Sigh. Writers and publishers are again up in arms about Amazon, this time because of a letter sent directly to thousands of self-published writers by the book behemoth, and repeated on a new Readers United website. Full text of the email below for non-KDP authors who are curious.
So here we are again. Amazon is correct, 100% so, in every major point they make. The comparison with paperback publishing is HUGELY relevant and the price elasticity is absolutely in line with every major consumer product that has transitioned to digital. And how have many writers and publishers responded? Basically by screaming…
FUCK YOU AMAZON!
Yeah Amazon, fuck you! Fuck you for being right! Again! What have Amazon ever done for books eh? Pioneered a postal delivery market publishers ignored? Yes ok, but what else? Invested millions in an ebook infrastructure publishers deliberately ignored? Fine, but what else? Opened up publishing to thousands of independent authors of all kinds, many of whom are making entire careers in digital sales with 70% royalties? Well, damn yes that’s pretty good I guess, but what else?
What else? Look people, there is no scenario where publishing isn’t utterly transformed by digital technology. Do you know what the real threat to book publishing is? Total and utter irrelevancy. If books aren’t present in the digital market places where people now buy music, films, tv shows, games and apps, they effectively cease to exist for the VAST MAJORITY OF PEOPLE. Remember record stores? Remember video rental stores? You’ll soon be remembering book shops as well, beyond a handful of well run independents in rich neighbourhoods. Where the hell do you expect people to see your books if not on Kindle, iBooks or Google Play? And in what possible universe are people going to pay $19.99 for an ebook when that pricing is waaaaaaaaay over the value of other digital media?
People are justifying this “FUCK YOU AMAZON” response by the “tone” of Amazon’s letter. Read and judge for yourself. It may be assertive, or it may be patronising. It’s still right.
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From: Kindle Direct Publishing
Subject: Important Kindle request
Dear KDP Author,
Just ahead of World War II, there was a radical invention that shook the foundations of book publishing. It was the paperback book. This was a time when movie tickets cost 10 or 20 cents, and books cost $2.50. The new paperback cost 25 cents – it was ten times cheaper. Readers loved the paperback and millions of copies were sold in just the first year.
With it being so inexpensive and with so many more people able to afford to buy and read books, you would think the literary establishment of the day would have celebrated the invention of the paperback, yes? Nope. Instead, they dug in and circled the wagons. They believed low cost paperbacks would destroy literary culture and harm the industry (not to mention their own bank accounts). Many bookstores refused to stock them, and the early paperback publishers had to use unconventional methods of distribution – places like newsstands and drugstores. The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.” Yes, George Orwell was suggesting collusion.
Well… history doesn’t repeat itself, but it does rhyme.
Fast forward to today, and it’s the e-book’s turn to be opposed by the literary establishment. Amazon and Hachette – a big US publisher and part of a $10 billion media conglomerate – are in the middle of a business dispute about e-books. We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive.
Perhaps channeling Orwell’s decades old suggestion, Hachette has already been caught illegally colluding with its competitors to raise e-book prices. So far those parties have paid $166 million in penalties and restitution. Colluding with its competitors to raise prices wasn’t only illegal, it was also highly disrespectful to Hachette’s readers.
The fact is many established incumbents in the industry have taken the position that lower e-book prices will “devalue books” and hurt “Arts and Letters.” They’re wrong. Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books. On the contrary, paperbacks ended up rejuvenating the book industry and making it stronger. The same will happen with e-books.
Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.
Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger.
But when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move. It was never in George Orwell’s interest to suppress paperback books – he was wrong about that.
And despite what some would have you believe, authors are not united on this issue. When the Authors Guild recently wrote on this, they titled their post: “Amazon-Hachette Debate Yields Diverse Opinions Among Authors” (the comments to this post are worth a read). A petition started by another group of authors and aimed at Hachette, titled “Stop Fighting Low Prices and Fair Wages,” garnered over 7,600 signatures. And there are myriad articles and posts, by authors and readers alike, supporting us in our effort to keep prices low and build a healthy reading culture. Author David Gaughran’s recent interview is another piece worth reading.
We recognize that writers reasonably want to be left out of a dispute between large companies. Some have suggested that we “just talk.” We tried that. Hachette spent three months stonewalling and only grudgingly began to even acknowledge our concerns when we took action to reduce sales of their titles in our store. Since then Amazon has made three separate offers to Hachette to take authors out of the middle. We first suggested that we (Amazon and Hachette) jointly make author royalties whole during the term of the dispute. Then we suggested that authors receive 100% of all sales of their titles until this dispute is resolved. Then we suggested that we would return to normal business operations if Amazon and Hachette’s normal share of revenue went to a literacy charity. But Hachette, and their parent company Lagardere, have quickly and repeatedly dismissed these offers even though e-books represent 1% of their revenues and they could easily agree to do so. They believe they get leverage from keeping their authors in the middle.
