Hugh Howey
Hugh Howey

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

Two Wrongs Don’t Make a Right

But three lefts do.

And what of Orwellian triple-speak? That’s like double-speak, except you circle back around to the truth again. I’m seeing some bizarre protestations about an Orwell quote making the rounds among the anti-Amazon crowd. When Amazon sent a letter to KDP authors asking them to help talk sense into Hachette, one of the points detractors seized upon was a quote from George Orwell about paperbacks. From the letter:

 The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.”

The quote was taken out of context, pundits and bloggers cried. The rest of the letter from Amazon was dismissed because of a single fact that seems to have been gotten backwards. In reality, they said, Orwell thought cheap paperbacks were great. He flat out says so. Can’t you hear the sarcasm dripping from his voice? He wasn’t really suggesting collusion.

Except he was. And he wasn’t being sarcastic at all. An intrepid researcher tracked down the origin of the quote, and Orwell was indeed suggesting, just as Amazon portrays, that he and others of his time thought cheap books would destroy the trade. Great for consumers, sure, but bad for everyone else. Here’s the link. And the quote in full:

The Penguin books are splendid value for sixpence, so splendid that if the other publishers had any sense they would combine against them and suppress them. It is, of course, a great mistake to imagine that cheap books are good for the book trade. Actually it is just the other way about. If you have, for instance, five shillings to spend and the normal price of a hook is half-a-crown, you are quite likely to spend your whole five shillings on two books. But if books are sixpence each you are not going to buy ten of them. because you don’t want as many as ten: your saturation point will have been reached long before that.

 

Probably you will buy three sixpenny books and spend the rest of your five shillings on seats at the “movies.” Hence the cheaper books become, the less money is spent on books. This is an advantage from the reader’s point of view and doesn`t hurt trade as a whole, but for the publisher, the compositor, the author, and the bookseller it is a disaster ….

 

If the other publishers follow suit, the result may be a flock of cheap reprints that will cripple the lending libraries (the novelist’s foster-mother) and check the output of new novels. This would be a fine thing for literature, but it would be at very bad thing for trade, and when you have to choose between art and money – well, finish it for yourself.

 

Publishers today—like Orwell was in his time—are terrified of affordable literature. Amazon’s point is that they were wrong, and that cheap paperbacks helped grow the entire pie of reading and enrich everyone in the industry. It bears mentioning, I think, that one of the pundits who twisted Orwell’s wording to suit his needs also freely admits that he encourages publishers to jack ebook prices up as high as possible to protect the print trade.

Another thing lost from this debate is that $9.99 is not the ideal price point for all ebooks. In fact, most ebooks would generate more revenue at even lower prices. $9.99 is like a speed limit. Exceed it in rare emergencies, but also feel free to drive slower where appropriate. Among the 120,000 ebooks we’ve analyzed at AuthorEarnings.com, $4.99 ends up being the bestselling price point by far. Some publishers know this. John Green’s THE FAULT IN OUR STARS (holy shit, what a brilliant book, as is everything the dude’s ever written; go read all his stuff) spends much of its time at $4.99.

The debuting authors and the midlist authors who would most benefit from price flexibility are the ones who are crushed by the stubborn pricing habits publishers employ.

Which has me wondering if we shouldn’t borrow a tactic from the art and photography worlds. We often hear that books aren’t widgets and shouldn’t be treated as such, well then let’s treat them like art. And in most artistic mediums, artists put their own price on their works. They decide what they’re worth.

How about allowing this be part of the negotiations with publishers? Price minimums or maximums. Because a lot of the affected Hachette authors I’ve spoken to wish their ebooks were priced much lower than $9.99. They wish they had the pricing freedoms that self-published authors enjoy. And I think they are right.

Pricing everything at $14.99 or $9.99 is what you do with widgets. Maybe publishers could stop doing that and let the artists have some say.

110 replies to “Two Wrongs Don’t Make a Right”

I’m still a fan of Amazon’s pricing algorithm. Sure, some tweaking may be in order but it’s far more sophisticated than us authors slapping our own price tag on a book and adjusting it up and down as we see fit. In my perfect little world, Amazon would give us both options – a fixed price or their algorithm. Maybe add the ability to set a minimum and maximum and allow the algorithm to adjust between them based on existing parameters?

I like this idea. And I know publishers are open to these discussions. When in talks with one Big 5 publishers about WOOL, I discussed not wanting the ebook to be priced higher than $7.99. They were open to discussing that and setting it down in the contract. Of course, they weren’t willing to pay what the digital rights were worth, so we didn’t do a deal. But this is definitely something agents and authors should be insisting on.

What they shouldn’t do is assume publishers are going to price their ebooks in a way that maximizes their readership or their earnings. Because they won’t.

Why should authors or Amazon have the right to decide what the publisher wants to price a book at? Neither one of them have made a cash outlay for that book. The publisher has paid an advance and it should 100% be their right to choose what they want to sell that book for. This is never ever a question with printed books. Why should it be with digital books? If the publisher wants to price the digital book at $15.00, why shouldn’t they be able to? Publishers use price promotions all the time to increase sales. Amazon says apple products….do they tell Apple their price is too high and they have to lower it? Of course not. The publishers are smart enough to see how digital books are selling and so far they’ve been selling plenty at the “higher” prices. There hasn’t been any problems with the model. This has nothing to do with raising prices; it has to do with Amazon wanting more of the profits. And frankly, that’s their right to try and get it. Hachette doesn’t have to agree if they don’t want to. If they don’t want to sell their books at those terms on Amazon; they won’t. Generally there will be some sort of compromise when a retailer is such a large piece of the business. Time will tell.

Why should publishers have the right to decide what Amazon wants to price a book at? The publishers set the wholesale price; they have that right. They have the right to suggest a retail price. But they have no right to fix a retail price and order all retailers to abide by it. The most they can do (as, for instance, Apple and a few luxury-goods manufacturers do) is to refuse to sell to retailers who undercut the suggested price.

If the publisher wants the retail price of an ebook to be $15, they can want it all they want, but they have no right to complain if Amazon chooses to sell it for $10 instead. Moreover, if Amazon is selling at $10 because its own enormous collection of data shows that more total revenue and profit will result at that price, then the publisher might want to try listening to Amazon instead of insisting upon a right that it does not even have.

I have no problem if Amazon lets me set the wholesale price to what I’d like. But that’s not the way it works with the wholesale model….only on the agency model.

> This is never ever a question with printed books.

Many authors and publishers appear to disagree with you. They have many complaints about how Amazon is or is not discounting their printed books. And about how many books Amazon chooses to buy (or not buy) and about how many they choose to keep on-hand in their warehouses. And they care a great deal about whether readers get an email that a book is ready to ship or an email that a book is available to purchase.

It seems that many people have many questions about printed books they’d like to raise with Amazon. They shouldn’t be surprised if Amazon has some questions they’d like to raise as well… but somehow thongs don’t work that way.

I wasn’t referring to just the battle going on now with my comments. Yes they’d like Amazon to discount their books so they sell more copies…perceived value is important. But it has nothing to do with Amazon being able to set the list price for the book. I have no problem if I can give Amazon the list price of the book and they want to sell it for something different but pay me off the list price.

The other items you mention about the email are specific to this battle and of course they’d care. But in the course of normal business things would be different.

Why should authors… have the right to decide what the publisher wants to price a book at? They haven’t made a cash outlay for that book.

Steve, you couldn’t be wronger.

By the time a publisher makes a “cash outlay” for a book, the author has already spent at least hundreds — and often thousands — of hours creating the goods that a publisher merely packages and sells. They have made a much larger outlay in labor and opportunity cost than the publisher.

And the publisher’s “cash outlay” for the advance is in fact contractually not an investment outlay at all. It’s no more than a loan — an advance payday loan of the author’s own future royalties.

I can understand why you, coming from an old-school publisher-centric point of view, might see things the way you do. But for an entire generation of up-and-coming authors who never gave a single thought to traditional publishing, we read parochial comments like yours and shake our heads in bemusement.

Thank you. Pisses me off to no end this idea that writers aren’t putting into this. Every hour an writer spends writing that they can’t spend at a job with hourly pay or salary plus benefits is an investment. Plus all those classes, books, etc. Writers have probably paid out thousands if not 10s of thousands in “work hours” and equipment investment (software, computer, reference works, writing courses and seminars) before they send a manuscript out to agents or editors.

