Amazon versus Hatchette, round 3 or 4

Wow. The gloves are off! It was reported a while ago that the trade press Hachette was negotiating with Amazon on pricing. This happens each year as contracts come up for renewal. But this year is being different. According to some observers, Amazon is pressing harder for more profitability (due to shareholder pressures?). And also according to some observers, the Hachette negotiation is becoming something of a test case for other publishers. The chief executive of the company, Michael Pietsch is something of a hero to literary editors, having been the guy who out-bid everybody (by a huge amount) for David Foster Wallace's novel, eventually titled Infinite Jest. Pietsch spent years mid-wifing Wallace through the final re-writes and cutting process to produce what is considered a modern classic, published by Little, Brown a subsidiary of Hachette. Pietsch is an editor-hero, and apparently a good executive, now to the parent company. Other industry insiders are watching the negotiations intensely:

“In a sense, Michael Pietsch is like ‘Horatius at the Bridge,’ ” says the literary agent and former Amazon executive Laurence J. Kirshbaum, referring to the soldier of legend who single-handedly saved ancient Rome by fighting off an invading army. “He is carrying the rest of the industry on his back.”

(from NY Times article June 2, 2014, linked above)

But after several efforts on both sides, things are breaking down big time. On Sunday, August 10, 2014, 900 authors banded together as Authors United, signing a open letter, and taking out a full page ad in the New York Times. Authors United is the brainchild of author Douglas Preston. But many authors have signed, and a number of high profile authors helped pay for the Times ad. The letter complains that Hachette authors are being squeezed in the battle between Amazon and Hachette in the following ways:

--Boycotting Hachette authors, by refusing to accept pre-orders on Hachette authors' books and eBooks, claiming they are "unavailable."

--Refusing to discount the prices of many of Hachette authors' books.

--Slowing the delivery of thousands of Hachette authors' books to Amazon customers, indicating that delivery will take as long as several weeks on most titles.

--Suggesting on some Hachette authors' pages that readers might prefer a book from a non-Hachette author instead.

The list of signatories includes many authors who are NOT Hachette authors. They just feel the practices are unfair to authors and to the consumers as well. Read the complete letter which calls on Amazon to resolve its differences with Hachette without further hurting authors or blocking or delaying shipments and sales to customers. (Over the weekend, it became known that Amazon was engaging in the same blocking/delaying tactics with another producer/publisher in negotiations with the sales giant: Disney. Might be an interesting fight, and one with a little more equal weight.)

The New York Times ad from Authors United was a little more in-your-face than the letter. The ad included the e-mail address for Jeff Bezos, the chief executive of Amazon. It reproduced the open letter, but the inclusion of Bezos' e-mail address implicitly encouraged readers to contact the man with readers' opinions on the matter.

Amazon has responded. They created a counter organization, Readers United with a web page attempting to present the history of publishing's antagonism to the introduction of the paperback book. Unfortunately for Amazon, they did a sloppy job of research, and quote George Orwell, of all people, trying to implicate him as one of those opposed to paperbacks, and trying to show that he was promoting collusion of the publishers to suppress publication of paperback books. (I think they are trying to remind folks that Hachette is among the publishers called to task by the Justice Department recently for colluding with Apple to increase pricing of e-books on the Kindle.) The web page also gives readers the e-mail address for Hachette CEO Michael Pietsch (who actually had nothing to do with the Authors United ad, as far as I know), and offers a number of rather aggressive suggestions for e-mails to him:

We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.
Lowering e-book prices will help — not hurt — the reading culture, just like paperbacks did.
Stop using your authors as leverage and accept one of Amazon's offers to take them out of the middle.
Especially if you're an author yourself: Remind them that authors are not united on this issue.

As to the quote from George Orwell, though Amazon's Readers' United page asserts that he advocated suppressing paperbacks, that simply misunderstands what he wrote:

When Orwell wrote that line, he was celebrating paperbacks published by Penguin, not urging suppression or collusion. Here is what the writer actually said in The New English Weekly on March 5, 1936: “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.”

