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Thursday, June 5, 2014

Amazon Ebook Dispute With Hachette Threatens All Commerce


The fight between Hachette and AMAZON could dictate the future of publishing and even online commerce.

AMAZON is a monster that has been allowed to get too big for its own good. Consumers may love the cheap prices and convenience of using the world’s largest online retailer but it poses a grave threat to jobs, consumer prices, fair competition and choice in the marketplace. Further, it has cast a shadow over book publishing that darkens daily.

What’s so bad about AMAZON? Well, let’s first acknowledge the good. They do sell a lot of books and have done a great job to market books. They created the whole ebook revolution, and they offer the best prices. But in doing so, they are destroying publishing, threatening the existence of bookstores, and changing how books get discovered.

They should be able to negotiate with Hachette rather than use their muscle to stop selling any Hachette titles, including printed books. They went a step further and pushed competing titles when consumers looked to purchase a Hachette title.

AMAZON reminds me of a deadly little boy on The Twilight Zone, the 1960’s science fiction show. There was an episode about a kid who had the power to think people away. If you made him mad, he just wished you to the corn fields, dead on arrival. All of the adults, including his parents, were afraid to try to rein him in; concerned he’d turn on them. Well, AMAZON is that bully right now. The other publishers privately want to contain AMAZON and support Hachette but publicly they stay off the dispute.

AMAZON should be a leading partner in the book industry, instead of using its size to injure an industry that is important to America’s well-being. Books represent ideas, information, history, and the unlimited landscape of the imagination. How can any company do something to endanger the free flow of books? Shame on AMAZON.

AMAZON grew in the 1990s not just because it was ushering in the whole online shopping experience, but because publishers wanted another outlet to sell books. AMAZON doesn’t have issues with returns the way publishers have with brick and mortar stores. Further, AMAZON is available globally – publishers got access to selling overseas without having to go over there and convince stores to carry their books. It seemed like a good idea.

Then AMAZON started selling ebooks for their own device and since then it has become apparent they can one day crush an industry it once helped to grow.

Now AMAZON, through its own publishing arm and through its self-publishing division (Create Space), can further influence and control who gets published and sold. Authors could be the ones to stop the madness.

If authors stopped publishing or self-publishing with AMAZON, that would be a start. If they stopped showing links to AMAZON on their sites and social media, that would be better. If authors negotiated a contact with a publisher not to do a kindle version or to sell to AMAZON, that would be awesome.

AMAZON doesn’t have to be used by authors to find success. Consumers should boycott AMAZON and assert themselves as the real powerhouse here. If publishers and authors can’t or won’t try to stop AMAZON, consumers can.

The status quo won’t do. Action must be taken now while we still have alternative vendors to sell books and a diverse publishing industry to publish what it values – not what AMAZON dictates. That boy on The Twilight Zone will only grow stronger. I wouldn’t want to run into him – or AMAZON – in a few years.

AMAZON is publishing’s Titanic. It thinks it’s the ship that won’t sink, but the publishing industry may drown staying aboard it. AMAZON, according to Publishers Weekly, sells 41% of all new books that are sold in America. It also sells 65% of all books purchased online, whether digital or print.

What AMAZON wants to do next seems up for grabs but I would expect it to eventually buy one of the Big 5 – perhaps after there are more mergers, and it gets down to the Big 3. Or maybe it’ll open up physical stores, especially in states it has decided to charge sales tax in.

AMAZON is not a good corporate citizen. It replaces humans in its companies with robots. It fails to charge sales tax in many states, even though other online retailers do. It practices predatory pricing, which hurts competitors and suppliers, causing job losses.

So AMAZON has a private dispute with Hachette on ebook pricing, and rather than hammering out a fair deal, it tried to force the No. 5 publisher by understocking Hachette print titles, delaying shipping and refusing to accept pre-orders on future titles. Is this how adults should behave?

Publishers should sell books directly to consumers. They need to brand their lines and develop a direct marketing channel. They don’t need AMAZON at all. But publishers should also encourage the existence of physical stores, to showcase titles and stimulate a book community.

AMAZON could get stopped another way. It would require Wall Street to stop recommending AMAZON stock. The company’s share price is way overpriced beyond any sane price-to-earnings ratio that is used to benchmark Apple and other leading companies. Once Wall Street wisens up that AMAZON produces a profit that is a fraction of what it takes in – all to the detriment of the greater economy – the publishing world may be able to see signs of hope.

Until then, the industry is just rearranging chairs on the deck of the Titanic.

Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer, Media Connect, the nation’s largest book promoter. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person. This is copyrighted by BookMarketingBuzzBlog © 2014

11 comments:

  1. Good blog, Brian. To tell you the truth, I hadn't even heard of Hachette until now. Thank you.

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  2. I'd also thought it would be a great idea for publishers to create their own (enticing) way of selling books to the public. Most readers do not think about going directly through a publisher, if shopping online they feel Amazon will give them the best price. Amazon is the big dog on the block, but I read a quote recently which reminds me of this situation.
    "Success is not final; failure is not fatal; it is the courage to continue that counts." Winston Churchill.

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  3. I blogged about this danger over two years ago and was called a lunatic.