I guess our time and money doesn’t count…

And the writer should have a say because the writer is the creator of the work that is going to have their name on it and who want to make money from it–no creators of works, no need for publishers, right?

The very first person to invest time and money in a work is the writer. I figure, yes, that gives them a right to decide at what price maybe it would sell more and gather in readers for future works. At least nowadays, authors have a choice. Negotiate with a publisher if they are interested, and if they won’t be flexible, self-publish. Better than the days without choice.

Paul I think you are 100% wrong as well. If the author is an indie author or a traditional author; they’ve spent the same amount of time hopefully, in writing their book. With a traditional publisher though; the publisher is taking a risk on giving that author an advance that may or may not earn out based on the royalty agreement. With self publishing there is nothing to be paid back by the retailer. The publisher has 100% of the risk with traditional publishing.
And the argument about the author spending their time writing the book is really not part of this discussion since they’ve done that either way they’re published. But to say they’ve invested more than the publisher is ludicrous. The publisher could be spending loads of money for that advance. So I shake my head in bemusement of your comments too.

I’m glad we can amuse each other so much, Steve. ;)

There’s way too much angst floating around the publishing industry these days. And none of it’s necessary.

Instead, we should simply fasten our seat belts and enjoy the ride… because we’re privileged to have front row seats during the greatest renaissance literature and publishing have seen since the invention of the Gutenberg press. What’s going to happen in this industry is going to happen. It’s inevitable. No amount of blog-commenting or blog-posting from anyone is going to make a difference.

Our points of view are irreconcilable, and that’s okay — we can still have civil discourse about our fast-changing industry, and maybe even learn from each other.

But here’s some food for thought: every day, more and more writers are starting to see the world the way I do, and fewer and fewer are still seeing it the way you do.

Right now, you’ve got nothing we want.

The biggest publishers will find change the hardest.
Perhaps Kensington can turn that into an opportunity.

Paul, I have no problems with a civil toned discussion. I enjoy it. I obviously have a different perspective than just about everybody on most of these blogs. Many people keep talking about writers changing over to indie writing, as you just did. This is a great opportunity no doubt for you and them. For many reasons they might not have been picked up by a publisher….lack of space to distribute books, etc….But we have yet to see the slightest decline in the amount of submissions even from people who are indie publishing now. We have a number of authors that we publish that continue to self publish or publish with our houses as well. We even offer to cross promote excerpts in each other’s books. But our Lyrical Press line of digital firsts in going to public close to 250 books next year so we don’t see the slightest decline in available good content. And I think that readers should keep in mind that yes, we have acted as a gatekeeper and filter in selecting these titles that we publish in digital. They have all gone though editors and marketing. Maybe the indie books are selling and increasing the market rather than taking it away from publishing overall. The prices are cheap and people can hoard books.

Many people keep talking about writers changing over to indie writing, as you just did…

Except that I didn’t. :)

I’m talking about brand new writers, who indie-publish as their first choice, the way I did, because we see it as the far better business decision. We never submitted anything to anyone associated with the old industry.

I’m talking about writers fully capable of hiring our own pro team of editors, cover designers, proofreaders, formatters, etc. and publishing our own books to professional standards that equal or exceed those of traditional publishers.

More and more of us. Every day. Grabbing an ever-larger share of the market, while silly pundits like Mike Shatzkin try to claim we don’t exist ;)

This isn’t about “failed” trad-pub submitters getting a consolation-prize second chance in a lower-value flea market, Steve. This is the future.

For many reasons they might not have been picked up by a publisher….

Just can’t see past your publisher-centric biases, can you? I’ve had unsolicited offers by publishers bigger than Kensington… and turned them down. I’ve spoken to a lot of indies — midlisters and best sellers — who have done the same.

The convenient fiction that any indie would jump at a trad deal, and the only reason they are indie is the publishers didn’t have room for them, is just that — a fiction.

Maybe the indie books are selling and increasing the market rather than taking it away from publishing overall.

I think you’re right about this.

Indie author-publishers are now selling 250 million ebooks annually and generating $750 million dollars in gross consumer sales. That’s a third of all ebooks sold, and 10% of all trade publishing books of any format sold. And yet traditional publishers are reporting roughly the same total unit sales (but higher profits due to the higher ebook margins.)

The overall trade market has grown by 10% in unit sales.

The prices are cheap and people can hoard books.

There’s some truth to that observation, but you’re oversimplifying.

The trade publishing market’s customers (readers) are not homogenous. The market is made of very distinct segments. Some were well-served by the old publishing model of limited availability. Others were poorly served, and it left a lot of money on the table which indies are now capturing.

We have the 4-book-a-year hardcover and airport-mass-market-paperback buyers that make up the majority of readers… but not the majority of book purchases. These “casual” readers a market segment where price is inelastic and demand fairly fixed. As brick and mortar shelf-space shrinks — and title selection the “casual” reader sees shrinks with it — those purchases are becoming more and more concentrated in the top best sellers, while everyone below the top 50 or 100 loses visibility. That’s traditional publishing’s bread and butter market.

And then there are the “avid” readers that make up maybe 10% of all book-buyers, but account for something like 50% of all book purchases. This market segment is highly elastic, because these readers are voracious. When books are available for reasonable prices, they buy more, read more, spend more — often hundreds of titles a year. They try new writers, and when they find one they like, they vacuum up that writer’s entire backlist right away. And then also buy anything that writer produces in the future.

That’s me.

That’s also the market where indie writers made their first inroads. And where now — in genres like Romance, Science Fiction, and Fantasy — indies are the dominant publishing segment.

So an interesting question for all of us is this:

What percentage of “casual” readers will — because of the convenience and better pricing of ebooks — find themselves reading more and more, over time, and watching TV and playing video games less?

A very small % of casual readers drifting toward avid will mean a very large % increase in the number of books sold. That’s why the pie will keep growing. :)

But we have yet to see the slightest decline in the amount of submissions even from people who are indie publishing now.

I doubt those numbers will ever decrease. Publishers aren’t losing market share because authors don’t like them. They are losing because consumers are spending on independent books.

The author submissions to publishers can increase while publishers’ market share decreases. Above a certain number, the number of submissions doesn’t matter. The publisher has all the material he needs.

But the independent segment also has all the authors it needs. Both segments are overflowing with supply. There is no shortage of authors for anyone.

Consumers are another matter. Consumer spending is shifing to indpendent fiction more and more each period. That means indpendents are gaining market share, and publishers are losing it.

We do hear from publishers that increases in eBook sales are flattening. But they don’t tell us if this is the rate of increase, absolute dollar increase, or if their numbers include independents on Amazon KDP.

If the numbers do include Amazon KDP independents, where do those numbers come from?

Because publishers are wholesalers? Does Del Monte set the exact price that Jewel Foods or Safeway or whoever sells their canned corn for?

I’m pretty sure Apple does dictate the price of their electronic products, but that’s a contractual thing. So yeah, I guess publishers are free to do the same thing with their ebooks (tell the retailers exactly what they’re going to charge for them) but I’d also guess that it would have to be included in their supply contract or whatever.

More power to you if you can get all of your retail outlets to agree to cede that control to them. (I’ve rarely if ever paid full MSRP for a book at Barnes and Noble…)

“The publishers are smart enough to see how digital books are selling and so far they’ve been selling plenty at the “higher” prices. There hasn’t been any problems with the model.”

This is what gets me. Maybe, from the publishers point of view, what they’re selling is “good enough”. I’m not sure why anybody settles for “good enough” when “much better” is easily attainable, but I guess while we’re talking about rights, that is their right – the publishers are free to take OK sales when they could have more, if that’s what they want.

However, speaking as a reader, and a writer, the problem with the model is huge.

I just wrote a post on my blog about how I had decided to load up my Kindle with Agatha Christie books for my summer vacation, until I saw they were $12.99 EACH! I went to the library instead, and while away read an average of 1.5 books a day – at $13 a pop, that would have been a costly vacation!

As a writer, the digital edition of my first, traditionally published, book is $12.99. Good luck earning out an advance when nobody will buy the book. I won’t even promote it myself. It’s embarrassing to me that my publisher will ask readers to try a completely unknown author’s work for $12.99 (five cents higher than print list, by the way). The eBook of my second, self-published book is selling nicely at $2.99 – it’s lovely to know the book is selling and to connect with readers.

