Since there seems to be a decent number of authors/aspiring authors on this forum I figured I would post this link.
Kedrosky is rather restrained considering how little sense Robinson is making.
http://www.ritholtz.com/blog/2014/09/am ... /#comments
The Authors Guild is just clueless about this entire situation.
Authors Guild/Hachette/Amazon
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Spartan_Warrior
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Re: Authors Guild/Hachette/Amazon
Felt kind of awkward just watching it. 
Frankly, I haven't been paying attention to this dispute at all. I have no interest in picking sides between two corporations vying to preserve or stake out monopolies. It also seems so much of a "he-said, she-said" that I can't even be sure what the real issue is or who's at fault. All I know is that businesses care about generating profit and eating other businesses to create more profit. The strategies on display appear tried and true: the established monopoly using legal measures and lawsuits to try to maintain relevance and profit, with the new monopoly seeking to price out the competition long enough to burn them out (and then resume price gouging to make up any profits lost in price competition tenfold).
Amazon seems especially naked in this intent, as IIRC it "barely" (comparatively speaking) runs a profit and instead uses its earnings to expand its business. At some point, likely once it hits a critical mass in terms of cornered markets and competitors driven out of business, it's going to switch into "profit" mode (and maybe we'll all regret supporting them).
But in the meantime, what can you do? I see this process as fairly inevitable. Despite the propaganda from both sides*, I don't see how authors have any vested interest in this at the moment (aside from the unfortunates who are published under Hatchette). I will continue to publish primarily with Amazon because it appears to be the most profitable avenue for me at the moment. If and when that changes, I will seek more profitable venues. That's the only thing I care about. Beyond that, corporations gonna be corporations.
*I got an email from Amazon's KDP newsletter maybe a month ago about why authors should support their crusade. I laughed a little as I deleted it.
(Correct me if I'm wrong and should be deeply concerned. I'm probably about as business savvy as Robinson.)
Frankly, I haven't been paying attention to this dispute at all. I have no interest in picking sides between two corporations vying to preserve or stake out monopolies. It also seems so much of a "he-said, she-said" that I can't even be sure what the real issue is or who's at fault. All I know is that businesses care about generating profit and eating other businesses to create more profit. The strategies on display appear tried and true: the established monopoly using legal measures and lawsuits to try to maintain relevance and profit, with the new monopoly seeking to price out the competition long enough to burn them out (and then resume price gouging to make up any profits lost in price competition tenfold).
Amazon seems especially naked in this intent, as IIRC it "barely" (comparatively speaking) runs a profit and instead uses its earnings to expand its business. At some point, likely once it hits a critical mass in terms of cornered markets and competitors driven out of business, it's going to switch into "profit" mode (and maybe we'll all regret supporting them).
But in the meantime, what can you do? I see this process as fairly inevitable. Despite the propaganda from both sides*, I don't see how authors have any vested interest in this at the moment (aside from the unfortunates who are published under Hatchette). I will continue to publish primarily with Amazon because it appears to be the most profitable avenue for me at the moment. If and when that changes, I will seek more profitable venues. That's the only thing I care about. Beyond that, corporations gonna be corporations.
*I got an email from Amazon's KDP newsletter maybe a month ago about why authors should support their crusade. I laughed a little as I deleted it.
(Correct me if I'm wrong and should be deeply concerned. I'm probably about as business savvy as Robinson.)
Re: Authors Guild/Hachette/Amazon
Though, Amazon isn't a monopoly. Hachette and the other publishers are definitely a monopoly/cartel. Amazon is currently helping consumers and authors (mid-list and lower), while the publishers take advantage of them. I'll take my chance with the potential monopoly over the one that already exists.Spartan_Warrior wrote:Felt kind of awkward just watching it.
Frankly, I haven't been paying attention to this dispute at all. I have no interest in picking sides between two corporations vying to preserve or stake out monopolies. It also seems so much of a "he-said, she-said" that I can't even be sure what the real issue is or who's at fault. All I know is that businesses care about generating profit and eating other businesses to create more profit. The strategies on display appear tried and true: the established monopoly using legal measures and lawsuits to try to maintain relevance and profit, with the new monopoly seeking to price out the competition long enough to burn them out (and then resume price gouging to make up any profits lost in price competition tenfold).
