Amazon removes Hachette buy links from its stores.

JournoWriter said:

QFT. I have a friend with a Hachette book coming out in July that's gotten great early buzz, a big-name award, a recent NYT blurb, etc., and the Amazon pre-order links that have been pushed are now all dead. Amazon is screwing with authors' livelihoods and careers.

My guess, because I'm a suspicious individual, is that it's partly hoping the authors will put pressure on the publisher to resolve this quickly, and thus at terms more favorable to Amazon.

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Oh, Hachette is to blame here as well. Agency Pricing helped writers make more money about as well as it enticed readers into buying more books, the Big 6 and Apple didn't undertake it to make their authors bank accounts bigger did they? That said, authors will rise up, but against Amazon, because they can't bite that hand that not only feeds them, but controls their IP as well. If authors could complain and get their way, my Hugo Packet with books from Hachette wouldn't have "Extended Excerpts" from Charlie Stross, Mira Grant and Ann Leckie, but the full books the Authors wanted sent out.

Dav

thothguard51 said:

Two things about Michael.

While I respect him as an author, he did not voice his concern for his fellow authors when things were going down hill with his wife's publishing house, Ridan, through which he was published. As far as I know, to date, he still has not talked publically about Ridan's down fall or how the other authors were treated.

Secondly, in his statements about the Hachette/Amazon situation, he suggest a fair split of 35/35 between the publisher and author and 30% with Amazon.

I am not sure how he figures that he should get a equal split with his publisher when they have done all the work, plus, he got an advance. Six figures if I remember right. His publisher Orbit, a Hachette sub, did the final editing, the formatting to the various e-formats, the cover design, and got the reviews, not to mention the art work, and paid for the printing of the paper versions.

This is not to say Michael could not have done so himself, as he has in the past. But when he went with the big boys, he agreed to their terms and now he is whining because Amazon wants more of the pie and Hachette/Orbit is digging in?

As Michael said, even if self published authors lose the 70% from Amazon and are reduced to 35%, that is still more than what he would be getting from Orbit at 17.5% at his current deal with them. But I don't think he or many other SP are thinking about how much they have to spend to equal what the big boys do. Especially in time as Michael has had the time to devote to writing full time, and do less social media type stuff than he did when he was on his own, or with Ridan... That has got to be worth something...

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I'm curious to know what you think all that is actually worth. As a SP author, I know I can find good editing and cover art for less than two grand. Formatting can run up to a couple hundred depending on how many different ways you want it done. For an SP author, that all equates to a one-time fee that can be, let's round up, about $3000.

Let's say you go with trade publishing though. You get the standard 12.5% royalties on a seven year contract. No ebook though, let's say you just get the straight to paperback version and that's it. Let's also say you do moderately well and sell 50,000 copies over that seven years. Your cover price is $8.99. Making a gross $449,500. Now, the bookstores buy at a discount, 40%. So your publisher makes $269,700 in gross. You get 12.5% of that, a meager $33,712.50.

Now, I'm not going to state that editing and cover art are more valuable than the author and his original work. So let's say 10% covers the publishers costs on all those. That still leaves $26,970 for their editing, cover art, and formatting. Is is really worth that much? And if you renew your contract, you just keep paying them even more for it, you don't get new and better terms, even though all that should be well paid for by then. And what about longer contracts? Ten years? Life of copyright? Add in ebooks and hardcovers and they just make even more money.

Does it seem proper to have to be paying for editing, formatting, and art for the full published life of the book?

Publisher also has overhead...
Publisher also has attorneys on retainer...
Publisher is more capable of getting books into brick and mortar stores, book clubs, etc.

All of which the author does not devote any time, or financial commitment to helping the publisher succeed.

I am not saying the author, whose IP the publisher is banking on, should not get a bigger cut, but when you also add in the advance, especially in a case like Michael Sullivan who got a six figure advance, well; well, a 35/35 split on Amazon with Orbit/Hachette is not reasonable. IMHO. And yes, I understand the advance is not a lump sum but split over the three book series.

A self publisher that can afford to mass produce his/her product, warehouse it, pay for the overhead, lawyers, get their product into the brick and mortars nationwide, is going to spend more time on the business end than on writing the next best seller...

