Hugh Howey

Bestselling author of Wool and other books. Currently sailing around the world.

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Hachette’s Slides to Investors

This broke a while ago, but while looking for the link to this story to share with a media outlet, I saw how far down the search results it was with one set of keywords and how difficult it was to find in general. If you want to help spread awareness of what Hachette’s goal is in its negotiations with Amazon, please link to this Passive Voice story on your own blogs. Or link to the original in social media:

http://www.thepassivevoice.com/06/2014/lagarderes-investor-presentation/

Not many people are considering the idea that Hachette could be the side offering unreasonable terms to Amazon or negotiating in bad faith. And I saw almost no coverage of the Perseus acquisition as being harmful to competition in the book trade. Hachette gobbled up the largest remaining independent trade publisher and peeled off their distribution business to Ingram while folding the publishing side into what will undoubtedly become more Imprint Soup.

The truly amazing thing? The NYT (of which I’m a 7-day home subscriber and massive fan) covered the acquisition of Perseus from the angle of Amazon being the bad guy. No, really. Even though Hachette is quoted as saying the acquisition and negotiations are unrelated (their slides to investors suggest otherwise). Meanwhile, agents now have one fewer place to submit their manuscripts.

If, after seeing these slides, you want to petition Hachette to stop fighting for higher e-book prices and lower wages for authors, click here.

22 replies to “Hachette’s Slides to Investors”

I’ve read those presentation slides – they made me cringe. They still believe they can push their oppressive tactics in today’s web world. Especially the “Agency pricing” and “control” quotation over authors reminds me of a desperate king trying to enforce his waning power.
I hope the market punishes them by choosing the competitor, e.g. indie authors ;)

I still find the most telling phrase in the slides to be the one admitting this is a fight for “control”–of author relations, pricing and distribution. It’s telling, but not at all surprising. This is what big businesses do every day. Neither side is “evil.” (if you want to call the whole system “evil,” that’s an entirely different matter to be filed under “Got a Better Alternative, Bud?”)

This current battle, then, is about the lonnnng future. The stakes are huge. So to expect either side to act as if this is a charity fund raiser is crazy.

It is certainly understandable for authors with economic ties to one side or the other to have a strong rooting interest. But for some reason the phrase “keep your powder dry” keeps knocking about in my head.

Ah, I remember reading this. I needed the slide today and was amazed there wasn’t a big kerfuffle in the media about this.

Hahahaha! Totally got that out with a straight face.

By Post Author

I just read the NYT article about the Perseus acquisition. It stated that Amazon is the largest publisher of fiction in ebook form.

Is that right? That sounds to me as if they are counting self-publishers in with those actually published by Amazon.

You really have to wonder what they hope to gain by doing a smear-Amazon campaign while they are negotiating with Amazon.

Also, ridiculous. Amazon is the largest DISTRIBUTOR of fiction in ebook form.

What I’m seeing is so weird.

Also, really, the Preston letter said to consumers, “Tell Amazon you are willing to pay higher prices for ebooks because Amazon is getting too big.”

You know people are out of touch when they think a petition to raise ebook prices will go viral among consumers. I think what’s happening is the typical echo chamber you see sometimes in politics. Publisher’s Marketplace is so incredibly slanted, Shatzkin thinks he’s making mincemeat of Indie arguments– they hear each other talk and think the voices they hear are universal.

I’d love to know what Preston thinks of the fact that there are not more than 5,300 signatures within 5 days on Hugh’s petition. Is he discounting the opinion of the unwashed masses?

Shatzkin is a great guy, but he doesn’t understand much of what’s going on in publishing these days. I wish people would cut him some slack, to be honest. He’s been an expert in a system for a very long time. That system is changing. Expecting him to be happy about it or to be able to keep up with it is unrealistic.

I read everything he writes in order to learn the mindset of those being left behind. It’s very useful. And he’s an A+ awesome guy. I have nothing but respect for him.

By Post Author

That’s why I used to read him, too — to find out how the executives were thinking. But lately he’s been hysterical. I found it annoying, but instead I should have just figured the execs were also getting hysterical :)

One more:

Obviously they thought they disguised the fact that the petition was about raising ebook prices. They also thought enough people will have a knee-jerk reaction “Amazon is too big! We must take away some of their power!”

The problem is that their reasoning is: Higher ebook prices keep paper important, so it keeps physical bookstores in business and allows other e-retailers to compete with Amazon, which keeps Amazon from getting too big.

But in short what they said was: Consumers, tell Amazon you are willing to pay more for ebooks to keep Amazon from getting too big.

They ignore Author Earnings. Are they going to ignore more than 5,000 signatures? Someone should tell Preston this is what a letter looks like when it really does go viral.

