. It is not in your best interests for publishers to be able bar the way to reaching a potential audience for your book.

            At least not from my perspective. Yours may vary.

            Best of luck!

            Rick Chapman
            http://www.softletter.com
            http://www.saasuniversity.com
            Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
            Read Excerpts from all 10 chapters at http://www.saasentrepreneur.com
            Author “Rule-Set: A Novel of a Quantum Future.”
            Just Released at http://www.rule-set.com.
            Blog at http://www.rule-set.com/blog

          • Gray says:

            I think what he is trying to say is before self publish authors defend Amazon so much and blame trad publish, they should understand what would happen in the future when Amazon has destroyed their competitors. You can bet it would happen because at some time in the future Amazon would need to increase their profits. They cannot operate at lost forever. Hence it is in the best interest for self publish authors for both sides to restrain each others.

    • John O'Donnell says:

      How is that possible? Amazon never stopped selling books, they only stopped pre-orders and stopped stocking warehouses with piles of copies that ‘ might’ sell. If your sales are down 60%, Amazon must have been selling 90% of your books. Let us know the name of your book, how can we help sales if you don’t post your book or name? Why would we believe you?

      • Steven Zacharius says:

        Amazon sells over 90% of the print books that they inventory with most traditional publishers. It isn’t a matter of stopping stocking the warehouse with books that don’t sell. That has never been an issue with Amazon. They order what they expect to sell and if need be they can get books from a publisher in a few days or from a book jobber the next day.

  22. Great post, Hugh. Really great. Tweeted it. May it spread far and wide.

  23. I used to believe the cure for misinformation was more information. After following this battle for some time, I’m no longer convinced. Part of the problem is inundation. Unless you are deeply invested in the topic, your incentive to wrestle the truth from the fiction is pretty low–there are just too many messages to consider. Eventually you tune it all out. Media literacy and critical thinking skills get overwhelmed. As a result, instead of critically evaluating the data, the tendency is to pick a side and gravitate toward the media messages that support it. Thus, if you have an inkling Amazon has too big a market share, you believe Hachette’s hype. If you believe legacy publishing gives authors a raw deal, you believe Amazon. If you are a fan of Colbert, you presume he’s got the inside scoop and back him without carefully considering what he says and what his own personal stake in the argument might be. The same goes with Douglas Preston. Please, people. Evaluate these messages. Consider what the speakers have to gain by taking a side. If you’re going to take a side, make sure your reasons for doing so are well-supported. That’s why I always come back to this blog. Of all the messages I’ve seen on this, Hugh’s strike me as the least self-serving and most carefully considered. While that doesn’t always make him right, at least he’s done his homework.

  24. When coupled with Lincoln Child, Preston is one of my favorite authors. However, when his latest book comes out and it’s over ten bucks, I wait. Only once have I ever paid over ten bucks for an eBook, and if I can avoid it, I won’t do it again. Those $14.99 books will not get my money.
    I wonder why the bigger publishing houses feel they have to charge so much for eBooks? Smaller publishers like mine charge a lot less. Are we paying for the name?

    • Are we paying for the name? Sort of. We’re paying for the Manhattan rent, the tradition of doing business over hyper-expensive lunches, the needless chain of middlemen, the antiquated and wasteful offset printing/shipping/return distribution methods, and of course the inflated salaries of the guys at the top of the business, who do next to nothing to impact the success of the books they publish, except for pinioning good editors with ridiculous acquisitions requirements and impeding authors’ ability to publish more books with short-sighted contracts.

      So yeah, we pay for the name, because these outmoded business practices are all tied up in the cache of these labels.

      • Steven Zacharius says:

        This is a ludicrous comment. Publishing has never been a high paying business. People go into publishing because they love books. Your comments about hyper expensive lunches and inflated salaries at the top is just absolute nonsense.

        • Tom Maddox says:

          High pay is relative.

          I am guessing that a low-level new hire at one of the big five publishing offices in NY probably makes more than I do a in smaller Midwest town after 20 years of IT work.

        • Terri says:

          Steve – I always enjoy when you enter a conversation, it adds balance, but telling people that their thoughts on a subject are “ludicrous” doesn’t add anything. You disagree and have your own business experience to back it up. But it’s not coming from Mount Olympus. Others may or may not agree.

          When someone does that to women, it is called mansplaining. Don’t publishersplain. It weakens your argument.

          And part of the bad taste of this issue is that writers are not getting a share of the higher profits of ebooks. Hachette’s own stockholder presentation showed that. My opinion is that if I am paying a bloated price for a trad pub book and the profits are going into the maw of the mothership of a multi-national corporation, instead of to the writer, then I will buy indie except for the very small list of writers (some of them yours) that I support because I consider them friends.

  25. C. Behrens says:

    Wondering where all this leaves someone like me, who has self-published with Xlibris. My ebook is currently at $3.99. I hate that my hardcover is high 20′s and paperback is high teens. They have a set your own price option, but not worth it as they will only reduce it like 2 bucks for either one.

    I hope this works out for everyone, especially us Indie’s!

