Amazon turns screws on French publisher: Don't feel sorry for Hachette, it's just 'negotiation' Amazon has admitted that it’s restricting the sales of books from publisher Hachette over a contract dispute and defended the restrictions as a legitimate negotiating tactic. The online marketplace has been facing criticism from users, authors and publishing houses as it became apparent it was changing how it sold Hachette …
If the US Justice had not found that the publishers were colluding when they did their deal with Apple, Amazon would not be all powerful now and there would be competition in the market place (albeit a duopoly). Unfortunately, now it is only Amazon that can dictate terms to publishers.
It wasn't the US Justice Department that decided that poor little Apple and the publishers had an illegal price-fixing agreement - it was a court, and a pretty comprehensive trashing it was, too.
And the whole time you were holding up that deal, WE told you it was all a smoke screen to leave Amazon in a position to dictate to publishers the prices at which they will operate. In short, yet another government sanctioned monopoly because Amazon were the ones greasing the political wheels.
But no, you wouldn't hear the truth because Amazon is a good little progressive Nazi.
If Amazon was doing something illegal go after them for it.
If they are just doing something you don't like, too bad.
In both cases that is not an excuse to setup an illegal price fixing scam because Amazon is evil.
Who do they think they are? Batman?
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
http://www.law.cornell.edu/uscode/text/15/1
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty...
http://www.law.cornell.edu/uscode/text/15/2
It's flat out wrong to say the act was to protect consumers. The language clearly demarcates it is about not restraining trade. Apple did NOT restrain trade. Any publisher who gained a cost saving edge was free to cut prices to suppliers. The MFN clause does NOT prohibit that. It just says you the business can't charge Apple more as a means of generating the monies which allow a competitor better pricing. In effect, the MFN clause is Sherman Anti-trust Act language included in the legally binding contract between the two companies.
What the trusts did that caused the law to be passed was to create monopolies which allowed them to set prices at will. At this point in time, Amazon is the Standard Oil of online direct sales. Their behavior as cited is precisely price setting behavior, and worse it is not simply price setting behavior on something they produce, but on the producers of something they sell.
This is plain and clear for anyone who actually reads the law for the sake of the law instead of promoting a personal vendetta.
... and absolute power corrupts absolutely.
Let's face it: in the markets they operate, Amazon reigns supreme. Not merely dominant but in total control of the who, what, where, when and how much. So for a company in that position to say
"a legitimate negotiating tactic"
when the victim of it's negotiating is so powerless brings to mind all the "tactics" used by Standard Oil to suppress competition and maximise profits, at the expense of everyone it dealt with, 100 years ago.
I think you'll find that in negotiations there is no 'victim'. Hachette are hardly small fry being tromped over by the big boy here despite their claims. They are using the press to try and sway opinion in their favour, and it looks like the 'Amazon haters' are doing some of the work for them
I worked in small independent publishing for many years and the remarks from the Permanent Press guy are true: we were seen as a risk, got charged higher rates by distributors, could not achieve the marketing clout of bigger publishers with better marketing departments (try getting your books reviewed when you aren't an important press) and so on. Amazon was not a generous marketplace, but we could guarantee to have our books there and could maximise our small marketing efforts to get people to go and buy. I fear Amazon srapidly becoming the only game in town, even though I am no longer in publishing -- TOGIT is never a good thing for customers OR initial publishers, as Amazon will always feel its slice of the pie needs to be bigger, and bigger...and what are we going to do about it, eh?
If Hatchette titles are a pain to get from Amazon, why not buy from Waterstones/B&N/iTunes?
Saints of the Shadow Bible can be had from B&N for $16.85 for example.
Amazon are big - but they are not the entire market.
Unfortunately Amazon controls a large percentage of the physical ereader market and many non-technical people think the Kindle is the only ereader available. And if they do own a Kindle and buy an ebook from another vendor that doesn't support mobi then they'll have to learn how to convert. That's a hassle most non-technical people don't want[0].
What it comes down to is if the ebook isn't available from Amazon then there are going to be many missed sales.
