Amazon Offers Authors 100% Of Ebook Sales To Get Them To Recognize Its Fight With Hachette Isn't About Screwing Authors
from the wake-up-authors dept
Last week, we had a post from author Barry Eisler, responding to a bunch of other authors who were attacking Amazon over its current contract dispute with Hachette. As Eisler noted, nearly all of their complaints were either misleading or didn’t make sense. There’s no doubt that there’s a contract dispute going on, but claims of “boycotts” and other attacks seem really directed to people misunderstanding what’s going on in the dispute — and thus, those authors are defending the traditional gatekeeper publishing model in which Hachette gets to keep nearly all of the proceeds of book sales. Of course, the authors’ main “complaint” was that they felt like they were being used as pawns in the fight, and that the dispute might impact their sales directly.
To show how bogus that claim is, Amazon today went directly to Hachette authors with a proposal Amazon claims Hachette rejected: offering to give authors 100% of the proceeds on ebook sales.
The letter extends and develops a proposal Amazon made earlier in the dispute, which was dismissed by Hachette. It now offers Hachette authors ?100 percent of the sales price of every Hachette e-book we sell.? Amazon also offered to suspend all its shipping delays and price adjustments, which it put in place in an effort to bend Hachette to its will.
Of course, defenders of the publishers insist that this is all a ploy for Amazon in its never-ending mission to take over the world:
Roxana Robinson, president of the Authors Guild, dismissed the proposal.
?If Amazon wants to have a constructive conversation about this, we?re ready to have one at any time,? she said in an email. ?But this seems like a short-term solution that encourages authors to take sides against their publishers. It doesn?t get authors out of the middle of this ? we?re still in the middle. Our books are at the center of this struggle.?
Once again, it’s confusing to figure out which side the Authors Guild is really on here. Since we started covering that organization, it appears that it sides 100% with the publishers and rarely sides with what matters for the vast majority of authors.
The whole situation is quite bizarre when you think about it. At the same time you have Hachette and the Authors Guild insisting that they’re trying to “protect the book” by keeping book prices artificially high, they’re loudly complaining that Amazon won’t discount their books. Notice some hypocrisy here? If you want to understand why this is happening, the best explanation I’ve seen so far comes from Hugh Howey, one of the super successful self-published authors who is firmly in Amazon’s camp on this fight. Writing in the Guardian, he notes the perverse incentives of the traditional publishing world on Amazon:
Under the previous wholesale model, publishers might price an ebook at $14.99, and with the 50% discount, an online retailer like Amazon was able to discount to a more reasonable $9.99 to serve customers. Customers who expect digital books to cost less than the paperbacks with which they were familiar. With the new discount rate, Amazon stood to lose money by offering that same price. Publishers, meanwhile, were less than enthusiastic about lowering the offered wholesale discount.
Publishers like Hachette now found themselves in enviable territory. They could price ebooks high ? protecting their relationship with high-street booksellers ? and rely on Amazon to cut their own margin to the bone in order to move quantities of ebooks. This new situation created the bizarre scenario where authors who once complained about Amazon’s discounting are now complaining that they aren’t discounting enough. And during these negotiations, parties from Hachette’s side are accusing Amazon of raising prices by offering something close to what the publisher itself is setting.
In a presentation to investors, Hachette has stated as a primary goal the control of ebook pricing. Breaking their habitual silence just last week, a representative from Amazon confirmed that the sticking point in these negotiations is indeed price. So both sides have confirmed what’s at stake. History would indicate that Amazon thinks ebooks should cost no more than $9.99. Their agreement with self-published authors supports this, as the royalty rate paid halves if the price exceeds this amount. Hachette, meanwhile, would very much prefer to offer ebooks at $14.99 or more and leave any discounting up to Amazon (or any pain up to their customers).
In other words, everyone really knows that ebooks should be priced lower, but the old publishing world wants to be able to set much higher prices, forcing Amazon to basically make no money at all on pricing the books lower. Given this scenario, it actually makes sense for Amazon to then make this offer to authors directly: it will hand over 100% of ebook revenue, because under Hachette’s proposal, Amazon would make no money at all (or even lose money) on ebook sales anyway.
Update: Adding the text of the letter:
Dear XX,
I wanted to ask your opinion about an idea we?ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.
Our first choice would be to resolve a dispute like this through discussion only. We tried that already. We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.
We agree that authors are caught in the middle while these negotiations drag on, and we?re particularly sensitive to the effect on debut and midlist authors. But Hachette?s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.
