Daily Archives: August 9, 2014

Amazon Gets Increasingly Nervous

Amazon is not in the least bit happy about the full-page ad some authors have placed into the New York Times this weekend, complaining about its tactics in its negotiations with Hachette, so it is perhaps not entirely coincidental that this weekend Amazon is trying a new tactic: Trying to convince readers that it is in their best interest to favor Amazon’s business needs and desires.

Thus readersunited.com, which posts a letter from Amazon to eBook readers. Go ahead and take a moment to read it (another version, almost word for word, went out to Kindle Direct authors this morning as well), and then come back.

Back? Okay. Points:

1. First, as an interesting bit of trivia, readersunited.com was registered 18 months ago, which does suggest that Amazon’s been sitting on it for a while, waiting for the right moment to deploy it, which is apparently now.

(Update, 7:03pmmore information on the domain name and when it likely came into Amazon’s possession.)

But as a propaganda move, it’s puzzling. A domain like “ReadersUnited” implies, and would be more effective as, a grassroots reader initiative, or at the very least a subtle astroturf campaign meant to look like a grassroots reader initiative, rather than what it is, i.e., a bald attempt by Amazon to sway readers to its own financial benefit. Amazon isn’t trying to hide its association with the domain — it’s got an Amazon icon right up there in tab — so one wonders why Amazon didn’t just simply post it on its own site, to reinforce its own brand identity. The short answer is likely this: It’s just a really clumsy attempt to reinforce the idea that Amazon is doing this for readers, rather than for its own business purposes.

Well, surprise! It’s not. That much is obvious in the Tab header for readersunited, which (currently, at least) reads: “An Important Kindle request.” That much is correct — Amazon is doing this to support its own Kindle brand, not directly for readers (or for authors) at all. It was (again) clumsy of Amazon to leave that in there, but then I don’t think much of Amazon’s messaging in this corporate battle with Hachette has been particularly good. Amazon’s PR department is good at not commenting on its business practices; when it does comment, it does a lot of flubbing.

2. Amazon reheats in this new letter a number of arguments it made in a previous letter, arguments which have been picked apart by me and others. I’ll refer you to my previous commentary on the matter for further elucidation, and otherwise note that in general Amazon’s points make perfect and logical sense as long as one proceeds from the assumption that Amazon is the only distributor of books whose business needs one should ever consider.

Sadly for Amazon, the real world is not like that. Readers might see a benefit in not having Amazon being the only distributor of books in the world — if, for example, they like having physical bookstores in their home towns, employing local people and contributing to the local economy, and keeping money in the area rather than shipped to Seattle, or if, simply as a matter of practicality, they remember that companies trying to drive the market toward monopoly rarely are on the side of the consumer in the long run. Or for any other number of reasons.

3. Amazon’s new(ish) argument appears to be that the eBook is a new and amazing medium (which is in many ways true), and compares it to the paperback disrupting the publishing industry before World War II. Well, let’s talk about that for a second.

Leaving aside that Amazon’s initial phrasing of their argument seems to be largely and clumsily lifted from a Mental Floss article, and that paperback books existed well before the 1930s — see “penny dreadfuls,” “dime novels” and “pulps” (further comment on these and other flubs here and here) — the central problem with Amazon’s argument is economic, to wit, it’s trying to say that its drive to have all eBooks priced at $9.99 is just like paperbacks being priced ten times cheaper than hardcover books.

Well, except that $9.99 isn’t one tenth of the price of a hardcover book, otherwise hardcover books would regularly cost $100, which admittedly is a bit steep. $9.99 is something like 40% of the cover price of most hardcovers, and since most retailers discount from the cover price of a hardcover, the real-world price differential decreases from there. This is hardly the exponential cost savings that Amazon wishes to embed into the mind of the people to whom it is making its argument.

Amazon also continues the legerdemain of hyping very high e-book price points — it’s doubling down on its previous $14.99 boogeyman price point by introducing another one that’s even higher: $19.99! — while conveniently ignoring the fact that most eBooks are priced at neither of those price points, even ones tied into a new hardcover release.

As an anecdotal piece of information, the eBook price of my upcoming novel Lock In is $10.67 on Amazon — not $14.99 or even $19.99 — a price that is roughly 40% off the price that Amazon is willing to sell you the hardcover for ($18.62). As another anecdotal piece of data, Lock In currently the most expensive English-language eBook of mine in Amazon’s Kindle store — the other prices range from 99 cents (for various short stories of mine) to $9.01.

When Amazon’s absolutely-amazing, totally-disruptive price point of $9.99 is in fact less than 10% off from the real world price point of the latest eBook from a Hugo-winning, New York Times best-selling novelist with two television series in development, and more than the price of every other eBook of his, what does that tell you? It might tell you many things, but the thing I’m hoping it tells you is that the $9.99 price point is less about changing the world than it is about serving Amazon’s own particular business needs — not the needs of the consumer or (for that matter) the author or the larger business of bookselling. It’s worth it for readers to ask what Amazon’s business needs are.

4. My notation that only one of my English language eBooks is priced above $9.99 at all should bring home the point that this battle between Amazon and Hachette isn’t really about consumer choice. The consumer who wishes to buy a John Scalzi eBook will discover that more than 90% of his work available for sale for less than $10, just as she will discover that large majority of work of almost all authors is priced below $10. The budget-minded consumer is spoiled for choice in the sub-$10 eBook realm. If Amazon fails to get Hachette to bring down its prices on its new releases, than consumers will still be spoiled for choice in the sub-$10 eBook realm.

