AMAZON VS. HACHETTE
In the red corner stands the reigning world champion, weighing in at ninety billion: Amazon.
And in the blue corner stands tonight’s challenger, weighing in at four hundred million: Hachette.
In a nutshell:
- Amazon would like to see lower fiction e-book prices, i.e. $9.99.
- Hachette wants to control e-book prices, e.g. $14.99 to $19.99.
For a balanced introduction, see this article.
Imagine that Amazon was a chain underwear store. You could find one in just about every mall in America.
Imagine that Hachette was a popular underwear distributor.
Amazon is where people shop for underwear. Hachette has the underwear that people want to wear.
Suppose that Hachette decides to set its wholesale price at $14.99.
Suppose that Amazon refuses to buy underwear at a price above $9.99.
Should Amazon be forced to stock Hachette’s underwear and sell it at higher prices?
- No. It’s crazy to think that an underwear store would be required to stock every single kind of underwear.
- Each store has the choice to stock whatever items it wishes to sell.
Should Hachette be forced to lower the price of their underwear?
- No. It’s crazy to think that the store should be able to dictate the distributor’s prices.
- Each distributor has the choice to set whatever wholesale price it wishes.
So who’s right?
- The consumers, of course.
- They decide which underwear they would like to wear.
- They decide where they would like to shop for underwear.
- They decide how much they are willing to pay for underwear.
In these terms, Amazon is lobbying on behalf of the consumer, trying to get the consumer the underwear he wants at a more affordable price.
But Hachette must decide how profitable that price is and if it’s willing to sell underwear at that price.
Nobody, especially underwear designers, wants to sacrifice the value of art that goes into underwear.
It’s a negotiation:
- Amazon wants to stock all the underwear, including Hachette’s special brand.
- Hachette wants to sell its underwear everywhere, including Amazon.
- Many consumers would like to buy Hachette underwear at Amazon.
Latest developments:
- Both sides have urged people to contact the CEO of both companies (this request was not one-sided).
- Here is Amazon’s recent letter: http://readersunited.com.
- Here is Hachette’s recent response: http://www.digitalbookworld.com/2014/hachette-ceos-response-to-amazon-advocate-emails-why-we-price-books-the-way-we-do.
In the meantime, all consumers should run around naked! Send a positive message to the corporations. 🙂
Chris McMullen
Copyright © 2014 Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers
- Volume 1 on formatting and publishing
- Volume 2 on marketability and marketing
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Comments
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chrismcmullen 
It seems to me, as a reader, that the market should set the prices. If Hachette wants eBooks to be priced higher than I am willing to pay, then I just won’t buy the books (and with Kindle Unlimited I wouldn’t have to if they participate).
I certainly have a limit to what I’m willing to pay. (Especially, when I think about how many of my books I need to sell just to afford one of theirs.) 🙂
Agreed. But I can get those mass market books at the library or I wouldn’t read them. I think the market should be consumer driven not retailer driven
That’s a good point.
One reason I like Amazon is that everything I buy there seems reasonably priced. So I personally wouldn’t mind if they chose not to stock things that cost more than they think I should pay (because those things will definitely cost more than I’m willing to pay).
Reblogged this on Year 'Round Thanksgiving Project and commented:
One of the clearest descriptions about the Hachette/Amazon feud I have seen.
Thank you. 🙂
This brings up another travesty. Why are boxers priced so high? It’s like 3 for $20 in some places. Having to decide between food and underwear is so wrong.
Seriously though, this does bring both sides into perspective. As a consumer, I never understood the $14.99 eBook pricing. It felt wrong for something that took less time to make and buy than a physical book. I always figured it was because a company has more hands in the profit pie.
At least, with a paperback or hardcover, you can sell it used and recover some of your investment. With an e-book, you’re out 15 bucks (so much for dinner).:-)
Resell books? That’s a thing? 😀
More popular prior to ebooks…
I’m still conflicted, but then maybe one does not always need to choose a side. However, in a way, I might side with Amazon on this issue more than with Hatchette. It doesn’t make sense to price e-books so ridiculously. One reason I held out on purchasing The Fault in Our Stars for so long was because the e-book was more expensive than the hardback on Amazon! That made zero sense to me. Should I have bought the hardback? Perhaps I could have. In reality, I just didn’t want to wait for the book to ship, especially because I was still wary about the general storyline. However, the price finally came down, and I snapped that book up in a heartbeat. Turns out, I fell in love with the story enough to get its paperback version, too.
