Monday, August 11, 2014

Amazon vs Hachette

Let me start by saying Amazon is making the right arguments for the wrong reasons.

As some know, Amazon accounts for over half of all book sales and even more of all digital sales. That gives them enormous power that they, naturally, can't resist abusing. Hachette is big enough and powerful enough that they don't feel like nuckling under when Amazon tells them to.

The arguement is simple. Amazon says they're looking out for the readers and trying to drive prices down for everyone and Hachette should thank them for it.

This is, in a way, true. As an author, I make more selling larger numbers of 2.99 books than I do off selling a few 9.99 books. Readers like it, I like it. Win win.

But the dirty secret is Amazon profits the most from this. They make as much as the publisher on every sale (without doing any real effort)... while this practice also hurts publishers other than KDP (amazons publishing wing) and punishes writers who publish with publishers other than KDP. Authors using KDP get to keep 70 percent instead of 35 (for now). On top of that, amazon has discovered that digital books are way more profitable at a fraction of the risk than paper books, and since they own kindle, that gives them near monopoly status. Digital's only competition is paper,and so it is in amazons interest to set pricing policy that makes digital the most attractive (best value/cheaper than paper)

But Hachette sees things differently than Amazon. They want to sell their books at a price they pick, not one Amazon tells them to use. They want the right to price digital and paper the same, if they want, whether or not it is wise to do so.

They see their initial digital release the same as hard cover books or movie theater tickets vs dvds. For the price of a movie ticket you can buy the dvd and watch it as many times as you want. But people are willing to pay a premium to watch a movie in a theater. Dvds aren't released before movies because they would cut into that profit/premium some are willing to pay. In essence, Amazon wants to sell $1 DVDs on opening day of new movies because amazon makes a lot of money on dvds and digital downloads.

Hachette sees ebooks the same as hard cover. Standard practice in publishing is to release the high priced hard cover first, then the paperback. Hachette believes there is a market for expensive "hard cover" ebook editions of their work, and I think the market is the only way to find out if they are right.

There are really two arguements being made here. Both are right, both are wrong. All are dripping in self interest and none have anything to do with what's in authors best interest.

But what amazon is doing by making Hachette books unavailable during the fight is evil, heavy handed, and likely criminal.

And by forcing Hachette to use Amazon approved prices IS PRICE FIXING. It doesn't matter if you price fix too high or too low, the law calls fixing prices illegal. Amazon (KDP and CreateSpace) is a publisher, and when two publishers get together to agree on prices that is the legal def of price fixing, and that is exactly what amazon is doing to Hahette.

Worse, amazon is using coercion in order to fix prices with other publishers.

I like amazon, and I like the Kindle and am on KDP (Kindle Direct Publishing). But I don't like their practices and they're trending worse. They can be hostile and they use a lot of bullying practices that you don't see any place else.

1 comment:

  1. Interesting. I didn't know that was going on between Amazon and Hachette. Thanks.