Tuesday, May 27, 2014

Why the Hachette vs Amazon Fight is Both Good and Terrible

A little housekeeping before we get started. I did two interviews last week, one where I interviewed Elizabeth Moon for Orbit (SQUEEE) (Here's where she interviewed me), and another really fun interview where I talked Devi (as well as hints of future Paradox books) with Not Yet Read. I had a blast with all of these, and I hope you enjoy them! Thank you to Orbit and Tabitha at Not Yet Read for having me!

Now, on to the controversy of the day.

(UPDATED with Amazon's official response at the bottom of the post)

As I'm sure many of you have already heard, Hachette Books, the behemoth international parent company of my own publisher, Orbit, is currently engaged in a very nasty round of negotiations with Amazon, the largest bookseller in the world. I, of course, am not privy to the substance of such high level power plays between corporate giants, but considering the entire reason Amazon and Hachette are at the table now is to renegotiate ebook pricing models after the US Department of Justice slammed Apple and the world's five largest publishers for colluding to fix ebook prices in 2012, it's not a big jump to guess that how much ebooks should cost, and who controls that price--the publisher or the bookseller--are the main bones of contention.

This is not a new fight. Amazon and publishers have been going around this same ring since ebooks were invented, and it probably won't be settled any time soon. With more and more of the world moving to ebooks as their primary book buying venue, the quarrel over who controls the prices for that market will only get dirtier and more contentious. What really has people up in arms this time around, however, is that Amazon, in an effort to flex their mercantile muscles at Hachette, has delayed the the shipment of paper copies of Hachette's new releases, and is now removing pre-order buttons from certain unreleased Hachette titles, thus effectively preventing those books from gathering any pre-release sales.

This is a pretty big deal. Though technically not a monopoly due to other booksellers like Barnes & Noble, Books-a-Million, and even Wallmart (plus indie shops and many other large, non-American chains), Amazon is hands down the biggest online seller, bigger than next dozen internet retailers combined. If they decide not to sell your stuff, then for all practical purposes, it ain't getting sold. Amazon knows this, and right now, they're using that enormous market power to squeeze Hachette into accepting their terms.

Some, like my fellow Orbit author Lilith Saintcrow, have called this type of behavior evil. Amazon supporters like Joe Konrath call it capitalism working exactly as it should. Personally, I think it's both. After all, the entire point of capitalism is to be more ruthless, clever, and efficient than the other guy. It's a system where the strong eat and the weak are meat, and, for the most part, I have no problem with that as it applies to the book industry. Modern publishing is a cobbled together mess of old, outdated business practices and assumptions. It needs to be shaken up, have a few bites taken out of it, before it collapses under its own ponderous weight. My problem with this fracas comes from where, and more importantly, whom Amazon decided to bite.

If you want to know just how much losing a preorder button hurts, consider the debut author. Imagine the following scenario: after years of rejection, you sell a series to a publisher. Hooray! Now, after a year and a half of edits, copy edits, cover designs, and so forth, your book is finally launching in July of 2014. You're racing around to get ready, doing blog posts and trying your best to get the word out. The marketing dollars your publisher has put into launching your book are in full swing--books are going out to reviewers, your cover is being featured on their site and twitter feed, and you're starting to see real buzz about your writing for the first time...and then, due to a dispute so far above anyone involved in your book, Amazon removes the pre-order button from your book's page.

Now, all that buzz you worked so hard to generate, the interest your publisher's marketing dollars bought, has nowhere to go. You can try to point people to other places to preorder your book--other stores, indies, all that good stuff--but you're not even published yet. Most people have no idea who you are. And those potential readers, the ones who read a good review of your book (on that same review site where your publisher sent your book as part of their pre-release promo) and decide to go check it out? They'll click over to Amazon and find no preorder button. Some, of course, will go to another site or call their local bookstore order that way, but most will decide not to bother. They'll go on about their lives and forget all about your book, and you'll never even know about them because no one but Amazon can track how many people visit a book's page and don't buy.

For an author trying to get their first foothold, this is a death knell. An under-performing debut can ruin an author's career before it begins. This is the real fallout of Amazon's tactics--not the publisher or the big sellers or even the midlist authors like myself who already have dedicated readers, but the new writers. People who are just starting their first series, or who only have one or two books out. These are the most fragile members of the traditional publishing ecosystem, the ones who can't easily weather this sort of disruption, and they're the ones whose careers will ultimately pay while all of this shakes out.

