Archive for Hachette
Amazon has penned an open letter on their website which spells out their mentality in approaching the ongoing Hachette eBook dispute. They primarily contend that selling eBooks at the $9.9 price point sells more copies and garners more money than titles that retail for $14.99.
In a written statement Amazon said “A key objective is lower e-book prices. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market — e-books cannot be resold as used books. E-books can be and should be less expensive.
It’s also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that at the lower price, total revenue increases 16%.
Amazon also made the keypoint of exactly how royalties are pointed to be shared between Hachette and the Seattle based company. “While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.”
In closing Amazon said “Is it Amazon’s position that all e-books should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99.”
Despite the hordes of critics who have verbally assaulted Amazon for its greed in the Hachette dispute, an article for Forbes today demonstrated the outcome of the current contract negotiation holds a certain percentage of Amazon’s revenue in the balance. How much is that revenue? Around eleven million dollars.
As in, 0.014% of its total $78billion business.
Apple was criticized for not taking the judge’s ruling lying down when it came time to a $200+ million verdict against it in the DOJ ebook pricing fixing lawsuit, despite the fact that the amount was less than one percent of its cash on hand. The critics argued that Apple has already spent far more than that amount in legal fees, but the tech giant claims that it’s not about the money, it’s about the guilty ruling.
If Apple will fight for $200 million and some change just on principle, then Amazon’s fight for $11 million is equally important, except that Amazon is fighting for its customers, not its drop in the bucket. Once the door opens with Hachette to dictate its own terms, terms that will block Amazon from offering its titles to readers at a discount, then that same door is thrown open even wider for other publishers to follow suit. Eventually, the retail book market will be a landscape where even lower-priced ebooks are a luxury item that consumers can no longer afford.
Amazon’s recent request to support Hachette’s authors in what is arguably a difficult situation for them by offering the authors 100% of the sales price of their books has yet to be agreed upon.
In another twist in the ongoing fight between Amazon and publisher Hachette, Amazon has either demonstrated its true spirit of support for authors and readers, or made the best PR move in the history of book publishing. Yesterday, in a King Solomon-like letter that has not been sent to the publisher but was sent to various experts and author organizations for feedback and weighing in, Amazon has offered to give Hachette’s authors 100% of the sale price from the ebook sales of their titles until this dispute is resolved. The goal is to force both parties’ hands into resolving the matter, as this will cost both Amazon and Hachette their royalties.
Hachette (and several of the authors, in syrupy open letters) has maintained that Amazon doesn’t care about authors or the damage this contract negotiation does to the authors’ livelihoods, that it only cares about its bottom line. While that is even allowed to be true and is even accepted in the world of free market retail, Hachette has been equally unmoving in its inability to compromise on the terms they seek with Amazon, even to help their authors.
So Amazon has put its money where its mouth is. If the real victims in this battle are the authors, and food is being ripped out of their mouths while the grown-ups argue, then this should help them get by while the terms are still negotiated. Right?
Wrong. Amazon has already been accused of playing this up for publicity, and the offer hasn’t even been made to the publisher yet. The retailer is willing to forfeit any fees or costs associated with bookselling in order to give the full purchase price to authors (knowing full well that Hachette won’t make a dime on the sale either), yet that is not enough for those who froth over their anger towards the retail giant. The Author’s Guild has already (and characteristically) denounced the offer.
Interestingly, Amazon had also reportedly already offered to fund a pool (50% of which would come from Amazon, the other 50% from Hachette) to help see the authors through this difficult time. That offer was rejected.
The best part of this scenario is Hachette can’t possibly turn it down. What would be their logic, except to finally admit that their authors are just a commodity? Amazon has deftly demonstrated its true feelings for the authors who’ve made it what it is today, while also throwing open the door to show the rest of the world (namely, its critics) what publishers really believe.
Despite early and biased coverage of this proposal in news outlets such as the New York Times and the Wall Street Journal, it’s GigaOm’s Laura Hazard Owen who has gone to the effort to make the letter available to readers.
Verdict: 5 Stars
Rowling/Gilbraith has done it again, and this one may be even better than the first in her Cormoran Strike series.
It was both sad and amazing when JK Rowling returned to fiction writing after closing the covers on her Harry Potter series. As she transitioned into becoming the head of the worldwide wizarding empire that has seen a movie franchise, interactive website world, licensed products, and even a theme park, her writing bug may have been quieted by the other projects, but it certainly hadn’t died. With her embarrassingly disappointing first adult novel, no one could argue that Rowling didn’t stay true to herself and write the book she wanted to write, critics be damned.
But with her second series, Rowling smartly opted for a pen name to avoid the comparisons. Her adult fiction is nothing like the world she built for avid young readers, and she avoided being associated with the first book for as long as she could. Still staying true to her literary choices, she penned the book she wanted to write and her audiences responded favorably.
With the second installment, The Silkworm, Rowling crafted an even more gripping story than the first Strike novel, this time focusing more on the literary world. After a novelist goes missing and Strike is called in by the wife to find him, Strike discovers that the writer’s most recent manuscript is a tell-all that would expose people who know the novelist personally, including his own wife. Someone has a motive for murder, and Strike must sift through the saga of dirty laundry in order to beat the killer to it.
