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Initial post: Aug 9, 2014 2:17:42 PM PDT
Mack E. Tan says:
I'm not sure I understand the scope of the problem. If Hachette and other publishers want to overcharge for their products, wouldn't it be their business model decision? People can either buy it or not. I won't buy it. I'll put my name on the wait list at the library.

While I agree with Amazon's logic that demonstrates more books would sell at a lower price, I still don't think that is Amazon's decision to make. All Amazon or any other sales or distribution company can do is recommend to the publisher.

Why not suggest a trial period to test the logic about sales? To be honest, I can't imagine a book publisher turning down an opportunity to make more money given the slim margins in that industry today.

Writers never get a good deal...unless you are in the ranks of Stephen King. It's never a good idea for writers to sit on the sidelines ever, not if they care about being read. Signing a contract does not promise success to anyone and should not signal the end of a writer's involvement in pushing his book. A writer can only take advantage of opportunities a publisher or Amazon offers, not sit back and rely on them. So, yes, I believe writers have a dog in this fight and should get involved.

Lastly, I can't understand Amazon's decision to embargo Hachette's books while this dispute rages on. If you, Amazon, have proof of Hachette's collusion with other publishers to price-fix, file a suit. I just don't see the positive impact an embargo gives you.

As for Hachette, a publisher has a lot of discretion when it comes to pricing. I know, having worked in various areas of book publishing for over 30 years. An ebook, for the most part, is a derivative product re-formatted from a primary publication. Put another way, most of the labor for this book was done in its original form. The ebook version, therefore, is a technical tweak, even less demanding that paperbacks.

But what Amazon doesn't mention is that the cheaper paperbacks weren't released simultaneous to the hardbound copy to give the publisher an opportunity to make profits without competing with its own cheap paperback. These days, I believe, ebooks are released simultaneously with the hardbound book, taking away the opportunity to make money on the higher priced format. With a growing trend toward ebooks, that would mean the publisher would have to base its future profits on the cheaper ebook. Lowering the price, to the publisher, accelerates the growth of the ebook market, making it, eventually, the only market. This is a big decision for a publisher, and Amazon has no right or authority to force a publisher into a decision that would ultimately enlarge a market highly profitable to Amazon's future financial goals.

If some of my claims are wrong or incomplete, I'd really like to hear feedback.

Posted on Aug 9, 2014 2:33:55 PM PDT
Laura B says:
Yes, that may be Hachette's business. It is also Amazon's business to try and get their customers the lowest price possible for the ebooks. I understand they are trying to negotiate a contract - that makes it both Amazon and Hachette business. Amazon can't make a decision about what Hachette charges for their books, but they can make a decision whether they (Amazon) want to sell them at that price. They do have that right...

In reply to an earlier post on Aug 9, 2014 2:37:20 PM PDT
King Al says:
Um, Hachette and the other publishers have already settled the price fixing lawsuit and had to pay several hundred million dollars.

In reply to an earlier post on Aug 9, 2014 7:34:07 PM PDT
Last edited by the author on Aug 9, 2014 7:35:31 PM PDT
Mack E. Tan says:
The contracts regarding ebooks a publisher sells on Amazon are way outside my bailiwick. As a marketplace and distributor, Amazon does indeed have a right to ask for a larger discount on a book so that it can realize a serviceable profit, but that would mean that Hachette would have to give the same discount to all sellers.

Publishers are in a very precarious position. Their margins are small as it is and they do invest a lot into publishing and marketing books. Additionally, publishers in my experience have not been good at future-forward thinking. They have clung to old business models to their detriment.

However, the market determines, can determine, everything. If people buy the books, fine. If they don't, they don't. Amazon doesn't have to stock an ebook, so what's exactly the problem? Publishers contract with distributors and bookstores constantly, and welcome feedback on their titles. But the decision is Hachette's and Hachette's alone because pricing can affect its very structure and existence down the line. No publisher should be forced to cut its own throat. By lowering the ebook price, it accelerates the demise of the physical book market, which, by Amazon's own admission is now over 90% of hachette's revenue stream. If the $30 hardcover were released at the same time as the $5 paperback, which format would be more successful?