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  4. The monster grows daily and is a major threat to authors and publishers in even more ways than those listed. I'm a small, independent publisher who has published 122 books and represents approximately 130 authors, some of whom already had books in print. Based on experiences we have had with Amazon, I'm convinced their overall goal is to be the ONLY publisher in the world and to "own" or have rights to as many copyrights as possible. (I don't think they acknowledge copyrights even exist.) A few examples: 1) In 1997 I placed a Halloween activity book with Amazon. They sold some of them that year and halfway through September of 1998, returned 6 copies to me. The covers were damaged and theses books could not be sold. A week later they requested I send them more books. I refused. Instead of removing my title, per my request, they set the price at $895 per copy so it wouldn't sell, and I would look bad. (They still do similar things today if you watch prices on items. They discourage the things that take any sort of extra time or don't result in a large enough amount of income to make it worth the time.)

    2. At that point I got very frustrated and also requested that all of my other books be removed. The response was the same. A $20 book was listed for $857.00. I closed my account years ago.

    3. Just this year, I got an email telling me I had a commission coming from sales of one of my books that I requested by removed. When I investigated, I discovered that they had taken one of my books, made a digital file from it--without my permission or knowledge--and sold three of them. I did arrange to get the payment, but their action was unacceptable. It would cost more time and cash to fight it than it would be worth.

    4. One of the authors I represent placed her book on Amazon and ordered a copy to see how it looked. When the book arrived, her contact information had been removed from the back of the book.

    5. Other authors, who placed books there, discovered that their books were being sold as "used copies" even though there were no "used copies" available since they were new printings. We found out that as soon as as author places a book, a buyer will see "used" copies available for less. The key? Amazon doesn't pay commissions on "used copies."

    6. I could go on. Many of my authors have similar stories and a friend of mine worked in their warehouse in our town and was forced to RUN, not walk, to work in the shipping department.

    I avoid Amazon for selling and purchasing whenever possible (I've come across a couple of things that didn't give me options) and plan to continue to do so and to make authors aware of what is happening there.

    If you come up with a way to become Jack from "Jack and the Beanstalk" and bring the monster down with a slingshot, be sure and let me know.

    My books and those of my authors are sold strictly from my website. We don't sell a gazillion, but the authors always get paid the amount they are due, and I sleep well at night.

    Thanks for letting me vent.

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  5. This is so good to know, Kas. I'm sending it to all my writer/author friends.

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  6. I've wondered for some time now why publishers don't sell their own eBook versions on their websites.

    Kas, your points are very interesting. I would recommend--to any authors who use Createspace to publish paperbacks--that authors visit their sales channels in Createspace and remove Amazon from their channels. Sell directly from your own websites through the e store link.

    Amazon has made it very easy for people to publish their own work and feed the audiences, though. Where traditional publishers are so overly selective and cater only to what they think will sell (would they have rejected 50 Shades? I would have, but...) that I'm torn to believe that Amazon will be the only downfall of "Big House" publishing. Economy and bias to celebrities or established authors seems to contribute to their demise, too. "Take down the snobby giants!" roared from Amazon and the world of writers jumped on board. How do you get them off now?

    I have also had questionable dealings with Amazon selling my books, and when confronted received a confusing dialogue of information that didn't make sense. Time to do some more research on this topic...

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  7. Oh, for the love of Mike.

    Amazon is a HUGE business. The Big Five publishers are HUGE businesses that are part of even HUGER media conglomerates. This whole thing is nothing more than business as usual, except one side has access to media outlets and can start screaming "the sky is falling" because they're so afraid someone might actually come up with a more successful business model than the 80-year-old one they cling to for dear life.

    Business experts have been telling traditional publishing for years they need to stop thinking like distributors and start selling directly to the public, but they don't want to have to compete with Amazon or any other retailer that's willing to take a cut in profits to offer competitive prices.

    Which is what this whole Hachette thing is about, count on it. Before the price-fixing agency model was imposed on Amazon TO PREVENT DISCOUNTING EBOOKS, the industry standard split on ebook sales was 50/50. Care to wager this is about Amazon wanting to go back to that and Hachette refusing to accept anything but 70/30?

    There is plenty of blame to be placed on both sides of this situation, and hearing the traditional industry and its apologists ranting over and over that Amazon is and/or will be destroying the publishing industry is ridiculous.

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  8. Oh, for the love of Mike.

    Amazon is a HUGE business. The Big Five publishers are HUGE businesses that are part of even HUGER media conglomerates. This whole thing is nothing more than business as usual, except one side has access to media outlets and can start screaming "the sky is falling" because they're so afraid someone might actually come up with a more successful business model than the 80-year-old one they cling to for dear life.

    Business experts have been telling traditional publishing for years they need to stop thinking like distributors and start selling directly to the public, but they don't want to have to compete with Amazon or any other retailer that's willing to take a cut in profits to offer competitive prices.

    Which is what this whole Hachette thing is about, count on it. Before the price-fixing agency model was imposed on Amazon TO PREVENT DISCOUNTING EBOOKS, the industry standard split on ebook sales was 50/50. Care to wager this is about Amazon wanting to go back to that and Hachette refusing to accept anything but 70/30?

    There is plenty of blame to be placed on both sides of this situation, and hearing the traditional industry and its apologists ranting over and over that Amazon is and/or will be destroying the publishing industry is ridiculous.

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  9. I published "#Betrayal" with Amazon this year. I specifically put the hashtag in front of the name to make it a title not previously used. Instead, you now cannot find my novel on Amazon (unless you search over 2000 titles) because their software does not recognize the #hashtag sign. When I pointed out to them that my novel cannot easily be found, and that "hashtag" is in the dictionary now, they said when someone searches on Amazon it is their policy to give them many titles to choose from and they present the best selling ones first. That may help Amazon but it certainly doesn't help me. Their representation as my publisher should at least enable people to find my novel easily when searching.

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  10. Very helpful, Barbara. Thanks for the info. Good luck to you with your book.

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