Even more than the ever-present writing ability of an author who has the ability to put her readers in the setting, whether it’s a dark alley or Diagon Alley, this is one book that might hit too close to home for the world famous author herself. Who better to write about the perils of literary fame than one of the highest grossing authors of all time? It was easy to wonder “what if” as I read, wondering how much of the torment her character feels applies to her own life.
Despite the ongoing dispute between Amazon and Hachette, this title is now available in all formats (paperback still pending).
When the dust finally settled from the Department of Justice lawsuit against Apple and five of the then-Big Six publishers for illegally colluding to inflate the price of ebooks, essentially bilking consumers out of hundreds of millions of dollars in an effort to grab some more market share away from Amazon, the terms of the judge’s ruling included a caveat. That statement was that Apple could not engage in book discounting under the agency model for at least two years, and then it could only negotiate terms of the so-called “agency model” (in which the publishers set the prices of their books, not the retailer) with one publisher at a time spread out over a period of six months each.
Guess who the first publisher in line is? Hachette.
Yes, Hachette, the company who is in heated, contentious dispute with Amazon, currently isn’t allowed to sell titles through Apple without giving Apple the right to discount as the court ruling from Judge Denise Cote states that Apple cannot engage in agency pricing for a predetermined period of time.
Hachette wants Amazon to have to submit to the no-discount policy of agency model pricing, knowing full well that Apple is legally bound to not enter into that agreement and can therefore discount ebooks all it wants to. Amazon will be held to whatever price Hachette decides to charge, while Apple can set its own prices, including selling titles at a loss.
I’m sorry, I’m confused…who’s the bad guy again?
Interestingly, two other publishers have jumped into the debate. Macmillan and Simon&Schuster have filed court documents contending that the entire situation will work to harm their businesses. Since Apple is filing appeals and has therefore not resolved the issue on when agency model can be reinstated, and since Macmillan and S&S are presumably now at the back of the line of publishers, they cannot institute agency pricing with Apple (and therefore, by common sense, any other retailers) until sometime in late 2017.
Is it any coincidence that Hachette attempted to return to agency pricing with Amazon (and not Apple) at nearly the same time that Apple’s new iOS 8 update will make the iBookstore easier to access from its mobile devices?
While the open letter writing, name calling, and petition signing in the Amazon-Hachette battle continues to rage on, it’s important to remember that the end result of Hachette getting its way will be that Amazon will not be allowed to discount ebooks, and by law Apple will. I seem to recall there was a massive lawsuit because one retailer had too much of an advantage…
A headline in the Wall Street Journal today promised that a senior executive at Amazon had finally spoken openly about the ongoing dispute between the online retail giant and Hachette Book Group, one of the mainstays of publishing and a member of the Big Five. And the remarks attributed did come from VP Russ Grandinetti, but that’s really where the amazement of the announcement stopped.
Grandinetti maintained the position that Amazon has held all along, that it is simply fighting for the best prices to give its customers. But instead of taking that at face value–despite the fact that Amazon has built itself into one of the most customer-centric entities in the retail space–those who hate the empire that it has become are determined that there is an ulterior motive, that the retailer is just throwing its weight around and outlining terms that will be adhered to at all costs.
Odd…the Publix grocery store in my town refuses to sell my favorite brand of vegan cheese, and no one’s picketing out front.
As the country wrestles with the aftermath of the Supreme Court decision this week that gave another company the power to do pretty much as it pleases with regard to how it conducts business and employee relations, it’s easy to lose sight of the fact that Amazon is not required to conduct business with any single entity. In fact, Amazon has been criticized in the past for refusing to sell certain books and for removing content that it deemed inappropriate from its retail shelves, but is now being criticized for not stocking titles from a supplier with whom it currently has no valid terms.
However the terms and the battle end, it is nice to know that both companies feel so strongly about their positions–one that customers deserve the best possible price and the other that authors are true artists who need to be compensated as much as possible–that they are willing to continue the fight in order to achieve their goals.
Perseus Book Group was founded in 1996 and has been acquiring small imprints to expand their business. Over the course of the last few years the entire publishing industry is consolidating and Perseus was a solid acquisition target. Hachette has announced they are purchasing Perseus and absorbing all of their imprints and then selling the distribution business to Ingram.
Hachette is currently the 4th largest publisher in the US and the absorbing of Persius will boost their annual revenue an extra $700 million dollars. This stems from the many imprints it now owns, such as from Avalon Travel, Basic Books, Da Capo, The Economist, Nation Books, Running Press, Seal Press, Weinstein Books and Westview.
Not only does Hachette get access to all of the current catalog of titles but also access to 6,000 backlist of titles it can now issue as eBooks. These include perennial sellers such as “Friday Night Lights” by Buzz Bissinger and “Skinny Bitch” by Rory Freedman and Kim Barnouin.
Perseus can be considered by some, to be the largest book distributor in the US. Under the terms of the Hachette deal Ingram will absorb the client services division, which provides back-end services like marketing and distribution, to Ingram Content Group.