Publishers price their book as they see fit. It’s their choice to do so. They’ve paid an advance and have the right to earn it back. If they want to discount the book, they will. Most publishers will discount the book at some point whether through a bookbub promo or daily deal or some other promotional vehicle. There’s more to consider in pricing than just the charts that Amazon made public during their PR campaign with Hachette during their negotiations.

I am not interested in a publisher’s puny cash outlay if said publisher then says they now own me. I put something far more valuable into my writing: my time and my blood, until that latter thing shorted out my laptop.

Why should the author decide the price of the book? BECAUSE!!!! IT’S!!!!!!!! MINE!!!!!!!!!!!!!!!!!!!! Not the publisher’s, not the readers, not YOURS, it’s MINE MINE MINE MINE MINE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Okay, I’m channeling Daffy Duck.

Now I’ll channel Harlan Ellison. Steven, if any publishing company that thinks as you do (hey, corporations are people now!) ever puts its hands on my writing, it will withdraw two bloody stumps.

I don’t think you’ll have to worry about that. If you don’t want to go to a publishing house, you don’t have to. But once the publisher acquires the book, it is theirs to decide how they want to price it; not the authors. Do you think publishers don’t experiment with pricing?

Yeah, I do think publishers experiment with pricing. Did you check out the post below by Hatchette Author? How to kill sales in one obnoxious lesson. Why does my spider-sense tell me that was an experiment in suppressing ebooks?

The problem with publishers is that think that they acquire a book, that it belongs to them and not the author. They should be distributors, not owners. Publishers and authors should be as Baron Mordo said to the Dread Dormammu: “We are allies, not master and slave!”

We do look at publishing a a partnership in many ways. We want the author to self promote while we promote as well. But it’s our decision on how to price the book. In the case you mentioned, when the mass market edition comes out, assuming one is, the price of that book will drop to 4.79 or somewhere around that on Kindle. People can wait to buy it then if they like. There will be many who want the book now and are willing to pay the higher price and give the publisher the chance to recoup their investment and in turn have the author make bigger earnings.

I want to throw in my voice to echo others: You don’t think authors make the equivalent of a cash outlay by writing the damn thing? You don’t think our time, often thousands of hours, is worth anything? Seriously?
SERIOUSLY?
Then again, I’m never going anywhere near traditional publishing, so for me it is a moot point. I’m just insulted that you consider writers to be random text generators whose time means nothing.

What an author spends writing the books was not my point. Whether the author self published it or traditionally published; they spent the same amount of time writing it. But with one model they were paid an advance on future earnings. That’s the difference that you’re overlooking. And in some cases that advance is very substantial.

A cash outlay is totally different that the writers own time. I was saying Amazon isn’t giving a cash outlay and doesn’t have to compensate for that in the price of the book.

Stevie Z asks: “Why should authors or Amazon have the right to decide what the publisher wants to price a book at? Neither one of them have made a cash outlay for that book.”

Why should authors have any say in what kind of cover goes on their book? Or what format it’s released in? These are publishing decisions, and yet they are often negotiated in book contracts. The author and agent might push for final cover art approval. They might push for a hardback release or a mmpb edition.

You act like this is a crazy demand, an author suggesting a cap on the ebook price, but look lower down in these comments where two Hachette authors engaged in these negotiations (or attempted to) after their contracts were signed. They mistakenly believed that their publisher would help them maximize their audience and their earnings. THEY WERE WRONG. The publisher doesn’t give a shit about them or their book. Sure, their editor does. And Jen in marketing. And Mike, from the sales team. Great people. They believed in the book. But the lever-pulling bean-counter, CFO, CEO, editor in chief, whoever, will not be flexible in pricing to help authors establish a career or a liveable income.

And the fact that you don’t care says legions about you and Kensington, Stevie. Authors are out of their minds to sign with you, sitting here telling us that we should have zero input on the price of our wares.

I’m sorry you see things that way Howie. And this is all because two authors from Hachette made a comment when they have thousands. So two people say something and it now becomes typical for the rest of their authors. Thaty’s how your logic seems to work here.

Fortunately you know nothing about Kensington. We have authors that have been with us for over 25 years. Many publish multiple books per year with us. They rely on our expertise in setting the price and format. We discuss the format together many times however, to decide when an author is ready to go into hardcover for example. I guarantee you that we give a shit about our authors as you put it. I meet every one of them when they come into our offices and sit down and talk to them.

And as far as cover control goes, there are very few authors that have cover approval in this business. One of the reasons an author chooses to go with a publisher, besides the advance they’re getting is because hopefully they know what they’re doing with packaging. We know what’s selling and what’s not. The author is not necessarily an artist and their opinion as to if a cover is “good” could be meaningless. We ask salespeople and accounts if they like our covers.

It’s our job to make money on each title we sell. We are a commercial publisher. I don’t get to show a loss like Amazon does or I’d be out of business. So we experiment with pricing all the time. I agree that certain genres have ebook pricing that is too high but we also don’t want to lose the sales of the paper edition of the book which is still 70% of the sales. It’s a balancing act and not just about ebooks.

And those Hachette book prices will come down substantially when they decide to release the book as a mass market edition. Probably will retail for 4.79 and at that price be competing with indie author pricing.

And I never heard back from Hugh. Do you have the same exact contract as everyone else on KDP or do you have extra perks? I think your readers should know since you promote everything Amazon does as being the gospel. Barry Eisler claims his contract is standard. I wonder about yours and Konraths as well.

And thank you for the lovely words that authors would be out of their minds to sign with Kensington. I appreciate that. How many other CEO’s or owners of companies do you have here reading any word that you say? Your tone in dismissing what I say is rude, unnecessary and unprofessional to say the least. Since you clearly don’t want me commenting on your blog, I’m done here. Although I am waiting for you to post your kdp contract here so that we can see if Amazon does anything special for you to spread the gospel about them.

I had posted a long reply to Hugh’s comments here but it didn’t show up for some reason. Some people can have an intelligent conversation without resulting to childish things, like Hugh calling me Stevie. Or suggesting that the 700 authors that we publish each year are out of their minds for signing with us. I will no longer comment on this site.

You’re all left to believe the gospel of Hugh who has yet to answer if he has any additional benefits from KDP that you don’t have. Has he shown you his kdp contract for spreading their gospel or does he have an nda that claims he can’t discuss his contract. Our contracts don’t have that.

I didn’t realize that Hugh has to approve the comments here before he posts them. So my comments that were previously here are now gone. So be it.

I only have to approve comments if they have certain cuss words, more than one link, or are too long. Yours fell in the last category.

My contract with KDP is the online EULA that everyone agrees to. You can view it by signing up for a KDP account. I’ve also opted in to several beta programs over the years. I get preferential treatment from most distributors on account of my high sales, not my advocacy. Apple & Kobo have used me as a guinea pig as well. My rates everywhere are the same. My payments the same.

Right now, I do have the advantage of being in KU without being exclusive to Amazon, something they offered to dozens of top-selling authors to entice us to try out the program. It’s a time-limited offer, not a permanent exemption. I blogged about this here and elsewhere when KU was announced.

I’m holding you to your promise not to comment here anymore. I don’t think you are a good or honest person. I wish you spent a fraction of the time you spend trolling websites and spreading your ignorance tending to your authors, instead.

Have a little more class and don’t tarnish my name or reputation. I assure you I am a good and honest person and I don’t think you’d be able to find a single author that ever worked with me that would say otherwise. And I can assure you that I am not ignorant.

Steve, my inbox is full of people who have shared their Kensington horror stories with me but don’t want to air their grievances in public. In the past three years, I’ve heard from too many of your disappointed authors to keep count. I could have a separate email tag for them all, just to keep them organized.

I’ve also had people from the trade inform me about the history of your company, which isn’t a very glamorous story.

And I’ve heard from quite a few who have had major problems with you. Just recently (because of your comments here), I got an email explaining how you’ve been saying incorrect things about publishing for a long time, and that you’ve done more damage to your cause than you’ve ever furthered it. Most of the things you say, honestly, lead me to believe that you don’t know how book publishing works. So maybe it’s a good thing that you spend all your time trolling blogs instead of managing operations of your father’s company. Keeps you from mucking things up.