I'm not privvy to the contract between Amazon and publishers, but I've heard from friends still in publishing that Amazon gets a pretty sweet deal, perhaps too sweet. While I appreciate Amazon trying to get me a better price on books, I don't want Amazon to just strong-arm publishers to bow to their demands, demands that are really self-serving.

In any case, embargoing books strikes me as a bully tactic. Seems to me that the company that has invested in the product and put its investment at risk by publishing and signing the author should have final say about the pricing.

In reply to an earlier post on Aug 9, 2014 7:38:50 PM PDT
~nospin says:
Amazon has invested billions into data centers and customer service.

Hachette is a vendor. Vendors don't run the store.

In reply to an earlier post on Aug 9, 2014 7:45:03 PM PDT
" If you, Amazon, have proof of Hachette's collusion with other publishers to price-fix, file a suit."

Where have you been the last two years? The Department of Justice did in fact, file a law suit against the top publishers and Apple for collusion. They were found guilty and ordered to pay fines that were then distributed to ebook buyers. I received $144 in the settlement.

Posted on Aug 9, 2014 7:48:59 PM PDT
Bookwyrm says:
I'm really not sure that Amazon's objectives are "all about their consumers". I think ther's multiple reasons for trying to lower the prices they get from Hachette. Regardless, I think both parties should just get it over with. Yes, I want my book prices to stay low, but I also want them to be AVAILABLE.

Posted on Aug 9, 2014 7:50:07 PM PDT
http://www.washingtonpost.com/business/2014/06/06/203176c4-eb5c-11e3-b98c-72cef4a00499_story.html

Posted on Aug 9, 2014 7:52:27 PM PDT
http://www.washingtonpost.com/news/act-four/wp/2014/06/17/how-to-think-about-amazons-fight-with-hachette-over-book-pricing/

In reply to an earlier post on Aug 9, 2014 7:54:46 PM PDT
em·bar·go
verb
1.
impose an official ban on (trade or a country or commodity).

Amazon has not banned or stopped selling Hatchette books. From a post by Amazon describing the situation:

"We are currently buying less (print) inventory and "safety stock" on titles from the publisher, Hachette, than we ordinarily do, and are no longer taking pre-orders on titles whose publication dates are in the future. Instead, customers can order new titles when their publication date arrives. For titles with no stock on hand, customers can still place an order at which time we order the inventory from Hachette -- availability on those titles is dependent on how long it takes Hachette to fill the orders we place. Once the inventory arrives, we ship it to the customer promptly. These changes are related to the contract and terms between Hachette and Amazon."

In reply to an earlier post on Aug 9, 2014 8:04:07 PM PDT
Last edited by the author on Aug 9, 2014 8:06:41 PM PDT
Mack E. Tan says:
"Hachette is a vendor. Vendors don't run the store."

Hachette is a publisher. As publisher, it finds authors, signs contracts with those authors, pays royalties, invests in marketing and sales. Amazon is a store and a distributor.

When we sold books to bookstores, they were sold at a 50% discount from the recommended retail price. Publishers employ a battalion of marketing staff to develop quantitative market plans for each title. That plan must be approved by the head of marketing and must be in sync with the publisher's vision.

Bookstores can sell the books they buy at a discounted price for any amount they want, but the price of the book that's being sold to the bookstore is determined early on. If those books don't sell, the publishers are stuck with them; they get to return them, and no publisher wants returns, which is why so much salaried effort goes into researching the marketplace and coming up with a fair price.

What Amazon is doing is telling Hachette to disregard its own marketing division and do as it says regarding the pricing of a book they had nothing to do with during the publishing process. In addition, it is forcing the publisher to make a business decision that grows a market favorable to Amazon's interests but possibly jeopardizes its own in the long run.

As politicians are wont to say, let the marketplace determine the outcome. Hachette will eventually reconsider its pricing decisions if their products stop selling or if they lose authors. But Hachette is the publisher and it makes its decisions on its own business.