[0] I know from talking to many of my friends that can convert that most of them don't like it. I know I don't. I have epub and mobi books and every so often I have to take my purchases from Amazon and convert to epub and take my purchases from other places and convert to mobi (I have a Kindle DX and a Nook and I like to have all the books available on both). Usually it works but sometimes the formatting gets messed up during conversion.
You can thank DRM to a large extent.
Once you have a Kindle, and a few Kindle books you are locked in (Apple is trying to do exactly the same thing with iPads).
With a paper book people buy from Amazon because
- it's cheaper, or easier, or they have it in stock.
With an ebook people buy from Amazon because
- they have a kindle.
If there was a standard mp3* for books it would be different, people could just buy their books anyplace they wanted. But thanks to the publishers/authors insisting that they had to have DRM (that works for 5 minutes) now people who have a Kindle will buy your book from Amazon, or they will not buy your book. Publishers jumped onto the Kindle DRM bandwagon, now it's going to fast to get off.
*There is EPUB, that almost everything can read... except Kindle.
No, even really basic sales contracts have terms and conditions about pricing in a given sales venue. You can't fix across the board pricing, but you sure as hell can fix pricing on your own venue. Now, it would be hilarious if Hachette did that, when they got caught they could blame Amazon's tactics, but it would be a really expensive laugh and just not worth it.
"The French knew all about capitalism long before there even was a USA."
If you didn't like to be reminded of that, remember too that without French help the American Revolution would have been defeated and its ringleaders hanged. Americans are really most ungrateful, although one may excuse them on grounds of historical ignorance.
Except that is true. Amazon only sells products if consumers are getting a deal that makes the hassle of shipping and delayed gratification worthwhile. If I can head down to my local bricks and mortar and get the same product for nearly the same price, I'm satisfied now. Amazon can either use volume to make up for low margin or its ubiquity and expansive inventory as leverage on distributors.
At the end of the day, it is for the consumers... because without them, Amazon wouldn't have a business.
Well, it sucks to get boxed in by a vendor, but sooner or later it happens to everybody. Nobody wins all the time, you learn from your errors and move on.
It'll be interesting to see if Hachette learns anything though. The correct thing to do would be walk up the road and talk to eBay or even Google or MS. Any of those companies would just fucking love to get a toehold in Amazon's space. They'll bend over backwards for the chance. Hachette lost its negotiating steam the moment they went all in with Amazon and left themselves no real out, they can never win in a pricing battle with a company that runs perpetually in the red and succeeds at it. You just can't win that sort of game.
So you take the game to somebody else who can and will assume huge losses as an investment and let them do your fighting for you. It's a loser of a game to do the fighting yourself.
…But I wonder how this type of practices would be translated, say, for the cloud business. Where a certain "book store" happens to also be the market leader.
I think large companies eventually stop noticing that everything they do tends to make them look like bullies.
'According to a popular anecdote, Scottish poet Thomas Campbell (1777-1844) once asked to give a toast at a dinner with fellow authors. The toast, which was met with anger and disbelief, was for Napoleon Bonaparte. A tribute to Britain’s enemy at wartime was nothing short of an outrage. As the table’s objections increased in volume, Campbell interrupted to defend himself.
'“Gentleman”, he said, “you must not mistake me. I admit that the French Emperor is a tyrant. I admit that he is a monster. I admit that he is the sworn foe of our nation, and, if you will, of the whole human race. But, gentlemen, we must be just to our great enemy. We must not forget that he once shot a publisher.”
'The speech was met with thunderous laughter'.
http://hiddenabacus.com/tag/napoleon/
A creator isn't the same as a copy editor, a proof reader, a marketing person, cover designer and all the other jobs involved in getting the work in front of an audience. There may be a few polymaths who can do all those jobs as well as writing a book, or composing a song, or whatever - but the vast majority of people either can't, or simply would prefer to concentrate on the stuff they're good at, and leave the other elements to someone else.
