My Take on the Amazon-Hachette Dispute

Hi. Barb here.

I’m not sure the world really needs another take on the ongoing, fraught, negotiations between Amazon and the publisher Hachette, but it’s a main topic of conversation among the writers, readers, agents, editors and booksellers I know. Besides, I’ve been on all sides of this one, as a technology executive, author and publisher, albeit all on a small scale.

The two points I see most often in commentary are

Amazon is not like other booksellers.
Books are not like other consumer goods.

I agree Amazon is not like other booksellers. At this point, I’ve seen estimates that Amazon handles between a third and 50% of all combined ebook and print sales in the US. But more important, Amazon has never been about books. Founder Jeff Bezos understood from the beginning that selling books was a way to collect a list of educated, upscale consumers. The value of Amazon has always been in its customers, not its goods.

Therefore, Amazon’s laser focus has always been on making it stupid simple to buy things. And let’s face it, that’s why we keep going back. Because we know we’ll find what we want, can buy it in one or two clicks and it will arrive in a couple of days. (Or if it’s an ebook or a streaming video, it will arrive RIGHT NOW.)

It’s also why Amazon’s Kindle dominates the ebook market. It may not be the greatest device (or App if you’re using it on your tablet or phone), but it is crazy easy to load it up with books.

“The money’s not in the razor, it’s in the razor blades,” is an old business saying. It means that you don’t make money on infrequently purchased hard goods, you make it on frequently-purchased, consumable goods. But to seduce you into the ebook market, Amazon deeply discounted both. They didn’t make money on either the razor or the razor blades, but their shareholders didn’t care. It was about owning the market.

Now they do. Now they need to make money on the blades, but they’ve trained us all to expect ever-lower prices for them. So they need their suppliers, the publishers, to take a lower cut, or to share in the discount.

So that brings us to the other side of the argument.

2) Books are not like other consumer goods.

The crux of this argument seems to be that books are not like other consumer goods because they contain ideas. This is the argument Hachette put forward in their statement and it’s been taken up by many others.

Frankly, I find this idea laughable. Maybe it would have moved me if I lived in an era when books were one of the few ways to transmit ideas, but now, in the era of the Web, I doubt there’s a single idea humans are capable of having that isn’t out there somewhere, with proponents and opponents arguing over principles and esoterica and calling each other Nazis in the comments section. (Unless they actually are Nazis. Then what do they call each other? Nevermind, it’s too easy to imagine.)

What publishers face is a radically restructuring of their cost structure. Right now, they’re caught between a rock and a hard place, laying out, printing, storing, shipping print books and accepting all those returns, and laying out ebooks. And paying Barnes & Noble for endcaps and faceouts and to appear on their bestseller lists (As opposed to the super-secret bestseller list B&N provides to the publishers about what’s really selling.) And then turning around and paying massive marketing dollars to Amazon for online marketing. If you like this book, you’ll like that one! Etc.

Something’s got to give, and my guess is, it’ll be print. We’ll see more programs like the e-first Witness Impulse program Jim Hayman is in. Let’s work together to prove we can sell your book, and then maybe we’ll print some.

When that change really comes, it’s going to cause a lot of dislocation and misery, as all sea changes do, but it’s not going to be the end of books. Not even close. All those games and videos and social media on your devices are a much bigger threat to books than Amazon is. And I think long-form, prose fiction and nonfiction intended to be read linearly (because that’s what we’re really defending here) will survive even those. For awhile at least. For way longer than I need to worry about.

So back to Amazon. I have to say their bullying behavior with Hachette surprises me. Not because they haven’t done things like this before, and not because I think they’re in any way above bullying. But I always say businesses are motivated by either greed or fear. In general they’re motivated by greed on the way up, and by fear on the way down. For a long time now, Amazon has consistently acted out of greed, the publishers out of fear.

As I said in the beginning, the value of Amazon has always been in its customers, not its goods. And it’s been driven by greed. So where does not selling certain goods to your customers come into it, and even more radically, telling them to shop elsewhere? It doesn’t make any sense. The old Amazon wanted every customer it could get and every penny they would give.

Shooting yourself in the foot is a key indicator (maybe the key indicator) of a business acting out of fear. Which tells me that inside Amazon the pressure to increase profit margins must be intense. Like coal into diamonds pressure.

In the meantime, as a consumer, if you think Amazon is behaving like a jerk, what should you do? You should do what you would do if your favorite convenience store stopped stocking your razor blades. Go down the street. And while you’re there, in that store that stocks your razor blades, do your other shopping, too.

I’m not saying it won’t be hard, particularly if you live in a rural or shopping-deprived area. And little you, going to your local bookstore, or to Target online, for that matter, to buy your next book may seem like a drop in the bucket. But the machine at Amazon is finely calibrated to notice these things, and they will.

I’m not saying to quit them forever. Getting through a day without Amazon is like getting through a day without using a Microsoft product or Google. It can be done, but it’s a full-time job.

You can go back, but right now, you might want to send them a message. That you want greedy Amazon back. The one that would never withhold goods and would do anything to have you as a customer.