The most obvious solution to this of course would be to just get out of this all together and self-publish, but the authors this is happening to signed those publishing contracts two years ago. Even if they did decided to say screw it all and go publish their next work on their own, that doesn't save the book that's losing sales right now. Also, as I've already talked about, not everyone wants to self publish. That is their choice, and it is just plain awful that those authors who did everything right according to their publishing choice are getting bashed around by giant powers they have no control over. And yeah, I realize getting stepped on by massive forces you can't control is life, but we're not talking about tornadoes here. Tornadoes are unfeeling natural phenomenons. Companies, on the other hand, are made up of people. You can bet your bottom dollar that someone at Amazon, probably a lot of someones, knew exactly what their decision to employ these sort of tactics on Hachette would mean for these authors, but they did it anyway. They made the decision to be ruthless. That's capitalism, but it's also cruel and needlessly harmful to the very authors who write the books Amazon and Hachette are fighting over.

Long story short: I don't object to Amazon strong arming publishers. I actually think we'll end up with a better, more efficient ebook market once all of this shakes out. What I object to are the callous tactics being employed. There's always a choice in these things, and Amazon's decision to use Hachette's authors as hostages in their negotiations says a lot about them, most of it not good. We'll never know exactly how many sales were lost in all of this. It very well might be that I'm making a mountain out of a molehill, or it could be enormous, we simply can't know. But I stand firm on my belief while capitalism can and has done great things, it does not excuse bad behavior wholesale.

Just as freedom of speech does not mean freedom from criticism, good business decisions do not mean freedom from morality. I can't and wouldn't want to keep Amazon from doing business, but I can stand up and call it out when I think it's gone too far. This is the natural push and pull of society. And who knows? Maybe if we all make enough of a stink about it, even a giant like Amazon will think twice before pulling a stunt like this again.

EDITED TO ADD: Amazon has issued an official explanation of the situation from their side. Basically it says that they've been doing this for a while, and they don't anticipate negotiations with Hachette to go anywhere anytime soon. They're also talking about setting up an author fund to cover loss royalties, but that smacks of PR BS to me, and I'll believe it when I see it.

As I mentioned in the comments below, this whole situations is super depressing for me both as a Hachette author and as someone who generally likes traditional publishing and wants it to survive. This failure to come to even a modest agreement over months of negotiations shows there's a fundamental disconnect between how Hachette and Amazon see the future of ebooks. But if history has taught us anything, it's that once these digital revolutions get rolling, there's no stopping them. If that's the case, then the weight of change is already on Amazon's side, and if Hachette, and the rest of traditional publishing, can't adjust and compromise and find a way to thrive within that, nothing's going to get better.

That said, this is just one author's opinion. I do not speak for Hachette or Orbit or Amazon or anyone but myself. Ths is just an armchair publishing commentary from someone with a lot of skin in this game. :D


Anonymous said...

I think you're making an assumption that Amazon is not making, which is that they would be able to fulfill those orders. If a customer buys something at Amazon and Amazon is unable to deliver it, Amazon looks bad. Amazon is basically saying to Hachette, we are no longer assuming that we can find mutually satisfying terms and we are preparing to walk away. They can do that. They're under no obligation to deliver a product that they feel is a bad deal to their customers, nor is Hachette obligated to sell for them. Does that stink for authors? Sure, but it also stinks when Costco or Walmart or B&N don't order your book, and that's just business as usual. For the people negotiating at Amazon, removing preorder buttons is practical: don't make promises you might not keep. That's what Hachette authors should really be worried about.

Rachel Aaron said...

This is actually a really good point. I still think they're primarily doing it to squeeze Hachette because that's how Amazon operates (they have a history of changing prices on items in the middle of negotiations), but you raise a good counter point, Anon

Sandy Williams said...

Good points. But I'd also like to point out that this wasn't a sudden removal of buy buttons the second negotiations began. They started several months ago - in October if I remember correctly. (Kristen Nelson mentioned on her blog she's been asking Hatchette questions about this for months.) If you're a company negotiating with another company, and you aren't able to come to an agreement after three, four, or five months, at some point, you have to realize you might NOT come to an agreement, and take action so that a product isn't offered on your site. This goes along with Anon's point.

This type of thing probably happens at Amazon with other products; we just don't know about it because they're not books.

(Disclaimer: I know nothing of the negotiations - pretty sure none of us do - so it is possible that Hatchette has budged or given some concessions; just not enough for Amazon. It's hard to say who's right or wrong when we don't know the details of a negotiation.)

But, yes. This is absolutely terrible for debut authors. I felt terrible for S&S authors last year when B&N stopped carrying their titles.

Sarah said...