Charlie Stross has written a fair bit on that topic, and also directly on this Hachette matter; his comments are well worth a look:
http://www.antipope.org/charlie/blog-static/2014/05/amazon-malignant-monopoly-or-j.html
One of the first lessons that successful creators/makers learn is that the 'middlemen' are what keep you in the creation/making business. Assuming your output isn't commissioned, bespoke work then you can't sit around on inventory. You have to pass it off to somebody else as quickly as possible or you never have enough money to pay the bills. You can have 10000% margins but if you've got inventory it's revenue that keeps you in business and those middlemen provide that revenue.
All in all it's a very desirable situation. You make one sale you move 1,000 units, without the middle men each unit requires its own, individual sale and leaves you with the headaches of 1,000 customers. The middlemen get stuck with those problems and that frees you up to do your creating. Eliminating middlemen is a fantasy that fades quickly once the realities of business set it. Those middlemen are your friends, not your enemy.
Writers will always need middlemen.
The problem at the moment is the middlemen are the gatekeepers and they're holding all the keys. (sorry for the subtle Matrix quote).
That dream will only be realised when the middlemen become the fulfilment people that they should be. Publishers should be working for writers, not the other way around.
This is why I downvoted Don Jefe on this topic (something I don't often do). Middlemen are fine when they know their place (or a forcefully put in that place). When the middlemen think they are the sole reason their sector exists, it all goes woefully wrong. The creative sector is a prime case - publishers, music labels, film distributors all think the market exists for them to make money from both seller and buyer, when in actual fact they have become simply a form of parasite which may have some benefits, but are just as likely to kill their hosts. They ensure that any risk is strictly one way, and regard their existence as being ordained as a fundamental part of the universe.
At some point, Amazon is going to need challenging, but whilst it is shaking up cozy entrenched attitudes which are generally harmful, I'm quite happy for it to do so.
There's certainly no question that the middlemen in some industries need some correction, that's pretty obvious. But they aren't 'just' parasites and what they add, even for the most aggressively parasitic, may not be obvious, but they definitely add value. I'll use myself as the example, since I tried it both ways. This may be a bit wordy.
I wrote a scholarly work dealing with the migration of Scottish furniture forms and design elements through the Southern Appalachian Highlands from 1790-1850. It's a massive, five volume work that took me about six years and I funded it out of pocket because it was something I wanted to do. I never expected to make any money, but recovering the investment would be nice. The thing was independent publishers aren't keen on 6,500 page treatises on extremely esoteric subjects. The full set with the two volume appendix was going to retail for about $2,200, well beyond the reach of the academic audience I wanted to reach.
So I went to the company that publishes my commercial works. They've made a lot of money on my seven industry titles and those titles are about as esoteric as you can possibly get, and they're really, really expensive. The subscription, updated quarterly, for one of the tables references is $11k per year (now on a single Blu-Ray :) and the graduate level textbooks are $7-800. The point is they are used to pushing high price works and they've already got direct contact with the people who are used to buying high priced works. I had wanted to bypass them and, not to put too fine a point on it, give some wee, invisible publisher a leg up, my name carries and I'm a big supporter of small business.
But it simply wasn't feasible. The small publishes simply don't have the resources to get it done. I'm not going to pay someone to publish my stuff on speculation, that's not how the industry works. They've got to assume some risk too, otherwise they really aren't adding anything. I understand it's a big risk for a small publisher, but I'm not a supporter of risk averse businesses as I don't understand why they're in business.
So there we go. My regular publisher and I worked out a deal and they covered my out of pocket expenses with a single check and an dandy advance on the first printing, which they sold out of in four months. The 2nd edition will be in museums, reference libraries, classrooms and private libraries in 2016, if anyone is interested. The proceeds from that are how I pay the extremely gifted art history students who expanded the work for the later editions. The work those sorts of people do is vitally important, but it doesn't typically pay a lot, so it's up to people like me to make sure that work continues. So I'm creating jobs and supporting higher education in subjects that have a much longer reach than any of the commercial studies so popular today.