    Thanks for keeping us posted.

  26. If we want to say a price is fair or unfair, then we need some standard against which to measure the price.

    What is the standard being used where $9.99 is fair, but $14.99 is unfair?

    How about $7.63? Is that more fair than $9.99? How do we know? What is the standard?

    If I post a new eBook on Amazon tomorrow morning at $100, is that fair? It’s way more than both $9.99 and $14.99. Is anyone harmed by my price? Who? How?

    • Publishers and their advisors have made no secret that high ebook prices are an attempt to protect the print industry. This is why they can’t be trusted to dictate price. They don’t have the best interest of the product in mind.

      It’s also why I am even bothering to advocate on this issue. Writers sign with publishers with the hope that the publisher has their best interests at heart. They often don’t. High prices for e-books is one of those cases.

      A debut author with a $12.99 or higher ebook is doomed. If the publisher can’t be trusted to do what is right for the author, they need someone else to advocate for them. They can’t advocate for themselves, or they’ll be dropped in a skinny minute. The reason self-published authors can fight for better contracts and terms is because we aren’t beholden to publishers.

      People like Stevie Z, below, probably think this advocacy comes from being denied access to publishing’s hallowed halls. Nothing could be further from the truth. I got a deal with a publisher after two weeks of querying. Since then, I’ve done nothing but reject offers from publishers. I don’t have any anger of rejection; I have disappointment over terms. Seeing the contracts that authors are signing these days makes me want to speak up.

      • I wouldn’t dispute any of that. My concern is there are no fair prices. If a book is priced too high, then consumers choose not to buy it. If it is at or below what they are willing to pay, then they buy it. The market handles all that just fine. We see it with a zillion other products.

        The argument that a price is not fair just isn’t very strong. When both sides say their favorite price is fair, and nobody knows what the standard of fairness is, then it might be time to dump the idea.

        That simply means one needs better arguments. One might start with the idea that society is better off when it has abundant and available goods at low prices.

  27. Steven Zacharius says:

    How can you determine what the proper price for the ebook should be? It’s fine to be $9.99 if you don’t have any overhead, manufacturing costs or any advance to be paid….but how can you say that the ebook should be 9.99 versus 14.99? Why shouldn’t it be the publisher’s choice? Do you dictate to other companies what the price of their products should be?

    I agree that an ebook should be less expensive than a print book, but the only difference in costs are the manufacturing, warehousing and shipping primarily. If a publisher is still paying out an advance and they now have less print copies to amortize that advance over; you can’t just discount the ebook price to a low level. If this were the case the publisher would never have any chance to recover the advance investment they made unless the level of advances were to drop significantly.

    This is why digital only imprints do pay higher royalty rates than the standard 25% of net receipts. Those books do not have the same cost structure.

    • Matt says:

      Of course we can determine what the proper price for an ebook should be! If a paperback costs $8.99 then the ebook should be cheaper. So yes in that case I can say $14.99 is too much, as can everyone else. Easy! That wasn’t so hard.

      Here’s an example: http://www.amazon.com/dp/0385743564
      The top fantasy author Brandon Sanderson. This book of his is priced at $8.99 for paperback and $15.96 for ebook…

      This is a disgrace. And you guessed it, it’s published by Hachette. If you take out manufacturing costs, warehousing, shipping, and let’s not forget returns… then the ebook should cost around $6.99.

      No one is saying publishers shouldn’t recoup their costs, or make a profit like any other normal business. But publishers are pricing ebooks high for 2 reasons:

      1. Their business strategy is to overprice a different format to try and drive readers toward print. Which I’d say is not a very good strategy. Maybe it would be 5-6 years ago, but that horse has bolted. Times they are a changing.
      2. The higher margin on ebooks is offsetting the lower revenue publishers are making from a shrinking print market. They know by lowering ebook prices to a reasonable (and logical) level they’ll make more money from that format, but at the expense of hastening the slide of the print market.

      What we can say with certainty is that an ebook should cost less than a print book. You agree. So do self published authors. So do most traditionally published authors. So do retailers. So does everyone in the entire world EXCEPT the big publishers.

    • Mir says:

      When the retailer in question sells 60%+ of a suppliers ebooks, then I think the retailer can make demands. Period. And the innovator that made these profits possible should get a reward.

      If Hachette wants 14.99 ebooks, then they can sell them for 14.99 at other retailers or create a user-friendly site to do so. But Amazon has a right to say: “This is what we want to sell it at. Take or leave.” Can Hachette leave? If it can, it should and do what it wants. If it can’t, then bend over and take it until they find a way to sell it the way they want at the price they want. Necessity is the mother of invention. Amazon invented. Now , maybe trad pubs needs to get on the innovation bandwagon and beat Amazon at its inno-game.

      • Gray says:

        Yes, I agree with you. Hachette should make their decisions. Whether they want to continue depend on Amazon or make their own channels. The quicker they decide, the quicker all involved can move on. For me, I like Hachette to make their own channels. And I applaud HarperCollins trying to make their own website to sell ebooks not only limited to US residents, but also international readers. More choice is always good for customers.

