Open response to Amazon: Important request

As someone who publishes books through Amazon Kindle Direct, I received a long email today asking me to take Amazon’s side in their dispute with publisher Hachette.

I’ve added the full text of their email below. You can read more about the dispute here. In summary, Amazon wants to sell Hachette’s eBooks for cheaper, Hachette doesn’t want to. That’s fair enough. Amazon has taken the tactic of removing pre-orders for some of Hachette’s titles and removed faster shipping options as well as removing promotions. That’s hardball but that’s business. If you’re mad at Amazon because you thought it was nicer than this, it’s probably a good reminder that Amazon is a for-profit business like any other.

But then today Amazon finally irked me. It appealed to me as someone locked into its frustratingly restrictive publishing system to help its business negotiations.

Why Amazon’s KDP Select Bothers me

You see, Amazon has a promotional system called KDP Select. You get better royalty rates and promotion of your ebooks if you agree not to sell them anywhere else. I’ve usually declined to do that because I believe in making most everything I create available as widely as possible. I also don’t like encouraging monopoly behavior. In fact most of my eBooks I make available freely as un-DRM’d PDFs with a Creative Commons license, including one called “Chronology of Tech History.”

However, when Scott Johnson and I decided to try monthly Kindle singles about tech history, using the facts from “Chronology,” I decided to sign up for KDP Select. We weren’t going to publish these smaller and illustrated eBooks anywhere else, so why not? Turns out “why not” is because Amazon wants to control all text not just editions. My first submission was flagged as in violation because someone had published a pastebin of my Chronology of Tech History, which has much of the same text in it as the Kindle Singles.

I explained to Amazon that my Kindle single certainly shared text with that larger work, but was a different edition with illustrations. The representative very politely and nicely explained that the text could not be available anywhere else but Amazon in order to qualify for the program. So I removed the singles from that program.

What Amazon asked us to do today
Now back to today. Amazon asked me (in a form letter) to email Hachette’s CEO and gave the following points to work from.

- We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.
– Lowering e-book prices will help – not hurt – the reading culture, just like paperbacks did.
– Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.
– Especially if you’re an author yourself: Remind them that authors are not united on this issue.

What I ask Amazon
Instead, I have emailed the following to Jeff Bezos

- I have noted your illegal monopoly. Please stop working so hard to restrict distribution by others. Ebook distribution can and should be more widespread.
– Loosening restrictions on distribution will help – not hurt – the reading culture, just like Kindle did.
– Stop using your authors as leverage and take them out of the middle of your fight against other distributors.
– Just because authors take part in KDP Select does not mean all authors believe it is best for us all.

I admire Mr. Bezos and his company. I rely on Amazon for a lot. I think it provides valuable services. I don’t feel like helping it fight with Hachette. I certainly won’t unless it stops treating me and other solo authors this way.

Here’s the full text of the email that was sent to Kindle Direct Authors.

Dear KDP Author,

Just ahead of World War II, there was a radical invention that shook the foundations of book publishing. It was the paperback book. This was a time when movie tickets cost 10 or 20 cents, and books cost $2.50. The new paperback cost 25 cents – it was ten times cheaper. Readers loved the paperback and millions of copies were sold in just the first year.

With it being so inexpensive and with so many more people able to afford to buy and read books, you would think the literary establishment of the day would have celebrated the invention of the paperback, yes? Nope. Instead, they dug in and circled the wagons. They believed low cost paperbacks would destroy literary culture and harm the industry (not to mention their own bank accounts). Many bookstores refused to stock them, and the early paperback publishers had to use unconventional methods of distribution – places like newsstands and drugstores. The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.” Yes, George Orwell was suggesting collusion.

Well… history doesn’t repeat itself, but it does rhyme.

Fast forward to today, and it’s the e-book’s turn to be opposed by the literary establishment. Amazon and Hachette – a big US publisher and part of a $10 billion media conglomerate – are in the middle of a business dispute about e-books. We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive.

Perhaps channeling Orwell’s decades old suggestion, Hachette has already been caught illegally colluding with its competitors to raise e-book prices. So far those parties have paid $166 million in penalties and restitution. Colluding with its competitors to raise prices wasn’t only illegal, it was also highly disrespectful to Hachette’s readers.

The fact is many established incumbents in the industry have taken the position that lower e-book prices will “devalue books” and hurt “Arts and Letters.” They’re wrong. Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books. On the contrary, paperbacks ended up rejuvenating the book industry and making it stronger. The same will happen with e-books.

Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.

Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger.

But when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move. It was never in George Orwell’s interest to suppress paperback books – he was wrong about that.

And despite what some would have you believe, authors are not united on this issue. When the Authors Guild recently wrote on this, they titled their post: “Amazon-Hachette Debate Yields Diverse Opinions Among Authors” (the comments to this post are worth a read). A petition started by another group of authors and aimed at Hachette, titled “Stop Fighting Low Prices and Fair Wages,” garnered over 7,600 signatures. And there are myriad articles and posts, by authors and readers alike, supporting us in our effort to keep prices low and build a healthy reading culture. Author David Gaughran’s recent interview is another piece worth reading.

We recognize that writers reasonably want to be left out of a dispute between large companies. Some have suggested that we “just talk.” We tried that. Hachette spent three months stonewalling and only grudgingly began to even acknowledge our concerns when we took action to reduce sales of their titles in our store. Since then Amazon has made three separate offers to Hachette to take authors out of the middle. We first suggested that we (Amazon and Hachette) jointly make author royalties whole during the term of the dispute. Then we suggested that authors receive 100% of all sales of their titles until this dispute is resolved. Then we suggested that we would return to normal business operations if Amazon and Hachette’s normal share of revenue went to a literacy charity. But Hachette, and their parent company Lagardere, have quickly and repeatedly dismissed these offers even though e-books represent 1% of their revenues and they could easily agree to do so. They believe they get leverage from keeping their authors in the middle.