Now please be a man of your word and never comment here again. I don’t censor this discussion, but it would be a lot more helpful without your inanity. Others may praise you for being willing to engage, but I think it would help to have a dissenting opinion that was informed rather than strident and desperate.

This’ll be the last time I reply to you directly. I’d be nicer to you if I didn’t have so many accounts of you treating authors miserably and harming their careers. I don’t think you are a good force in this trade. Prove me wrong, and I’ll retract every bit of this and sing your praises. That would start with advocating for authors instead of bashing competitors and bashing those who choose to self-publish (remember calling for a ghetto for us to reside in? I do.)

http://www.huffingtonpost.com/steven-zacharius/selfpublishing-the-myth-a_b_4453815.html

I had a long reply written to you but I decided to delete it. I don’t think I’ve ever encountered such rudeness or arrogance from a person that’s supposed to be a professional in this industry.

How Kensington spends it’s authors money…..

Unfortunately there is no way I could not respond to this after someone sent me a copy of it. Unfortunately it was posted here in a cowardly fashion with no name attached and the highlighted excerpts from the case that followed the link fails to mention that the charges were dismissed. It would have been nice if the total results were shared. Furthermore this has nothing to do with Kensington’s authors money.

Why should authors or Amazon have the right to decide what the publisher wants to price a book at? Neither one of them have made a cash outlay for that book. The publisher has paid an advance and it should 100% be their right to choose what they want to sell that book for.

Really? The author’s are the ones who spent many hours (time = money, right?) creating the product. They are also directly impacted by the pricing decision. If the publisher decides a 200 page novel is worth $30 as an e-book, the author would be completely screwed. Yes, they have the “advance”, but would never see anything more than that. Because they are paid based on sales, they should have input that allows them to help maximize the sales – price, formatting, cover, marketing, etc., should all be things the author has a say in.

Steve Zacharius: “I don’t think I’ve ever encountered such rudeness or arrogance from a person that’s supposed to be a professional in this industry.”

That would be because you’ve never dealt with Kensington as an author. If you had, you would have encountered plenty of rudeness and arrogance.

http://www.courts.state.ny.us/Reporter/3dseries/2014/2014_50011.htm

The Complaint further alleges that Steven Zacharius has used his control of Kensington’s board to “self-vote” salary increases. (Am. Compl. ¶ 92). In addition, the Complaint alleges that Steven Zacharius improperly billed personal expenses as business travel, and that Steven Zacharius travels to work each day via limousine. (Am. Compl. ¶ 88). Further, the Complaint avers that Steven granted Judith Zacharius a “no-show job” at Kensington in exchange for granting Steven the ability to vote her shares under the Voting Trust Agreement. (Am. Compl. ¶ 93).

Steve, here is where you express what publishers seem to feel about authors:
“Why should authors or Amazon have the right to decide what the publisher wants to price a book at? Neither one of them have made a cash outlay for that book.”

Cough. Cough. Cough. Are you for real? Are you actually trying to say that the publisher’s investment in my book (and I’ve been published by your company, and I know how very small that investment was: $2500, and that was after FIVE books with you guys, you big spenders you) is more than MY investment? Forget my imagination, my skill, my time, my labor. I’ve invested actual cash money too– equipment, research books, time off paid work, all that stuff.

But there you are. The publishers have that much respect for the work of those who write the books.

That, Steve, is why so many of us are just quitting traditional publishing. We respect our own work.

Publishers have been in control so long that they don’t realize how much of what they’re doing probably wouldn’t stand up in court (such as price-fixing, which many were recently convicted of). Retailers actually have every right to determine the price they offer products. Yes, a retailer can agree to stick with the supplier’s price (Apple, which was involved with price-fixing with those publishers, has the muscle to enforce that), but that happens by agreement. A retailer has the right not to carry a product if they don’t come to an agreement. That apparently doesn’t make sense to publishers.

Never mind. We authors don’t need you anymore, and neither do the retailers. So sad.

And btw, Steve, you say publishers “acquire” a book. In reality, we own our books. You “license” them. Of course, you and I know that publishing contracts tend to make that licensing rather more like a “sale” than a “rental,” but let’s be clear here. I don’t give up my copyright. I own my book. You don’t acquire it. You rent it.

I think one of the biggest things that isn’t addressed here, is how much people read these days.

I think Orwell is correct when you’re dealing with an average reader that reads a book every month or so. Reaching that saturation point with a lower price threshold is very much an issue. It’s not as big of an issue for more modern readers and avid super readers that read in excess of 200 books a year.

It also doesn’t take into account today’s accessibility and ease of procuring reading material. I can literally be anywhere on the planet and buy virtually any book ever written with my phone.

It also doesn’t take into account people who may buy a book on a lark and never read it, which is a much more common practice these days both when the book isn’t a major investment in funds or time spent purchasing.

It’s great to cite history. But sometimes there’s just no “similar” context.

It’s not as big of an issue for more modern readers and avid super readers that read in excess of 200 books a year.

There is nothing, in point of fact, modern about that. The ‘avid super readers’ were around in Orwell’s time as well. In the U.S., they tended to be the people who went to the newsstand every week and bought a dollar’s worth of pulp magazines to get their fix, or went to the library and came out with a stack of borrowed books they could barely see over. (Or both.) In Britain, they tended to subscribe to lending libraries. Orwell himself describes them in his essay, ‘Bookshop Memories’:

Our shop stood exactly on the frontier between Hampstead and Camden Town, and we were frequented by all types from baronets to bus-conductors. Probably our library subscribers were a fair cross-section of London’s reading public. It is therefore worth noting that of all the authors in our library the one who ‘went out’ the best was — Priestley? Hemingway? Walpole? Wodehouse? No, Ethel M. Dell, with Warwick Deeping a good second and Jeffrey Farnol, I should say, third. Dell’s novels, of course, are read solely by women, but by women of all kinds and ages and not, as one might expect, merely by wistful spinsters and the fat wives of tobacconists. It is not true that men don’t read novels, but it is true that there are whole branches of fiction that they avoid. Roughly speaking, what one might call the average novel — the ordinary, good-bad, Galsworthy-and-water stuff which is the norm of the English novel — seems to exist only for women. Men read either the novels it is possible to respect, or detective stories. But their consumption of detective stories is terrific. One of our subscribers to my knowledge read four or five detective stories every week for over a year, besides others which he got from another library. What chiefly surprised me was that he never read the same book twice. Apparently the whole of that frightful torrent of trash (the pages read every year would, I calculated, cover nearly three quarters of an acre) was stored for ever in his memory. He took no notice of titles or author’s names, but he could tell by merely glancing into a book whether be had ‘had it already’.

And I posted that without affixing my point, which is that Orwell knew perfectly well about the avid super readers, and therefore should have known that quite a lot of people would buy ten books for five shillings if they could get them at the price. But because he disapproved of the books they chose to read (‘frightful torrent of trash’) he placed no value on anything that would help them to read more.

‘Bookshop Memories’ was published in 1936, the same year as Orwell’s fatuous remarks on paperback books. It’s not that he was ignorant at the time and learnt these things later. He knew, but his mind refused to make the connection.

More to the point, the person who normally spends their money on cheap fun (alas, movies are no longer cheap) may be willing to fit in a novel, if it is also cheap and looks fun. He may find out that reading is fun, and buy more cheap books.

But if it’s a choice between known, cheap fun and unknown, expensive fun, what will people on a budget tend to pick?

“But if it’s a choice between known, cheap fun and unknown, expensive fun, what will people on a budget tend to pick?”

That statement is common-sense. However, it rarely matches American (and in general human) buying habits.

The answer is… the more expensive one.

Seriously. The perception is that between two like products, the more expensive one will be of higher quality. Right or wrong, that’s just how we think. Cheap Japanese imports don’t make BMWs any cheaper. A lot of buying habits are more about perception than about reality.

And Data Guy’s data reflects this as well. Publishers complain that eBooks are a pricing race to the bottom. That’s not true. While we see a glut of 99 and 2.99 books, we’re seeing the most profitable price point to be 3.99 and 4.99.

Why? How does that make sense? On a book per book sale basis 3.99 outsells 2.99 — plus you’re making an extra 70 cents per book. Why?