Re: Authors Guild/Hachette/Amazon
The real action is in the competition between Amazon and Google for possession of the card catalog and microfiche machine of the future. I do not know and can not predict the means through which authors will be reimbursed for use of their intellectual property even 10 years from now. The amazing thing is that I still very frequently come across books that nobody else on the internet is selling which are not yet in Amazon's catalog or able to be referenced through internet search. That is why I hope to eek out a meager living as a used book dealer for a few more years.
Anyways, I don't think anybody can really hold a monopoly on intellectual property because it is not in any way a finite resource.
Anyways, I don't think anybody can really hold a monopoly on intellectual property because it is not in any way a finite resource.
Re: Authors Guild/Hachette/Amazon
I self-publish for a living (and make a very healthy living at it, in the romance genre) and I lean more toward the opinion that Amazon is trying to keep prices at $9.99 or below because they use eBooks as loss leaders. If eBooks were more profitable then Apple iBooks and Google Play might become more competitive. Right now, both are unfortunately quite terrible (Google Play in particular -- damned awful search/visibility engine) but have the potential to become HUGE in the eBook field.
By pushing the prices of eBooks down, Amazon holds them at bay (in theory).
Also, what Kedrosky says is so true -- Amazon has tried for nearly a year to get Hachette to renegotiate the contract, and the contract expired last spring. EVERY SINGLE TIME an author (Malcolm Gladwell, Stephen Colbert, Sherman Alexie...etc.) goes on tv and claims Amazon is "blocking" or "refusing to carry" their books, I do a search and -- lo and behold! -- the book is listed and for sale.
Pre-order buttons can only exist when the supplier KNOWS the product will be available for delivery. Otherwise it's a customer service nightmare. Without a contract between Hachette and Amazon, why on earth should Amazon offer a service to its customers that could lead to the product not being available in the end?
The Author's Guild (which I could qualify for if I applied, as I've published traditionally) and Authors Unlimited, Doug Preston's group of 1,000 traditionally-published authors, are so out of touch with the business side of publishing that it makes me cringe to read/watch their complaints.
By pushing the prices of eBooks down, Amazon holds them at bay (in theory).
Also, what Kedrosky says is so true -- Amazon has tried for nearly a year to get Hachette to renegotiate the contract, and the contract expired last spring. EVERY SINGLE TIME an author (Malcolm Gladwell, Stephen Colbert, Sherman Alexie...etc.) goes on tv and claims Amazon is "blocking" or "refusing to carry" their books, I do a search and -- lo and behold! -- the book is listed and for sale.
Pre-order buttons can only exist when the supplier KNOWS the product will be available for delivery. Otherwise it's a customer service nightmare. Without a contract between Hachette and Amazon, why on earth should Amazon offer a service to its customers that could lead to the product not being available in the end?
The Author's Guild (which I could qualify for if I applied, as I've published traditionally) and Authors Unlimited, Doug Preston's group of 1,000 traditionally-published authors, are so out of touch with the business side of publishing that it makes me cringe to read/watch their complaints.
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jacob
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Re: Authors Guild/Hachette/Amazon
Well, it would be cool to sell books directly from [my] the website. The problem is this:
My paperback list price is $14.95. From that I get $5.27 in royalties. If you were to buy it from my website [directly from the printer], you would pay $14.95+$4 or so in shipping. If however, you buy it from amazon, they're currently pricing it as $12something (has been as low as $10something) because B&N prices it at $12something and amazon matches almost instantaneously. So amazon will eat/sacrficie the distribution cost (it's not a cash outlay for them) that the printer would take if you bought it directly from "me". Also, amazon provides free shipping.
So it's ~$20 vs ~$12 for the customer and 99.5% choose the latter option (there are a few amazon haters who refuse to deal with them on principle).
To buy directly from me, competitively, I would have to find a way to effectively ship free and control close to 100% of margin (instead of the some 35% I do now).
Running a business at zero income certainly provides a moat. On the other hand, when authors are their own publishers, the moat is only as wide as the difficulty of reformatting [slightly] and transferring the pdfs and htmls to some other distributor.
BTW, it's my understanding that the traditional split is approximately-order-of-magnitude 1/3 to the bookstore, 1/3 to the distributor, and 1/3 to the publisher. Of the last 1/3, 1/3 goes to the author (if there's an agent 10-15% of that goes to the agent), 1/3 goes to the editors, etc. and 1/3 goes to the owners. Keep in mind that most books are economic losers and that publishing companies essentially work on the venture capitalist model with a few big sellers carrying the bottom line. If you're selfpublished, you get the entire publisher pie piece. However, with amazon's ebook model (<$10), you get the publisher AND the distributor pieces, so 70%. Compared to a traditional publisher that pays 10%, getting 7x is very very attractive.
