Thoughts on Hachette, Amazon and the Missing Link

The news has been abuzz the past week or two over the Hachette/Amazon dispute.  The two are negotiating a contract, and Amazon, in what some are calling heavy-handed moves that hurts authors and consumers, has stopped stocking as many Hachette books (so customers have to wait 2-3 weeks for books to ship); stopped discounting Hachette books (so consumers have to pay full price or just buy something else); and removed the ability to pre-order Hachette titles (this is the same way Amazon treats independent authors with whom it has not negotiated a separate contract).

Both Amazon and Hachette released statements on the matter. Today, I’m most interested in discussing Hachette’s statement, which contends Amazon doesn’t value the work of authors and publishers.

Well, I think Hachette has it right on one point. I don’t think Amazon values the work of publishers. As an indie author who deals with Amazon on a regular basis, I get no indication that Amazon doesn’t value authors. Amazon is willing to deal directly with any author who wishes to put his or her book in the marketplace. All Amazon asks with electronic book sales is that you provide it with a cut off the top.  It even tries to help authors maximize profits by offering the biggest cut (70 percent) in what it believes are the optimal price points for ebooks (2.99 – 9.99). If it wanted to hurt authors, it might offer higher revenue at lower price points, such as 99 cents. Amazon doesn’t. If you want to sell low, you can. You just earn 35 percent. If you sell over 9.99, you earn 35 percent, too.  While the upper threshold is for Amazon’s sake, I don’t think it’s a sign it devalues authors so much as a sign that it wants to keep prices down for customers.

So, does Amazon not value publishers? It’s not clear. But it does value money and it seems to be that Amazon would prefer to take more money and seems to want it’s cut from the publisher’s share rather than the author’s.  And who can blame them? If you look at what is required to sell books, it’s two things: the content creator and a marketplace. Those two things would be Amazon and the author. Publishers do provide great services like editing and distribution, but anyone could provide those services.

While both Amazon and Hachette refuse to discuss exactly what terms they’re fighting over, the industry buzz is that Hachette wants an agency model that lets them keep more money and Amazon wants a model that lets publishers keep less.

The Missing Link

I don’t know how this issue is going to be resolved, and Amazon’s statement indicates they’re not gonna budge. However, I think this is a watershed moment in the publishing industry. How it is resolved is going to have long-term effects. Even the length of time it takes to resolve it could have long-term effects, if it pushes more authors to consider the idea of leaving their publisher and going it on their own.

While self-publishing has been on the rise, there are still a multitude of traditionally published authors who want the print distribution in stores and make a big number of their sales from being seen on shelves around town. I think the longer this goes on, the more some of these people are going to get fed up with the situation, but have no place to go, because being in stores like Barnes & Noble, Books-a-Million, Wal-Mart, Target and Costco is important to them.

That’s where the missing link comes in. The thing holding these authors back is distribution. I think there’s an opportunity here for an enterprising former publishing exec with relationships in the book-selling world (knowledgeable/friendly with the people who buy books at the big chains) to come out and offer distribution to big-selling authors who would like to explore going it on their own. And if this exec can get distribution for a few big guys, they might realize the benefit of getting distribution for other indies. Opening up in-store distribution for independently published books would be huge.

So far, in-store distribution that has been the biggest hurdle for indies challenging the traditional publishing model. Indies can sell online, and they can even sell hard copies online, but getting in stores isn’t easily available (like it is with publishing). There’s no one company out there that says, if you can show me the online numbers, I can help get you into stores, too.

It’s not one hundred percent clear why this hasn’t happened yet. If Barnes and Noble or Wal-Mart were to start taking distribution from some third-party distribution channel that focused on putting the best indie-published books into big chains, would traditional publishers get fussy and somehow retaliate? (Though I’m not sure what the retaliation could be that wouldn’t hurt the publisher; Nananabooboo you can’t sell our books anymore! Customers won’t see them on your shelves anymore! That’s a shoot yourself in the foot proposition if I’ve ever heard one).

Whatever the reason it hasn’t happened (no one’s thought of it, stores are reluctant and set in their ways), I think it will happen one day. And when it does, that will definitely be a game changer. Much like the way this dispute seems to be shaping up to be.  If you’re looking for insights on the Hachette/Amazon dispute, here are some great blog posts on the topic (Gaughran and Konrath have written multiple posts on the subject, so click around their sites to find ones in addition to the ones I linked to):

David Gaughran

Joe Konrath

Hugh Howey

Howey’s Author Earnings financial view of the situation

(updated) Mark Coker