Good old fashion perception. This is something that is just ingrained into how we judge value based on very few factors.

P.S. Mind you, this only goes so far. By the same logic, you’re saying, “Well, shouldn’t the 9.99 books outsell everything then?” Only if buyers felt the price reflected quality or the value–which they don’t. They start asking, why does something that has virtually no cost to produce cost 10 bucks? It no longer feels like a value. While the 3.99 and 4.99 (and apparently 5.99–as Hugh’s books are in this area) still feel like the reader is getting their money’s worth.

Cheap Japanese imports don’t make BMWs any cheaper.

True; but the Japanese imports outsell BMW by a factor of nearly 20 to 1. This past July, according to the Wall Street Journal, BMW sold 26,409 vehicles of all types in the U.S. The three big Japanese makes, Toyota, Nissan, and Honda, sold 473,161. BMW maintains its high prices at the expense of volume, which is exactly what you are claiming does not happen.

Now, remember, BMW genuinely sells a premium product. The people trying to get $15 for an ebook are selling an ordinary product for a premium price. Because they have a monopoly on that particular product, and no two books are perfectly interchangeable, they have enough leverage to get some sales – but as both our host and Amazon’s sales data show, they are losing sales and leaving money on the table.

They’d try the expensive one and choose whichever one they like better. But here’s the rub. It’s not an either/or situation. You can choose to do both. Some weeks go cheap, others more expensive.

James makes some good points concerning the car analogy but it’s difficult to compare what is for most people their second largest purchase with a form of entertainment.

I don’t believe, once you get your money from either a traditional publisher or your self-publishing distributors (Amazon, etc.), that you can tell which dollars are dirty (ie, came from the masses) vs. which ones are clean (came from the elite readers).

Most writers (maybe not the 1%) would just rather ‘have some more, please’ for their labor.

@Tom

1) You missed the point. I was talking about the perception of quality — which holds up regardless of how many units are sold. Cheap Japanese imports don’t make BMWs cheaper. That was the analogy of my thesis statement. And you failed to disprove it. In fact, you didn’t even try to, despite claiming to have succeeded. /boggle

2) Number of units sold without the price per unit doesn’t prove or disprove anything. Also looking at a portion of sales (US only) for a European car company isn’t looking at the big picture. It also doesn’t address the fact that BMW is intentionally a luxury automobile. Book Publishers haven’t really assumed this role, yet. (But they will).

3) On top of that, it was an analogy. Tearing apart a flawed one doesn’t prove or disprove the underlying points.

4) You’re kinda getting on the trollish side. Rapidly replying to everyone in this thread with a rebuttal of some sort. Picking apart details that aren’t even significant to the larger comment on the whole.

Probably my mistake for even engaging you. Shouldn’t feed the trolls and all.

The car companies I picked were totally arbitrary. It doesn’t matter what I picked. I was commenting on the Big Publisher fears of eBook pricing being a race to the bottom. My point was, it isn’t. The prices stabilize. And it’s of the market’s own doing — OMG! Can you believe it :p

And I pointed out Data Guy’s data supports this as well.

I also gave a reason: It mainly happens because a buyer’s perception of “value” is that when the market starts to saturate, and like products become difficult to tell apart, the ones that are more costly, people inherently assume are also of higher quality.

I also pointed out that there’s a middle ground. That when expensive products aren’t seen as a good value, we see things head in the opposite direction. And this is where we see our 3.99, 4.99, and 5.99 point break existing — which is right between the 99/2.99 and 9.99 price breaks — as we would assume it would be.

What’s awesome for indies is that we can price our product as a premium product within the Indie market and still be seen as a value compared to the Big Publisher books.

Not sure what’s difficult to grasp about that. Other than, I’d suggest you try the 3.99 price point for your books :p

Mr. McCormick:

I take grave exception to your calling me a troll. I am not, and have done nothing of the kind. It is clear that you neither understand what I am saying, nor wish to engage my points, since you have retreated into pure personal insults. Good day to you.

Interesting. I still think the ease of access plays a large role in today’s version. I wouldn’t read as much as I do if it weren’t for the technology surrounding reading. I also think the pool is much larger, and also global, meaning its much more difficult to saturate the market.

Absolutely. Lee Hall recently talked about how his publisher says his readers only buy four books a year. That seems to be the market Hachette is focused on to the exclusion of all others. They want to sell to the casual buyer who picks up a book as they pass through the supermarket or airport, even if that means ignoring super readers.

But it’s not just super readers who buy lots of books. I’m a slow reader (dyslexic) but I love books. About ten years ago I made a vow to stop buying print books because they piled up unread. Yet, since the advent of digital, I probably have bought about 50 ebooks that I haven’t had time to read, but hope to someday. And I don’t feel bad about it because they don’t take up room in my tiny space and remind me I’m not a great reader. Moreover, I can carry them with me anytime I’m traveling and have a great library of selections. But if they were too expensive, I probably would stop buy extra books all together. (Falling into the four books a year category.)

The other market that is over looked is the binge reading of a single author. I’m a slow reader, but in the past I would occasionally binge on a particular writer. Back in high school I poured through 25 or so cheap paperbacks of The Avenger by “Kenneth Robeson” (mostly by Paul Ernst) in a couple months and enjoyed the fact that they all fit in a nice tight formula. Fast writers and writers who have a large back catalogue have even better opportunities now to sell a ton of books in a short period to a reader that likes their style. This is a completely different market from the four books a year kind of reader.

Unfortunately, it’s not just that the big five don’t want to service those kinds of markets, superreaders, horders, binge readers, etc., but that they actually want preferable treatment from Amazon to slow ebook adoption to prevent those markets from being exploited by others.

You nailed it. Ebooks allow guilt-free hoarding of reading material. The psychology of book-buying is completely different with digital. Pricing needs to reflect that reality.

@Hugh — Don’t you think pricing on Amazon by and large does reflect that?

Or are you talking about Publisher pricing of eBooks, arbitrarily trying to jack up prices?

For the most part, what I see on Amazon is the market taking care of itself. It’s settling at a new price point for this rather new (at least in a mainstream sense) medium for reading.

Eventually, the big publishers will have to come down-ish. However, they’ll probably always be able to charge a premium. But I also think that’s a good thing. It means newer authors and indies will always be able to undercut them, while still having a window in which to play with price.

Honestly, I think eBooks are past the point where even collusion tactics will have an impact. If they did happen to get Amazon onboard with price setting (which I don’t see happening) it’s basically asking a couple smart entrepreneurs to fill the gap and do what Amazon is currently doing (letting the market set prices).

Eventually, the big publishers will have to come down-ish. However, they’ll probably always be able to charge a premium.

Oh, they’ll always be able to charge a premium – and pay for it in reduced volume. For the last four years, that is a choice they have been making deliberately, because they wanted to keep paper going at the expense of ebook sales. But it has mightily speeded the flight of their best customers to books from other sources.

Oh, they’ll always be able to charge a premium – and pay for it in reduced volume.

We know they’re protecting print but even if they weren’t and determined that a higher price point maximizes revenue than that’s where the price should settle.

If they want a bit more exposure, a lower price would be beneficial but would erode short term revenue but might increase it over the long haul.

We know they’re protecting print but even if they weren’t and determined that a higher price point maximizes revenue than that’s where the price should settle.

The thing is, I have never seen the slightest bit of evidence that revenue is maximized at a price point over $10. Nor that publishers have even grasped the idea of setting prices to maximize revenue. If they did that, they would (for instance) price a 300-page paperback by James Patterson higher than a 300-page paperback by J. Random Shmegegge, because Patterson’s name will carry a premium in the market. Instead, both books are priced at an approximate multiple of the cost of printing; so that if there is any difference at all between them, the Shmegegge book is slightly more expensive because of the shorter print run. This method of calculating a selling price can best be described as antediluvian.

Sorry, Mr. Orwell, but I don’t have a saturation point. If I were free to buy all the books I wanted, the film crew from Hoarders would be showing up for an intervention to find me (assuming they could get into my house) in my hollowed out mommy fort amidst mountains of books, Amazon boxes and bubble wrap. I think what bothers me most about all these arguments is the assumption made by so many people that readers are freaking idiots. If we were as stupid as some are insisting (one blogger actually suggested that we wouldn’t appreciate books as much if they were priced lower) I don’t think we’d have the mental capacity required to learn to read.