Here?s what we?re thinking of proposing to them:Here?s an example: if we sell a book at $9.99, the author would get the full $9.99, many multiples of what they would normally get. We can begin implementing this arrangement in 72 hours if Hachette agrees.
- If Hachette agrees, for as long as this dispute lasts, Hachette authors would get 100% of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit from the sale of every e-book until an agreement is reached.
- Amazon would also return to normal levels of on-hand print inventory, return to normal pricing in all formats, and for books that haven?t gone on sale yet, reinstate pre-orders.
We haven?t sent this offer to Hachette yet ? we?re sending this to a few authors and agents to get feedback first.
What do you think? Would this be helpful, especially for midlist and debut authors?
Can we talk on the phone later today or tomorrow once you?ve had a chance to digest?
Thanks and look forward to talking.
Filed Under: authors, books, contractual fight, ebooks, self-publishing
Companies: amazon, hachette
Comments on “Amazon Offers Authors 100% Of Ebook Sales To Get Them To Recognize Its Fight With Hachette Isn't About Screwing Authors”
There’s some analysis/article floating around the Internet that claims that only about $2 of a book’s cost goes to things like printing and distribution, i.e. the things that ebooks actually cut out. The rest goes to editors and authors and presumably dust-jacket-designers or something.
I suggest looking it up if you haven’t seen it and are in need of a good laugh. The whole traditional publishing industry is farcical at this point.
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It depends on how many pages the book is and how big the pages are. It also depends on whether it’s in color or black and white. $2 seems rather low to me. For black and white, on one of those office printers or an industrial printer (it may depend on your contract) the cost of the click charges would run you about 1.5 cents per page (that is per side so it’s 3 cents for two sided) on an 8 1/2 by 11 (though some copiers may charge the same for an 11 / 17 which can be cut into two 8 1/2 by 11 ‘s depending on your contract). On top of that you need to pay the monthly charge of leasing the printer and that’s not cheap (and depends on your printer/contract). Sometimes at the end of leasing it you can buy the printer outright and the company will maintain it for you given you pay the click charges but the click charges go up a percentage each year as the maintenance costs are expected to increase after that. Plus you have to pay for paper (go online and look at the cost of paper. There are different qualities of paper as well, if you look at really really cheap paper it will fall apart. If you use standard 8 1/2 by 11 at regular quality it should cost you about $30 for 500 sheets). For full color it’s about 10 cents per page (per side) in click charges. Plus the cost of getting a cover and binding the book.
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(and let’s not forget storage and distribution costs)
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(and let’s not forget storage and distribution costs)
Storage and distribution costs that Amazon alone provides, not the publishers. My B/S flag has been thrown.
What Hatchette wants is Amazon to pay all the costs and Hatchette to get all the money (since they only pay a pittance to the Authors.)
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I’m not arguing about who is paying for those costs just that they need to be included when the original comment says “only about $2 of a book’s cost goes to things like printing and distribution, i.e. the things that ebooks actually cut out.” That sounds low.
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actually no, it doesn’t. That stuff is built on economics of scale and bulk discounts. If it were only 1 book here and there, you might have a point, but the moment you brought up office printers you lost it, because prices for those are not even in the same starsystem as the prices for large volume printruns.
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Sure, more expensive printers may give you lower prices per page when printing in bulk but it won’t be that much lower. I’m not that intimately familiar with the cost of the larger scale printers (but I have looked into and asked salesmen about them before) but $2 per book still seems low. The price won’t be that much lower (from what I said above) either because more speed costs more and larger scale printers need to be faster and will tend to have more maintenance issues. If you want a better estimate of the cost and are that interested I can ask around.
Here are some of the larger production printers
http://www.office.xerox.com/digital-printing-equipment/digital-press/enus.html
(Xerox is rather expensive though, you may look at other companies like Canon, Konica Minolta, or maybe even HP).
What’s much cheaper is something you can run on a press where you’re running the same page over and over (single color though they do have multi-color configurations as well). Then the cost of ink is very very low, a $30 can of ink can run about 250,000 pages or so (but you still may have to shoot film and make plates and there is the cost of developing film and you need to maintain your press and you need blanket cleaner and all sorts of things that go into it and you will invariably lose some pages as the press sometimes acts up and you need to readjust the press or rollers or whatever or else the printing will have problems. but it’s still much cheaper than a printer). But that won’t be practical for a book publishing company that prints multiple books with different pages.
