I Think It’s Time for Indies to Join Publishers in Their Fight Against Amazon

amazon frownOver the past two months Amazon has been supporting their very public and very rough book contract negotiations with a subtle media campaign which has kept indies on the sideline. By saying little and letting the publishers leak details, Amazon has avoided giving indies a reason to join sides with the major publishers that Amazon is fighting. That was a smart move, but yesterday everything changed. Amazon released a statement which inadvertently confirmed that indie authors and publishers have a horse in this race.

Amazon responded to the news that a German trade group had filed an antitrust complaint, and the statement said in part:

It’s widely understood that e-books should cost customers less than the corresponding print edition - in digital there is no printing, freight, warehousing, or returns. We believe this should also be reflected in the terms under which booksellers buy their books from publishers, and this is the case in our terms with most publishers around the world, including in Germany. For the vast majority of the books we sell from Bonnier (a division of the 3 billion Euro international media conglomerate, Bonnier Media Group AB), they are asking us to pay them significantly more when we sell a digital edition than when we sell a print edition of the same title.

In short, Amazon has confirmed the rumors that the Bonnier negotiations include a fight over ebook payments. This is also a strong indicator that the similar rumors coming out of the UK are also true.

As a result, Amazon has told us that indies have a dog in this fight.

Indie authors might not care whether Amazon is extracting increased and specific co-op service fees from Hachette (they might actually want to pay for the services - if they boost sales), but now that Amazon is pushing major publishers to accept a smaller cut of ebook sales it is time to be concerned.

Tell me, if Amazon manages to force the major publishers to accept a smaller cut of ebook sales, how long do you think Amazon will continue to offer the 70% option in KDP?

I think it would last about 15 minutes.

As I have argued in the past, I see the 70% royalty option in KDP as one of Amazon's carrots. Amazon offers the high royalty in order to encourage authors and small publishers to deal directly with Amazon. It also encourages authors to stay independent and to get their rights back and republish their backlist.

I think Amazon is using the high royalty rate to keep the publishing industry fragmented. By offering better terms, Amazon keeps power from concentrating into fewer hands. But if Amazon manages to force publishers to accept a lower rate, it won't need to offer such a high rate via KDP any more.

Amazon can cut it, and I would expect them to do so once they think they have the advantage.

Edited to Add: Remember, Amazon has already arbitrarily cut royalties on one occasion. Earlier this year they lowered the rates they paid on Audible audiobooks. They have no effective competition for audiobooks so they decided to use their monopoly power to grab a larger share of sales.

With that in mind, I think it's time for indies to hold our noses and side with publishers. This bothers me, but we are potentially in a situation where indie revenues are at stake.

Or am I wrong?

P.S. If anyone cares to suggest an effective course of action, the comments are open.

About Nate Hoffelder (11370 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader: "I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

90 Comments on I Think It’s Time for Indies to Join Publishers in Their Fight Against Amazon

  1. It’s always been a concern. Remember Amazon didn’t do 70 percent UNTIL Apple offered it. Then they matched it with various terms. No matter what happens with Germany or Hachette that 70 percent isn’t likely to last forever.

    What can indies do? List on other retailers. Don’t lock yourself in.

    We still don’t have a dog in the race with Hachette or Germany companies. No matter what happens there, that 70 percent probably has numbered days.

    • Actually, Amazon did it first. But a lot of people assume that Amazon was anticipating the 70% in iBooks, so we have a chicken and egg situation.

      • I stand corrected. But I don’t believe they would have done it without the prodding/competition. What I never understood was why B&N had to offer LESS (as well as some other places). Why not be competitive? Why lower the bar just that little bit?

        • BN offers 65% with no “delivery fees” and no unilateral pricing control. Fair trade.

          • B&N also offer more – 40$ for prices below 2.99.

            Amazon only offer 70% of r handful of countries, and some of these (Japan, Brazil, mexico) only if you are exclusive.

            By contrast Amazon pretends to be giving consumers the best deal but then penalises authors trying to offer readers a bargain by selling cheaper ebooks, fleecing them for 65% of list.

            Just to make sure overseas readers are deterred Amazon further imposes $2-$4 surcharges on readers buying from outside the Kindle Zone countries, and even charges $2 for free ebooks. The author sees absolutely none of this.

            Apple somehow manages to pay 70% across the board, regardless of how much the list price is and regardless of which country the ebook is sold in.

