Hachazon War: peace declared
I was on my phone and additionally limited when I sent the first very short version of this post, but this obviously deserves a major update.
It’s being widely reported (I’ll include links later on) that Amazon and Hachette have reached an agreement after months of a messy contract negotiation that saw Amazon discouraging customers from buying Hachette books (by delaying them, putting ads on the books’ pages for other books, removing the ability to pre-order them, not discounting as deeply, and, I think perhaps by not listing them on their books of the year, except for one…these are all allegations that have been made. It would be hard to prove the exact motivations).
It also got authors involved on both sides…pro Amazon and anti-Amazon (not so much pro or anti Hachette, I’d say). For more on my coverage of what I’ve been calling the “Hachazon War”, see
this category of posts on this blog
I’m not seeing an announcement in the Amazon Kindle forum, yet, so I’ll be going by what is in the news as I look at the ramifications.
Interestingly for readers, this appears to be a return to the “Agency Model”, meaning that Hachette will set the prices that consumers pay for e-books.
There has been confusion about that. The U.S. Department of Justice went after the publishers that had used the Agency Model and forbade them from using it…for a while.
That wasn’t because the Agency Model was in itself illegal. It was because they had, according to the DoJ, used it to do illegal things.
I said before that it was sort of like a baseball bat. You can own a baseball bat, and you can carry it around. However, if ten of you got together and used baseball bats to inflict damage on somebody, a judge might say that you ten can’t have them.
I’ll admit: this makes me uneasy.
The Agency Model, by its nature, reduces price competition. If the publisher sets the consumer price at multiple sales channels, it’s unlikely that it will be lower at one than at another. Amazon has always used the power of discounting, and this pretty much takes that out of the picture for the e-tailer.
Here’s a phrase which has been in several stories:
“…pleased with this new agreement as it includes specific financial incentives for Hachette to deliver lower prices.”
That’s attributed to an Amazon executive, David Naggar.
It says clearly to me that Hachette gets to set the prices.
I’m guessing the incentives would be Amazon agreeing to take a lower cut at different price points. Hypothetically: “Price the books under $10, and we’ll take a 30% cut. Price them at higher than $14.99, and we’ll take a 50% cut.”
The logic behind that, which Amazon has explained, is that many more of the books will sell at $9.99 than $15, so they make up the difference on volume.
I’m happy to see it settled, but I still don’t like it. As a former brick and mortar bookstore manager, I don’t like the idea of the publishers setting the prices. The store owner/manager should do that, it seems to me.
Publishers don’t have the experience at doing it, and I see that as a problem.
Another big issue for me is how nimble they will be. When something big happens in the news, a store can slash the prices on all related books…let’s say a celebrity announces an engagement. A store might give 10% off on all of the books about that celebrity…to get people into the store, where they will hopefully also buy other things.
A publisher doesn’t have the same motivation to make someone a customer of a specific store. They’d probably have to run the idea through a pricing committee, which looks at all the stores, runs projections…and by then, the logical discounting window may have closed.
I’m not saying it will happen that way, just that I’m concerned. I suppose all of the big publishers could hire retail pricing managers…and give them considerable autonomy to make the decisions.
One question is whether Hachette will strike this same deal with other big e-book retailers…hmmm, just who would that be again? 😉
Amazon has now reached agreements with Simon & Schuster and Hachette, leaving three of the Big Five to go: HarperCollins; Penguin Random House; and Macmillan.
Another interesting thing for me: how does this impact the subsers (subscription services), like Oyster, Scribd, and Amazon’s own
Kindle Unlimited (at AmazonSmile: benefit a non-profit of your choice by shopping*)
?
My guess?
It helps them.
I think the prices may rise under these agreements, at least somewhat on some titles (I’ll keep track of prices, as I always do).
That will, in turn, make the subsers more attractive.
We’ll have to see, though.
I took a look at
Hachette’s Grand Central books in the USA Kindle store (at AmazonSmile: benefit a non-profit of your choice by shopping*)
That’s sort of their “blockbuster” imprint. I didn’t see any delays listed on any of the ones I checked, including
The Silkworm (Cormoran Strike Book 2) (at AmazonSmile*)
by J.K. Rowling writing as Robert Galbraith…that had been one of the most high profile books in this dispute.
I also didn’t notice any Stephen Colbert books being delayed.
Good will all around from here on forward?
That would be my preference…but I wouldn’t bet the bullfrog.
Here are some of the articles:
- The Daily Mail: The battle of the book is over: Amazon and Hachette end months long dispute over e-book revenue
David Streitfeld at the New York Times: Amazon and Hachette Resolve Dispute
Nick Statt and Donna Tam at c|net: “Amazon and Hachette settle bitter e-book dispute”
and a search at Google:
Update: more links now that there has been a bit of time since the announcemnt:
- Jim Milliot at Publishers Weekly: Amazon-HBG Deal: The Reaction
- Publishers Weekly: “Amazon Versus Hachette: The Whole Story”
What do you think? Feel free to tell me and my readers by commenting on this post.