    • “I agree that an ebook should be less expensive than a print book, but the only difference in costs are the manufacturing, warehousing and shipping primarily.”

      Why should it be less? Why shouldn’t it be the publisher’s choice? Suppose someone prices an eBook $10 more than the hardback. So what? Consumers will decide what they want.

      Likewise, why shouldn’t retail price be the retailer’s choice?

      It seems we have a lot of people telling everyone else what prices should be. Perhaps they should just price their own goods, and get out of everyone else’s way.

      • Nirmala says:

        Hachette is trying to regain the right to set the retail price and force Amazon to price accordingly, just like they did when they first made the sift to agency pricing. After the court case, they cannot have any contracts that prevent discounting by retailers for I think 2 years. And that time is running out, so Hachette is probably stalling so they can ask for a no-discounting contract again.

  28. Mackay Bell says:

    There is a key point that is being ignored by those arguing that Hachette should be allowed to charge what they want because it’s a free market.

    It’s the Hachette/Big Publishing side that is threatening government intervention. They keep hinting the government should step in and force Amazon to make a deal.

    That is not a free market.

    Had the issue of government intervention not been floated early on, and if this had remained a private business dispute, I doubt anyone in self-publshing would have noticed or cared. But when anti-Amazon proxies argue that Amazon should be forced to price books higher for Hachette (and who else?), it makes a lot of sense that self-publishers might get concerned about where this is heading.

    And push back.

    • Avatar of Rick Chapman Rick Chapman says:

      But Amazon is not being “forced” to price anything.

      Hachette is pricing its books. What is wrong with this?

      If their pricing decisions are wrong, the market will punish them fairly swiftly. Ideally, Amazon should function as an open, level playing field. All rules apply equally to all players, price whatever you want, here’s the royalty schedule.

      +++ Here’s an example: http://www.amazon.com/dp/0385743564
      The top fantasy author Brandon Sanderson. This book of his is priced at $8.99 for paperback and $15.96 for ebook…

      This is a disgrace. And you guessed it, it’s published by Hachette. If you take out manufacturing costs, warehousing, shipping, and let’s not forget returns… then the ebook should cost around $6.99.+++

      Gosh, I have to agree, that seems ass backwards to me. But why is it the business of Amazon to attempt to force Hachette not to be stupid?

      Let them be stupid. I don’t think people are, and I suspect sales of the e-book will be poor.

      But please remember that YOU are supplier as well. And your channel wants to dictate your pricing decisions.

      Do you want to control your pricing so as to maximize your revenue or do you want to allow your channel to control pricing so as to maximize THEIR revenue.

      That’s what this fight is all about.

      Rick Chapman
      http://www.softletter.com
      http://www.saasuniversity.com
      Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
      Read Excerpts from all 10 chapters at http://www.saasentrepreneur.com
      Author “Rule-Set: A Novel of a Quantum Future.” Just Released

      • Joseph Ratliff says:

        I like what you point to here Rick:

        “Do you want to control your pricing so as to maximize your revenue or do you want to allow your channel to control pricing so as to maximize THEIR revenue.

        That’s what this fight is all about.”

        Because you’re right.

        But, Amazon established what I would call a “high-value” distribution channel here. They have done a good job, in the interest of their profits of course, to bring an author’s book close to the reader.

        Then, they add good (not perfect, good) customer service and fast shipping to the mix. They top that off with a good price for the reader, and they have dominated using that strategy for years now.

        They maintain that strategy through the digital channel (good service, good price, and obviously, instant delivery).

        The reader (customer) is going to find it hard to give that up unless there is another competitor who can step up and establish more value for their dollar.

        Yeah, there are competitors, and I don’t think Amazon is going to head into “monopoly” territory anytime soon (they are a retailer, not just a bookstore, or Wal-Mart might fit the same bill).

        But those competitors need to focus on differentiation, not direct competition.

        I buy books from them because they are books, but if another bookstore added value in some way (free ebook, wait… free audio… wait… ) I would shop with them instead where appropriate.

        I think Amazon, like Wal-Mart is “owning” the section of the market that is buying on price, because there isn’t a competitor that has figured out the value yet.

        I have a feeling there will be in time though.

        Because I don’t buy anything that Wal-Mart sells, because in each category, another competitor has figured out something that gets me to buy from them instead. :)

        • Avatar of Rick Chapman Rick Chapman says:

          +++ Because you’re right. +++

          Yes, I am. I have written extensively about distribution and reseller channels. And work with people who actively engage with Amazon, WalMart, Best Buy, et al in different markets. Some books, some software, some hardware. I have a lot of knowledge about this area. Actually, sometimes more than I care to have. Suppliers and channels are constantly at each other’s throats and the arguments and disputes aren’t that new or fresh.

          +++ But, Amazon established what I would call a “high-value” distribution channel here. +++

          No argument there. So did Ingram. Macy’s. B&N. Computerworld. And so on. People have made fortunes building channels. People have lost them. A very important part of American business.

