Thoughts on Hachette, Amazon and the Missing Link

Hachette-Book-Group Amazon.comThe 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

About RJ Crayton

RJ Crayton is a former journalist who now writes fiction. She's reported for the Kansas City Star and Wichita Eagle, as well as the smaller publications Education Technology News and Campus Crime. She has two published novels, Life First and Second Life and blogs for Indies Unlimited and the Institute for Ethics and Emerging Technologies. For exclusive content and first looks at her new work, sign up for the newsletter at http://rjcrayton.com/subscribe.
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7 Responses to Thoughts on Hachette, Amazon and the Missing Link

  1. Dale says:

    I’ve read nearly every post about this including TPV. But I’m over it now and waiting for the next weird story, lol.

  2. Really nice post, esp re someone coming forth that can provide an alternative for book placement in physical stores. Also liked the links to Joe, David, and Hugh. They add a lot to this whole thing.

    Mark’s post on the Smashwords blog (DV’s link above) really clarifies about “agency model.” But for some reason, it just doesn’t stick in my understanding when then I read another article against it.

    I propose it would be neat if someone came up with a new term, one that specifically is recognized as being indie author favorable, regardless whether one is considering publishers or retailers.

    Passive Guy also has a really nice article ( http://www.thepassivevoice.com/05/2014/how-the-amazon-hachette-fight-could-shape-the-future-of-ideas/ ) linking to and commenting on an article on The Atlantic.

    The comment thread is huge, over 125 now, with lots of ideas.

    All in all, very nice RJ, glad you chimed in. 🙂

    • RJ Crayton says:

      Thanks for the link to the passive guy. I think book placement in physical stores for indies is the next frontier. We just need a Kirk or Picard to boldly take us there.

      • you bet, and best wishes with your shorts on select; all (most?) things are worth trying; that’s why i’m also in the subscription and library distribution options, take care 🙂

  3. DV Berkom says:

    Here’s another take on the subject written by Mark Coker of Smashwords. http://blog.smashwords.com/2014/05/amazons-hachette-dispute-foreshadows.html He’s all for agency pricing and makes some salient points. Personally, I’m just watching the kerfuffle and don’t really have any opinion (so weird, I know!) other than I prefer to not go the exclusive route. But that’s just me.

    • RJ Crayton says:

      Thanks for the link to the Coker article, DV. I updated the main post with it. Also, I’m with you about exclusivity, as my impression is it’s best to be everywhere. That said, however, I’m actually going to be trying KDP Select for my short story collection, which I suspect will give me some first-hand knowledge on whether exclusivity has any benefits.

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