I think pricing an e-book that high actually devalues the book more than it puts value you to it. By pricing an e-book that high, that book then just becomes another dollar sign. Are readers going to see it that way? Perhaps not. If a reader desperately wants a book, they’ll pay the price for it. Then again, I had a reader desperately want my book. She ordered the print, but Amazon claimed it was out of stock, even though my publisher said that it really wasn’t. So instead of waiting on the print, she immediately downloaded the e-book, even though she still holds strongly to print books.
I wouldn’t ever buy an e-book for such a high price, especially with no justifications behind the pricing. Neil Gaiman’s Ocean at the End of the Lane is priced 20 bucks for paperback, a very tiny book that could probably take an hour or two to finish. I love Neil Gaiman, but I am never going to pay that price. I don’t care if it’s in the adult market where books tend to cost more. Such a price is ridiculous for a book that’s just a little more than a hundred pages. It’s probably priced that much because of his brand. But there’s a reason most people tend to shop Wal-Mart and not Hollister or Abercrombie and Fitch. You still see people walking around with these brands, but at the end of the day, those brands are probably just a treat for them, something they’ll occasionally spoil themselves with. Even if it’s the only brands they buy, they probably have less clothes in their closets than someone who shops Wal-Mart or an affordable mall store, like Forever 21 or Charlotte Russe.
It’s the same with books. The cheaper the books, the bigger the library you’re probably going to have. I can buy books like candy now because of the e-reader. I have never read so much in my life. Before the e-reader, books were a treat like Hollister or Abercrombie and Fitch. Now with the e-reader, books are Wal-mart, but they still hold value to me because I hope the authors are making their well-deserved royalties off the books they write. If they price their books at $2.99 and receive 2 bucks per book, which is more than what a trad author would receive per e-book, I would say, monetary wise, their book has more value because they’re making more off it despite the low price point. And I don’t care if they charge $9.99 for their self-published book! If I want it badly enough, I’ll pay the price. And they’ll make A LOT more money than a trad author with a book at that price point.
It’s a tough call. We don’t want Amazon to become a monopoly, but Amazon has been an enormous gateway for self-published authors. I’ve heard there are other retailers, but guess what? Those retailers aren’t as known as Amazon. My book is on all sorts of other retail sites, but they garner more sales from Amazon than anywhere else.
Wow. Thanks for sharing your perspective in so much detail. I have to agree about those ebook prices. Some of my favorite authors’ books remain unread because I couldn’t comprehend the prices.
I’ll share what I know, first-hand, about “brand names.” I worked in the electronics industry, in a factory that made woofers and tweeters. A woman worked at the end of one of our assembly lines, and her tools were a stamp pad and a whole bunch of rubber stamps. Her job was to put identifying marks on each speaker before the conveyor belt took it through the hole in the wall to the person who packed it in a barrel to ship to the company that assembled the finished product. The rubber stamps wielded by the woman sitting by the wall sometimes bore only a nondescript serial number, and sometimes they bore the logos of “brand name” merchandise. There was never any difference in the product we produced on different runs for different companies. They were identical speakers, with only different stamps on the back. As the slogan of one of the brand-name companies said, “The quality goes in before the name goes on.”
naked is good. sometimes i am weary of capitalism…
Perhaps better reason to be wary of capitalism than nakedness. 🙂
If I get arrested for public nudity, I’m telling my lawyer to contact you.
Your lawyer is welcome to get naked, too. 🙂
Oh geez. You’re the type of person to take off all your clothes, make a giant bonfire of discarded garments, and laugh as you watch the world burn.
Please tell me you don’t own a fiddle.
