Podcast Episode 318 – The Amazon Hachette War By Terry Mixon Posted on June 12, 2014 2 Comments on Episode 318 – The Amazon Hachette War Join Paul and Terry as they discuss the Amazon Hachette dispute. Tagged:CooleyMixonPublishing
we’ve got to ask ourselves why Amazon wants to go over to the wholesale model so much. As it is they will be earning 30% of $15 or however much a book is selling for, which is probably a lot more than they will make if they were setting the price. This goes back to the Evil Amazon thing you mentioned in the show, but let me put on my tinfoil hat here for a second and say that this will allow them to undercut everyone else’s prices. They can even make a dollar or two loss on all their titles, like they did in the beginning, and who can possibly compete with that. As an author I am terrified of a situation where Amazon has complete control and so just for that, I am standing behind Hachette.
You also mentioned that The agency model has gone from every other industry, but isn’t this the model they are using in the App stores, as well as every indie online bookstore? You set the price and Amazon takes a cut. Do you really want them to move those over to a wholesale model where they set the selling price of your novel?
The agency model requires a discount on behalf of the creator to the distributor. The creator sets the MSRP and then gives 60% off to the distributor. Therefore the profits of an agency model are already skewed. That’s they way it still works in cars, electronics, and etc.
Books are different. For years, the publishing conglomerates have used the same metrics with their distributors. And guess whose profit gets squeezed? The author. NOT the publisher.
What Amazon is doing is setting a lower mandatory discount price (30%) and then giving the publisher/creator the rest of the cash. They are handling all the transactions. They provide the full infrastructure. There are no warehouses. There are no folks printing books and storing them. Ebooks don’t have those issues. Therefore, they are a VERY different animal. Unfortunately, the publishing conglomerates have yet to understand the difference.
If you haven’t noticed, Amazon is not asking publishers to change the prices of their physical books. What they want is to sell more ebooks. And their metrics prove that bringing down the price points will actually sell more units.
Amazon and Hachette had a contract. Amazon wants to renegotiate the contract. Technically, neither Hachette nor Amazon need a contract to do business. I’m an independent press and I don’t have a contract. So why does Hachette need one? They want terms that benefits them, not the distributor. Amazon wants a new contract because in order to offer Hachette a better deal, they want them to agree to their terms.
App stores do NOT work on an agency model. They don’t set the price. They take their cut for providing infrastructure and get out of the way. That’s the misunderstanding. Google Play and Apple’s App Store aren’t big box stores that give different deals to different companies. They screw everyone equally.
IF Amazon starts to be draconian, then indies and the conglomerates will drop it. People will stop shopping there when they run out of products to sell. I’ll not trade one vile dictator for another. But to try and tell me that the conglomerates are in the right is not only against common sense, it’s simply being a wanton, bowing slave.