We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture. We’d like your help. Please email Hachette and copy us.
Hachette CEO, Michael Pietsch: Michael.Pietsch@hbgusa.com
Copy us at: readers-united@amazon.com
Please consider including these points:
– We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.
– Lowering e-book prices will help – not hurt – the reading culture, just like paperbacks did.
– Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.
– Especially if you’re an author yourself: Remind them that authors are not united on this issue.
Thanks for your support.
The Amazon Books Team
P.S. You can also find this letter at http://www.readersunited.com
Damien Walter 
Just in case we weren’t clear on where Bezos line in the sand was. Seriously, your blog, Damien, has entirely changed my perspective on what digital publishing means for the independent writer. Expect collateral damage between these two juggernauts, though who and what it will be, I have no idea.
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Thank you. There’s a lot to consider in the realm of digital publishing. My main concern is not to fall in to a reactionary response to change, which I believe is the current default for many in the industry.
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My reply to their e-mail looked like this:
Greetings to the Amazon Books Team and the so-called Readers United team.
Thanks for this e-mail. I recently crawled out from under a rock, and had no idea of what was happening in the Amazon vs. Hachette dispute.
To be blunt, this e-mail is an inappropriate use of your list. It may be true you’re facing an unprecedented nemesis, or that you somehow lack the courage or conviction to see this through to a conclusion (I doubt it), but e-mailing authors in this way is, again, inappropriate. I have no love for Hachette, and genuinely appreciate all that Amazon has offered in terms of opportunities and royalties for my dozen-plus titles.
Please carry on about your dispute, and leave me out of it.
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That’s an entirely valid response. I think neutrality is the most intelligent position in this fight. But it does seem that public opinion, or at least opinion in the writing world, is swinging hard against Amazon. That doesn’t surprise me, but only because it’s the response I expect when people are faced with radical change.
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You’re right, there’s a huge demand out there for cheaper books. That’s why public libraries are so popular these days.
Oh wait…
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Public libraries are hugely popular, more so than ever (I know the field professionally) but they are in decline because of budget cuts, not under use.
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Our local library is always busy. Their problem is budgetary, not people using the service.
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The main issue for me here is this: is it really up to Amazon to police publishers’ pricing? There’s no doubt 20 bucks is pricey for an ebook, but amazon holds too much away as it is, without also deciding what publishers can and can’t charge.
Moreover, people must not be fooled into believing that Amazon is acting for the greater good here. Its only motive for its stance here is profit, not altruism. Amazon should not use its power here to determine what publishers should charge, period.
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And why do Amazon have that sway? Because while publishers ignored ebooks for over a decade, Amazon made all the investment to build a viable ebook marketplace. Publishers could have done that, but they didn’t. Now they are paying the price for not innovating.
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“Its only motive for its stance here is profit”
Please show us where Amazon is declaring a profit
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You know, I would have a nit more sympathy for Amazon except that the only offer their best royalty rate to authors who price their eBooks at $2.99 or above, and even then there’s strings attached.
It penalises authors who set a price point that even Amazon isn’t comfortable with, because they want to get their work out there and into the hands of the reader for far less than the “new establishment” would like.
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That’s why price points exist, to keep the market in place. It’s Amazons job to make the most profitable market, not a market that advantages the lowest possible price.
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All that does is shaft authors for setting what they feel is a reasonable price for their work, for the number of pages. A one-size-fits-all market is great – if you happen to like wearing super stretch pants.
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Not only did the Amazon team misquote Orwell, he loved paperbacks (see NYT article on that). It also is based on the mistaken assumption that book demand is perfectly elastic, i.e., the cheaper e-books are, the more will be sold, and, conversely, the more expensive they are, the fewer will be sold. There is really no evidence that it works this way. Check the Amazon bestseller list, it’s populated by exactly the expensive “elite” writers, not by the $0.99 e-books.
As Orwell also pointed out, when you make books cheaper, people have more money left over for other things. That may be good for people, but not for books. I carry no torch for Hachette. The big five are an oligopoly. But replacing an oligopoly with a monopoly is not a real solution. I support independent publishers who make their e-books available on their own website and without DRM.
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Both Amazon and the NYT misread the Orwell quote. It’s an excellent example of English irony, which Americans truly do seem to find very hard to interpret. And the price elasticity is demonstrably true, unless of course you exaggerate Amazon’s claim as you have to say ALL EBOOKS MUST HAVE LOWER PRICES. That’s simply not what they are arguing.
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Reblogged this on Riding into the Sunrise and commented:
Great read with insightful info.
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Hello. Thank you for writing this article. With respect, you are wrong.
