Gratitude: A business perspective on the Amazon-Hachette Negotiations.

Amazon and the Hachette Group continue to be locked in unfruitful negotiations over the price of ebooks. From what I’ve been told, Hachette, the publisher of David Baldacci and such recent popular titles as “I am Malala,” demands that it’s ebooks be priced at $14.99 while Amazon demands they be no more than $9.99.  As the negotiations dragged, Amazon stopped promoting ebooks from the publisher.

“FOUL!” cried Hachette. “Help!” cried its authors who watched their book sales plummet. “This isn’t fair!” They are taking to the media to solicit our sympathies. I feel bad for them – I really do. But I can’t join in their outrage. Being stuck in the middle is frustrating and obviously something they didn’t anticipate when they signed the contract Hachette pushed in front of them. But that doesn’t mean it’s unfair. It’s simply business.

Amazon is now fighting back on the public pressure/media front, sending out lengthy emails to ebook authors and independent publishers explaining their analysis that Amazon, Hachette and even Hachette’s authors would make more money based on the increased book sales at a $9.99 price point. Amazon asked us to email Hachette and demand they stop their tactics. I’m not doing that, either.

It’s simply business.

Let’s look at another retail giant, Walmart. Everyday, its buyers consider which products to carry – say a bath mat, usually negotiating on the price point with the hopeful bath mat supplier. The supplier can refuse to go any lower than a certain point, and Walmart can decide to carry the bath mat or not. But Walmart has so much of the market, you say. The supplier will go out of business and its bath mat factory workers will starve. If this is a really great bath mat and there is sufficient inelastic consumer demand for it, then the supplier has leverage to get Walmart to come up. If not, the supplier can find other retail venues for its luxury bath mat, perhaps boutique bath shops that provide a shopping experience rather than the lowest price.

The book industry isn’t much different. Publishers are the packagers and suppliers of books to retailers. The authors are the production workers, albeit, vastly underpaid for the number of hours they work.  But they’ve agreed to the equivalent of piecework scrap terms – being paid whatever is left from the sale of a unit after everyone else  in the chain has taken what they need to be profitable. Those really are the terms most author’s publishing contracts come down to. Even mine. Each author could have negotiated the terms of the agreement, providing outs if the market changes made it undesirable to stick with the publisher. Sure, negotiating those terms as well as acting on them is easier for big names authors rather than mid-list or small ones, but it could have been done. If it wasn’t or if the author doesn’t want the hassle of switching publishers (e.g. new tracking numbers for their books meaning previous reviews might not found), that is their choice. It’s not unfair. It’s the business decision they are making.

As for Hachette, if Amazon won’t agree to your terms, I hear Walmart wants into the ebook market.

As for Amazon, as you know, the reading of a book increases the chance the person will buy another books – any other book. Therefore, I’d rather see you carry Hachette ebooks at $14.99 than not at all, but as a consumer, I wouldn’t pay that for them.

As for the authors caught in the middle, sorry about your luck. Bad turn of business, nothing more.

To everyone else, I’m glad I’m not in the middle!




This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *