Amazon vs. Hachette: It's Over and What Really Happened (and AAAG Owes Indies and Authors an Apology)
A web collective I've come to think of as the Aggregated Amazon Ankle Grabbers (AAAG for short) is in a bit of shock. The problem can summed up by this plaintive post on The Digital Reader, a site I rate as being an AAAG member.
+++ One has to ask what happened to the demand for ebook prices to be below $9.99, that was apparently so important to Amazon that we indies were asked to write to Hachette on Amazon’s behalf? +++
Yes, that is an interesting question, isn't it. Here Hugh Howey and David Gauhgran and Joe Konrath and Passive Lawyer and others have spent so much time telling us how awful agency pricing was. Awful, awful, awful. And that $9.99 was a golden number. Of course, anyone who actually believed that nonsense either A) failed math in high school or B) buys bridges crossing the East River in New York.
But, apparently, agency’s not so bad after all if Amazon gets more margin and more MDF. Which it did. Which is what channels always want.
And if you, as an indie, suspect you were being used, you were. Yes, those are bus tracks all over your clothing.The publishers used their writers and Amazon used you. And nothing about the outcome of the fight benefited indies in the least. In fact, you never had a real stake in the fight in the first place. Evil agency pricing is alive and well and will be in the future. Amazon is not going to talk anymore about optimal price points and 1.7 more readers and all the rest of that junk. That’s in the past. Until the new contracts are up.
What Just Happened?
After the major publishers lost the collusion case, Amazon had the whip hand in the negotiations. It decided to swing for the fences. Why not? They had nothing to lose. By forcing the publishers to abandon agency pricing, they would gain control of the E-book publishing pricing model. Channels always like being in charge of that.
Part of their strategy was to proclaim the wonders of $9.99. It’s a price calculated to put pressure on the publishers. THAT’s why they put indies in their $7 pricing box and are keeping us/you in it. If indies are allowed out of the box, some of you are going to find out why that box is bad for you and you’ll talk about it. And once you do, Amazon loses an arrow in its quiver to fire at the publishers.
Amazon overplayed its hand. Hachette failed to break (Hachette, BTW, will get the same basic deal as Simon and Shuster, as will all the other publishers. All that will differ in the deals will be squabbles at the edges about margins and MDF). Playing games with product availability didn't play well in the press. Having highly visible writers dabbing their eyes while muttering about censorship didn't help. I don’t think Paul Ryan noting his book had disappeared off Amazon played well either.
Amazon started to hear rumblings from the Feds about being a monopsony. That’s why they put in that odd phrase about “legitimate” reasons for pricing books above $9.99, which I covered in the article Amazonium Codexorum. And I can assure you that every time the Feds wanted to talk about the ramifications of the collusion case, the publishers jumped up and down pointing to movie theaters, threw around .pptx files loaded with slides on famous monopsony cases and flashed sock puppets who asked why no one could find possible presidential candidate Paul Ryan’s book in the Amazon search engine.
This was all becoming a bit noisy and complicated so Amazon decided to grab the extra MDF and margin that was always on the table.
Who's Happy?
New books from hot authors will be priced at $X for Y period of time, then drop back to $Z based on wholesale pricing and promotional patterns. IOW, the long tail will be activated. Publishers will also do things like release big fat art books with lots of illustrations and not have to apply for the Amazon pricing codex to wholesale them out to Amazon over $9.99. They are happy boys and girls!
Amazon gets fatter discounts (more margin) and more MDF from publishers. (BTW, did you, the writer, ever stop to consider where some of that extra margin and MDF is going to come from?) They are happy boys and girls!
Established publishers such as Doug Preston and pols like Paul Ryan will see their books shine in the Amazon search engine.They are happy boys and girls!
Indies are in exactly the same place. Stuck in a $7 roach motel paying 30 points for a download service. (And don't forget those international margins.) If you (I use the collective you here) are happy about this, I think you definitely need to pick up 50 Shades of Grey as you squirm in the happy sadistic grip of Hugh Howey's “Incentivized Agency.” The hour and the book are met.
AAAG Doubles Down on Stupid
Now you would think that AAAG would have learned something. Unfortunately, in too many cases, they haven't. Exhibit A is Joe Konrath, who has spent many pixels preaching the evils of agency. Apparently, he failed to finally persuade Amazon of this. Nor does he seem to be able to tell us if agency is so bad, why does Amazon impose it on indies? Maybe he and Hugh Howey can punish each other.
To see what I mean, please read his October 23rd post. This is supposedly helpful advice to Authors United. If anyone takes any of it seriously, take a quill, stick it into your eye and end it all. Your stupidity is terminal.