IMHO the only reason to go traditional these days is if you expect your book to sell less than the advance, e.g. you're famous and your book probably sucks.
My paperback list price is $14.95. From that I get $5.27 in royalties. If you were to buy it from my website [directly from the printer], you would pay $14.95+$4 or so in shipping. If however, you buy it from amazon, they're currently pricing it as $12something (has been as low as $10something) because B&N prices it at $12something and amazon matches almost instantaneously. So amazon will eat/sacrficie the distribution cost (it's not a cash outlay for them) that the printer would take if you bought it directly from "me". Also, amazon provides free shipping.
So it's ~$20 vs ~$12 for the customer and 99.5% choose the latter option (there are a few amazon haters who refuse to deal with them on principle).
To buy directly from me, competitively, I would have to find a way to effectively ship free and control close to 100% of margin (instead of the some 35% I do now).
Running a business at zero income certainly provides a moat. On the other hand, when authors are their own publishers, the moat is only as wide as the difficulty of reformatting [slightly] and transferring the pdfs and htmls to some other distributor.
BTW, it's my understanding that the traditional split is approximately-order-of-magnitude 1/3 to the bookstore, 1/3 to the distributor, and 1/3 to the publisher. Of the last 1/3, 1/3 goes to the author (if there's an agent 10-15% of that goes to the agent), 1/3 goes to the editors, etc. and 1/3 goes to the owners. Keep in mind that most books are economic losers and that publishing companies essentially work on the venture capitalist model with a few big sellers carrying the bottom line. If you're selfpublished, you get the entire publisher pie piece. However, with amazon's ebook model (<$10), you get the publisher AND the distributor pieces, so 70%. Compared to a traditional publisher that pays 10%, getting 7x is very very attractive.
IMHO the only reason to go traditional these days is if you expect your book to sell less than the advance, e.g. you're famous and your book probably sucks.
Re: Authors Guild/Hachette/Amazon
I don't think this is Amazon's reasoning. Apple and Google can afford loss leaders even more than Amazon can (of course, they all sit on piles of cash), so $9.99 is not really a competitive advantage for Amazon vs the other tech giants. Amazon is doing this for two big reasons.prosaic wrote:I self-publish for a living (and make a very healthy living at it, in the romance genre) and I lean more toward the opinion that Amazon is trying to keep prices at $9.99 or below because they use eBooks as loss leaders. If eBooks were more profitable then Apple iBooks and Google Play might become more competitive. Right now, both are unfortunately quite terrible (Google Play in particular -- damned awful search/visibility engine) but have the potential to become HUGE in the eBook field.
One being that Amazon wants ebooks to be the norm instead of physical books. The bigger the ebook pie the more of it is theirs, even if Google and Apple get part of it. This is going to happen no matter what anyone does, but keeping them cheaper than physical books will speed up the process.
The second part of this strategy requires them to break the traditional publishers' monopoly. Fighting Hachette is just the beginning of a war, which the publishers can't hope to win.
Tying these two goals together greatly improves Amazon's profitability. As Jacob aptly points out, Amazon would be breaking the 1/3 bookstore, 1/3 distributor, and 1/3 publisher model, so at the very least they would be both the bookstore and distributor, while taking a chunk of the publisher's 1/3. They would also end up being all three for a solid portion of the authors, while taking a piece of the publishers for the authors who aren't self-published or who use a publisher.
Then when you add the increased profitability of ebooks, due to the lower cost of production, to this model, Amazon's profitability increases even more.
This is good news for authors too, as Amazon will kick more profit their way. Self-publishers will get the most, as they do a lot of the business side of the publishing for Amazon. While, authors that sign with Amazon or publishers with a new business model will be offered better contracts than the current cabal of traditional publishers.
There is obviously a danger that Amazon becomes a monopoly and screws the authors over like the current cabal, but the barriers to entry into being a bookstore/distributor/publisher are significantly lower now than in the past. This will make it very difficult for Amazon to treat authors poorly, as they will just go to Google Play, iTunes/iBooks, Alibaba, some random startup, etc.