Posted on Aug 9, 2014 8:14:35 PM PDT
ohjodi says:
Only KINDLE e-books are sold on Amazon, so why should the publisher have to take the cut of Amazon wanting to discount the price of KINDLE e-books for use only with Amazon's own KINDLE and KINDLE software?? KINDLE is used as an advertising tool for Amazon....why should publishers pay for Amazon's own advertising?

In reply to an earlier post on Aug 9, 2014 8:16:48 PM PDT
~nospin says:
It is contract negotiations between two giant companies. Hachette is free to make its own decisions about business as is Amazon.

Feel free to buy Hachette books elsewhere.

In reply to an earlier post on Aug 9, 2014 8:23:44 PM PDT
Mack E. Tan says:
@ScottBooks

I really agree with Steven Pearlstein in all respects; he makes these points much better than I did.

I see both sides, really. I know how screwy and dated publishers' policies can be, having worked in that industry for decades. While Amazon is in a good position to bring them up to date, still, Amazon's principal interest is its own profit goals and not the health of publishing companies who see boosting the Kindle market as detrimental to publishers' more profitable, traditional revenue stream.

Ebooks and audiobooks that are published simultaneous with the more lucrative hardcover book demolishes the hardcover market. That has a dramatic impact on a publisher's health and its ability to even help authors create content. Eventually, it'll just get rid of publishers so that Amazon takes everything. That's not good. We need a diverse marketplace for creatives.

In reply to an earlier post on Aug 9, 2014 8:28:35 PM PDT
PF says:
Hachette USA has had 2 astoundingly bad years in a row, with staggering revenue loss in 2012 and 2013. It is now less than 10% of its parent company's revenue and ebooks have dropped to less than 1%. If they still haven't reconsidered after 2 such bad years, one wonders if they ever will.

http://www.hoovers.com/company-information/cs/company-report.Hachette_Book_Group.4a167e7de7733afd.html

Amazon incurs costs for their own marketing, storage, and sales of Hachette titles. Hachette does not pay for services such as "customers also bought" or email promotions. When Hachette sales tank in the wake of high prices it affects Amazon's bottom line as well. It's in Amazon's best interest not to go down with the Hachette ship.

In reply to an earlier post on Aug 9, 2014 8:33:25 PM PDT
Mack E. Tan says:
A Kindle ebook is still an ebook. It is derived from the author's work and provided by the publisher for sale in a different format. The publisher and the author retain rights to their work and receive payment for its sales. People can buy an ebook from Amazon or an ebook for kobo ereader. The publisher can't favor one ebook seller over another. That would be like a publisher selling books more cheaply to Barnes and Noble than to other competing book sellers. Lawsuit, big time.

Posted on Aug 9, 2014 8:37:53 PM PDT
Old Rocker says:
The history of business is a history of companies failing to keep up with progress.

Once, Sears was the mail order retail giant, basically filling the niche that Amazon does now. Sears is now an afterthought.

The management of big publishing companies hopefully realize that they need to evolve.

In reply to an earlier post on Aug 9, 2014 8:41:55 PM PDT
Old Rocker says:
An individual publisher can sell eBooks to different resellers for different prices. Nothing legally wrong with that at all. It's when they secretly collude to set prices that the legal issues come in.

In reply to an earlier post on Aug 9, 2014 8:49:43 PM PDT
Mack E. Tan says:
"Hachette USA has had 2 astoundingly bad years in a row, with staggering revenue loss in 2012 and 2013. "

I'm not surprised. I have a friend who's been a small publisher for decades now and for whom I freelance on occasion. I constantly nag him to update in tech areas, but that's all I can do. He still signs authors, he still sells books. It's his company. If someday his company crashes, it will be a result of his own decisions about his own company. If one day, he finds authors leaving him for a company with a more competitive business model, that's his choice. If Amazon really can't afford to sell Hachette books, then that's Amazon's choice--though it's not true. Amazon, like any other bookseller, can return books it did not sell. It can limit the number of books it orders originally if Amazon thinks they won't sell. I doubt Amazon's financial health depends on Hachette in any case.