          +++ Then, they add good (not perfect, good) customer service and fast shipping to the mix.+++

          Are you talking about digital goods? Because your statement is not really appropriate to this class of purchases. What meaning does fast shipping have with a digital delivery? Unless their servers are down.

          Again, Amazon is NOT attempting to control the existing paper book pricing model. They wish to control the digital book pricing model to their benefit.

          One of the smartest things Amazon has done is call their margin requirements a “royalty.” It obscures the issue. Even Hugh has not quite realized this. Amazon is NOT A PUBLISHER! They are a channel. They provide none of the services a publisher provides. You can argue about the value of these services, but Amazon doesn’t provide them, nor will it. From the standpoint of editing, copyeditng, illustrations, etc, none of these are part of your “royalty.”

          They are a channel. Their use of the term “royalty” is misleading. Their function, as a business, is to extract margin from you.

          That’s what channels do.

          Amazon=channel, not publisher. 70/30 is the amount of margin they are extracting from you; it is NOT royalties.

          Once Amazon thinks the coast is clear, it will extract MORE margin from you. To Amazon, margins are God. It will not ever provide publishing services. It will be very hard for your bottom line to endure the packs and spifs the Amazon channel will attempt to pry out of you. And if you do find an effective e-publisher, THEY will pay the Amazon margins and in addition extract MORE fees for you in return for their publishing services.

          This is something few people here understand. That is why, before taking sides in this fight, you need to understand what is going on here. Your best interests are not the focus of this fight. The best interests of readers are not the focus. For Amazon, it’s a battle about margins and building them. For Hachette, it’s about maintaining pricing control over their product lines. You, as the supplier, are at the bottom of the worry pile.

          +++ The reader (customer) is going to find it hard to give that up unless there is another competitor who can step up and establish more value for their dollar. +++

          I would suggest that you, the supplier, had better have some control over the process of establishing value. I notice that no one has addressed my observation on the insanity of giving 65 margin points to a reseller!. It’s been crickets.

          +++ Yeah, there are competitors, and I don’t think Amazon is going to head into “monopoly” territory anytime soon (they are a retailer, not just a bookstore, or Wal-Mart might fit the same bill). +++

          Amazon is already under federal scrutiny. The US has lots of lawyers with lots of time on their hands. Amazon’s grip on digital publishing is growing and may already be a technical monopoly.

          This does not mean the feds are going to come after them, but believe me, Hachette knew what it was doing when it starting crying anti-trust to Uncle Sam.

          As I said, channels always want to drive prices down. I’ll assume you’re a supplier (an author). Lower prices aren’t always in your best interests and it is possible for an overly powerful supplier or channel element to wreak havoc. Eventually, competitive pressures will force a correction, but in the meantime you can be squashed like a bug.

          Rick Chapman
          http://www.softletter.com
          http://www.saasuniversity.com
          Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
          Read Excerpts from all 10 chapters at http://www.saasentrepreneur.com
          Author “Rule-Set: A Novel of a Quantum Future.” Just Released at http://www.rule-set.com. Blog at http://www.rule-set.com/blog

          • Alexvdl says:

            Amazon IS a publisher. They have many publishing imprints. (http://apub.com/)

            They are also a channel for those willing to sell their books directly without going through a traditional style publishing imprint without a contract. Hugh Howey knows this, and has discussed it in the past. Though not traditional royalties, that’s how people tend to refer to them.

      • Hachette is pricing its books. What is wrong with this?

        There is nothing wrong with Hachette pricing its books. But Hachette wants to price its own goods, then tell the retailer what the retail price is. It wants to set both prices.

        So, there is nothing wrong with Hachette pricing its own goods, and there is nothing wrong with Amazon pricing its own goods.

        Free markets work both ways. We have to accept that.

  29. Mir says:

    I certainly hope Hachette loses these negotiations, and a good deal of that is that I think the behemoth that helped create the ebook market that brings Hachette so much $$ should get a bigger cut of the ebook pie. They deserve it. Period. Hachette didn’t do this; Amazon did. The innovator is worthy of it’s reward. :D

    Big 5 books at 14.99: I don’t care. I really don’t. I won’t buy ebooks at that price. Even when it’s my fave authors, I balk. So, let the trad pubs keep overpricing. Better for indies.

    Where I care is that trad authors get bigger ebook royalties. They should demand it. ALL OF THEM. Right now, they should be asking for at least 50%. Demanding it. If Hachette wants 14.99 ebooks or 11.99 ebooks, fine. Give the authors some of the juicy pie.

    I’m pro-author. I’m pro-Amazon in this fight (I might be anti-Amazon on another matter). Hachette, pfft. I can live without Hachette books. So many more out there….

  30. […] Zacharius, a respected CEO for Kensington Publishing, responded to my comment from this post on Hugh Howey’s […]

  31. If you can’t convince them with reason, then slaughter them in the market.

    “Hey everyone! See how that ebook is priced at $15? Well, mine is only $4.99! It’s a bargain and a much better read!”