That time has got to be worth something...

You're aware that when an advance is involved, that's paid forward on future royalties? So the author gets nothing until the advance is earned out by sales.

And are you saying that the remaining $209,018 from my example after the author's 12.5% and the 10% for book management are taken out isn't enough? And that's just on one book by one author. Most major trade publishers have thousands of books they're reaping profits on, many probably much more lucrative than my example.

I'm not familiar, are the lawyers on retainer there for their authors in case some kind of libel or copyright issue is brought against them? If not, I fail to see why their retainers should be paid for out of a book's profits and not out of some general operating budget.

Publisher also has overhead...
Publisher also has attorneys on retainer...
Publisher is more capable of getting books into brick and mortar stores, book clubs, etc.

All of which the author does not devote any time, or financial commitment to helping the publisher succeed

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Well, if Big Publishing had joined the 21st century instead of keeping their heads and feet in 1995 this wouldn't be an issue. They ceded all this territory to Amazon, watched the recording industry flail around with a smug look of "That will never happen to us" and are now upset "Things aren't the way they used to be!"

A self publisher that can afford to mass produce his/her product, warehouse it, pay for the overhead, lawyers, get their product into the brick and mortars nationwide, is going to spend more time on the business end than on writing the next best seller...

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Well, thats demonstrably untrue.

That time has got to be worth something...

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It is worth something, 87.5%. Of which half probably goes to their bottom line. It could be less, but its certainly not 12.5%.

Do you think in the current fight between Hachette and Amazon, Hachette is taking the stance they are in order to send more money into their authors pockets?

Dav

Yes, the lawyers will represent the author in many cases, but not all, concerning the IP rights. It is in the publishers best interest. Also, take down or cease and desist notices carry more weight in many cases coming from a lawyer than Joe no-body...

Yes, I understand the advance is paid against future royalties and the author does not collect any royalty until the advance pays out. But in many cases, the advances never pay out. In those cases, should we give the publisher a percentage back. Hell no. The publisher gambled, paid out, lost, end of story.

My point was/is that Michael Sullivan did not take a lot of things into consideration, or explain why he feels authors should get a 35/35 split on amazon. Is that after his advance is paid back, which in many contracts after a certain amount of sales, the authors share is increased.

Michael is/was talking all manuscript formats sold on amazon, e-books to print books and audio. Obviously, different formats should be negotiated separately. IMHO, one size does not fit all.

This is why I would want an agent figuring all of this out. Let the agent work for me, and if he/she can not explain to me, to my satisfaction, I find me a new agent...

Or so is my opinion...

Let's see. When my books published by a mid-sized independent press were still in print, Amazon got a 50% discount and I was paid 10% on net revenue.

This meant that for every book sold on Amazon, Amazon received $4.00 and I received $0.40. These figures (or at least percentages, since the Amazon price is less than $8) hold true for the e-books.

Now Amazon wants even more.

Colour me unimpressed. I don't see why Amazon should get 10 times as much as I do, when I wrote the books and all Amazon does is host the files and electronically process payments.

Dav,

Neither party is fighting for the author and I am not saying the author does not deserve more. I am saying Michael Sullivan's logic does not fit the solution as he defined a possible solution, and again, just IMHO...

AS to 1995, that is old news and old SP propaganda...

The big five today are more into the 21st century technology than most SP will ever dream of. They have the technology, the skill, and the capital to make things happen. Do you really believe that the big 5 are going to sit on the side of the road and let all their stock just dry up and die to Amazon?

What Hachette and Amazon are fighting over has nothing to do with the big 5 behind in technology. And like Michael said, which I think he got right, he is under no delusion that Amazon will keep the 70% royalty share for SP writers forever. They are already starting to cut this 70/30 split back... So Amazon is not the SP best friend neither...

Publishing is a business, no matter how the author is published, it is and always has been a business.

Terie said:

Let's see. When my books published by a mid-sized independent press were still in print, Amazon got a 50% discount and I was paid 10% on net revenue.