I don't think it's unusual for companies to flex their power in the middle of negotiations--it just gets a lot more attention when Amazon does it. Costco is notoriously rough on its suppliers, including cutting them off entirely and no one cares. If Amazon cuts off Hachette, I'm sure there will be editorials everywhere condemning them for destroying literature. Meanwhile, Hachette is a billion dollar business that's choosing to play hardball with their authors' incomes on the line. Amazon's a billion dollar business with enormously less at stake that plays hardball as a matter of course. Hachette's trying to win now in the court of public opinion and Amazon taking away the pre-order buttons is saying, 'not a chance.' And Hachette doesn't have a chance. It needs Amazon a lot more than Amazon needs it, so dragging out these negotiations is just screwing over the people who've trusted them with their careers. (Sorry for being anon before, I was on my ipad and all my passwords are too complicated for me to remember! I gave up and went anon without realizing there was a name/site option.)

Anonymous said...

Hmmm. My limited understanding of the dustup from Michael Sullivan's blog is that Amazon is claiming Hatchette is the source of the slow-walking of books.

Rachel Aaron said...

Amazon has finally come out and explained the situation (I've added the link to the post above) but it basically looks like they're saying exactly what y'all have already said: they've been at this for a while, and they don't foresee it getting resolved any time soon.

This is super depressing for me, not just as a Hachette author, but as someone who wants traditional publishing to survive. Now's the time to try something new, not dig in heels.

Siiiiigh. Oh well, not like we can do anything about it. When elephants fight, the grass gets trampled. Still, stuff like this is the best argument I've ever heard for authors diversifying their publishing options. That's a big part of why I'm self publishing this summer. I don't want all my eggs in one basket, be it Hachette or Amazon.

Sarah said...

Re: the PR BS, Amazon can easily afford to throw a few million dollars into the pot. It's petty cash for them. The interesting point is that they said they made the same offer to Macmillan a couple of years ago--which Macmillan could pretty easily say, "Nuh-uh" to if it weren't true--and clearly Macmillan didn't take them up on it. If I were a Macmillan author, I'd be pretty darn annoyed to know that Macmillan refused that offer. But that's probably part of why Amazon is comfortable making the offer. They laid the PR groundwork for it two years ago.

Anonymous said...

This is a good illustration of the differences between the free market and capitalism -- they are often confused. The free market is the world were buyers and sellers get together, and it has certain defining characteristics -- many buyers, many sellers, information on choices available to both buyers and sellers, and low barriers to move to a different buyer or seller.
Individual companies (and buyers) on the other hand, are all striving to destroy these conditions to benefit themselves -- this is not an evil, it is pretty much their job. Sellers are looking to cement themselves with buyers, buyers are looking for good deals and arranging the most beneficial arrangements.
Hence regulation and the world of public opinion. The risk to Amazon with these moves is that it will be seen as a monopoly power, encouraging public opinion backlash or (less likely) regulatory moves.
So yes, it is capitalism at play, but it brings with it the danger of backlash, and customer awareness of the disadvantages of relying on one sales outlet too much.

Anonymous said...

From what J Konrath has posted, Macmillan did send its authors a check for estimated royalties on lost sales. However, the situation for Hachette is different, the Macmillan dispute lasted less than a week, and it would be fairly easy to assume that sales that week would have been the same as the previous week without the dispute. The Hachette stuff has been going on for months, how can they reasonably calculate the lost sales? Esp. for new books.

Busy Woman said...

Rachel, thanks for posting your thoughts. I'm a big fan of yours and a wannabe author. I wrote my undergrad thesis on the book retailing industry back in the late '80s before Amazon, Borders, BN and others. At that time the major disruption was adding coffee and chairs in a bookstore. My professor thought I sounded crazy but look where we are today.

I am a believer in the free enterprise system and can look across a number of industries that are facing these harsh realities.

You've stated the value of a publisher and the value of a retailer like Amazon. Amazon is also becoming a publisher and the authors are in the middle. Writers have to change and as publishers are going to have to change. The traditional system has failed these are just the last desperate attempts. As oppose to trying to squeeze out more $$ in their perspective pockets they really need to focus on creating more propoganda to stress their value. Publisher have to let us know that teir value cannot just be in sourcing and marketing authors. They have to reinvent themselves and present their worth to their authors or they will end up like travel agents, record store and movie theaters. Some have succeeded in creating value while others are just holding one. Amazon will have to stress their support for authors of all backgrounds and diversity. If they begin to filter then their are no better than any other traditional retailer.

I do get your point of authors may not want to wade into self publishing but it's a necessity of self preservation in my opinion.

I do hope Amazon and Hachette could put more energy in piracy of content. Instead of trying to get what they can from each other. Let's focus on protecting the digital rights of the author.