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* 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! By the way, it’s been interesting lately to see Amazon remind me to “start at AmazonSmile” if I check a link on the original Amazon site. I do buy from AmazonSmile, but I have a lot of stored links I use to check for things.
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.
I Love My Kindle 
November 14, 2014 at 6:27 am |
It sounds to me that Amazon and Hachette have agreed to bury the hatchet. Yeah I know don’t quit my day job.
I am not well versed in publishing, but I will have to admit that the agency model is not comforting, but at least it wasn’t done under collusion like the last time.
If Amazon and the other publishers work out deals that benefit all parties, Amazon, readers, authors, and publishers, then it would seem that those publishers will benefit from improved sales and Hatchette’s marketshare will fall.
I have no idea where all this will go, but I don’t think that we have got there yet. At the end of the day, all the principals have to get a fair share of the pie or publishing as we know it now will fundamentally change. Are we going to lose well written serious non-fiction because the publishers can not underwrite the costs from best sellers? Will non-fiction end up being priced like text books? Some people would argue that products should reflect their costs. I am not sure what the answer should be.
November 14, 2014 at 5:47 pm |
Thanks for writing, hxestant!
I don’t think there is any “there” to reach. 🙂 It’s always going to be changing and evolving…and I don’t think that’s an “or”, but a definite. Publishing as we know it will fundamentally change, as you put it.
My guess is that the remaining three Big Five publishers aren’t going to have a substantively different outcome…might be different in the particulars, but the concepts will be the same. That’s just speculation, of course.
Your point about the “serious non-fiction” is a good one. Currently, one of the ways it works when it will take years to write a book which may not have a big market is that the author (and the author’s agent) proposes it to a publisher, the publisher pays an advance (allowing the author to get enough money up front to concentrate on the writing)…and the book may still lose money. That’s okay for the publisher if they are making money on other books, and if this “prestige” book helps them by inspiring other sales and upping their image. Having a Pulitzer Prize winner gives publishers legitimacy.
However, that’s not the only possible model. Kickstarter, and other crowdfunding sites, would be another alternative (and it is being used today). Let’s say Ken Burns wanted to write a book about, oh, the Spanish-American War. It becomes a crowd-funding project, and individuals “invest” in it. That gives Burns the money necessary to write the book.
That’s just one possibility.
I would also say that, certainly where technology and content are concerned, the consumer prices almost never reflect costs (although they won’t tend to go under the costs, they can be many times over).
I do think serious books will still be available…just possible not under the current model in the way they are now.
November 14, 2014 at 3:38 pm |
I don’t see this as affecting me in any way. They can set asking prices as high as they like, but not make me pay them. I’ve noticed a lot of Amazon-published books recently being offered for $1.99 temporarily, and have bought the ones that interested me. That may be why Amazon felt free to agree on this – their real plan is to move the market to books for which they are the publisher and can still set lower prices.
November 14, 2014 at 6:02 pm |
Thanks for writing, Man!
I think you are right that the discrete prices of each book from the tradpubs (traditional publishers) may not matter much.
However…
I think this may affect you. Let’s say that the typical e-book new novel price was to go to $20 under the guidance of the Agency Model (I think that’s unlikely…just using it for purposes of demonstration).
In that case, those $1.99 sales might become $3.99 sales: the lower price is always going to have an element of comparison to the “standard”.
I also think that Amazon’s “real plan” may involve not just their tradpubbed and indie-platformmed books, but the subser (Kindle Unlimited). That’s what will really, really lock people into Amazon. If they get all their books from KU (even if they pay extra for some, or to gift them to people), they won’t want to stop using Amazon…ever. Amazon can monetize that additionally by charging the publishers, and not just by sharing when there are borrows, but for the privilege of being listed in KU.
November 18, 2014 at 7:00 am |
I just bought the latest Michael Connelly Bosch “The Burning Room” (published on Nov 4th this year by Little Brown — a Hachette imprint). The price was $9.99. The previous book in this series (as well as many others) hit #1 on the NYT best seller list. Based on past form, I would have expected that the kindle edition for such a potentially popular item to be priced higher?
Could this $9.99 price be an early fruit of the Hachette settlement 😉 ? I bought the book on the 18th — days after the settlement was announced 😀
November 18, 2014 at 2:42 pm |
Thanks for writing, Edward!
It’s possible that Amazon lowered the price because a settlement was reached. It will be interesting to see where Hachette sets the consumer prices, when they start doing that.