    →I← That’s me, myself…set the price of my ebook. I chose my price based on a number of factors. First, I felt that an ebook shouldn’t cost more than 70% the cost of the least expensive print version of the book because once the pre-production is done, there are no further production costs for an ebook. Second, I considered what I could afford to pay for a book when I was a kid. My money came from allowance I got paid for mowing the lawn. Then I allowed for inflation costs, and when that price met the price from the first point, I had my price: $4.99. That price also gave me flexibility to set a sale of 20% off at $3.99 and still make a decent profit from the sale.

    If I don’t like the way a retailer is handling my product or they begin to dictate to me what they think I should be paid for each sale, I can always communicate my displeasure by discontinuing my relationship with that retailer. I can always sell my books on my own website if necessary.

    One writer taking a hike might not make much of a dent. Sure, I can be replaced by another writer fairly easily. But will that writer supply the same quality of writing? What if hundreds or even thousands agreed with me? In truth, all I would need is the top 100 bestselling authors to agree—that would be an enormous financial hit if they all walked out at the same time.

    Remember, as an independent author, if you don’t like their rules, you don’t have to play their game.

    • Avatar of Rick Chapman Rick Chapman says:

      +++ There is nothing wrong with Hachette pricing its books. But Hachette wants to price its own goods, then tell the retailer what the retail price is. It wants to set both prices.+++

      No, it does not. Hachette is not attempting to dictate markups on the items it sells into Amazon. Again, you don’t understand how channels work.

      The opposite is occurring. Amazon is attempting to dictate a ceiling on what it will pay publishers (the first channel tier) and offering economically ridiculous terms in retribution if you do not toe the line. Again, it is not economically feasible to pay 65 margin points to the channel. (Amazon is NOT a publisher!)

      The reason it is attempting this gambit is it believes it has enough monopoly power in the industry to seize control of the pricing structure in digital books. It would not attempt this if it had, say, 20% marketshare. But Amazon is well over 50% and its share is increasing.

      Rick Chapman
      http://www.softletter.com
      http://www.saasuniversity.com
      Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
      Read Excerpts from all 10 chapters at http://www.saasentrepreneur.com
      Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
      Book reviews and observations up at http://www.rule-set.com/blog

      • Nirmala says:

        The whole point of the collusion several years ago was that the publishers got to tell Amazon the retail price. It was not actually about agency pricing which is worse for the publisher anyways. It was to gain control of the retail price, and that is most likely what Hachette wants to return to.

        See this old post:
        http://jakonrath.blogspot.com/2012/04/agency-model-sucks.html

      • No, it does not. Hachette is not attempting to dictate markups on the items it sells into Amazon. Again, you don’t understand how channels work.

        Channels? What channels? Hachette wants to set Amazon’s retail price. That’s what it attempted to do in the collusion case, That’s what it publicly advocates, and that’s what its supporters advocate so our literary culture isn’t devalued. That’s what Preston and Patterson campaign for. That’s what the Authors Guild supported.

        The reason it is attempting this gambit is it believes it has enough monopoly power in the industry to seize control of the pricing structure in digital books.

        Of course it wants control of retail prices. That’s normal for retailers in any line. Hachette disagrees and wants to set Amazon’s retail price.

        • Avatar of Rick Chapman Rick Chapman says:

          +++ Channels? What channels? +++

          If you don’t understand the concept of distribution channels, I’m not gong to try to teach you about them. There are many sources of information. If you want, you can pick up a copy of my “SaaS Entrepreneur: The Definitive Guide to Succeeding in Your Cloud Application Business.” Self published 2012; working on the second edition. It has a definition of channels as they apply to the software industry, but you’d have to read my earlier works to really dig into the topic as the software industry’s channel structure has morphed greatly. When I wrote the SPA’s “US Software Industry Channel Guide” in the late 80s and 90s (three editions), the software industry far more resembled the book market. It was a big, boring book of interest only to people interested in channel systems and how they operate.

          +++ Hachette wants to set Amazon’s retail price. +++

          No, it doesn’t. Not a disputable point. Amazon wants to put a ceiling on Hachette’s upper pricing boundary.

          Again, not a disputable point.

          +++ That’s what it attempted to do in the collusion case, +++

          And they were caught. Price fixing is not a smart thing to do, especially in highly visible markets. But the US government is not that enthusiastic about channel players trying to fix price points, either. Particularly when you are a monopoly.

          +++ Of course it wants control of retail prices. That’s normal for retailers in any line. +++

          Amazon is able to charge whatever markups it wants. What Amazon is attempting to do is dictate what suppliers can charge for their goods. This is not disputable. This is the reason behind the ridiculous 35% (you) 65% (them) margin grab. Anyone who understands how channels operate knows what’s going on. And anyone with channel experience knows how dubious this is.

          I’m going to step out of this thread at this time as I’ve said what I need to say and I don’t find discussing distribution channels all that interesting. You are welcome to believe whatever you wish and take the advice of your own council.

          I will put up, when I have the time, put up a quick breakdown of how the Amazon channel model operates, supply some numbers, do some quick analysis and build on a few of the points I’ve made here. They are points made based on real world experience and extensive research. Do with them what you will.