This meant that for every book sold on Amazon, Amazon received $4.00 and I received $0.40. These figures (or at least percentages, since the Amazon price is less than $8) hold true for the e-books.

Now Amazon wants even more.

Colour me unimpressed. I don't see why Amazon should get 10 times as much as I do, when I wrote the books and all Amazon does is host the files and electronically process payments.

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How many books do you sell without Amazon? There is your answer.

Do you deserve more? Obviously. But then when you create the delivery system, I guess you can afford to demand the lions share.

I am not sticking up for Amazon, I am just looking at the situation realistically...

Now, if all SP authors as well as small indie presses said we are no longer going to use Amazon, who do you think would be able to hold out longer?

thothguard51 said:

How many books do you sell without Amazon? There is your answer.

Do you deserve more? Obviously. But then when you create the delivery system, I guess you can afford to demand the lions share.

I am not sticking up for Amazon, I am just looking at the situation realistically...

Now, if all SP authors as well as small indie presses said we are no longer going to use Amazon, who do you think would be able to hold out longer?

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My point is that Amazon already gets the biggest single piece of the pie in exchange for performing the least amount of work and making the smallest financial investment...and bearing the smallest amount of risk. Wanting more only proves how greedy Amazon is.

Which is not to say that a heck of a lot of us are surprised. We've been saying for years that once its monopoly is firmly established, Amazon would start throwing its weight around more and more. Behold.

I agree, Amazon is greedy. But then so are the publishers who have shareholders to report too each quarter.

I suppose that if I sold my name in stocks and had shareholders to report to, then I would be a bit more greedy as well... It is business after all and not a charity...

Terie said:

Let's see. When my books published by a mid-sized independent press were still in print, Amazon got a 50% discount and I was paid 10% on net revenue.

This meant that for every book sold on Amazon, Amazon received $4.00 and I received $0.40. These figures (or at least percentages, since the Amazon price is less than $8) hold true for the e-books.

Now Amazon wants even more.

Colour me unimpressed. I don't see why Amazon should get 10 times as much as I do, when I wrote the books and all Amazon does is host the files and electronically process payments.

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Is it Amazon's fault your share is so little? Maybe you should be complaining to your publisher that you want a higher royalty than complaining about the company that actually gets your work in front of consumers.

thothguard51 said:

Dav,

Neither party is fighting for the author and I am not saying the author does not deserve more. I am saying Michael Sullivan's logic does not fit the solution as he defined a possible solution, and again, just IMHO...

AS to 1995, that is old news and old SP propaganda...

The big five today are more into the 21st century technology than most SP will ever dream of. They have the technology, the skill, and the capital to make things happen. Do you really believe that the big 5 are going to sit on the side of the road and let all their stock just dry up and die to Amazon?

What Hachette and Amazon are fighting over has nothing to do with the big 5 behind in technology. And like Michael said, which I think he got right, he is under no delusion that Amazon will keep the 70% royalty share for SP writers forever. They are already starting to cut this 70/30 split back... So Amazon is not the SP best friend neither...

Publishing is a business, no matter how the author is published, it is and always has been a business.

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Maybe they're not exactly behind in technology, but they ceded the race to Amazon in the first place when they watched the music industry fold and decided ebooks weren't going to be anything but a fad. Now they are so far behind, there's no realistic way they can catch up except by trying to force high prices down the throats of their distributors and onto the consumers. It also seems like every quarter they pump out some kind of report which says ebook sales are leveling out and the boom is over, even though their own sales reports continue to grow.

Terie said:

My point is that Amazon already gets the biggest single piece of the pie in exchange for performing the least amount of work and making the smallest financial investment...and bearing the smallest amount of risk. Wanting more only proves how greedy Amazon is.

Which is not to say that a heck of a lot of us are surprised. We've been saying for years that once its monopoly is firmly established, Amazon would start throwing its weight around more and more. Behold.

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Oh, right, how dare some company try to make a profit by selling something someone else made! How DARE they?!? Amazon is just evil and greed personified! They're nothing like our benevolent masters the Big 5 and other trade publishers, taking an author's work, demanding changes be made to attract a certain demographic, slapping on their own choice of cover art, and then giving the writer the smallest piece of the pie possible while they rake in millions in profits...