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Uh…I’m not sure why you’re arguing about the cost of printing on Xerox printers. I highly doubt that Hachette is printing James Patterson’s latest bestseller on a sheet-fed laser printer. I’m pretty sure they’re still using the same roll-fed offset lithographic printers they’ve been using for decades–you know the ones that fill a building. And, yes 2 dollars a book sounds about right for a large publisher–Mill City Press will print a paperback for you for about $3.90 a book plus somewhere between $1700 and $10,000 one time fee for editing and proofreading.
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That sounds low.
I am not sure on the original numbers either. Wholesale paper and ink and mass runs will bring the cost of printing down, but $2 does sound low.
However, for e-book distribution, $2 sounds really high, depending on the number of sales of a book. Storage is constant and very, very small (average size of my .anz files is about a MB each.) Distribution occurs only a couple times (maybe more if you go through devices like I do.) We are talking a couple pennies at most.
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Oh, and for the record I am not defending Hatchette. I side more with Amazon here (though I’m not necessarily defending them either).
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There is a huge difference between laser, or other dot type printers, and plate based printing presses. A laser printer is cheaper for a few hundred copies, delivered tomorrow, but a plate based printing press is way cheaper for a few thousand copies book3ed for delivery in a few months time.
FTFT
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Publishers need to understand that with the internet books cannot sell at over $3 in any numbers that count.
They need to accept lower cuts of profits as they lose the distribution system. this they will refuse to do as then authors make more money and they make much less.
I see no reason why an author should sell his rights to a book fully and have to give 80% of the profits to publishers. Yes they do a great job for the authors arranging for their books to be edited and reviewed and changes made or advised to be made. This in itself is a job that should be paid for , but it is a job nothing more.
If authors are forced to use publishers they should have laws protecting them from publishers. No more massive costs and fees and losing copyright to their work. let the publishers charge and get their costs and a small profit from every book but nothing like they are getting now.
Established authors can churn out novels all day and make money , it is the new authors that need to be protected from publishers, like with music and video content creators should not be allowed to sell their rights away for more than a very short period , and then review their contracts with the middlemen.
Substitute MPAA for Publishers, Amazon for Movie Theaters
Same basic approach, same basic model.
We can’t allow people who actually deliver the product to profit from our books or movies. They’re ours!
As long as we get our cut, it doesn’t matter who we starve,
and the public be damned.
Re: Substitute MPAA for Publishers, Amazon for Movie Theaters
Oops. Got that backwards. S.B. “Movie Theaters for Amazon”
Editors are actually kinda handy
Speaking as a writer (though not a book author) I’d turn this deal down in a second. Cut out my publisher entirely? Yeah, extra paycheck now, hooray, but it’s a textbook case of killing the goose that lays golden eggs. I get all the money from selling the books I’ve already written, but then what? The publisher gets no money from my sales anymore so they’re done with me. I have to edit and promote and otherwise wrangle my future books myself, or with volunteer help rather than a professional. And professional editing – which is a time-intensive, personal process – helps. A whole goddamn lot. Arranging signings is a chore and sometimes a logistical nightmare, too.
Publishers aren’t parasites, is my bottom line. They actually serve a function in producing good books, and the idea that any cent that doesn’t go to an author is automatically wasted pisses me off as a reader and a writer.
(Also, here’s that breakdown of costs. Read the comments too.)
Re: Editors are actually kinda handy
The people who WORK at publishers aren’t parasites. Editors, copyeditors, proofreaders, typesetters all contribute to the product.
The people who RUN the publishers are lawyers, accountants, and investors. Lawyers ask “Who can we hurt so they don’t hurt us?” and the latter two ask “How you going to make money with that?” Product? Quality? Who cares?
There is NO major publisher that is run by book lovers, and it shows.
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I think Baen might come close actually, they seem to be fairly on the ball with regards to bookselling and ebooks.
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Baen, be it noted, was started by a book lover and continues in the capable hands of another. It has never been one of the Big Five Cabal.
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I though Baen Books was run by book lovers. Am I wrong?
Re: Editors are actually kinda handy
Speaking as a writer (though not a book author) I’d turn this deal down in a second. Cut out my publisher entirely? Yeah, extra paycheck now, hooray, but it’s a textbook case of killing the goose that lays golden eggs. I get all the money from selling the books I’ve already written, but then what? The publisher gets no money from my sales anymore so they’re done with me. I have to edit and promote and otherwise wrangle my future books myself, or with volunteer help rather than a professional. And professional editing – which is a time-intensive, personal process – helps. A whole goddamn lot. Arranging signings is a chore and sometimes a logistical nightmare, too.
1. Nothing in this arrangement they’re offering is about getting rid of the publisher. They’re just offering a temporary deal while the negotiation plays out.