          Rick Chapman
          http://www.softletter.com
          http://www.saasuniversity.com
          Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
          Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
          Book reviews and observations up at http://www.rule-set.com/blog

          • “If you don’t understand the concept of distribution channels, I’m not gong to try to teach you about them.

            Thank Godd for that. It’s tedious enough. We don’t need lessons on channels. Economics works just fine without them. Not a disputable point.

            No, it doesn’t. Not a disputable point. Amazon wants to put a ceiling on Hachette’s upper pricing boundary.

            The court found that is exactly what they wanted. Their supporters advocate for it today. Not a disputable point.

            But the US government is not that enthusiastic about channel players trying to fix price points, either. Particularly when you are a monopoly.

            The US covernmment doesn’t give a hoot about channels or people who play in them. Not a disputable point. And Amazon is not a monopoly. It doesn’t control supply, competitors are free to enter the market, and it’s market share is not at a monoploy level. Not a disputable point.

            Amazon is able to charge whatever markups it wants.

            Amazon intends to charge whatever it wants. Markup, mark down. Whatever. Not a disiputable point.

            I’m going to step out of this thread at this time as I’ve said what I need to say and I don’t find discussing distribution channels all that interesting.

            I don’t find them intersting either since they have nothing to do with the economic question. Not a disputable point.

          • Nirmala says:

            There was nothing illegal per se about the contracts the publishers had with Amazon or that the publishers were able to set the retail price under those contracts (Apple was doing business under an agency model for years before they got into ebooks and continues to for its app and music sales). What was illegal is that the publishers colluded to get the same terms with Amazon and Apple. Competitors cannot do that. But it is clear that they did the illegal collusion to control retail price, and most likely that is what Hachette wants in this fight. Sure they are also probably arguing about margins, but the issue of who gets to set the retail price is probably the bigger sticking point.

  32. Avatar of Rick Chapman Rick Chapman says:

    +++ If I don’t like the way a retailer is handling my product or they begin to dictate to me what they think I should be paid for each sale, I can always communicate my displeasure by discontinuing my relationship with that retailer. I can always sell my books on my own website if necessary.+++

    Yes, you can, but many many many people will want to buy it on Amazon.

    Do you think this is a viable strategy for an indie publisher? Is anyone out there succeeding in fiction markets by bypassing Amazon?

    I would love to hear from you.

    Rick Chapman
    http://www.softletter.com
    http://www.saasuniversity.com
    Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
    Read Excerpts from all 10 chapters at http://www.saasentrepreneur.com
    Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
    Book reviews and observations up at http://www.rule-set.com/blog

    • Give J.K. Rowling a call. Though even quicker than that, just click on any Harry Potter ebook link on Amazon, or any other ebook retailer for that matter, and watch what happens.

      I have no illusions about the market presence of Amazon and the effect it has on sales. My own sales numbers are quite clear on the fact that the bulk of my sales come through Amazon. I’m clearly stuck in the minnow trap. Breaking from a major retail channel would be quite difficult and dangerous to sales.

      Still, I feel any author with several thousand loyal fans could make a potentially successful break from the retail channels. It does bring with it a whole new set of headaches to deal with, such as online shop functions and promotion.

      The key danger that any of the ebook retailers face is if they squeeze the market too much, they open the door for an upstart to unseat them. One of the best examples of that is what Facebook did to MySpace. The potential is there, even now. All one has to do is poll the independent authors and ask them what they like and don’t like about one retailer or another and then create an environment that answers that.

      Instead of a 30% cut of the proceeds, what if the new site asked only 20% of the proceeds? Allowed authors to set their own prices and gave them tools to easily schedule and drop that price for sales or set a title or two as a loss leader? Gave them them the ability to post the pre-sale of their upcoming novel? With enough venture capital behind them to get it started, someone could do just that and potentially scoop the other retailers by catering to the needs of the authors and making purchasing easy for the readers.

      • Avatar of Rick Chapman Rick Chapman says:

        +++ Give J.K. Rowling a call. Though even quicker than that, just click on any Harry Potter ebook link on Amazon, or any other ebook retailer for that matter, and watch what happens. +++

        Verrryyy interesting! Thanks for pointing that out.

        But I suspect you have be someone who’s generated $1B+ (and still counting) on a franchise to possess the type of clout that puts you out of reach of Jeff Bezo’s margin clutching grasp. I don’t think you or I can do it. Let’s hope one day we can!

        +++ The key danger that any of the ebook retailers face is if they squeeze the market too much, they open the door for an upstart to unseat them. One of the best examples of that is what Facebook did to MySpace. The potential is there, even now.+++

        Maybe. Once a business model is established and major players emerge, they tend to be long lived. FB caught MS as the business model for social platforms was emerging and surpassed them. However, the social platform market has stabilized. Right now, there are three major platforms and a whole host of wannabees, including Google+. Even Google, with a great deal of resources at hand, hasn’t been able to crack the FB/TW/LI axis.