What it’s about is two large corporations — Amazon and Hachette — arguing about whose business needs are more important. Hachette wants to continue to price new-release eBooks above $9.99 so it can continue to make what it considers an acceptable amount of profit on new releases and then lower the price point as the new release matures, capturing other audiences as it goes. Amazon wants to nail the price at $9.99 because it’s in the business of selling everything to everyone, and price control is a fine way of locking the consumer into its business ecosystem.

But Hachette colluded! Leaving aside that Hachette’s past actions are neither here nor there in this new set of negotiations between these two corporations, if Amazon wishes to note the mote of illegal business action in Hachette’s eye, it ought to equally note the beam in its own. Which is to say that Amazon is no angel on the side of consumers any more than Hachette is — they both have their business interests, and by all indications they are both willing to see what they can get away with until they’re called on it.

It makes sense that Amazon wants to make this about the benefit for the consumer (or the author), just like any corporation wants to make their wholly self-interested actions look as if they’re meant to directly benefit their consumers and stakeholders. Consumers, like everyone else, should ask what’s really at stake.

5. Amazon is correct about one thing in this new letter — authors aren’t of a single mind about this. There are a lot of authors who rely primarily on publishers like Hachette for their income; there are a lot of authors who rely primarily on Amazon for their income; there are a lot of authors who publish in a wide range of ways and receive their income from both and from other sources as well. They will all argue from their own economic point of view because that’s how they keep their lights on. This is not (necessarily) disingenuous, but it may be uninformed or heavily biased depending on the knowledge and inclinations of the author in question.

Readers need to be aware of this and factor in who is saying what, and how their bread is buttered. They should also read more than one author on the subject. Corporations — and in this case Amazon and Hachette — benefit the less you know about their reasons for doing anything; their promoters and detractors benefit when you only take their word for things. So don’t. Find out more, and don’t rely on a single source for information on anything. Including me — look, I’m pretty sure I’m reliably skeptical all the way around, here, and anyone who thinks I have have it in for Amazon while fawning over large publishing houses is delightfully misinformed. But then I would think that, wouldn’t I. So, yeah, get other viewpoints. More information is always good.

6. With that said, if I were a writer whose primary source of income was Amazon’s publishing platform, I would be rooting like hell for Hachette to win this particular round of negotiations. Why? Because if I buy into the argument that Hachette, et al are artifically propping up eBook prices for their own benefit, and I’ve priced my own work below those artifically high price points, then in point of fact I’m cleaning up in the heart of the market while Hachette, et al are skimming in the margins — and the very last thing I want is a large and now-hungry corporation now competing with me at my price point out of necessity. Driving Hachette and all the other publishers into my territory is not likely to work out for me very well.

But they can’t compete there! They’ll die! They’re dying already! Well, I know you want to believe that. But if you’re basing your writing life on that assumption, then you’re leaving yourself open to a very very rude surprise. You need to understand that nearly all of these publishers have been around for a very long time — decades and in some cases centuries — and they’ve seen more market shifts in publishing and in the book market than possibly you can imagine, some of which were as disruptive as the current one. How many disrupting mammals have these lumbering dinosaurs already seen come and go? And believe this: These large publishers may or may not be able to eat Amazon, but they can surely eat you.

I think it is a very good thing that self-publishing and electronic publishing has come and shaken things up in the publishing field; it’s wonderful that authors can connect with readers without having to route through a publisher they have to convince that this audience is there. It is correct that large publishers tend to the conservative and safe, and do what they know, and often only what they know; it is correct that many authors are better off doing their own thing without them. It is wonderful, as a writer, to have options. Speaking for myself, I know I am better off because I have the option, at any time, to chuck my publishers and make a go of it myself. It keeps them appreciative of me, at the very least. But it does not follow that Amazon prevailing in this particular negotiation with Hachette signals the end of “traditional publishing” or that any particular author — independent or otherwise — will benefit if it did. It doesn’t follow that Amazon prevailing in this particular negotiation is beneficial to anyone other Amazon.

If Amazon does not prevail in this argument, it changes nothing for the authors who already use it as their primary means of distribution. They are still in the marketplace, they are still (largely) pricing their works below the very highest end of “traditional publishers” and therefore able to take advantage of readers who are motivated by price, and they are still able to benefit from not having to share their income on the work with anyone but Amazon.

If readers are in fact primarily motivated by price, then the revolution is already here and indie publishers and authors and readers are already benefiting from it while the traditional publishers slowly thrash and die of hypoxia. In which case all that Amazon will do by forcing publishers into lower price points is give them a shot of oxygen and cause them to compete on the point where indies presumably have the advantage: Price. If I were an indie author, I would rather let the publishers thrash and die away from me, then thrash near me and possibly crush me in their dying throes — which may not in fact be dying throes at all and just merely crushing me.

In sum and once again: Amazon is not your friend. Neither is any other corporation. It and they do what they do for their own interest and are more than willing to try to make you try believe that what they do for their own benefit is in fact for yours. It’s not. In this particular case, this is not about readers or authors or anyone else but Amazon wanting eBooks capped at $9.99 for its own purposes. It should stop pretending that this is about anything other than that. Readers, authors, and everyone else should stop pretending it’s about anything other than that, too.

(Update, 8/11: Followup responses to criticisms I’ve seen to this and other Amazon/Hachette pieces I’ve written.)