We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture. We’d like your help. Please email Hachette and copy us.

Hachette CEO, Michael Pietsch:

Copy us at: [email protected]

Please consider including these points:

– We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.
– Lowering e-book prices will help – not hurt – the reading culture, just like paperbacks did.
– Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.
– Especially if you’re an author yourself: Remind them that authors are not united on this issue.

Thanks for your support.

The Amazon Books Team

P.S. You can also find this letter at www.readersunited.com

11 comments for “Open response to Amazon: Important request

  1. August 9, 2014 at 3:58 pm

    Wow! Great post! The whole thing is so dodgy to me, I don’t care for it. :\

  2. Rob Weir
    August 9, 2014 at 4:02 pm

    Amazon seem to be trying to pull the trick of being the customer’s friend, while also extracting as much money as possible. I agree with them in terms of the oddity of eBook pricing – for example the way that the price of an eBook drops when the paperback comes out, despite the eBook being exactly the same as when it was at hardback price. They have a target in the publishing companies who are not exactly known for fair dealing – their attempts to limit the number of times an eBook could be borrowed from a public library service before expiring being a particularly egregious example. Nevertheless, Amazon are themselves in a de facto monopoly position with Kindle and this smacks of them using the power that gives them. They are a monopoly as their ecosystem and devices are the most successful and deservedly so – and I say that as a Kobo user. But that doesn’t mean they should be allowed to use that monopoly position to dictate terms to publishers and authors…..

  3. tw
    August 10, 2014 at 1:33 am

    You had me until “monopoly”…

  4. Tom
    August 10, 2014 at 12:12 pm

    Yeah that was me clumsily mimicking Amazon’s overwrought accusation of Hachette.

  5. Matthew Wright
    August 10, 2014 at 11:12 pm

    Great point, Tom. They don’t seem to be able to, however, search the entire internet to see if text is published elsewhere: I also have a KDP Select book, and the text it contain is published elsewhere on the internet, and I have yet to have Amazon object to this. Go figure.

  6. tw
    August 11, 2014 at 12:16 am

    The thing is monopoly has specific definitions in both common and legal understanding. Misusing it hurts your argument more than it helps, like I said you had me without that. (btw this isn’t directly at you Tom but I’ve seen/read/heard too many supposed wordsmiths misusing “monopoly”, it just makes me think that the author hasn’t a clue.)

    SO while Amazon doesn’t come close to being a monopoly, Hatchette and most of the other big 6/5 dinosaurs of publishing did actually collude in an illegal manner and were found to have done so by the feds.

    Don’t get me wrong, I think Amazon is a predatory company, but no more and no less than Hachette. Btw you can put as much blame for “restricted distribution” on the big 5/6 as Amazon, after all they insisted on drm for ages. AFAIK only baen has been a champion of drm free distribution from the get go. Sure McMillan/tor jumped on it during their spat with Amazon a couple years ago, but before that they were drming everything. The publishers are simply reaping the whirlwind they sowed. And a pox upon their houses…hey can I throw some more cliches in…

    Let me sum up my feelings on the matter, the dinosaurs are dinosauring, the predators are predatory, authors are stuck in the middle, those authors who get big checks from either side need to shut up you arent helping – if anything you are just making yourself look worse.

    Thanks for the time and space.

  7. Tom
    August 11, 2014 at 12:20 am

    I understand your point about monopoly. However amazon does stand accused of antitrust in Germany. And Hachette was not found guilty of collusion. They settled without a court case. So Amazon throwing that out isn’t much different. Also Amazon is trying to monopolise distribution. I still agree the argument is stronger for me I I don’t imitate Amazon’s hyperbole.

  8. Tom
    August 11, 2014 at 12:22 am

    Totally agree with you about the dinosaurs and predators. Neither side is in the side of the consumer.

  9. Michael
    August 11, 2014 at 5:02 pm

    The phrase “illegal monopoly” was inaccurate on Tom’s part in the line “I have noted your illegal monopoly. Please stop working so hard to restrict distribution by others. Ebook distribution can and should be more widespread.”

    What that line should have said was “I have noted your monopolistic tactics. Please stop working so hard to restrict distribution by others. Ebook distribution can and should be more widespread.”

  10. Don
    August 12, 2014 at 5:06 pm

    Hey Tom, as always, I appreciate the insights on the hot issue here.

    I am torn, as I certainly would appreciate a discount on the price of books. I think pricing ebooks at the same rate as a regular book is stupid. Its like getting an itunes movie, vs buying the DVD. I own the physical DVD and can lend or give it away, as its my property. That is certainly not the same with ebooks, so there should be a discounted price for a digital copy. I am also tied to the kindle platform, so if I want to use a Kobo e-reader, I am stuck. There has to be some kind of break in the price for those concessions.

    I can understand the concerns about a massive retailer having and weilding monopolistic power, so I get where you are coming from.

    I also, think this whole thing will work itself out, when one publisher bucks the trend and starts following a model that does work. If Amazon is right, and it results in a 75% increase in sales, authors will want to move to the publishers that are making authors the most money.

    Just another media that is being disrupted by digital delivery technology.

  11. Laura LeBleu
    August 12, 2014 at 6:26 pm

    I’d trust them more if they knew how to use an em dash.

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