2. Nothing in any option means getting rid of editors. Even if you self-publish you can hire a professional editor.
3. That bit about “promoting” books? Having actually met with book publishers in the past, all they want to know is how I’m going to promote a book. They almost all rely on the authors to promote anyway…
Publishers aren’t parasites, is my bottom line. They actually serve a function in producing good books, and the idea that any cent that doesn’t go to an author is automatically wasted pisses me off as a reader and a writer.
No one has argued that.
Re: Editors are actually kinda handy
So why not pay them, this is how everyone else does things they want, they pay for a service and then make profits. If the publishers cannot accept this i am sure there are many people out there , professionals that will do all the work that is too hard for you to do yourself, and be very happy accepting a reasonable amount to do so, Damn even offer them a small 5% for the first 5 years your book is being sold after you have paid them. Why be forced to hand over your books to a publisher never to have control over them again and make a pittance doing so. Find and editor that will accept a payment to edit and correct and advise authors who cannot do this themselves.Then find a company that can market your books if you cannot do it yourself,even giving them a 5% gratuity after paying them still leaves you with 90% of the money paid for your content
Re: Editors are actually kinda handy
I dont agree with your statement – since amazon is requesting approval from the publisher, there is no geese being killed.
This whole dispute is nothing more than a distributor trying to get a better deal from a supplier and vice versa, something that happens every single day in retail. It is only so newsworthy because it is big, bad tax avoiding Amazon.
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Are you Hachette doesn’t avoid taxes too?
Three for the price of one
$9.99-$14.99 for a book… yeah, no, especially if you’re talking an ebook.
For paperbacks, $7-8 is generally my limits, whereas for ebooks, I could take that same $10-15 and pick up three or more books, just as good as the ones written by the ‘professionals’, elsewhere.
Re: Three for the price of one
Or, go to a local book swap in your area and get those paperbacks for essentially free…
Personally, I prefer to buy my books used from yard sales for .25 to .50 each on the weekends, and then trade them in at a book swap for something that is harder to find.
Won’t be long before dead tree books are outlawed and you won’t be able to resell or trade them any more… the industry is starting to wise up to those of us who legally get our entertainment for nearly free.
Re: Three for the price of one
A smart publisher would be working to destroy the paperback market by lowering ebook prices so everyone converts to ereaders. That way in the future they won’t have to deal with the used book market undercutting their sales and they and can slowly raise their ebook prices with a locked in audience. Luckily no publish is so forward thinking.
Kinda off-topic but… how did Hugh Howey become such a great author in the first place? I’ve heard him preach about word of mouth, which is all well and good, but research seems to indicate that he did absolutely nothing to get that word of mouth going in the first place. He basically put his book up on Amazon, forgot about it, then came back after a few months and found a thousand people or so had accidentally stumbled upon it. He got lucky, so what should other authors that can’t rely on luck do?
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I’ve started on independent publishing, to include building a platform with word of mouth. Hopefully I’ll have my first book out before the end of September.
While there are plenty of “lightning strike” rarities like Hugh Howey, there’s plenty of people who rely on one word: conversations. Either they say thought-provoking things on social media (blogs, Twitter, Facebook, etc. etc.), or contribute to someone else’s thought-provoking topics.
People notice the source (the author), and get interested. They dig further, and might even buy a book after looking around. Rinse, repeat to grow reach, while releasing quality material worth buying.
It’s much slower than getting lucky, but it’s consistent and builds income over time from a growing audience that enthuses about both you, and the books you write.
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Yeah, it’s definitely a long-term game. I suppose that means that if you don’t catch lightning though, you’ll have a longer tail.
I’m kinda already doing the conversation game on Twitter, but I’ve been finding my words alone don’t generate much interest. Instead I’ve found some initial success making action figures of peoples’ Minecraft avatars and I have a book up for free called “Tales from the Creature Keeper: Survival Critters”. I wrote it as a stand-alone side story to its parent episodic novel and you can download it for no cost whatsoever on Smashwords.
https://www.smashwords.com/books/view/445045
Added full text of the letter
Added the full text of Amazon’s letter at the bottom of the post…
Re: Added full text of the letter
Ah. That answers my question.
I'm confused
Would the authors actually be able (legally, contractually, whatever) to accept this offer from Amazon for their Hatchette-published e-books? Or is this simply a way to prod them into encouraging Hatchette to play nice with Amazon? (It’s an interesting approach; I’m just wondering whether it’s practically workable.)
After reading the letter Amazon sent out, assuming it’s accurate, Hatchette is just looking worse and worse.
