What happens if Amazon and Hachette can’t agree?

What happens if Amazon and Hachette can’t agree?

It isn’t personal.

Hachette (a publisher) and Amazon (a retailer) are in the midst of a turbulent negotiation. It’s like Godzilla battling Mothra…and unfortunately, in that scenario,we readers are Tokyo.

Businesses famously fight and fight and fight and then settle things up and go back to business as usual. It’s not personal…there is nothing that fundamentally stops them from making money together.

Except sometimes, they don’t.

What if this is one of those times?

What if Hachette, which may be trying to bring back the Agency Model in September (when their legal prohibition ends), and Amazon, which wants control over consumer pricing, just finally have to stop working with each other?

A little over three years ago, I wrote

A Tale of Two Middles

I looked at the two “middles” between authors and readers: publishers and retailers. I even specifically compared Hachette and Amazon:

“How many people know Amazon versus knowing Hachette?  Familiarity is important online…you’ve got to trust the people from whom you buy.  Amazon has been cust0mer-facing for more than a decade…publishers are just really learning that.”

In the past three years have we gotten to the point where the tradpubs (traditional publishers) and Amazon don’t need each other?

Let’s postulate that Amazon and Hachette can’t work it out…and Amazon stops carrying Hachette books.

What would happen for Hachette?

Hachette would need to find another way to sell those books: Amazon is clearly a huge hunk of sales. They could, of course, hypothetically reconfigure in a way that they need to sell fewer books…take fewer risks in publishing choices, come up with alternate funding streams (licensing the backlist to subsers ((subscription servicers))), charge more for each book…there are ways. Let’s assume, though, that they want to continue to sell a lot of books.

They can work through other retailers…but that might be like running from one room to another during an earthquake. It might not exactly be a safe harbor.

The other choice is that they sell directly…which is what I was discussing three years ago.

I think that is a much stronger possibility than it was.

Initially, consumers were insecure about buying e-books: now, they aren’t as much. It’s familiar: they might buy from a publisher (which they know less well) rather than going with Amazon.

“Social selling” is another big possibility. Similar to Amazon Associates, the publisher could directly compensate anyone that sells their books (within certain structures). So, you e-mail your sibling about a $4.99 book, they buy it from your link, you get $0.50. That 90% “keep” for the publisher is much better than what they get from Amazon now, even taking into account the costs of sale.

Multiply that many times over with social media, like Twitter, Goodreads (owned by Amazon), and so on.

Do we trust Amazon more than we trust our friends?

Would we feel better about our friends getting a little cash than Amazon getting it?

What if it was a non-profit? That might do even more for the sales.

No reason for a publisher like Hachette not to make the file “platform agnostic”…they could make a book file like an MP3, where it could be read on pretty much any device.

It would cost publishers quite a bit to set something like this up…I think readers would insist on cloud storage of their books, like they get from Amazon, but I think it’s entirely doable. As discovery becomes decentralized, Amazon becomes less important.

What would happen for Amazon?

Amazon would need to have customers make a bigger mental shift than Hachette would, in part because I think customers have a more well-formed conception of Amazon.

When the Kindle was first released in 2007, Amazon had a goal of “every book ever published…”

They’d have to drop that as a marketing point.

If they didn’t have some of the big books, they’d be under more obligation to make other books matter just as much. That might be books they publish themselves, but it could be other titles as well. That’s exactly one of the tactics they are trying during the Hachazon War: they are putting ads on the Hachette books’ product pages recommending alternate books which are cheaper or better reviewed.

If that is successful, it means Amazon doesn’t need those publishers’ books…although the tradpubs would definitely be leading discovery at first (people would go look for the new J.K. Rowling before bouncing to another choice).

Another possibility is that Amazon keeps providing the books to their customers…but doesn’t sell them itself.

I think that might have been missed as one of the most important things Amazon said in their recent Hachazon War statement:

“If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors.” [emphasis added]
Announcement Hachette/Amazon Business Interruption (at AmazonSmile: benefit a non-profit of your choice by shopping*)

That’s right: somebody can buy that Hachette book from Barnes & Noble and then sell it to through Amazon…and Amazon charges for the service.

Third-party selling is very important to Amazon, and a good way for them to make money. Naturally, that only works with physical books at this point, and you might expect it to mean higher prices…but it is a way for Amazon to keep being a place where you can get the books. If a way to sell used e-books ever does come to fruition, that would also really feed this.

The third option for Amazon is to stop carrying a broad array of books.

While Amazon was originally positioned as an online bookstore, those days are gone. They are certainly still seen as a bookseller, but they are so much more. They could get out of the book retailing business and still have a very substantial business model (including web services and “fulfillment services”).

They might still sell Amazon published books (Amazon traditionally published and Amazon as a publishing platform for independent authors) in that scenario.

Both companies have viable alternatives to the publisher/retailer relationship.

The question may no longer be who needs the other company more…but whether or not they need each other at all.

What do you think? What would you do if you couldn’t get Hachette’s books from Amazon? Would you get them somewhere else? What if you could buy e-books from the publisher which would work on your Kindle? Would you be more likely to buy a book from a friend than from a store? Do you ever make buying decisions because it helps a non-profit? If Hachette and Amazon “break up”, would the other Big Five publishers follow…or might Random Penguin, for example, stick with Amazon (in the way that Random House did not go with everybody else on the Agency Model back in 2010)? Feel free to tell me and my readers what you think by commenting on this post.

Bonus deal:

Save $79 by getting the Kindle Fire HDX and the Fire TV bundle!

Amazon Fire TV & Kindle Fire HDX 7″ Wi-Fi 16GB with Special Offers (at Amazon Smile)

That’s $249…for both of them!

I very often use my KFHDX together with my Fire TV…one can almost be considered an accessory for the other.

The key thing is that the KFHDX mirrors very nicely to the Fire TV. Anything on my KFHDX can be displayed on through my Fire TV.

For one thing, that means that any video I can watch on my Kindle Fire I can watch on my TV…even if the app I am using would stop working if I connected an HDMI cable (which at least used to be the case with the Xfinity app). You could watch HBO GO that way.

I can watch videos from websites on my TV, by pulling them up on my Kindle Fire and mirroring to my TV.

This is definitely a good deal…so good that they are limiting it to one to a customer, and making it for a limited time only.

Already have one or the other? You could always give the duplicate as a gift…

New! Join hundreds of readers and try the free ILMK magazine at Flipboard! (many articles on the Hachazon War from different perspectives)

* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) 

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy  Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.

One Response to “What happens if Amazon and Hachette can’t agree?”

  1. Lady Galaxy Says:

    I wouldn’t mind buying Kindle versions of books from a source other than Amazon as long as the downloading process was simple. It’s just so convenient to turn on Whispernet, find the book in the Kindle store and click the buy button and have the book on my Kindle in usually less than a minute.

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