Yes, Amazon is a store and has its own infrastructure to take care of. It has its own profit goals, I get that. But Amazon is not Hachette's sole marketplace or distributor, though an important one. You'd be surprised how many orders a publisher gets from all over the world that aren't handled by Amazon. A publisher making a decision based on Amazon's needs alone would be committing malpractice. It would not only cut its own throat but the throats of many other booksellers and retailers as well. No doubt Amazon would love this, but down the line, it would not be good for publishers or authors.

There are two sides to this argument, both sides having reasonable claims...and clear boundaries. That's all I'm saying, and I believe I've articulated both sides of the argument.

In reply to an earlier post on Aug 9, 2014 8:52:55 PM PDT
Last edited by the author on Aug 9, 2014 8:54:17 PM PDT
PF says:
Ebooks in general outsell physical editions 3 to 1 at Amazon. You cannot return ebook files, so you cannot recover losses. What Amazon gets back in returning paper isn't going to be enough to offset their own costs. Amazon is currently in a planned growth phases with expected losses in its Amazon Digital Editions division so they have to keep unplanned loss to a minimum in order to finance their own growth.

In reply to an earlier post on Aug 9, 2014 8:54:46 PM PDT
So far, to date, Amazon has done a Hell of a lot more for me than Hachette ever did. Guess whose side I am on.

In reply to an earlier post on Aug 9, 2014 9:01:47 PM PDT
Mack E. Tan says:
I'm not disagreeing with you. I'm a longtime reader and one on a budget. I have probably 1000 physical books in my home and in boxes. I can no longer afford physical books. I can't afford the shelving, I can't afford moving them from place to place. My son bought me a Kindle 3 years ago and now I look for the ebook.

However, I still favor physical books. For some strange reason, I get a more pleasurable reading experience from them. But I only get them from the library. I get a lot of my Kindle books from the library.

Amazon has every right to press for a better deal based upon its own needs. I wouldn't expect it not to. But publishers can't make their business decisions based on Amazon's plight. While I think publishers need to move more quickly into the 21st century, they need to do it in a way that keeps them in the game as well.

In reply to an earlier post on Aug 9, 2014 9:06:40 PM PDT
Last edited by the author on Aug 9, 2014 9:07:17 PM PDT
Mack E. Tan says:
"So far, to date, Amazon has done a Hell of a lot more for me than Hachette ever did. Guess whose side I am on."

We need a diverse marketplace with an array of healthy publishers, authors, retailers, etc.

I would fear Amazon becoming the Comcast of the book world. Most publishers can't afford to exist selling cheap ebooks and that would be the business model they adopted if they kill off other formats. You don't make money publishing hardcover books only for libraries. And with only ebooks around, what would happen to our libraries? They'd become archives.

There are ramifications to consider is all I'm saying.

Posted on Aug 9, 2014 9:12:57 PM PDT
Old Rocker says:
Amazon wants to sell publisher's eBooks for $9.99. Hachette is going for $14.99 or $17.99. Amazon claims that at $9.99 a book will sell so much better that it will actually make more money than a higher priced book. Hachette, it seems, disagrees.

In reply to an earlier post on Aug 9, 2014 9:18:03 PM PDT
PF says:
It sure seems like you are. You negate all of the costs of Amazon paying buyers, data analysts, shipping companies, dockworkers, forklift operators, warehouse pickers, warehouse packers, shipping departments, and inventory control specialists who first order and then return the paper books as though returns of unsold paper are enough. You also keep focusing on the contracting and selling terms of paper books when it's the digital rights that are under dispute. You are only considering the supply side. Demand side should carry equal weight in a fair transaction. Amazon is under no obligation to pay wholesale prices if they feel the terms are unacceptable. It's their right to focus on publishers who are willing to negotiate.

Amazon cannot unilaterally change the digital rights. They need a sales contract. When Hachette won't negotiate, their only recourse is to halt sales.

Further, I don't think that Hachette's Q2 2014 loss of a further 900 million euros is going to keep them in the game. Digging in their heels when they are running out of operating capital seems a much poorer strategy than sitting down to contract talks.
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Discussion in:  Kindle forum
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Initial post:  Aug 9, 2014
Latest post:  Aug 11, 2014

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