Oh...nevermind...

And as usual, the little guy gets crapped on. Welcome to capitalism.

Davout73 said:

That said, authors will rise up, but against Amazon, because they can't bite that hand that not only feeds them, but controls their IP as well. If authors could complain and get their way, my Hugo Packet with books from Hachette wouldn't have "Extended Excerpts" from Charlie Stross, Mira Grant and Ann Leckie, but the full books the Authors wanted sent out.

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Just on this:

The Hugo packets decision was a bad one and it hasn't been properly justified by Orbit, in my opinion. Charlie Stross has made it clear he disagrees. But he's also made it clear why he disagrees with Amazon on a lot of things. It seems odd to suggest he's being disingenuous w/r/t publishers but not w/r/t retailers, especially when both are crucial for selling your book.

Data point: Stross is able to negotiate DRM-free and CC-licensed releases for his work despite Big 5 publishing being extremely leery of the idea. This suggests he isn't cravenly withholding criticism of his publishers out of fear for his contracts.

This IS capitalism. Sorry. What was Microsoft like in the 90's? Did Barnes and Noble and Borders feel sorry for all those small, independent bookstores they drove out of business? All businesses try to maximize profits. That especially applies to any business that is a monopoly or has a dominant share of the market.

I am a self-published author who uses the KDP Select program. That's not because I am in love with Amazon. It's because I decided I could make more $ from the free Select downloads then I could from sales on the Nook and other platforms. When Amazon stops offering 70% royalties, something I agree is coming, I will leave Select and start selling on other platforms. Again, not because of my personal feelings for Amazon, but because I will see it as being in my own best interests.

I am sure that both Amazon and Hachette are acting in their own best interests. That is what companies, and all businesses, do. As authors we should simply understand neither of them are on our side.

LOTLOF said:

This IS capitalism. Sorry. What was Microsoft like in the 90's? Did Barnes and Noble and Borders feel sorry for all those small, independent bookstores they drove out of business? All businesses try to maximize profits. That especially applies to any business that is a monopoly or has a dominant share of the market.

I am a self-published author who uses the KDP Select program. That's not because I am in love with Amazon. It's because I decided I could make more $ from the free Select downloads then I could from sales on the Nook and other platforms. When Amazon stops offering 70% royalties, something I agree is coming, I will leave Select and start selling on other platforms. Again, not because of my personal feelings for Amazon, but because I will see it as being in my own best interests.

I am sure that both Amazon and Hachette are acting in their own best interests. That is what companies, and all businesses, do. As authors we should simply understand neither of them are on our side.

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That's all fine and well for self-pubbed authors like yourself. But for those who take the traditional route to publishing, it's not so fun, especially since they barely make a profit from their sales as it is. So it's not in the author's best interest that Amazon is doing this. It's hurting the author, and to an extent, it's hurting those who read their books.

And as for the "none of them are on our side" bit, I beg to differ. The publishers make money off book sales. Without the author, the publisher doesn't get paid. And since Amazon is currently making it nearly impossible for them to sell their books, nobody wins. Not Amazon, not Hatchette, and definitely not the author. So please don't roll your eyes at this, especially since your sitting comfortably on the shoulders of the giant.

Maybe the publishers need to band together and buy Barnes and Noble outright as a counterweight to Amazon.

Not that I'm a fan of the Big 5 either and Amazon is pretty much responsible for making self publishing respectable. Still, they do need to be kept in check.

DanielaTorre said:

And as for the "none of them are on our side" bit, I beg to differ. The publishers make money off book sales. Without the author, the publisher doesn't get paid. And since Amazon is currently making it nearly impossible for them to sell their books, nobody wins. Not Amazon, not Hatchette, and definitely not the author. So please don't roll your eyes at this, especially since your sitting comfortably on the shoulders of the giant.

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And does the retailer make anything without the author?

Amazon is in the position it is in because it found a better business model. The publishers are going to have to adapt or go out of business. Simply saying Amazon is being greedy doesn't really help. I am sure the people who manufactured carriages and buggy whips said much the same thing about Henry Ford.

