Sunday, May 25, 2014

Hatchet Job

If you've kept up at all in recent days on writing blogs, then you've probably caught wind of a spat between two of the industry's giants, Amazon and HachetteSeveral articles help break down the argument, but it boils down to a major disagreement over splitting the revenue that technological change has brought on, namely e-books.

Writers in the indie market like to set our prices in accordance with what we think the market will support.  Most of us are also low-ball operations with very little overhead or expense.  We understand that it costs next to nothing to create an e-book, which is one of the appeals.  We also understand that although people may be willing to shell out $15-$25 for a hardback novel, few are willing to do so for a download.  It's the perception of value and what the consumer thinks it gets for that price, and something you read on the screen doesn't compare to that which you can hold in your hand.  That's not to say that our stories aren't appreciated in e-book form, but rather that people want something tangible if they're going to fork over major cash.  The public knows that there are no printing presses or glossy covers in an e-book to justify exorbitant expense.

Traditional publishers, on the other hand, continue to believe they can charge for e-books what they charge for hardcovers.  While some get that traditional publishers are still paying for editors, in-house lawyers, physical publishing facilities, etc, almost no one cares.  The value just isn't there to fork over $15 for a download when so many others are available.

For that reason, Amazon chooses to discount the e-books that it gets the contract to distribute.  Such things push books, but they also hold down Amazon's profit margins since the publishers still insist on a relatively high percentage of revenue from the e-books.  After lots of hurt feelings on both sides, Amazon has had enough, so they've decided to cut off one of the Big 6 - Hachette.  What Amazon is doing will delay or even cut off the writers of Hachette from using Amazon as a distribution medium.  Given that Amazon is one of the largest book distributors on the planet, their curtailing of Hachette novels puts a serious crimp in the revenue that company and its writers take in.

I'm not gong to sit here and pretend that either side is altruistic here.  In the end, it boils down to money.  That's why both companies exist - to make money.  No, it's not to make sure you get your favorite author as soon as his or her next work hits shelves, or to distribute literary masterpieces so writers can pay the light bill with their earnings - it's to make a profit for the company.

Most traditional writers are coming down on the side of Hachette and complaining that Amazon is choking the market.  I get that.  However, where they lose me is in the groveling way they are sucking up to their publishers to do so, as if Hachette is interested only in getting books to market so they can entertain the masses.  Sorry, but Hachette shares some blame here by not recognizing the changing market conditions that e-books have created.  Hachette appears to not even be considering reducing its e-book prices, which is a reason why traditional sales have gone down while indie sales have skyrocketed.  I do find a certain amusement in the fact that folks like Hachette are contributing to their own demise by stubbornly refusing to get that pricing has to change if they want to maintain market share.

Further, I believe that Hachette's writers are being kind of narrow minded here.  If people want the latest from Nicholas Sparks or JK Rowling, there are outlets besides Amazon.  This could give rise to new distribution channels, or publishers could find a way to distribute it themselves.  However, they won't lower prices at their organic sites the way Amazon does, which, coincidentally, is exactly why they can move so much volume through that distributor.

Amazon isn't a paragon of virtue here either.  They're the big kid on the block, and after the way traditional publishers and Apple tried to fix e-book prices, Amazon isn't feeling generous enough to back down since they think they now have the upper hand to force change in things like revenue sharing.  They know they can make publishers change, or those publishers will have to find new distribution channels(something not easy to do).  So they're flexing some muscle, and a few people don't like it.

(On a side note, I find the irony especially delicious about how folks like James Patterson and others are crying that Amazon is killing independent bookstores after embracing Barnes & Noble and Borders...which were the giant bookstores that initially killed off small independent bookstores.  There was even a movie about that - maybe you've heard of it.)

My guess is that some accommodation will be reached, with Amazon getting most of what it wants.  I grant that I could be wrong, but I can't see Hachette giving up its main distribution channel to its customers.  Yes, they'll bitch and scream for a while, but I think they'll have little impact in the end.  Ironic that Hachette is screaming about a thing - discounting e-books - that could, in fact, save it from indie.  However, I don't think they'll recognize their contribution to their own downfall until after they've gone past the point of no return.

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