If we were as stupid as some are insisting I don’t think we’d have the mental capacity required to learn to read.

Oh, but you see, the fact that we disagree with them proves that we don’t have the mental capacity to learn to read.

Remember, the favourite insult of any literary snob is ‘illiterate’. Fail to read a Great Important Book that the snob likes, and you are illiterate. Read something that the snob disapproves of, and you are illiterate. Disagree with the snob about the meaning or value or relative importance of a book, and you are illiterate. Sometimes they will, just to show how nice and tolerant and forbearing they are, treat you with kid gloves and call you ‘subliterate’ instead. But don’t be misled: the sentiment is the same. It is the shameless bigotry of the Gnostic towards the uninitiated.

I’ve already reached that point and need Hoarders to come and help me out. No, really, we can barely move in here. We’ve got maybe 2500 square feet, and we can move and eat and shower and lie down/sit down in 200 sq feet cuz the rest is books and hubby’s musical instruments. Thank God for the Kindles, or we’d have been buried under tomes ages ago and died premature deaths, our bodies burrowed into by bookworms.

I agree that most ebooks would be most profitably priced even much lower than 9.99. But I see no reason to put a “speed limit” on ebook prices. There’s no danger whatsoever from higher priced ebooks, except that they won’t sell as well, and that damage is therefore limited to those who publish the book. If they want to handicap themselves, that’s their business. It just means that other authors and publishers with better priced books will sell more of them.

Putting a price limit on books is silly and anti-free market. I’m pro free-market. I also think writers and publishers should able to price their books as low as 0.99 without suffering any penalties in the form of lower royalty percentages. If lower ebook prices are the good we think they are, there’s no justification for those penalties on lower ebook prices.

If the big five publishers want to handicap themselves with higher ebook prices, that’s their business, and their right, to set their prices as they see fit. Amazon shouldn’t take on the role of the pricing police. They can take their 30% as usual, of whatever price the author or publishers sets. And in some specialty cases, particularly in scholarly or unusual or picture-heavy books, a price higher than 9.99 is more than fair, and even a necessity for some. And while we’re at it, reduce or put a cap on the transmission charges that price out books heavy on photos and illustrations. No reason for that either, given that Amazon’s actual transmission expenses are about 1/20 what they charge publishers and authors.

They can price ebooks at 30 bucks. I don’t care. I won’t pay more than 7 unless strongly motivated, and with about 1500 books in TBR “piles” (real world and cloud books), I can wait for prices to come down or buy used.

Shoot, with the electronic library card, my hoard, all the free books you can get online that are public domain or promotions, and Kindle Unlimited, I am set for the next 3 decades–if I even live that long. (I’ve been spending time at CCEL with some classics this past week, and that’s free, baby, free.)

In fact, if Amazon weren’t battling it out with Hachette, and if Hachette weren’t ticking me off, I’d all be all, “Yeah, sure, make those babies 20 bucks. Be fierce! Fiercer! Go ahead. Make it easier for the indie authors I support to steal your readers.”

I think Amazon’s position might be that they not only handicap themselves by pricing at a point that yields less sales, but also costs Amazon in terms of lost revenues. Someone said that a missed opportunity for a sale is often forever, because the consumer will move onto something else and forget about the original item. I don’t think it works that way for Lee Child and Stephen King and authors of their stature; their fans will seek them out at whatever price.

(That said, I have a backlog of most of those authors’ books because I’m reading so much more on my Kindle and I generally won’t pay what they are asking for their ebooks. By the time I get to them, and often before I get to them, their next one is sitting there for $6.98 on the remainder shelves at Barnes and Noble and I buy that one. Sitting behind me are remaindered HCs by Grafton, Evanovich, Lehane, Connelly, Crais, and Margolin…and I have even more of their remaindered books at home, sitting there unread.)

Someone said that a missed opportunity for a sale is often forever… I don’t think it works that way for Lee Child and Stephen King and authors of their stature; their fans will seek them out at whatever price.

Don’t be so sure.

I used to read Child, King, Grisham, Iles, Hurwitz, Connolly, and a whole host of other big-name authors religiously. But when I started ereading, I saw their overpriced ebooks and thought, “They’ll come down eventually. I see so many other cool-looking choices to try out now for reasonable prices instead.”

A few months later, when I saw some of those big-name ebooks on sale for as low as $2.99, I found that I didn’t feel any desire to read them anymore, so I didn’t. Those hoary old standbys had subconsciously fallen off my must-read list — because I had discovered many new authors I liked just as much or even better.

Incidentally, most of those new authors I had discovered were indie.

That’s you. Me, I sort of reflexively buy books by many of those authors when I see them for a reasonable price, say, on the bargain shelves of my local B&N. (I have a nice library of HC’s and I like the way they look…) I admit I have a backlog of titles to read by them since I’ve been reading a lot of indie on my Kindle. But I still respect those authors’ ability to tell a story and suck me in. I may be unusual among power readers (I probably read 60-100 books a year) but I think there are a lot of “casual” readers who grab them the minute they come out, or get them in paper or whatever.

Point was, Lee Child and Stephen King and Connelly and all of them have a different audience than indie writers. Perhaps they overlap at times but oftentimes they don’t…

^ This

Five years ago my reading was 90% tradpub to 10% indie.
Now it’s (at least) 90% indie. And I’m buying at least 5x as many books.
And it’s not just about the price. There’s so much good work to read now I can’t keep up with my buying habit.

Scott, it’s true that when books (or any other item) are overpriced, it hurts everyone connected with that book – author, publisher, and retailer (Amazon). On the other hand, ebooks aren’t the only thing being sold by the publisher (print also), and Amazon isn’t the only retailer out there publishers sell through. Publishers really do have the right to decide what their overall sales strategy is, and they don’t have to optimize everything in their strategy to get Amazon the best possible sales results. If publishers decide that they want to overprice ebooks in order to protect their print distribution network, there’s a logic to that. It may end up hurting them in the long run, but that’s their business decision to make, not Amazon’s. Amazon can of course argue to them that they are making a mistake, but I don’t think it’s their business to insist that all publishers favor Amazon over all else. Those publishers who do see the wisdom of Amazon’s pricing arguments will prosper (if that really does help publishers) and those that don’t, will be hurt. Let the marketplace decide, not Amazon.

I happen to think that Amazon is mostly right on price issues, but mostly wrong on trying to force those prices on publishers who have other priorities than increasing ebooks sales. I understand their position, and that they make more money on ebooks sales, and therefore want to increase ebooks sales over print. But there’s a large segment of the market in print, and a large segment outside of Amazon that publishers want to protect. Obviously they do want to slow the digital revolution as long as they can. I would prefer that they not do that, but I don’t think it should become a line drawn in the sand by Amazon. The market really will decide over time, and the market for self-published books is getting an extra boost as a result. I consider that more than fair. And as a wannabe self-published author, I not only want a competitive advantage over those big publishers, I don’t want to establish a precedent that whatever Amazon thinks is right, goes. While I think Amazon has been great thus far for self-publishers, I don’t want them in the position of being able to dictate prices to anyone, big or small. I would much prefer an Amazon that offers unlimited ebook distribution and royalties with as few restrictions as possible. I think that’s a better business model for them than a market bully who dictates prices across the board. I wish they would see that wisdom of that as well.

” If publishers decide that they want to overprice ebooks in order to protect their print distribution network, there’s a logic to that. It may end up hurting them in the long run, but that’s their business decision to make, not Amazon’s.”

What I think you are missing here Conrad is that if the publisher wants the privilege of selling their books to Amazon’s customer base then they need to play by Amazon’s rules. Selling your goods on Amazon.com is not a right.

In the end, publishers have to decide if they want more for their ebooks and sell them on another site, or meet Amazon’s requirements and sell to the customer base Amazon has spent billions of dollars building. If you want to play in Amazon’s house, you have to follow their rules. You don’t like their rules, take your toys someplace else and prove you know better.

Mike, of course Amazon has the right to do business as it wants, even to make mistakes, just as the publishers do, and it has the right to refuse to sell books from publishers that don’t meet its pricing requirements. I just think that Amazon is wrong to take that approach. Because here’s the thing: Amazon’s business model in the book biz has from the start been “we sell every book possible”. They are the one-stop shopping destination for books, because they really do sell almost every book available in the US (and overseas as well). That’s been great for their business. For them to change that model to: “we only sell books that give us the best pricing/profit deal” is to destroy the business model that made them so successful.