        Where things open up is when a model is cracked by societal and technology changes. This is happening in books right now. We are living in “exciting times.” The old paper model stabilized in the 19th century and is now dying in the early 21st. I’m not sure how it’s going to end up, but I’m not enthusiastic about a channel entity being able to grab 65% precious margin points in stocking fees. And that’s what that 30% and 65% are. Not “royalties.” Stocking fees.

        I don’t want to get into a discussion of margin issues too much right now, but I can tell you a 30% margin is a license to print money in most channels. Amazon’s overhead is very low on a per unit basis and, as I’ve pointed out, you pay the transmission costs already.

        Now, the company does have real overhead. Servers, support personnel, server rooms, backup, security, programming, etc. But this is tiny when compared to the costs of maintaining a pick, pack and ship operation. There’s a reason Amazon wants to dominate E-books. For a channel, E-books are margin heaven.

        Now, here is what Amazon will attempt to do. It will attempt to recover all its overhead via MDF programs. As they are introduced, if you study them, they will all track back to a particular part of their operation they want you, the supplier, to pay for. There may be a “storage” fee (the servers). An “admin” fee (that’s programming and support). A “marketing funds development” program (that’s when you’ll start to pay for things like free giveaways, e-coupons, enhanced placement, etc.) A “data analysis” fee (that will cover your reporting on sales). Etc., etc., etc. The imagination of the channel when it comes to MDF is limitless.

        +++ Instead of a 30% cut of the proceeds, what if the new site asked only 20% of the proceeds? Allowed authors to set their own prices and gave them tools to easily schedule and drop that price for sales or set a title or two as a loss leader? Gave them them the ability to post the pre-sale of their upcoming novel? With enough venture capital behind them to get it started, someone could do just that and potentially scoop the other retailers by catering to the needs of the authors and making purchasing easy for the readers. +++

        Let us hope this is how the industry proceeds. The more competition, the better. Keeps everyone honest. The publishers were colluding and deserved their punishment. Amazon is now throwing its weight around and hurting a raft of niche publishers with that silly 65% stocking fee.

        As I said, absent competition, they’re both Malificent. Neither has the best interests of you, the supplier, at heart. They have their best interests at heart. They’re businesses and that’s what businesses do.

        Rick Chapman
        http://www.softletter.com
        http://www.saasuniversity.com
        Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
        Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
        Book reviews and observations up at http://www.rule-set.com/blog

        • MC Planck says:

          I went to Amazon and clicked on a Harry Potter book. Then I clicked on the 1 star reviews. The first page was all about how difficult it was to buy the book from the Pottermore store – they loved the book, but they gave the delivery channel a 1 start review.

          So… that’s pretty interesting too.

  33. Avatar of Rick Chapman Rick Chapman says:

    +++ Amazon probably also wants Hachette to pay more for “co-op,” which is like advertising money that publishers pay to retailers so that the retailers will spotlight a book on their website or in their store. Hachette, naturally, doesn’t want to pay more. +++

    I’m doing a bit of research on the H vs. A dispute for an article nn http://www.rule-set.com/blog and picked out this little tidbit to share. Few here understand “co-op” and “MDF,” but as a channel “partner,” you will one day know more.

    Oh, yes.

    Rick Chapman
    http://www.softletter.com
    http://www.saasuniversity.com
    Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
    Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
    Book reviews and observations up at http://www.rule-set.com/blog

    • Matt says:

      I’m pretty sure most people here know what co-op is, and an MDF is a co-op fund by another name.

      • Avatar of Rick Chapman Rick Chapman says:

        I tend to doubt it. Unless you were a fairly big name in conventional publishing, your publisher wouldn’t offer you co-op opportunities.

        I think hardly anyone here had heard the term MDF as it’s an inside term used by channel people. Also, co-op is just another form of MDF program.

        The interesting thing is that under the conventional publishing model, writers (suppliers) rarely dealt with the channel on a business basis. You had to be a big name before you were even allowed near that aspect of the business.

        As I participated in this discussion, I realized how much that is going to change. Every indie, unless they only sell directly, will now need to deal with the channel. Amazon, Smashwords, Oyster, etc. All channels seeking margins. (Not royalties.)

        Like it or not, over time many many many of you will learn about channels. You won’t have a choice.

        Best of luck! It will be fascinating to compare this discussion with one on a related topic five years from now. I’m going to save some of the most interesting posts for just such a future analysis.

        Now, I REALLY must stop posting in this thread! I’ve just finished The Beauty by Aliya Whiteley. Reading it was somewhat similar to drinking absinthe while smoking opium from a hookah. I’m going to write a review and I don’t have time to do that and go further into channels.

        Rick Chapman
        http://www.softletter.com
        http://www.saasuniversity.com
        Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
        Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
        Book reviews and observations up at http://www.rule-set.com/blog

  34. margaret rainforth says:

    Hugh, I just tried to email Preston through your link; here’s what I received:

    Delivery to the following recipient failed permanently:

    //djpreston@me.com

    Technical details of permanent failure:
    Google tried to deliver your message, but it was rejected by the server for the recipient domain me.com by mx1.mail.icloud.com. [17.158.8.67].