Orwell then went on to undermine Amazon’s argument for cheap e-books. “It is, of course, a great mistake to imagine that cheap books are good for the book trade,” he wrote, saying that the opposite was true.

“The cheaper books become,” he wrote, “the less money is spent on books.”

Instead of buying two expensive books, he said, the consumer will buy three cheap books and then use the rest of the money to go to the movies. “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,” Orwell wrote.

(from NY Times article of 8/11/14.)

But the Orwell mis-quote has boomeranged on Amazon in the Internet world. To mis-quote and mis-represent a hero of TRUTH, mis-using his words for your own commercial purposes is a pretty bad move in the cyberworld, I think. It's especially ironic coming from the company that brought you the 99 cent 1984... and then took it away again. Actually, Orwell's original essay is pretty darned apposite. He was balancing the interests of readers, who are naturally pleased to get cheaper books (I know I am -- sorry), against the interests of authors, and all those who work in publishing, who are getting (despite what Amazon asserts), a SMALLER PIE, when books cost less. People really don't spend the same amount or MORE on books when they cost less. They buy the same number of books they were going to get in the first place, and pocket the money they saved, to buy something else. This is very nice for Jeff Bezos and Amazon, who have spread their marketing into LOTS of new areas. Amazon sells nearly everything on earth now. So they really do have a bigger pie. But for authors, and publishers, compositors, type designers, etc. -- all those folks who in print or digital worlds still are needed to produce books --- cheaper books translate to a smaller pie. No matter how Amazon wants to cut it.

There are a few voices out there supporting Amazon. Hugh Howey, Damien Walters. It's quite true that there is a balance point in the market where if you charge too much for e-books, or make them too hard to get, you will lose your market, which is the point of some of these folks. People will not pay above $9.99 or so for most trade e-books, apparently. Don't know why. But despite the fact that you save on printing and paper, and delivery, there are still sunk costs to an e-book. The author's time and the compositor still has to lay out the book in an attractive way. Anybody who has tried to read an e-book from Project Gutenberg will quickly see the difference in a nice modern lay-out compared to the less effective layouts from the books at Gutenberg that are out of copyright!

The image decorating this post is bare knuckle boxers from the 1820's - evidently a collectible print. See http://www.lordprice.co.uk/SPBX1038.html for the original site.

Amazon Domain Name Fight

Amazon has applied for a set of top level domain (TLD) names under the new regime at the Internet Corporation for Assigned Names and Numbers (ICANN).  Amazon would like to sew up rights to such domain names as .reader, .books, and .author.  As you might imagine, some other organizations have objected.  The Authors' Guild  has a note about their protest on the front of their home page.  The Association of American Publishers is also listed as a protesting organization, but their website does not say anything on the issue at this point, at least as far as my exploration shows.

There is a short article from the Wall Street Journal about the dust-up. But more helpful actually, are the e-publications, such as ComputerWorld.com, which include in their articles, as a matter of course, links to the original submission, and to letters from the various organizations filing objections.  Hooray! Makes up for the ad, which you can skip if you are ready with your mouse.

Link to Amazon's application for .book (they also applied for less generic domain names like .kindle)

 Barnes and Noble protest

Association of American Publishers protest

 The most obvious problem is the use of such a generic term of interest to so many other organizations and corporate rivals, is that it would be anti-competitive in the extreme.  It would also be misleading.   Keep in mind how much it costs just to file an application for a top level domain name:  $185,000!  And Engadget points out that if the protest are persuasive, ICANN can rule that Amazon will lose not only the TLD names in question, but also 20% of each filing fee for each name in question!  I suppose that seems like chump change to a company like Amazon. Maybe it's worth it to twist Barnes and Nobles' tail?