Here are some of his trenchant observations:
Write an open letter to Hachette. You've stated, repeatedly, that you aren't taking sides. Prove it. Let Hachette know how unhappy you are with their negotiating tactics..."
This is remarkable. Everyone knows what the negotiations where about. Agency pricing, margins and MDF. If Amazon had gotten everything it wanted, just who does Konrath think would have paid for the loss of revenue? And will pay for the loss of revenue the Simon and Schuster deal, which will be extended to the entire industry, represents? Remember, more money to the channel, less money for publishers and authors. Care to hazard a guess, oh content provider?
Openly ask Hachette why they can't reach an agreement.
Uh, they have. Konrath didn't know that this battle was over agency pricing? Really? Once Amazon conceded it would remain, the fighting was over. The S&S deal is the template for the industry.
Ask Hachette and Amazon to retroactively compensate all effected Hachette authors once an agreement has been reached.
Wait a second. Is Konrath claiming that Hachette stopped paying royalties to its authors? No? Well, how were the authors hurt?. Oh, by Amazon deprecating their search results, playing games with pre-orders, recommending competing books during searches and launching a ridiculous PR campaign proclaiming $9.99 was the one true pricing.
And this was the second time Amazon had done this. Macmillan was the first. And if you actually believe that Hachette's Amazon web problems were a coincidence, you also believe in Santa and that Elvis directs him from his UFO to the homes of all the good little boys and girls on Christmas Eve.
Now, you may say that Amazon has a perfect right to hurt a publisher's authors as part of hardball negotiating tactics. But Amazon didn't say that. It spewed a lot of nonsense about "optimal" pricing and how awful agency pricing was, and gosh darn it, books were too expensive and all the rest of it.
There was also a lot of blather from AAAG about how Amazon, without a contract, wasn't required to carry Hachette authors. And AAAG is right! Amazon was perfectly within its rights to tell all those Robin Roberts, Dan Simmons, David Baldacci, James Patterson et al fans to just head over to Smashwords or Kobo to buy those author's hot new releases because those books weren't going to be available on Amazon going forward.
Wonder why that didn't happen?
Here's what AAAG can do for indies.
Stop carrying water for Amazon. It's a $75B company and can take of itself. And they just made fools of you.Apologize for all that bad advice and analysis you provided. It was a waste of time and pixels.If you have any influence on Amazon, push to get us out of the $7 roach motel, push for a more reasonable retail usage fee on downloads, help us get reasonable royalties on international sales. That's a start.Some of you should write less about Amazon and help out some self publishers with reviews and PR. I note Konrath, Howey, Gaughran don't do squat in that department. That would help indies.
+++ One has to ask what happened to the demand for ebook prices to be below $9.99, that was apparently so important to Amazon that we indies were asked to write to Hachette on Amazon’s behalf? +++
Yes, that is an interesting question, isn't it. Here Hugh Howey and David Gauhgran and Joe Konrath and Passive Lawyer and others have spent so much time telling us how awful agency pricing was. Awful, awful, awful. And that $9.99 was a golden number. Of course, anyone who actually believed that nonsense either A) failed math in high school or B) buys bridges crossing the East River in New York.
But, apparently, agency’s not so bad after all if Amazon gets more margin and more MDF. Which it did. Which is what channels always want.
And if you, as an indie, suspect you were being used, you were. Yes, those are bus tracks all over your clothing.The publishers used their writers and Amazon used you. And nothing about the outcome of the fight benefited indies in the least. In fact, you never had a real stake in the fight in the first place. Evil agency pricing is alive and well and will be in the future. Amazon is not going to talk anymore about optimal price points and 1.7 more readers and all the rest of that junk. That’s in the past. Until the new contracts are up.
What Just Happened?
After the major publishers lost the collusion case, Amazon had the whip hand in the negotiations. It decided to swing for the fences. Why not? They had nothing to lose. By forcing the publishers to abandon agency pricing, they would gain control of the E-book publishing pricing model. Channels always like being in charge of that.
Part of their strategy was to proclaim the wonders of $9.99. It’s a price calculated to put pressure on the publishers. THAT’s why they put indies in their $7 pricing box and are keeping us/you in it. If indies are allowed out of the box, some of you are going to find out why that box is bad for you and you’ll talk about it. And once you do, Amazon loses an arrow in its quiver to fire at the publishers.
Amazon overplayed its hand. Hachette failed to break (Hachette, BTW, will get the same basic deal as Simon and Shuster, as will all the other publishers. All that will differ in the deals will be squabbles at the edges about margins and MDF). Playing games with product availability didn't play well in the press. Having highly visible writers dabbing their eyes while muttering about censorship didn't help. I don’t think Paul Ryan noting his book had disappeared off Amazon played well either.