    The error that the other server returned was:
    550 5.1.1 unknown or illegal alias: //djpreston@me.com

  35. Avatar of Rick Chapman Rick Chapman says:

    +++ We don’t need lessons on channels.+++

    We? Are you perhaps a collective? A formic? Or have the Borg finally landed?

    Sci-fi types tend to hang out here. It would be appropriate if you unveiled yourself here first!

    (Just kidding. I think.)

    +++ The US covernmment doesn’t give a hoot about channels or people who play in them. Not a disputable point. +++

    Hmmmm. So that’s why the feds made the movie studios (the suppliers) divest themselves of their theaters (the distribution channel).

    I’ll let everyone decide for themselves if they found what I said interesting. You certainly didn’t!

    Not a disputable point.

    Best of luck!

    Rick Chapman
    http://www.softletter.com
    http://www.saasuniversity.com
    Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
    Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
    Book reviews and observations up at http://www.rule-set.com/blog

  36. Avatar of Rick Chapman Rick Chapman says:

    +++ Amazon IS a publisher. They have many publishing imprints. (http://apub.com/) +++

    That is an interesting point!

    Amazon is not the only major distributor or retailer to also play in the content or supplier game. However, these efforts usually wither or are spun off.

    There are legal issues. The more vertically integrated you become, from supplier through to distribution, the more the feds keep an eye on you in regards to anti-trust concerns.

    There are internal culture issues. Suppliers and channels have different mindsets, They look at the world differently. They usually don’t get along.

    There are conflict of interest issues. People will always be suspicious that Amazon is favoring their in-house content over external sources. Nothing Amazon will say will convince them this is not taking place. Refer back to my first point.

    +++ They are also a channel for those willing to sell their books directly without going through a traditional style publishing imprint without a contract. Hugh Howey knows this, and has discussed it in the past. Though not traditional royalties, that’s how people tend to refer to them. +++

    I strongly recommend you stop doing that. Margins aren’t royalties. Amazon is providing none of the services associated with publishers. You are paying them to obtain access to their real and virtual shelves. They will try to extract more margin, over time, via MDF programs.

    You are not paying royalties. You are handing over margin. If you do not learn this, you will hurt yourself in the pocketbook.

    Best of luck!

    Rick Chapman
    http://www.softletter.com
    http://www.saasuniversity.com
    Author “SaaS Entrepreneur: The Definitive Guide to Success in Your Cloud Application Business”
    Author “Rule-Set: A Novel of a Quantum Future.”www.rule-set.com
    Book reviews and observations up at http://www.rule-set.com/blog

  37. Nirmala says:

    Amazon just publicly posted their objectives in the negotiations with Hachette. It is all about lower prices for ebooks for them:
    http://www.amazon.com/forum/kindle/ref=cm_cd_tfp_ef_tft_tp?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdThread=Tx3J0JKSSUIRCMT

  38. […] links: how authors are not united – and if you’d like to see how those talkative best sellers see us (or even mid-list […]

  39. […] Hugh Howey wrote an article on author unity regarding this dispute. […]

  40. […] Authors United? I Wish it Were So. […]

  41. Paul says:

    Amazon is trying to take the profit out of traditional publishing, which would kill the publishers. The problem is that would kill the curation that comes with Hachette, Random House, etc. My experience is that Amazon published authors range from mediocre (Hugh Howey, and a few others) to horrible. Sorry, but I prefer better than that. I am boycotting Amazon until they give this up.

  42. […] Authors United? I Wish it Were So.Hugh Howey | July 23, 2014 […]

  43. […] Authors United? I Wish it Were So.Hugh Howey | July 23, 2014 […]

  44. Doni Tamblyn says:

    It is not that difficult to determine optimal price points — i.e., the highest price that will still attract the most buyers, resulting in the highest ROI. The best price point benefits everyone involved, or should. So why is this fight even taking place? It seems to be because Amazon is seeking NOT the best balance between attractive pricing and high sales, but something else. And that something else seems to be a monopoly for Amazon.

    Let’s understand that low price is not *per se* a good thing. We’re currently getting extremely shoddy products from China at extremely low prices; meanwhile, Chinese workers live and work in terrible conditions. There are many factors to take into account when setting price, and Amazon does not give signs of taking many of them into consideration. They should read one of the books they sell:

    http://www.amazon.com/Cheap-High-Cost-Discount-Culture/dp/0143117637/ref=sr_1_1?s=books&ie=UTF8&qid=1407758938&sr=1-1&keywords=cheap+the+high+cost+of+discount+culture

  45. This post is worth everyone’s attention. Where can I find out more?

  46. Heather Lovatt says:

    The thing that really amazes me about this conversation that you would think it ‘costs’ nothing to write a book. I didn’t realize part of the issue of a higher priced ebook was to get readers to read hardcover books instead of ebooks.

    But in the end, I repeat my first point. Funny, how we never ‘price the writing’. It’s always about the medium. Amazon wants to control it; the trads do too. Crazy.

    Tak.

    Heather

  47. […] And the battle over ebook pricing continues. Here’s one […]

  48. football says:

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