I couldn't resist the wicked desire to illustrate the Amazon fight with a Boadicea, the original warrior queen. All the Amazon warrior women I found were too sexy entirely.  From a gaming ring link site, I'm afraid.  Tip of the OOTJ hat to my terrific colleague Roy Balleste! (He had nothing to do with the illustration - don't blame Roy!).

E-book Market Shake-up as Justice Pursues Anti-Trust

The New York Times reports that the Justice Department has filed suit against Apple and six publishers of e-books on anti-trust grounds that they colluded to set pricing. Attorney General Eric Holder alleges that the group met at expensive restaurants and "double deleted" e-mails in an attempt to hide their efforts to fight back against Amazon.com's low pricing of e-books. Led by former Apple boss Steve Jobs, they agreed to set their e-book prices for the iPad between about $12.99 and $14.99 compared with the typical $9.99 Amazon e-book Kindle price. Using the popularity of the iPad, the group hoped to fight back against the low prices driven by Kindle's popularity and Amazon's pricing.

The complaint alleges that the collusion caused

“consumers to pay tens of millions of dollars more for e-books than they otherwise would have paid.”

Three publishers that were investigated, the Hachette Book Group, Simon & Schuster and HarperCollins, have already agreed to a settlement that will most likely overturn their pricing model. Macmillan and Penguin Group USA, which were also named in the suit, have not settled. ... The publishers who have settled are required to end their e-book contracts with Apple and any other retailer with a “most favored nation clause,” which says that no other retailer can sell e-books for a lower price. For two years, the publishers are also prohibited from restricting any retailer’s ability to discount e-books.

Amazon appears poised to lower the prices for its e-books even further, which should be further pressure on the remaining competitors in the marketplace. There is a companion article in the Times about this, and concerns by some business analysts that Justice may be inadvertently setting up Amazon as a true monopoly in the e-book market.

The British Library Steps in It

The venerable British Library has been accused of "undermining struggling independent book shops by piloting a website initiative that redirects visitors to Amazon to purchase titles," according to an article in The Independent. Independent bookstores in England, like their counterparts in the United States, have been struggling to survive because of competition from Amazon, which can sell books more cheaply thanks to its ability to buy books in large quantities.

The library's online catalogue lists more than 13 million of the more than 150 million titles owned by the library. The website's newly refurbished search system now offers browsers the option of clicking on "This item in amazon.co.uk", which redirects users to a page where they can buy a copy of the book from the online retailer.

British booksellers feel that the move by the British Library undercuts them and threatens the very existence of independent bookstores in England, despite their "cultural and educational value." At the same time, they are worried about the effect of tablet computers and e-readers on their business. The Booksellers Association has been lobbying the government to lend its support, and launched the Keep Books on the High Street campaign in October as a way to dramatize the plight of independent bookstores in England.

Amazon Eliminates the Middleman

Amazon has almost put both independent bookstores and chain bookstores out of business. Are publishers Amazon's next victim? The New York Times is reporting that Amazon has gone into the publishing business. This fall it plans to publish 122 books "in an array of genres, in both physical and e-book form. It is a striking acceleration of the retailer's fledging publishing program that will place Amazon squarely in competition with the New York houses that are also its most prominent suppliers." It is unclear to me whether Amazon will offer its authors the traditional services offered by publishers, i.e., editing and marketing, although the Times article states that Amazon is "gnawing away at the services that publishers, critics and agents used to provide." Traditional publishers have already cut back on editing (it's rare these days to read anything that wouldn't benefit from careful copy editing), so it's likely that authors won't lose much if they publish with Amazon. And the article points to efforts already under way by authors to market their work themselves, so they won't miss the marketing campaigns of traditional publishers as much as they would have in the days before authors and their readers could communicate directly. The article quotes Russell Grandinetti, an Amazon executive: "'The only really necessary people in the publishing process now are the writer and reader ... Everyone who stands between those two has both risk and opportunity.'" One question left unanswered by the Times article is royalties. It seems reasonable to assume that by forgoing the services of the traditional publishers and opting for Amazon, authors should be able to bargain for more generous compensation.