If you want to see the bias in this business, subscribe to DBW’s daily feed. If it’s Anti-Amazon, it leads. Usually, there are 2-3 anti-Amazon stories a day. I’m not kidding.

The biggest story right now is our petition. Instead of covering it, they promoted a bizarre attempt to discredit the thing.

I think they are still angry that we tore apart their attempt at cashing in on really bad data and then one-upped them with AE.com. That’s my guess. Hard to make sense of it otherwise.

By Post Author

I tend to be optimistic, too, Hugh. I hope the petition forces them back to reality. Nobody is well served when misinformation is brandied about.

As an aside, I do understand why they are so scared. I spent decades trying to get into the gates. I finally got in (I have one hardcover book out recently being very well reviewed — I write the kinds of books that still do well in hardcover but don’t sell much in ebook).

It took me a few years to get used to the fact that the world was changing fast and the old standards weren’t going to apply any more. As an author, I have to figure out how to make it in a new world. The publishers and agents, though, probably understand there isn’t as much room for them, at least not high on their thrones where they were before.

One way I was able to adjust was thinking back to how much (excuse me) ass-kissing I’ve had to do over the years while dealing with traditional publishers. I started to realize that I’m better educated and more capable than the people whose asses I had to kiss. I’m therefore glad for the shift in power.

Fact: It’s much harder to write a good book than sell one, edit one, or market one.

Here’s an analogy that I thought of the other day that I think you’ll appreciate Hugh. What is happening in the publishing industry is essentially what is happening in the energy/oil & gas industry. For a long time, we’ve known that fossil fuels are a problem. They harm the environment because they are not a clean source of energy, but it is just so dang profitable it is hard to get away from. So the cartels that control it do everything they can to suppress emerging technologies that will render their gravy train useless. Now that fossil fuels are starting to near their end, what is happening? All of those cartels are raising their prices trying to squeeze every last dollar they can out of an industry whose days are numbered.

Same in publishing. I don’t think big publishing is so naïve to deny that their role is becoming less important, but they have to put that image out there to dissuade those under them from jumping ship. And since paper will not be the dominant media for long, their agenda is going to be first to suppress emerging technologies and then when that won’t work any longer, to squeeze every cent they can out of it before it’s gone.

A lot of people question why big publishing doesn’t or didn’t innovate their own e-book technology and that can be answered simply. First, their partners in the paper industry (distributors, bookstores, etc.) would not let them keep their monopoly on paper distribution any longer if they did. And second, digital can’t be controlled. The barrier to entry costs are so low that anybody could do it. That’s why the “What if Amazon starts gouging us?” fear is so irrational. If Amazon steps out of line, there will be a thousand new ebook sites overnight offering what Amazon used to. Amazon can’t gouge because they’ve just authored the blueprints to their own demise if they do. No single entity can become so entrenched in a digital industry to make it impossible to get rid of them. That can only be accomplished with tangible consumer goods like paper books or gasoline. The harder you try to squeeze a digital market, the quicker it will slip through your fingers.

Kirk, I agree.

Also, people ask why the big publishers never tried to go directly to the consumers. But suppliers cannot compete with their distributors and channels or the distributors will refuse to sell their books. This is what happened when HP tried to go directly to consumers (like Dell). The outlets that sold HP computers said, “We’re not carrying your products if you offer them cheaper from your own outlets.”

Suppliers have to decide whether to sell direct or sell through channels. Publishers long ago decided to sell through channels. So they’re stuck with channels unless they want to take on the entire retailing themselves.

What happened is that Amazon, their biggest channel, is not giving in to their demands (or vice versa) but a breakdown between a supplier and its largest and most profitable channel is a potential disaster.

Well, it’s a disaster for the suppliers in question, but thankfully they don’t have a monopoly on content. Consumers and writers can turn to other suppliers (namely, writers themselves as independent publishers) to solve the problem. Everyone wins except the odd suppliers.

I am an aspiring author and I simply want to write. I’ve read through a lot of these posts, though I’ve been too busy cooking up my sequel to devote time to participating in the conversation.

That’s a good thing, right?

Now I have more story ideas rolling around in my head than I will have years on this earth. And I’m only 27. I’ve worked hard to finish my first novel titled The Crimson Fall(hey, the new guy has to make the shameless plug where he can, right?) and I released it five weeks ago on Amazon. Beforehand, I had spoke with many agents that are part of the big publisher industry and they all said the same thing. They told me I have little, if any chance of being published as a first time author. Most of them told me the game has changed and the way it works for new writers is that they pay for all upfront costs, which I did, release it on Amazon, which I did, and then if I am successful enough, I will be contacted by multiple agencies wanting to represent me. Now that the book is out, I’ve managed to make some top 100 lists the first month. Nothing too big, mind you, but decent for someone that’s trying to monetize his daydreams.

