Since I’m scheduling this for Tuesday, this may have ended by then. But, regardless, I’m throwing my two cents out there.
As many of you may be aware, internet superstore Amazon.com is embroiled in a feud with publishing conglomerate Hatchette Book Group. This seems to be how Joe & Jane Average seem to be seeing things. You note that only two seem to be neutral? All the others, especially is you search Amazon vs Hatchette seem to call for boycotting of Amazon in favor of Barnes & Noble, and indy bookstores. Yeah, as if that would be a good idea.
As a currently unpublished author, I’m going to say this, “Boo-fucking-hoo.” So the multi-million dollar authors aren’t going to get a few pennies more on their tiny royalties. If the authors really cared about the readers, they’d say, “See ya,” to the traditionals, and self-publish. But they don’t care about that, they don’t like the idea of competition, and they don’t want to give up their guaranteed multi-million dollar contracts.
Folks seem to enjoy painting Amazon as the Big Bullies, and Hatchette Book Group as the Heroic Underdog fighting for the little guy. I say those roles are switched around. Amazon isn’t the bullies here, Hatchette is. They are the ones that want to jack up the price of the e-books. They aren’t fighting for their authors that are under contract. Consider: The authors that are with HBG get, at most, 20% royalties on their books once they make a certain amount. Even guys like King, Patterson, & Rowling. Twenty fucking percent. And, when you have guys like them under contract, HBG offers them advances of $100K- $3Million. Those advances are why folks like King are bitching, not the royalties. If they cared about royalties on their books, they’d go with the folks with the highest paying royalties out there, Amazon. Yes, Amazon. They even say it on their pricing page (for authors), “For titles priced between $2.99-$9.99, we pay a royalty of 70% on each sale.”
In the meantime, Hatchette wants a bigger piece of that pricing pie. They think that Amazon is getting too big a piece with their charging 10% for titles that are over $9.99. Go look up Steven King, James Patterson, et al., on any book seller website, and look at what the books are being sold for. Barring a second hand site, you won’t find any of their titles for less than $7.99 for a trade paperback, and less than $25.99 for a hardback. Now, consider this price breakdown: on that $25.99 James patterson, Hatchette takes 70%, the author gets 20%, and Amazon takes 10%. The way Hatchette wants it to be is they get 78%, authors still get 20% (big names, anyway), and Amazon would be left with 1%. How is that fair?
You notice who’s not been mentioned in all of this? The customer. That’s because they’d still pay $25.99. Unless HBG wins, that is. Then it would be $25.99 + shipping & handling. Even with Prime.
beginingsinwriting 
First of all, Amazon gets 5-7% of the price of each book, not 1%.
Amazon does not make any profits for their stock holders. They have been continually growing since they began, so they’ve never paid a dividend. NEVER.
Now though, stock holders are getting restless and demanding to see some pay back. Their stock is down 25% this year.
Amazon has never made a profit on books (ebooks or otherwise). They use books as their loss leaders the way grocery stores use milk and eggs as theirs. Get you in the store for the reduced prices and make it up elsewhere. They are selling the books at cost. (They get almost 60% discount from publishers to do this). But as much money as they make this way, it’s still not enough, so they need to be looking to see how they can pay back those stockholders soon.
Here is their plan according to almost everyone who follows whats happening:
1. Get the publishers to agree to forgo some of their profits so that they can keep the discount on the books so they can pay a little to their stock holders and continue to increase the near-monopoly they have. They have 65% of all book sales. Ebook sales have stagnated at 20% of all book sales. You can see what that would be a problem for Amazon’s book dept.
2.Once they get to whatever percent they feel they need with physical and ebooks, then they stop offering the discounts on those loss leaders and make the customer pay full price. By that time , Barnes and Noble and most indy book stores will be gone. The Nook is dead in the water at this point already. 50% of all indy book stores have closed in the past decade.
3. After that, Amazon can name their price. They are not just doing this to Hatchett, they have added Time Warner to the list as well. They will do this to all publishers until the publishers cave.
So what happens when e-books are a third or a tenth of the cost of physical books? More Kindles will be sold.
4. So, what you are doing by supporting Amazon, is screwing yourself- as a consumer for short-term cheap books. You (and everyone who buys from them) are going to allow them to have a full monopoly based on false discounts and then when no one else is left to buy from and the publishers crash, you will get your self-publishing dreamland. But do you really think when that happens that Amazon will still be giving a 70% profit to writers? Look at what is happening in the music business and the royalties that Pandora is paying on digital music. The same thing is happening to books.
The worst part about this whole affair is that books only make up 7% of Amazon’s total sales. Their strategy worked, will continue to work and the say they decide that books are not longer cost effective, (research the books that were published under the Amazon imprint)- there is nothing to keep them from no longer selling them.
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Thank you for taking the time to read my thoughts, and comment on them. I can tell you’re passionate about this, and it is a good thing. I rarely see that anymore from anyone. You make some good points, and I’d like to offer some counter ones.
1) Let’s say that what you seem to want to happen and Hatchette get’s their way. What do you think will happen? The other Big Five groups will see the blood in the water, so to speak, and they will demand to be allowed the prices of their ebooks, and will most likely get their way. Would you honestly be happy with paying a high price for a file that cost the publisher maybe 30 seconds to upload?
“I’m supporting the author by paying him a decent amount for his IP!”
Actually, you’re not. You’d be paying the publisher what they said that IP is worth, that is, about 5% of $11.99 after the advance is made back. Note, I’m not talking about the proven money makers. I’m talking about the newbie author who was lucky enough to make it past the gatekeepers. Now, I’m not very good at math, but I think 5% of $11.99 is about $0.60. Feel free to correct me if I’m wrong. What about the other $11.39? Well, that would go into the pockets of Hachette Book Group. How’s that fair? Not only are they the ones that decide who is “good” enough to be published, but they are the ones who decide what that title is worth, they decide how much the author gets for his/her blood, sweat, and tears, and, depending on the contract the newbie signs, they decide what the author writes next, and when. There is none of that with Amazon.
2) Hatchette Book Group is not one of the “little guys.” They’re worth about $100 billion, or more, and are a private company with “real” assets. They don’t have investors to answer to. Amazon, on the other hand is worth about $90 billion, and they have investors with no real assets.
While Amazon has market share with books, where do you think that share will go if no one can buy HBG books? To the places with them.
3) Indy Bookstores died out because of things like HBG is trying to do with Amazon. Difference is, Amazon is big enough, and willing, to fight back. Oh, and Barnes & Noble? They pulled the same thing with Simon & Schuster last year that Amazon is being vilified for this year: They slowed delivery of S&S books to get more favorable terms: http://www.huffingtonpost.com/terence-clarke/simon-schuster-vs-barnes-_b_2944950.html
http://www.pon.harvard.edu/daily/business-negotiations/top-business-negotiations-of-2013-simon-schuster-versus-barnes-noble/
Why is Amazon evil, yet B&N heroic?
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