To be fair, when the world burns, it will be much more comfortable without clothes. Sorry, no fiddles. 🙂
I have passed on buying e-books that I wanted because the price was too high. There is a maximum that I’m willing to pay as a consumer and that’s it. Retailers are within their rights to price their product as they see fit but I am the manager of my money and if it means buying the paperback version because it’s cheaper then I’ll reconsider my options.
I can relate to that. There are some e-books by my favorite authors that I’d really like to read someday, if only the price would come down to a level that makes sense to me. 🙂
Excellent analogy – taking the ‘culture,’ ‘literature,’ and snobbery out of the equation shows the underlying logic. Underwear wearers vote with their dollars, too – and get what they can afford and like, as well as status-symbol undies.
What Hachette seems to be missing is that their are a LOT of underwear dollars out there, and the publisher seems to be purposely ignoring many of them. Hachette is not a privately-held company, accountable to no one. They have corporate masters and corporate lawyers. It will be interesting to hear how this plays out (and I’m sure the other corporation-owned big publishers are watching carefully, too).
Meanwhile, I think I’ll go write, and try to get Pride’s Children, Book 1, up on Amazon in KU and KDP (my chosen-for-now marketing/sales strategy) BEFORE the shakeups. Just in case it might affect me. THAT I have some control over.
Alicia
Thank you. It does seem like Hachette is ignoring some $’s. Seems like it would be a tough thing to do.
Sounds like your book is almost out. Good luck with it. 🙂
Reblogged this on and commented:
in a nutshell
Thank you for reblogging. 🙂
Not a good analogy, Chris. Amazon is not some underwear seller in the mall, with one like it in every mall, it is THE underwear seller in every mall. If I am looking for a brand of underwear and they don’t carry it, it is significantly less convenient for me to go to another store to find it. Amazon has monopoly power and they are flexing it, which is illegal in a country founded on free market capitalism.
Bottom line — it should be up to Hachette and Hachette alone what price point they want to sell their books at. If that price is too high for me, I won’t buy the book. Let them decide whether to risk those sales or not. It should be none of Amazon’s business if Hachette wants to price themselves out of the market.
So why is it? Because Amazon wants to make it more compelling to buy a Kindle, another market leader that is teetering on monopolistic power, and it is only compelling if it is significantly cheaper to get ebooks than to get print books.
Each company is merely trying to maximize profits in their fields. Amazon’s field happens to include selling hardware that is more valuable if they severely cheapen Hachette’s product.
Neither of them is looking out for the consumer.
Well, Amazon isn’t in ANY stores at all, yet there are stores all around. 🙂
Evidently, Amazon doesn’t meet the definition of monopoly, so the monopoly argument seems to be more about the ‘fear’ of what ‘could’ happen. As you say, there are laws to protect consumers against monopolies, so the fear doesn’t seem founded to me—in that worst-case scenario where Amazon grows larger and abuses its power (some will question that possibility), then there are laws to protect the consumer. So it seems more like a fear that, for some reason, those monopoly laws won’t be enforced…
Presently, there are many alternatives. You can buy print books at BN.com, the Book Depository (free worldwide shipping), and in a number of local bookstores (dwindling or not, they’re still there in large enough numbers). It’s easy to find Hachette’s books off Amazon. E-books are even easier to find elsewhere.
It’s not that there are no convenient alternatives. The argument is, rather, that Kindle customers are reluctant to shop elsewhere, not that they couldn’t find alternatives elsewhere.
Amazon may have a monopoly on indie authors through Select, but Amazon presently doesn’t have a monopoly on e-book or print sales.
Amazon is trying to negotiate lower prices for the consumer. Maybe there is some ulterior motive (maybe not). It seems clear to me that lower-priced e-books would benefit the consumer.
Amazon IS looking out for the consumer for one simple reason: happy consumers come back; unhappy ones not only don’t come back, but badmouth you to their friends. It is called good customer service, and it is quite rare.
I buy all kinds of things there – from the volcanic dust my chinchilla bathes in to an external DVD writer for my Macbook (which Apple declined to provide!) to sneakers on a particular odd size – because their website has one purpose: to make it possible for me to buy with a feeling of security.
I can’t wait to publish there – I hear they actually pay timely royalties (or whatever you want to call getting 70% of your list price, with them getting 30% as a distribution fee). I hear they take everyone – and let readers sort out which writers they like. I believe I got Valerie’s book there – and promptly bought copies for all of my kids.