They seem to be putting the screws to their authors by refusing to even discuss things with Amazon, and if the letter covered a few days ago is any indication, at least some of those affected have fallen for it, and are blaming Amazon rather than Hatchette for the stalemate in negotiations.
Of course, with an offer of ‘You keep 100% of the sales on your stuff’ on the table, and the offer being made directly to the authors, rather than through Hatchette(who would likely try and spin it as their idea, or just ‘forget’ to mention it), Amazon seems to have come back with a brutal counter to Hatchette’s silence.
so I go on pando daily and find this http://pando.com/2014/07/08/amazon-turns-authors-into-hachettes-personal-judas/ is it me or are many sites/authors not being objective enough
Some thoughts on Amazon's offer
> They’re just offering a temporary deal while the negotiation plays out.
If you’ve already got a publishing agreement covering paper books, the contract may also cover e-book publishing. If it doesn’t, then you’re free to accept Amazon’s offer. Of course, this WILL poison your relationship with your publisher. Think about it. Will you want to continue publishing through that publisher? CAN you publish through another publisher?
If you DO have a contract that covers e-books, you have all of the above relationship poisoning, PLUS you then either have to break the contract (with attendant penalties), or risk going to court over the rights of your own books.
One final question, then…
You’ve heard of the App-Store deals where your app gets promoted, popular, even, and you-the-author get nada because the Store set the price to zero during the promo? In this case, who is setting the price of the e-books you’re offering through Amazon? Remember, 100% of zero is still zero.
Re: Some thoughts on Amazon's offer
What is the matter, are you losing authors to Amazon?
Sounds like bitter grapes to me.
All I can say is, suck it, you deserve it
Re: Some thoughts on Amazon's offer
Read the letter!!
Amazon is not offering any deal to the authors. They are telling the authors what deal they are offering to Hachette, to try to help the authors during the period of negotiation, and encourage both Amazon and Hachette to get moving on the negotiation.
Sure Amazon is using disclosing this as a promotion ploy, but they aren’t offing anything to the authors. They are just informing the authors.
The key word here is "guild".
Note that it’s called the Authors Guild. A guild is a protectionist trade organization. As such, this one is controlled by authors that “made it” and works to exclude the vast majority of others from joining that club. Hence their support of the publishers’ gatekeeper behavior: the publishers are their gatekeeper, their way of effectively limiting the labor supply in their field.
Of course, Amazon’s anyone-can-publish-anything-and-see-what-price-the-market-will-bear model completely short-circuits the guild protectionism and breaks the back of the established authors’ price-fixing oligopoly, so of course they hate it and are fighting it tooth and nail…
Wtf ?
Hu ? Amazon wants to pay authors directly and remove any income from the publishers ‘as long as the conflict lasts’. Basically, you have a third party (amazon) trying to undo an agreement between authors and publisher. I’m not sure here, but that does not sound quite right to me. As someone else noticed: they try to undermine the powerbasis of the authors and if enough fall for it… well… then authors have no power left anymore.
Re: Wtf ?
No.
Read the letter. Amazon has made a proposal to Hachette that the authors get 100% of the eBook revenue during the negotiations. This is not about cutting out Hachette, it is an attempt to provide relief to the people Hachette and the Author’s Guild have been claiming are being hurt during these negotiations.
Hachette and the Authors Guild have been jumping up and down complaining that Amazon is using it’s power to force Hachette to settle by putting the screws to authors during the negotiations. The brilliant response from Amazon is ‘Ok, let’s take the hostages out of the equation while we negotiate’. Hachette and the Author’s Guild complaining about the move just highlights that THEY are the ones that want the authors held hostage.
Re: Wtf ?
I interpret this email to be:
Hey authors! Be aware that it is not amazon that is screwing you, we are willing to give you 100% of the income, until our disagreement with Hachette is resolved. It is Hachette that is unwilling to do this. Don’t blame us, blame Hachette.
Seems like Amazon trying to get some new agreements with publishers in other countries too.
In Germany several publishers reported delays and were recently been told to deliver their books for the germna market to Amazons distribution center located in Poland.
I guess this doesn’t make it anymore efficient than using the existing Amazon locations in Germany.
But it could be because of allegations about Amazons treatment of its workers and several strikes that occured.
Anyway in Germany a fixed book price agreement is ensured by law (since 1888).
Books count as cultural goods and prices shouldn’t fluctuate wildly over the whole market depending on where you buy them.
So german books cost the same all over Germany. At least if they are new.
So Amazon can’t lower prices for german books and getting a new agreement with publishers won’t lower any prices for the customers, it would just increase Amazons profits.