Ebooks are not going away and things are not going back to where they were twenty years ago. I don't think publishers or brick and mortar bookstores are going to disappear, but their importance and role are going to change. Will Amazon still be this dominant in ten years? Odds are no. The business world is extremely competitive and I expect others to chip away.

Right now Amazon is an 800 lb gorilla. And for the time being its actions benefit me. But I am under no illusion that the gorilla is my friend and understand it has its own agenda. All I am really saying is that as authors, whether self-pubbed or trade-pubbed, we are, effectively, small businessmen. We need to watch out for our own interests. Look at the current landscape and decide what your best options are.

LOTLOF said:

And does the retailer make anything without the author?

Amazon is in the position it is in because it found a better business model. The publishers are going to have to adapt or go out of business. Simply saying Amazon is being greedy doesn't really help. I am sure the people who manufactured carriages and buggy whips said much the same thing about Henry Ford.

Ebooks are not going away and things are not going back to where they were twenty years ago. I don't think publishers or brick and mortar bookstores are going to disappear, but their importance and role are going to change. Will Amazon still be this dominant in ten years? Odds are no. The business world is extremely competitive and I expect others to chip away.

Right now Amazon is an 800 lb gorilla. And for the time being its actions benefit me. But I am under no illusion that the gorilla is my friend and understand it has its own agenda. All I am really saying is that as authors, whether self-pubbed or trade-pubbed, we are, effectively, small businessmen. We need to watch out for our own interests. Look at the current landscape and decide what your best options are.

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I completely agree with you when you say that this is a dog-eat-dog world. To survive, you need to adapt. But this isn't forcing Hatchette to adapt. This is straight up bullying.

Amazon wants to increase their revenue and is putting pressure on Hatchette to get a better cut from the titles they sell. They want more money. Hatchette doesn't agree, so Amazon is basically acting like they just got friendzoned.

Something that seems to be getting swept under the rug (and correct me if my assumption is wrong) is that if Amazon gets their way, Hatchette will lose money. If they lose money, they will do what every other business does: cut costs. One way they might do this is that the new authors will have to absorb the loss by way of smaller advances and a different royalties. Agents will feel the heat too, narrowing the projects they decide to pick up.

These are two parents with talk of divorce and the only ones suffering are the children.

P.S. Books-a-Million is banking on the drama. If you guys will notice on their website, they're offering 30% on Hatchette titles.

Can someone point me to where the terms and bits under negotiation have actually been made public? Everyone is talking about how this is pure greed on Amazon's part, but all I can find that we actually know, without leaning on private blogs and such is that they're fighting over the Agency model vs Wholesale model.

What about the greed on the Publisher's part? I mean, it's not like the publishers are going to work together and use the Agency model to fix prices or anything, right? It's not like we have evidence they've already banded together in the past to set author royalties low and prices high.

This is business. Not bullying. If this was any kind of legitimate bullying, Hachette would probably have legal ramifications to use against Amazon and the DOJ would probably be involved, like they were a few years ago when they investigated the Big 5 and found them and Apple all guilty of collusion.

I'll put this to you, what would you prefer? Selling three copies at $3.99 each, or one copy at $11.99? Because that's what it's really going to come down to for the authors.

Hachette really has no bargaining power in this, and the fact that Amazon is even still negotiating is surprising. After all, Amazon doesn't even have to have an agreement to sell Hachette books. They can sell used copies and even sell new ones through it's own subsidiaries. Hachette, on the other hand, can't really afford to lose visibility to 1/3rd of the current market. Making this whole ordeal just a show.

The only thing Hachette has in it's corner is that it is, itself, a subsidiary of a multi-billion international group, Lagardere. So it's not like Amazon is the big dog in the room. Compared, Amazon is actually the smaller of the two. So what Hachette does have in its corner is the ability to reach out in a public relations campaign, which we can all see, is exactly what its doing.

So how does this effect authors publishing with Orbit?

I'm wondering, do such Amazon deals effect Yen Press too? I know it's manga, but it's a hatchet owned company if I was told correctly.