Amazon is playing a dangerous game of chicken (and so is Hachette, but I’m only concerned with Amazon for now). They are counting on no one calling their bluff on this, and all the publishing caving to Amazon’s demands, so that Amazon really can continue to sell all their books. But what if they don’t, as they didn’t back in 2010? Then Amazon has no choice but to continue to sell at these publishers prices and even pricing models, or no longer be Amazon. They would basically have to change their name to “Mid-Sized”. The only reason the publishers were stopped was because of the widespread evidence of collusion. I’m going to assume their lawyers wizened them up to what they could do and not do this time around, and now they are pretty much making the same demands without collusion. If the Justice Department can’t make a case against them, what will Amazon do? Will they really stop carrying all Big Five books, or punish them all the same way they are now doing with Hachette? Sure, that will hurt the publishers, but it will destroy Amazon’s business model. And I think that would be idiotic of them. For what? To accelerate what is going to happen eventually anyway because of market forces? Seems like a stupid and unnecessary move to me.

So the issue isn’t whether Amazon or the publishers have the right to do business the way they want, it’s whether it’s a mistake for Amazon to try to force all publishers to play by their rules, and their pricing schemes, and if they don’t agree, to hit the road. I think that’s a terrible and unnecessary mistake that hurts Amazon far worse than having to sell overpriced ebooks.

Amazon already has the solution to overpriced ebooks, and it’s KDP. A better solution to the whole mess would be to make KDP terms even more attractive to those authors who are now publishing through the big houses at high prices. Give KDP authors 80%, hell even 90%, based on volume (so that big selling authors make a higher royalty rate). Make no restrictions on pricing for that royalty (just to attract their business away from publishers – the market will dictate the best price anyway, and it will almost always be lower). Allow select with no exclusivity conditions. Give KDP authors extra marketing programs. Really go after the publishers where it hurts – authors. To hell with trying to reason with them. Take their business away.

Yes, there’s costs to that, but there’s costs to Amazon’s massive discounting programs as well. Overall, this would be a way to use the marketplace to Amazon’s advantage, which has been their business model all along. Stay true to that, rather than using their market share to bully publishers. Instead, use that market share to really go after their core business. Then maybe they will lower their ebook prices on their own, without any negotiation.

Conradg, I see where you’re coming from. I would disagree that Amazon is bullying anyone, but that’s a matter of opinion. What I think you are missing in your equation is that the industry is changing. If Hachette, or any legacy publisher, decides to pull their books from Amazon, how long do you think it would take before their authors leave that publisher? Publishers need Amazon more than Amazon needs the publishers anyone, and that gives Amazon the position of strength in negotiations.

Between Amazon, Smashwords and Kobo (just to name the digital big 3) Authors no longer need to grovel at the feet of publishers in order to get their books to market, and that fact scares the heck out of the publishers. They need to have access to Amazon in order to keep their authors happy.

And negotiating from a position of strength is not bullying, it’s business. Publishers do it to authors all the time and it is nice to now have Amazon leveling the playing field.

Mike, by “bullying” I simply mean using their market power to try to force publishers to accept their pricing model. The problem with you claim that the publishers need Amazon more than Amazon needs the publishers is that we already have a precedent for this back in 2010, when Amazon backed down and accepted the Big Five agency model. So now we know the reality, which is that Amazon does need them more.

What has changed since then? Basically nothing other than the collusion lawsuit. But since now the Big Five are no longer colluding (at least not in any way that can be proven), we are back to the realities of the marketplace that Amazon itself created. Amazon needs to carry all the Big Five’s books. That’s a known fact. The Big Five, on the other hand, can wait out Amazon’s bluff, and call it. All of them are subsidiaries of major corporations, and they can handle the losses, which they can continue to blame Amazon for. If Amazon is no longer willing to compete for Big Five books, but relies instead on KDP and small publishers, it will lose. They all know that. That’s why Amazon gave in back in 2010.

But you are right that backing self-publishing even more aggressively than they have done thus far is the real ticket for Amazon. Steal more and more authors with aggressive and attractive offers and marketing support. Weaken the publishing hold on bigger and bigger authors, until the pendulum has swung far into Amazon’s court. Then publishers will have little choice but to lower prices and offer better deals to authors just to compete.

True, publishers have the right to do whatever they want at the wholesale level, or by negotiating terms with their retailers (like Apple does). But said retailer has the right to decide that they can’t be profitable (or profitable enough) at the terms that the publisher insists upon, or at the wholesale price that the publisher sets.

But everyone who buys from a supplier makes decisions about those supplies. In dentistry (my day job) we have big, mid and small suppliers. We often pay more because we want the service that comes with the larger supplier, but on certain things, we go to the mail-order companies that can undercut prices by a bunch. The difference is, books aren’t all the same. My guess is that Amazon doesn’t want to be the retailer who doesn’t carry Stephen King and James Patterson and whoever else, but also doesn’t want to be losing money, or at least profits, because the publisher’s terms are not optimal. I guess that’s the point of negotiations.

See my reply to Mike above. I’m sure no dentist cares which suppliers they use, so long as the quality and price are there. That’s not how Amazon has ever sold books. They try to sell every book that’s even remotely available. If they make their terms so onerous and disadvantageous to publishers that they can’t come to a deal, that makes Amazon a niche retailer, not the giant that they are. And their entire business model and market share would collapse as a result. Too much is riding on Amazon’s ability and reputation to sell everything for them to severely limit their inventory over what, 16% more profit on ebooks? That’s chump change overall.

Well, of course dentists care about which supplier we use, but you’re right in that the same material is the same material no matter where you buy it, which isn’t the case with books. I think we agree that Amazon doesn’t want to be a retailer with a less-than-complete selection of books (or anything else), and that what Hachette wants is different than what Amazon wants. I don’t know more about it than that, and I doubt that anyone who isn’t in the negotiations does, either. But the terms thing works both ways. Hachette (and all book publishers) have a lot riding on having Amazon continue to carry their books, as do the authors they publish. Maybe even more than Amazon.

To add to Conradg’s comment, I don’t like the revenue cut flip-flop that occurs below $2.99 and above $9.99. To be blunt, I think it’s bullshit.

Many authors will price their first novel and .99 or $1.99. Why should Amazon get 70% of the proceeds from that sale? If I’m selling a compilation of books for $15, which would normally sell for $25 I get flip-flopped. Why?

If I’m selling a non-fiction book, which for many contains more value than fiction, and I want to set a price greater than $9.99, you guessed it. Flip. Flop.

How ’bout a straight 85% revenue cut (oops-did I say that? I meant 70%) regardless of price point.

Yes, this is an excellent point. As far as I know, no other ebook retailer limits their high royalties on either the top or the bottom of the pricing range. Only Amazon does that. It’s an example of them trying to dictate prices rather than allowing the market to find the best prices on its own. Clearly there are ebooks that need to be priced higher than 9.99, and there are many that would increase sales and profits if priced lower than 2.99. So there’s no real market reason for those limits. It’s just an example of Amazon using its power to dictate prices, even when it makes no sense. Because it can. There ought to be more noise made about this by self-pubbers, to help distinguish us from Amazon lap dogs who simply roll over for everything they do or say. Show some balls, guys.

And so does Kobo, limiting royalty rates above or below a similar price range:

Kobo vendors will receive a 70% or 45% royalty rate on each eBook sold
through Kobo Books, depending on the price of their eBook and the territory in
which the eBook is sold. eBooks that are priced according to the following
pricing rules are eligible to receive a 70% royalty rate:

USD – US dollar $1.99 – 12.99 USD

http://download.kobobooks.com/writinglife/en-US/KWL-User-Guide.pdf

Didn’t know that. I thought they were all like Apple, which doesn’t limit price/royalty. And Smashwords too I think.

What is with those people? I really don’t understand why they would do things that way.

Pricing everything at $14.99 or $9.99 is what you do with widgets. Maybe publishers could stop doing that and letting the artists have some say.

What price? The price the publisher offers to the retailer, or the price the retailer offers to the consumer?

