Amazon’s Latest Volley

Another day, another volley in the Amazon-Hachette battle, this time from Amazon, in which it explains what it wants (all ebooks to be $9.99 or less, for starters) and lays out some math that it alleges shows that everyone wins when Amazon gets its way.

Some thoughts:

1. I think Amazon’s math checks out quite well, as long as you have the ground assumption that Amazon is the only distributor of books that publishers or authors (or consumers, for that matter) should ever have to consider. If you entertain the notion that Amazon is just 30% of the market and that publishers have other retailers to consider — and that authors have other income streams than Amazon — then the math falls apart. Amazon’s assumptions don’t include, for example, that publishers and authors might have a legitimate reason for not wanting the gulf between eBook and physical hardcover pricing to be so large that brick and mortar retailers suffer, narrowing the number of venues into which books can sell. Killing off Amazon’s competitors is good for Amazon; there’s rather less of an argument that it’s good for anyone else.

2. Amazon’s math of “you will sell 1.74 times as many books at $9.99 than at $14.99” is also suspect, because it appears to come with the ground assumption that books are interchangable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to. They’re not, and it’s not. Someone who wants the latest John Ringo novel on the day of release will not likely find the latest Jodi Picoult book a satisfactory replacement, or vice versa; likewise, someone who wants a eBook now may be perfectly happy to pay $14.99 to get it now, in which case the publisher and author should be able to charge what the market will bear, and adjust the prices down (or up! But most likely down) as demand moves about.

(This is where many people decide to opine that the cost of eBooks should reflect the cost of production in some way that allows them to say that whatever price point they prefer is the naturally correct one. This is where I say: You know what, if you’ve ever paid more than twenty cents for a soda at a fast food restaurant, or have ever bought bottled water at a store, then I feel perfectly justified in considering your cost of production position vis a vis publishing as entirely hypocritical. Please stop making the cost of production argument for books and apparently nothing else in your daily consumer life. I think less of you when you do.)

Bear in mind it’s entirely possible that Amazon sells 1.74 times as many books at $9.99 than at $14.99, but then Amazon deals with gross numbers of product, while publishers deal with somewhat smaller numbers, and the author, of course, deals with only her own list of books. As the focus tightens, the general rules stop being as applicable. What’s good for Amazon isn’t necessarily good for publishers, or authors.

3. I’ve said this before and I’ll say it again: I think it’s very likely that if $9.99 becomes the upper bound for pricing on eBooks, then you are going to find $9.99 becomes the standard price for eBooks, period, because publishers who lose money up at the top of the pricing scale will need to recoup that money somewhere else, and the bottom of the pricing scale is a fine place to do it. Yes, the mass of self-published authors out there will create a tier of value-priced books (this has already been done), and I’m sure in a couple of years Amazon will release another spate of numbers that will show how much more profitable $6.99 eBooks are as compared to $9.99 eBooks, and so on. But at the end of the day there will be authors and publishers who can charge $9.99, forever, and they will. If you destroy the top end of the market, the chances you destroy the bottom end go up, fast.

4. I think Amazon taking a moment to opine that authors should get 35% of revenues for their eBooks is a nice bit of trying to rally authors to their point of view by drawing their attention away from Amazon’s attempt to standardize all eBook pricing at a price point that benefits Amazon’s business goals first and authors secondarily, if at all. The translation here is “Look, if only your publisher would do this thing that we have absolutely no control over, then your own income wouldn’t suffer in the slightest!” Which again, is not necessarily true in the long run.

To be clear, I think authors should get more of the revenue of each electronic sale, although I’m not necessarily sanguine about letting Amazon also attempt to set what that percentage should be. Increasing authors’ percentages of revenue on electronic sales is an exciting new frontier in contract negotiations, he said, having walked to that frontier himself several times now. That said, I also think I should be able to get more of the revenue of each sale and have the ability to have my work priced at whatever the market will bear, without a multibillion-dollar company artifically capping the price I or my publisher can set on my work for its own business goals, which may or may not be in line with my own.

5. While this is not going to happen because this is not the way PR works, I really really really wish Amazon would stop pretending that anything it does it does for the benefit of authors. It does not. It does it for the benefit of Amazon, and then finds a way to spin it to authors, with the help of a coterie of supporters to carry that message forward, more or less uncritically.

Look: As Walter Jon Williams recently pointed out, if Amazon is on the side of authors, why does their Kindle Direct boilerplate have language in it that says that Amazon may unilaterally change the parameters of their agreement with authors? I don’t consider my publishers “on my side” any more than I consider Amazon “on my side” — they’re both entities I do business with — but at least my publisher cannot change my deal without my consent. Which is to say that between my publisher and Amazon, one of them gets to utter the immortal Darth Vader line “I am altering the deal. Pray I do not alter it further” to authors doing business with it and one does not.

(I notice in the WJW comment thread someone opines along the lines of “Oh, that’s like EULA boilerplate and it would probably not be enforceable in court,” which I think is a really charming example of naivete, not in the least because, as I suspected, the boilerplate also specifies (in section 10.1) that disputes between Kindle Direct users and Amazon will be settled through arbitration rather than the courts.)

Authors: Amazon is not your friend. Neither is any other publisher or retailer. They are all business entities with their own goals, only some of which may benefit you. When any of them starts invoking your own interest, while promoting their own, look to your wallet.

Update, 8/9/14: Amazon tries a new tactic, addressing readers (and authors who use Kindle Direct Publishing). I comment on it. Spoiler: Still not especially impressed with the logic; Amazon still not your friend.