Amazon started to hear rumblings from the Feds about being a monopsony. That’s why they put in that odd phrase about “legitimate” reasons for pricing books above $9.99, which I covered in the article Amazonium Codexorum. And I can assure you that every time the Feds wanted to talk about the ramifications of the collusion case, the publishers jumped up and down pointing to movie theaters, threw around .pptx files loaded with slides on famous monopsony cases and flashed sock puppets who asked why no one could find possible presidential candidate Paul Ryan’s book in the Amazon search engine.
This was all becoming a bit noisy and complicated so Amazon decided to grab the extra MDF and margin that was always on the table.
Who's Happy?
New books from hot authors will be priced at $X for Y period of time, then drop back to $Z based on wholesale pricing and promotional patterns. IOW, the long tail will be activated. Publishers will also do things like release big fat art books with lots of illustrations and not have to apply for the Amazon pricing codex to wholesale them out to Amazon over $9.99. They are happy boys and girls!
Amazon gets fatter discounts (more margin) and more MDF from publishers. (BTW, did you, the writer, ever stop to consider where some of that extra margin and MDF is going to come from?) They are happy boys and girls!
Established publishers such as Doug Preston and pols like Paul Ryan will see their books shine in the Amazon search engine.They are happy boys and girls!
Indies are in exactly the same place. Stuck in a $7 roach motel paying 30 points for a download service. (And don't forget those international margins.) If you (I use the collective you here) are happy about this, I think you definitely need to pick up 50 Shades of Grey as you squirm in the happy sadistic grip of Hugh Howey's “Incentivized Agency.” The hour and the book are met.
AAAG Doubles Down on Stupid
Now you would think that AAAG would have learned something. Unfortunately, in too many cases, they haven't. Exhibit A is Joe Konrath, who has spent many pixels preaching the evils of agency. Apparently, he failed to finally persuade Amazon of this. Nor does he seem to be able to tell us if agency is so bad, why does Amazon impose it on indies? Maybe he and Hugh Howey can punish each other.
To see what I mean, please read his October 23rd post. This is supposedly helpful advice to Authors United. If anyone takes any of it seriously, take a quill, stick it into your eye and end it all. Your stupidity is terminal.
Here are some of his trenchant observations:
Write an open letter to Hachette. You've stated, repeatedly, that you aren't taking sides. Prove it. Let Hachette know how unhappy you are with their negotiating tactics..."
This is remarkable. Everyone knows what the negotiations where about. Agency pricing, margins and MDF. If Amazon had gotten everything it wanted, just who does Konrath think would have paid for the loss of revenue? And will pay for the loss of revenue the Simon and Schuster deal, which will be extended to the entire industry, represents? Remember, more money to the channel, less money for publishers and authors. Care to hazard a guess, oh content provider?
Openly ask Hachette why they can't reach an agreement.
Uh, they have. Konrath didn't know that this battle was over agency pricing? Really? Once Amazon conceded it would remain, the fighting was over. The S&S deal is the template for the industry.
Ask Hachette and Amazon to retroactively compensate all effected Hachette authors once an agreement has been reached.
Wait a second. Is Konrath claiming that Hachette stopped paying royalties to its authors? No? Well, how were the authors hurt?. Oh, by Amazon deprecating their search results, playing games with pre-orders, recommending competing books during searches and launching a ridiculous PR campaign proclaiming $9.99 was the one true pricing.
And this was the second time Amazon had done this. Macmillan was the first. And if you actually believe that Hachette's Amazon web problems were a coincidence, you also believe in Santa and that Elvis directs him from his UFO to the homes of all the good little boys and girls on Christmas Eve.
Now, you may say that Amazon has a perfect right to hurt a publisher's authors as part of hardball negotiating tactics. But Amazon didn't say that. It spewed a lot of nonsense about "optimal" pricing and how awful agency pricing was, and gosh darn it, books were too expensive and all the rest of it.
There was also a lot of blather from AAAG about how Amazon, without a contract, wasn't required to carry Hachette authors. And AAAG is right! Amazon was perfectly within its rights to tell all those Robin Roberts, Dan Simmons, David Baldacci, James Patterson et al fans to just head over to Smashwords or Kobo to buy those author's hot new releases because those books weren't going to be available on Amazon going forward.
Wonder why that didn't happen?
Here's what AAAG can do for indies.
Stop carrying water for Amazon. It's a $75B company and can take of itself. And they just made fools of you.Apologize for all that bad advice and analysis you provided. It was a waste of time and pixels.If you have any influence on Amazon, push to get us out of the $7 roach motel, push for a more reasonable retail usage fee on downloads, help us get reasonable royalties on international sales. That's a start.Some of you should write less about Amazon and help out some self publishers with reviews and PR. I note Konrath, Howey, Gaughran don't do squat in that department. That would help indies.
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