Neither publisher nor author have any business trying to control retail price. Author control over retail price is just as bad as publisher control over retail price.

Note Amazon’s KDP contract gives complete retail pricing control to Amazon.

In fact, they have. All my ebooks that list at $2.99, for instance, are now for sale at Amazon (so it tells me) at either $2.72 or $2.74. This is not a deep discount, but it is a discount.

Have they ever employed that power? Once?

Amazon hasn’t used its right to set KDP prices in any material way. There are instances where they have used it to reduce prices, but they have paid the author based on List Price. I pray to be targeted like that.

It appears Amazon is letting authors study the market, try different things, and give each book the attention Amazon could never give it. They are nudging authors with price/royalty channels and now the suggested demand curve in KDP book manager.

So, Amazon is essentially accepting author price judgement within wide ranges

But it is very important to acknowledge Amazon is choosing how to exercise its rights, and authors have no rights. The provision is in the contract so it can be used as needed.

But, what price do you suggest published authors set? Is it retail price or wholesale price? If authors’ contracts with publishers allow them to set retail prices, then the only way that can be accomplished is if the publishers then have the ability to set retail prices.

So giving published authors the right to set retail prices is simply disguising agency pricing.

I’d say authors benefit most ftom a free market where retailers set retail price. But that doesn’t mean they will get everything they want. Nobody does.

It seems that despite the simple math that clearly shows books sell more and earn more money if they are priced lower (indie or trad pub), publishers refuse to drop prices. Some would say that their older business model makes them naïve, but I think the unwillingness is for other reasons. Making ebooks $14.99 or $9.99 ensures that the publisher will collect the lion’s share of the money off the bat, whereas $6.99, $4.99, or lower would mean they have to wait a little longer to get it, and that’s if they decided to increase the royalty rate for authors. Many publishers are just not willing to try a new model. Wish that were different, but it’s not.

Maybe I can shrug off Orwell’s opinions about readers since he made his statements in a different time, but I find it troubling that there are authors today who voice the same sentiments. You hear it along the lines of “Ebooks are crap”, “Only genre readers buy ebooks. and what do they know?”, “Ebooks are the end of literacy”, etc. Spewing snark at readers who are willing to plunk down cash for your book (just not $30 for a hardcover or $14.99 for an ebook) doesn’t make sense. Such an elitist display of contempt for the people who keep you in business is not an effective strategy if you intend to stay in the business for a long time.

Don’t be so naive to believe one chart of price elasticity that Amazon releases during a public relations negotiation with Hachette. There is no proof that any of that is reality. We test prices all the time. If lower prices helped so much why are there hundreds of thousands of books available for free…..the classics….or hundreds of thousands low priced indie books for .99 that sell 50 copies per year. It’s about way more than price. That’s not what Amazon has you believe. It’s about the book, it all starts with the book. If it’s a good book, people will pay more.

Hugh,

Congratulations on another great post. The Orwell legacy agency who accused Amazon of misrepresentation are simply accusing another of their own failing.

What I hope for next, and what we might campaign for, is an Amazon store on 5th Avenue and eventually in every city, with indie and trad books side by side, graphics based ebook tasting corners and advanced ereader models to rent.

Authors are competing against movies, games and TV series. We need to innovate, fast. I wish you well from Ireland.

I agree, Amazon should forget about their little flying robots that deliver same day mail (which will never happen due to insurance rates and nuts who will use lasers and guns to shoot them down), what they should invest in are bookstores. What can the Amazon bookstore do different? They can sell EVERYONE’S books, maybe not on the shelf but able to order. I want a bookstore I can go into and be able to buy any book on earth. Also they can showcase thier new writers, and they can instal print on demand machines to print while you wait. There are a lot of people who have written by hand and know nothing about computers, i imagine if they walk into a bookstore and see the staff can scan thier work, pdf it, and print if right there and then, they might give it a go.
Yes, an Amazon book store could be amazing…

What I hope for next, and what we might campaign for, is an Amazon store on 5th Avenue and eventually in every city, with indie and trad books side by side, graphics based ebook tasting corners and advanced ereader models to rent.

There already is an Amazon store on 5th Avenue and in every city. It’s called a Kindle – or an iPad – or a Samsung Galaxy – or a PC – or any other device that can access Amazon’s website and be used to read ebooks. And it doesn’t cost Amazon a dime in rent, unlike actual retail space. Furthermore, that store has more products in stock than a brick-and-mortar store could have if it were twenty stories high and covered ten acres of ground.

If Amazon opened actual brick-and-mortar retail stores, they would destroy their own cost advantage and be forced to raise their prices dramatically. And those stores would have to operate without Amazon’s ‘long tail’ advantage, the virtually unlimited selection of products. There is a reason why B&M retailers can’t compete with Amazon. It would be the height of folly for Amazon to become one of them.

yes, that’s what BN and Borders thought– put a big bookstore in every town. (In my city, they put 3 Bns and 2 Borders within three square miles.) How’s that working out? I personally never go into bookstores before except the specialty ones (like the map store). And I don’t think I’m alone in that. There’s a reason bricks-and=mortar bookstores are vanishing– because they just aren’t worth the rent anymore. That’s sad, but I felt the same way when I stopped seeing horses pulling carriages through the streets. (Okay, truth– I felt that way when the rotary dial phones all got replaced with push buttons.)

I’d invest in Amazon, if I had the money to buy a bookstore. Less heartbreak and more profit.

I’m a Hachette author who was launched from a mm paperback platform, then abruptly switched to trade and the new, higher pricing structure, meaning my print books went to $15 and my ebooks to $10 (9.99).

I told them this would kill my sales. I pleaded with them not the price the ebooks so high. Crickets.

To put it mildly, my sales have tanked. From the mid five figure range to the LOW three figure range (units moved, not dollars) and Hachette can’t be bothered to care.

There are many reasons I will not be signing another Hachette contract, but this inflexible pricing structure is a big one.

Couldn’t have said it better than you did.

I hope Hachette sends me their next contract addendum on a roll, because then I might have a use for it.

If Hachette were really happy with the higher prices of ebooks why are they upset that Amazon is not discounting them? They want to set the prices and charge Amazon 30% of retail but still expect Amazon to discount the book leaving Amazon with a smaller piece of the pie.

I am actually surprised that Amazon is still discounting some of Hachette’s ebooks. You would think they would just give them a taste of their own medicine. Why would Amazon be taking a loss on their books, and thereby propping up their sales? Amazon is selling The Goldfinch ebook for $6.99, so they must be losing a few dollars per sale, as the list price is $14.99.

Yes they are losing money on each sale of Goldfinch. They are doing it to capture marketshare and stop other retailers from making any profit on that title. That’s their right if they want to do it, but eventually they need to show a profit.

Yes and that’s exactly their tactic Terrence. Sell it at a loss where B&N can’t since it’s their only business and drive them out of business.

Still seems strange for them to be doing it with Hachette ebooks when they are arguing that the publishers should move to a lower price. Why not force them to live with their list prices on their best-sellers and then see how they like it when sales and revenue drops? As it is, it seems they are missing out on some leverage they could have in their negotiations.

Sell it at a loss where B&N can’t since it’s their only business and drive them out of business.

Right, because B&N never offered a bestseller as a loss-leader to get people into their stores before.

I must say I was mystified by David Streitfeld’s take on the Orwell quote. First he said Orwell liked low priced paperbacks, although I am not sure how he was able to read sarcasm into the statement about collusion before the advent of emoticons. Then he said how Orwell would have been in agreement with Hachette because he did not like low priced paperbacks. And so he argued both sides of the point, and then also used them both to make Amazon wrong.

I was embarrassed and saddened that something like that made it into the New York Times (Are the editors all on vacation?). His piece on Preston was bad enough, but then he seemed to reach for a new low with his confusion about Orwell. And then the meme was repeated throughout the media that Amazon had misquoted Orwell.

I am sad to say that following this whole negotiation between Amazon and Hachette has further disillusioned me with the news media.

I am not an author or a publisher and have very little knowledge of the industry. But surely the system should work something like this:
Author and publisher discuss cover, hardback/paperback/ebook rights. Discuss pricing.
Publisher says: We’ll give you an advance of (say)$10000 of you accept THIS pricing, $5000 if you accept this pricing. etc.
Does it have to be more difficult than this?

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