Amazon vs. Hachette Update - It's About Price

[DiapDealer]

Originally Posted by AnemicOak

What's "at first"? Most ebooks had a a list price that closely matched their paper book equivalent originally (back in the days of Fictionwise, etc.). The only thing that often made them as cheap or cheaper than a paper book was the street price after the retailer had discounted the book.

Exactly. If the physical book only existed in hardcover, the list price for the ebook was the same as the list price for the hardcover. Me and my Palm Vx can attest to that.

[Crusader]

Amazon emailed a letter to all KDP authors asking them to petition Hachette. Full letter here - http://www.teleread.com/ebooks/amazo...t-negotiation/

And someone responded with this on Twitter:

Amazon emailed all kindle publishers with a plea to pass a note to the CEO of Hachette on their behalf. Like high school, but more pathetic.

[Barcey]

Originally Posted by Crusader

Amazon emailed a letter to all KDP authors asking them to petition Hachette. Full letter here - http://www.teleread.com/ebooks/amazo...t-negotiation/

And someone responded with this on Twitter:

So Douglas Preston and pals called on their army of lemmings to fill up Jeff Bezos's email box and now Amazon has called on their army of lemmings to do the same to Michael Pietsch. Yep just like high school.

[rhadin]

Originally Posted by DuckieTigger

Appreciate that. I guess the point is that I left a snark in my post. And that snarky remark left the door open to simply ignore what I said. That is ok, it means you either agree with (part of) it and not say so, or you disagree and want to reply and cannot find a good enough argument against.

What was your point? That you think Amazon is the greatest thing to ever happen to humankind and that Hachette is the worst? Nothing you said was anything more than opinion and it is impossible to rebut opinion that is not based on anything more than belief.

If you mean your statement that I misunderstood what you originally wrote, well, I don't believe I did, but then you know best what point you were trying to express.

Perhaps whatever you think you said as irrefutable fact was only worth at most ignoring.

[petrucci]

As an author that has published with Amazon, I just received a letter from Amazon regarding their conflict with Hachette. They requested that I write to Michael Pietsch, Hachette's CEO about that matter. I will post my thoughts in a second message.

Here is the content of the e-mail:
"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: Michael.Pietsch@hbgusa.com

Copy us at: readers-united@amazon.com

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"

[petrucci]

It is my opinion that e-book prices are vastly overinflated. At $9.99, an e-book is still more expensive than an average movie ticket. A movie takes a whole lot more work to produce.

Some may argue that e-book prices need to be high because sales volume is low. I agree that if sales volume is truly low, then a higher price may be justified. However, it is ironic that some of the more expensive e-books are popular ones, which have a high volume of sales.

[pwalker8]

Originally Posted by petrucci

It is my opinion that e-book prices are vastly overinflated. At $9.99, an e-book is still more expensive than an average movie ticket. A movie takes a whole lot more work to produce.

Some may argue that e-book prices need to be high because sales volume is low. I agree that if sales volume is truly low, then a higher price may be justified. However, it is ironic that some of the more expensive e-books are popular ones, which have a high volume of sales.

It's not ironic, is classic supply and demand. People are willing to pay more for good or popular books, it's the not so popular books that publishers have to charge less, or give away.

[pwalker8]

Originally Posted by Barcey

So Douglas Preston and pals called on their army of lemmings to fill up Jeff Bezos's email box and now Amazon has called on their army of lemmings to do the same to Michael Pietsch. Yep just like high school.

From a PR point of view, the difference is that the authors initiated it on the Hatchette side (or at least if Hatchette initiated it as some speculate, no one has presented any evidence that Hatchette initiated it) while on the Amazon side, Amazon is prompting their authors to mail bomb Hatchette. It's the difference between grassroots and astroturfing in politics. I suspect that it's unlikely to sway anyone to Amazon's side in the PR battle.

From a more practice point of view, why should the indie authors care what Hatchette wants to sell ebooks at? From their POV, don't they want Hatchette ebooks to be as pricey as possible? That way, readers who care more about price than specific authors are more likely to buy from the indie authors.

[shalym]

Originally Posted by pwalker8

From a PR point of view, the difference is that the authors initiated it on the Hatchette side (or at least if Hatchette initiated it as some speculate, no one has presented any evidence that Hatchette initiated it) while on the Amazon side, Amazon is prompting their authors to mail bomb Hatchette. It's the difference between grassroots and astroturfing in politics. I suspect that it's unlikely to sway anyone to Amazon's side in the PR battle.

From a more practice point of view, why should the indie authors care what Hatchette wants to sell ebooks at? From their POV, don't they want Hatchette ebooks to be as pricey as possible? That way, readers who care more about price than specific authors are more likely to buy from the indie authors.

So I guess "grassroots" would be the petition on change.org that's gotten almost 8,000 signatures?

http://www.change.org/petitions/hach...and-fair-wages

Shari

[tubemonkey]

Originally Posted by pwalker8

...(or at least if Hatchette initiated it as some speculate, no one has presented any evidence that Hatchette initiated it)...

No proof mind you, but my guess is that big shots from Hachette sat down with big shot authors and "suggested" it over lunch one day

[tubemonkey]

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.

This! eBooks need to be priced to remain competitive with other digital content.

[TCSimpson]

Originally Posted by pwalker8

From a more practice point of view, why should the indie authors care what Hatchette wants to sell ebooks at? From their POV, don't they want Hatchette ebooks to be as pricey as possible? That way, readers who care more about price than specific authors are more likely to buy from the indie authors.

Reading this tells me you really haven't read or clicked links to people's points of view that were contrary to yours throughout this entire debate, that you simply post the same bit of opinion you have.

If you had bothered to read links, you would realize that the change.org letter was penned by indie authors that included Hugh Howey and Joe Konrath. And signed by thousands of indie authors.

[Shane R]

Originally Posted by petrucci

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.

Is this the plain unvarnished truth?

[Josieb1]

I think this post by a KDP author sums it all up nicely

http://terribleminds.com/ramble/2014...end-the-realm/

[Shane R]

It looks like they twisted Orwells words.