But that couldn't happen if my publisher wasn't able to create enough demand for the book and push printing costs down to a level the target market could afford. Something simply beyond the ability of a small entity that doesn't have the established customer base, distribution mechanisms and most crucially billing systems and payment terms that take away the pain of purchasing. That's a really big part of selling more than tiny quantities of something and small companies and individuals just don't understand that.
You're not going to sell many of anything if you don't have the financial end of things absolutely locked in and most small entities don't even know where to get started with that. The people that are going to buy more than one of your thing aren't going to dick around with PayPal, call up with a credit card or even send a check. You're going to email a PO and a month or three later you'll get paid. That's just the way things are. Why would anyone capable of creating want to sacrifice that to do an office job that pays less than the office job they're likely trying to escape? Because that's what you're going to be doing if you're not going to let the middlemen do it for you.
It's a gross miscalculation that middle men don't add anything. A very well suited example for El Reg would be a co-lo datacenter. You can run a rack or two of servers in a garage with an extension cord but you can't scale very far. Sooner or later you're going to have to start writing some big checks to the utility department. Yes, paying them sucks, but unless you're going to build and manage an energy production and distribution ecosystem then you've got no choice to pay if you want to grow. It's a cost of doing business.
Trying to rebel against all that is the basis for the sad sort of story that so very many extremely gifted and talented people tell about how their (creation) almost became popular and/or made them a lot of money. The middlemen exist because they are the bridge between the creative and the commercial. You cut them out and you cut off huge swaths of the creative from the commercial. There's no bridge and nobody is going to build one because the commercial doesn't need it. They can keep cranking out endless copies of what they've already got and people will go on buying it simply because there's no option. You should be able to see that in the smartphone market. Incremental changes instead of groundbreaking new design (Apple is the most painfully obvious, but Samsung, Mokia, LG and HTC all do it too).
Yes, the middlemen have gotten out of control with the growth of the Internet, but that's a temporary situation. You see it in any industry as everybody tries to minimize their risks in the face of new opportunities. A breaking point always occurs where intrepid middlemen see a new product of creation and they carry it to commerce on their bridge. Yes, right now is crap, but that will change, it always does. It's important to realize none of this is remotely new, it's just more visible because it's seen online instead of being mailed around on paper.
> It's a gross miscalculation that middle men don't add anything.
I don't think anyone was suggesting that publishers don't do a useful job.
The issue for most people is that many of the larger publishers are too powerful and wield too great a control over the market and pricing.
>Remember when the internet was going to get rid of the middle-men
As usual, it means you get a choice of middle man.
But I don't weep for Hachette, or any of the other big publishers. They've been screwing authors over for decades and doing less and less - i.e. nothing - for anyone who isn't a million-seller.
Amazon's 70% deal is very generous in comparison. At least Amazon track sales accurately and pay monthly - which is much better treatment than most authors get from the big pubs.
Will 70:30 become 50:50 in the future? Maybe. Even if it does it's still better than the ~10% of net authors get on a typical publishing contract, or the 25% of net they get on ebook sales, if they're lucky.
Hope is an emotion. It's actually an evil depending on which version of Pandora's Box you prefer. It is wholly unquantifiable at any rate. Optimism, or lack thereof, can be, calculated based on all sorts of stuff. It's kind if a gray area, but hope never includes quantifiable variables, optimism can include them. Hope than includes quantifiable variables is optimism, not hope :)
Why don't they sell all their fabulous product through their monopoly buddy Apple? I bet they would even cut them a special deal. Meantime, they should open their own shop on their web site (assumes they're actually smart enough to have one) and sell everything they have. No sympathy for them for their prior crooked dealing and now they're paying the piper.
Amazon has 80% market share in eBooks in the US, and higher internationally. Apple is hardly the monopolist in books (the only industry they are one is music downloads).
What Amazon is asking publishers to do is subsidize the predatory pricing it will engage in, to kill off competitors like Barnes & Noble, and thus make the publishers even more dependent on Amazon's monopsony. Kind of how the Chinese government charges the families of executed people for the price of the bullets...
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