The only thing Amazon isn’t good for (yet) is helping me personally inspect the actual item I need to see before acquiring (don’t buy alfalfa for your chinchilla there – you can’t see if the bag that will be delivered is nice dried leaves on stalks just like Gizzy likes – or a bunch of dried up sticks she won’t eat).
Just like the ad, ‘For everything else, there is MasterCard,’ I find that for almost everything else, there is Amazon – where the customer is truly king. (For the record, they aren’t perfect.) I’m with Hugh Howey on this: they aren’t perfect – but most other suppliers of books are far LESS perfect.
I agree with Valerie above.
Hachette are the publishers and have every right to set their own price, even though it might be too high. Amazon say they want to give consumers a better price so are arguing to reduce it. The problem is that Amazon only want the reduced price so that they can shift more books and kindles to increase sales…for their own profit. The marketing is targeting consumers so that they seem on the consumers side, if they stated they wanted to make more profit I doubt the reaction of everybody would be the same.
They say that $14 or whatever for an e-book it is is too high, but they haven’t said what their trade price is. They can already discount it but they want more of a chunk of the money.
Michael Jecks on writerlywitterings gives his side of the story on his blog, the authors side, which does make for interesting reading.
So yes, I’m on Hachette’s side with regard to this, for the simple reason that they are the publishers and have the right to set the price, albeit they will probably loose sales because of it. People will vote with their wallets, or not, as the case maybe.Time will probably show them that they should reduce their price, but a near monopoly like amazon shouldn’t be allowed to dictate the terms.
Sure, Hachette can request whatever price they like. I have no problem with that. While I agree with that, I also believe it’s up to Amazon to decide which books they’d like to carry. Hachette decides on the list price, Amazon decides whether or not to sell at that price. Part of Amazon’s image is affordable pricing, so selling books for what Amazon views as unfair prices adversely affects Amazon’s image. Suppose Sony wants to demand that Wal-Mart stock all their t.v.’s and Sony will be doubling their wholesale prices this year. Should Sony be able to force Wal-Mart to stock their t.v.’s at high prices? No. Sony sets the wholesale price, Wal-Mart decides whether or not to stock it. Both have such freedom.
To me, it seems awfully one-sided that Amazon should be forced to stock any item at any price. It would also seem awfully one-sided if Amazon could set the list price on any book, but that’s not what Amazon is proposing.
I’ve read many articles about the author’s side, and have given this much thought, too. I definitely side with authors. But, not all authors side with Hachette on this. Amazon’s proposal seems, to me, to actually favor the authors, but, of course, we’d actually have to try it out to know for sure. (I also feel that authors with a strong following already ought to self-publish and take 70% of their royalties for e-books. They also wouldn’t be dependent upon negotiations between their publishers and retailers.)
I agree with you that Amazon shouldn’t be forced to take any book, that’s the bad bit about Hachette, trying to force them to take it. What I don’t agree with is that the price is solely dictated by Amazon in order to take the books. The publisher sets the price. As I say time will tell.
I think the major publishers are having a problem with regards e-books, they are not sure how to deal with them!
That may be the real issue here. 🙂 Major publishers are inherently slow to react to change, while technology has made the market high-tech. Amazon’s high-tech world thrives on changes and quick reactions to them.
It’s easy to suggest that time will tell if $15 e-books are overpriced, but in the tech world, there is limited time to capitalize on recent trends, projections, etc. Lengthy delays can lead to missed opportunities, new players let onto the field, old businesses going under… all of which can have highly significant consequences for authors, readers, bookstores, and libraries.
It’s not easy to forecast what will work best. Slow-moving businesses tend to look at forecast uncertainty as a reason to avoid change, but it’s not always the best decision. Whichever outcome turns out to be truly favored in the current market, everybody wins if they reach that outcome sooner rather than later.
I think we fundamentally agree Chris, the sooner they sort themselves out, the better it will be. The bottom line is that they should find middle ground so as to move forward, the truth is that they are both wrong, the question is, who is most wrong?