Now here is the problem I see with that idea: Let’s suppose I wake up tomorrow and see that I have sold 1,000 copies. Let’s then suppose that I wake up the following day and see that number has doubled. At that point I’d smile merrily with the knowledge that my novel is lighting up Facebook feeds and Kindles all around the world. No, I don’t expect to sell that many copies (honestly, I’m thrilled when I sell 25 copies in a day), but I will use that for the sake of this illustration. If that happens, and I start getting publishers banging down my door at all hours of the day as I try to focus on putting down a fresh 5,000 words per day for the sequel, why do I have any incentive to switch things up? I have done all the work, paid for the editor and cover art myself, and taken all the risk thus far. If I’m to believe that publishers only publish proven authors, then how does the new guy make it in this industry without Amazon? What do the publishers like Hachette bring to the table that a viral book hasn’t achieved already? Not every publisher has a Stephen Colbert to plug the book to 6 million twitter fans you know. Maybe Hugh Howey could flex his own might and see what a self-published author with a voice can do when he plugs a brand new book from a brand new writer. In case you were wondering, I’d happily let my novel be the subject of that experiment!

Regardless, the possibility of a slight increase in sales vs. signing over the rights to my book seems awfully bad deal to me. At the same time, I studied business in college and I know we take on the risk of letting Amazon getting too big and then using that power to increase their margins as they shrink the royalties of authors published through them. A small chance, but it is the risk of a monopoly.

I’m just curious where do new authors really fit in with all this bickering between the two corporations? On one hand I’m afraid Hachette will win out with names like King supporting them and Amazon will possibly lose a substantial buyer-base, forcing the big A to change things around and possibly cut back on my royalties as a result. On the other hand, I’m left wondering what happens if Amazon wins, gains their legal monopoly over the reading industry, and then starts squeezing the little guy when we have nowhere else to go? To me–the new guy with a big dream–it seems like I’m writing beneath two struggling giants and I have a hard time thinking I might not get stepped on before they finish their bout . . .

Hugh, You might not want to be the voice for self-published authors, but that doesn’t mean you’re not or that you don’t know more about this subject than most of us. I think I’ve managed to find this info scattered all around your website, but I would love to see you do a quick list/post with your honest pro-Amazon and pro-big houses(if you have any).

Jordan Ervin

Both Amazon and the big publishers have a desire for profits. They want to make money, and lots of it. Both can screw you (I’ve been screwed by both) and both can be great to you (ditto).

But when your publisher turns against you, there’s nothing you can do. The difference between Amazon and the publishers is rights ownership. You aren’t held hostage. If Amazon changes their terms to hurt me, I’ll focus my sales elsewhere. If my publisher does something dumb (like what S&S did with B&N), I have no recourse.

The pros right now are heavily in Amazon’s favor. But the biggest thing they have going for them is that they don’t own me.

By Post Author

Interesting. I’ve been following you ever since I ordered Wool in Hardback back in early 2013 after I blazed through ‘Holston’ on Kindle. I had just finished the first draft of my first novel you were a big reason I decided to only pursue self-publishing. My friends said I’d never make it–and statistics say they were right–but I do find it intriguing that the author I’ve been following that got the big six-figure deal from a publisher is now publishing solely through Amazon and Createspace. I didn’t realize until recently when I went to order Shift and Dust that you’re published through Createspace as well.

One thing I think the big-publisher has going for it is the ability to get the word out about a novel. Not just the big time publishers and their marketing teams, but I think published authors go to bat for each other quite often. I think, though I could be wrong, the majority of our success as self-published authors is almost purely depended on the chance that our novel goes viral. I guess my question for you is what resources do you think Amazon, Createspace, or someone related to the self-publishing industry could provide to new authors to help their success not be so dependent on luck? Maybe Amazon has these resources and I’m just missing them, but so far the only method of effective marketing I’ve found is through Facebook ads. And while my first month had been pretty decent (300 copies total) I had to spend nearly as much as I made to sell those copies.

Personally, I just want write, whether I make nothing or a fortune. To me it’s like a legal drug and I can’t get enough of it. Like I said, I have more stories in my head than years on this earth and if I don’t get them out, I’m liable to explode. But to make a career one day doing this is the dream for all of us, is it not?

A statement that really bothers me is “Agreement with Google on out of print books.”

What does (could) this mean for reversion rights?

Has Hachette dusted off the old files and made a quick and dirty agreement to prevent loss of old titles that are still under their life-of-copyright licenses?

And how can you claim to be a “sifter” when Twilight, 50 Shades, and Dan Brown are given as your shining examples? Not being a snob here, I love Dan Brown, but none of these are exactly Grapes of Wrath or To Kill a Mockingbird.

Terri

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