ShaunHorton said:

Can someone point me to where the terms and bits under negotiation have actually been made public? Everyone is talking about how this is pure greed on Amazon's part, but all I can find that we actually know, without leaning on private blogs and such is that they're fighting over the Agency model vs Wholesale model.

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We don't know the exact terms of the dispute, no.

What about the greed on the Publisher's part? I mean, it's not like the publishers are going to work together and use the Agency model to fix prices or anything, right? It's not like we have evidence they've already banded together in the past to set author royalties low and prices high.

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Weeell, not quite. We don't have any evidence of a conspiracy to suppress royalties. It's certainly true that no publisher really wants to set a precedent with agents for higher royalties, because there's not a whole lot of margin to work with in book publishing, and what goes around comes around; but there's no evidence of formal collusion.

On pricing, the Agency model was a bit of a no-brainer for anybody in a Big 6/5 firm looking at a book P&L. The analysis would go: publishers needed to cover their costs, and Amazon wasn't going to keep swallowing their huge discounts forever. If the price of a Kindle novel went to 99p, there's no point in publishers even making most ebook editions available - they'd lose money - and it'd probably start cutting into print sales in unwelcome ways. So protect the margin now, at a sustainable level, by putting the retail price back in the publisher's control.

I do not feel this was an unreasonable position by any means. The DoJ disagreed strongly and at length, and eventually prevailed. I suspect it didn't help that prominent publishers rather blithely discussed this not-terribly-outre strategy with each other in corporate email, for heaven's sake; but I think it was likely a bunch of people having the same pretty obvious idea at the same time, with Apple as a catalyst in that that was their business model already.

This is business. Not bullying. If this was any kind of legitimate bullying, Hachette would probably have legal ramifications to use against Amazon and the DOJ would probably be involved, like they were a few years ago when they investigated the Big 5 and found them and Apple all guilty of collusion.

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I wasn't very impressed with that decision, and at least one defendant settled because they apparently didn't have the resources to continue to fight it. The Big 5 are big, but they are nowhere near as big as Amazon, even collectively. This is a situation in which Goliath stomps David and then David has to kind of slink off.

I'll put this to you, what would you prefer? Selling three copies at $3.99 each, or one copy at $11.99? Because that's what it's really going to come down to for the authors.

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This implies a neat equation in favour of your argument: you're begging the question.

Hachette really has no bargaining power in this, and the fact that Amazon is even still negotiating is surprising. After all, Amazon doesn't even have to have an agreement to sell Hachette books. They can sell used copies and even sell new ones through it's own subsidiaries. Hachette, on the other hand, can't really afford to lose visibility to 1/3rd of the current market. Making this whole ordeal just a show.

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"Amazon could just cut author royalties to zero, so Hachette should just roll over" seems like a counsel of despair for authors.

The only thing Hachette has in it's corner is that it is, itself, a subsidiary of a multi-billion international group, Lagardere. So it's not like Amazon is the big dog in the room. Compared, Amazon is actually the smaller of the two. So what Hachette does have in its corner is the ability to reach out in a public relations campaign, which we can all see, is exactly what its doing.

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Lagardere is about a quarter of the size of Amazon in terms of assets and a third of the size in terms of equity; Amazon has twice as much operating income. Amazon's stock price is an order of magnitude higher, and it is a long way to being a monopsony for everything Hachette publishing companies produce.

And on Lagardere's size in relation to Hachette: if any of the (many) Hachette companies in any of its (many) territories starts looking like an unprofitable business, Lagardere can and will dispose of it. Massive corporate behemoth Pearson started to feel Penguin wasn't something they wanted, not too long ago, and effectively sold it.

Hachette, as well as the other Big Dogs, are pricing their ebooks too high in an attempt to make the same amount of cash as they would on their print versions. They set the MSRP at $14.95, for example. Amazon would then purchase the title, or stock it, paying 60% of cost. Then they set the price as they wish. Many book prices are slashed to less than $9.99, leaving very little profit for Amazon.

So, tired of taking that sort of hit, what happens? Amazon lists the book at the publishers MSRP, and Hachette throws a fit? Who's right or wrong in this debacle will mostly come down to the following: How much do you hate Amazon.