[Edit: So I wrote a response that was about twice as long as your article, realized how insane that is, and now I’ve broken it up to make it easier to read and respond (if you want). The length is no less insane, but hopefully you’ll forgive me. As you might know this whole conflict is huge and stupid and full of misinformation. You might think some of my info is wrong, and that’s fine, but I’ve got to try because, hey, I’ve already written this stupidly large response.]
This has turned into a self-published vs. traditional published fight, which is a shame because, as it’s been pointed out, self-publish authors would get gut-punched just as much as traditional authors would by lower prices. Prices on Amazon work on a ranking system. A system, that is should be pointed out, is enforced by Amazon. The system exists for, among other reasons, to keep self-published prices low and competitive with traditional publishers. (Like you said above in your reply to that comment) So if the prices are lowered for traditional markets there’s a good chance that Amazon will force self-published authors to lower their prices (probably with the same “lower prices mean more sales!” logic that they used above, which is unproven). Also, this is how Amazon treats it’s business partners. Why do you think it won’t treat it’s self-publishers any different?
And the anecdotal story about paperbacks. Sigh. First of all, it’s an anecdote, which should have made you suspicious from the start. You’ll notice that Amazon never gives out actual data about sales, or about anything. Amazon is notoriously tightfisted about giving out sales data of any kind, and this letter is no exception. We’re just supposed to take Amazon’s word that they’re right..
And the comparison between paperbacks and ebooks would be correct except that you’ll notice that paperbacks are currently released long after hardbacks for an audience that is willing to wait to get a cheaper version. Ebooks meanwhile are released at the same time as hardbacks meaning they compete with them directly in the market at what is usually five dollars less that what you would pay in store, meaning that currently the publisher is competing against itself sort of like how Starbucks competes with itself when it sets up too many locations close to each other.
Also, with the paperbacks all the money was still going towards the publishers, but here money is moving away from them. False equivalence in it’s finest.
Now, some people are willing to pay the extra to get the book right away, some aren’t, and that is where we’re at currently. But, say the ebook price is ten dollars less. Fewer people can excuse spending that extra ten, more buy online (specifically from Amazon) and fewer people buy from brick-and-mortar stores drying up what little revenue they have left. These stores are also Amazons only major competitor in the book market besides maybe Apple and BN’s online store. Curious, isn’t it?
(Cont.)
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Amazon is a company. A billion-dollar company. They are not doing this out the kindness of their hearts, they do not care about the publishing industry anymore than they care about the entertainment industry or the phone industry or whatever else they’re investing in right now. They’re building an empire, and they started with books. Yes, along the way they’ve done some pretty nice things for the industry. But the traditional publishers have also done some pretty nice things too, like say every book that was published before the internet came along. Do you want to know what Amazon and traditional publishers have in common in those instances? They’re both trying to make money. They do nice things for the consumer for that money. They work with authors (self-published and otherwise) to get this money. It really is just business. Maybe within the company there are people that care, but a company is not a person.
Amazon is currently trying to get more money from traditional publishers, and to do this is punishing them by hurting their sales. This is bullying, and a common business tactic from Amazon and other companies that are vying for low prices like Walmart (who invented the tactic btw. You’ll notice that Walmart is not where you go for quality goods.) Authors are currently angry with them because their books have earned Amazon a lot of money in the past, and now the old business partner is acting like an asshat. (Asshat is the technical term.)
(Cont. Yes, there is more.)
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This is not a simple David vs. Goliath conflict. It’s two Goliaths, neither of them innocent, duking it out while innocent villagers run to escape the falling debris. Both parties will try and paint themselves as Davids, which is what Amazon is trying (and not doing very well) with this letter. It’s got all the language of one of those sign-this-petition-pls emails, doesn’t it? Kind of tastes like propaganda, just a little?
And this response it too long. Sorry. I hope it’s not too overwhelming. I’ll break it up, and if you want you can reply to each bit instead of giving one long reply to the whole. Or you can ignore it. I’m not big on conflict, and I tend to avoid comment sections, but you were just so wrong, y’know?
Anywho, have a nice day. :-D
(Fin.)
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Hey, and thanks for that epic comment! Your points here are valid, but already widely made, and considered in my response. Worth noting, I’m neutral in this fight. My criticism here is of the kneejerk, reactionary response by many writers against Amazon.
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“self-publish authors would get gut-punched just as much as traditional authors would by lower prices.”
Not at all. Most self-pubbed authors already charge way less for their books and some of them are doing fine. Frankly, all this reactionary cry from authors I used to respect is mind-boggling. I stopped visiting websites from guys like Scalzi and Wendig, because, really, they are beginning to sound like luddites (it’s weird to realize how many SF authors can’t handle new ideas regarding tech when these ideas went out of the pages and became a reality). All this anti-Amazon bias has reminded me of the first years of the MP3 revolution. So many established writers blindly defending a dying way of life, like a chorus of whining Metallicas.
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