  2. Nate, this is what we on the publishing side have been trying to warn about all along. Amazon wants a bigger piece of the pie from *everyone,* and that includes indies. The process goes like this: Offer wonderful opportunities that really are favorable to both sides, at first. Get your vendors (publishers/indies) hooked on these great opportunities. Eliminate all other avenues of competition so eventually there aren’t any other opportunities left, besides yours. Now use your advantage to turn the opportunities in your favor, taking more and more of the profits that once made the opportunities fair for both sides.

    • I still can’t figure out why people are surprised by this. It’s the exact same tactics Wal Mart used in the 80’s and 90’s to wreck the American economy, Amazon is just doing it with even lower margins.

      • Note that Facebook did the same thing with their business Pages and advertising options. They initially convinced lots of small businesses to create Pages and promote their business through the Facebook platform, and then yanked the rug out from under our feet by dramatically lowering post visibility unless posts are paid for via “Paid Promotions”. It’s a common technique – make yourself out to be the most advantageous platform, grab the vast majority of market share, and then up prices so you’re taking whole hog.

  3. Nate, why jump now? Why not wait until Amazon cuts its rates to what you can expect to get from being traditionally published?

    What if Amazon cuts its rates to 50%. Or 35%. That’s still better than any rate offered by a Publisher. So why take less now?

    • I didn’t say indies should _sign_ with publishers; I said they should form an alliance of convenience.

      • And what could this alliance threaten to do exactly?

        • So far as I can see, not much. But I still thought I should point out where our interests lie.

          • Some indie authors are joining together and publishing under one imprint. It’s minutely possible they would have some bargaining power that way.

            Awareness never hurts.

            I created a blog store on my site and while I don’t sell as much as I do at Amazon, I love having it. It’s been very worthwhile and I hope it continues to grow.

    • Indies just need to be aware that their interests are not the same as Amazon’s. “Don’t put your eggs in one basket,” etc.

    • Trad pub royalty rates compared to what indies get from Amazon is a false premise. One which indies desperately cling to, but which has no substance.

      Amazon is not our publisher, therefore it is not paying a royalty.

      If we sell the same book on eBay we are not receiving a royalty. We are receiving our cut of the list price after the retailer and payment processor have taken their fees. Why do we pretend its different with Amazon?

      “Royalty” may be convenient shorthand but it bear no relation to reality.

      Amazon does not pay us an advance, does not edit our books, format them, or create our covers. It doesn’t get our books into bricks and mortar stores in even one country, and it doesn’t give us a print edition (try working out what the “royalty” actually is on a POD through Create Space if you go down that route).

      Amazon incurs no cost in the production of the book, and more importantly incurs n0 losses if the book fails to sell.

      Curiously when Amazon does publish, through its imprints, it pays nowhere near 70%.

  4. “Amazon has confirmed”… “Amazon has told us”… That’s your interpretation. Maybe, maybe not.

    Yes, I have the same concerns about Amazon that I have about other mega-corporations.

    But if they cut their royalties in half… 35%… that’s still markedly better than what trad pub is offering. And indie/self pub authors are not fools… they are already looking into alternatives, diversifying, direct sales…. which could could be as disruptive to Amazon as Amazon has been to trad pubs.

    • The small percentage of indies who make money are doing fine, but most are not only not making money at Amazon, they’re losing it — because Amazon is not a publisher, and thus doesn’t underwrite their publishing expenses. When people say “But I still get more royalties at Amazon,” they forget that 1. no advance 2. no editorial, marketing, cover art, or other services. No matter how much you hear about how little the publishers do for books, they really do, on average, quite a bit for every book they buy. And every author at a traditional house actually makes money, no matter how little.

      • This is not an accurate picture. I do know of some traditionally published authors who had to pay for their own editing (or make corrections later in the game at their own expense). Big publishers? No. But multiple authors at various small publishers. I also know of at least one author who was with one of the larger publishers who was “orphaned” — his book was not edited. It was copy edited, but no storyline edits were done and his cover was … well, there’s stock art and then there’s stock art. In addition, I know NUMEROUS authors who spent every bit of any advance and then some on marketing–these marketing costs mirror indie costs. Did they have to do it? Do indies? Neither does. But the point is, it is not a clear cut “all trad authors make money.”

        That is not to say I think trad publishers are bad.

        But when you’re indie, you decide how much money to spend on each project and if done carefully, it does not take a lot of sales to earn that back.

        There is no one right path. Each deal must be evaluated on its own merit.

      • Self pubs handle/outsource their own editing, cover, marketing… typically for less than $1000. Beats what it costs an author to give up control/input, lifetime rights, ability to compete, etc. to a trad pub in exchange for a vanishingly small advance and vanishing chance at small royalties if they ever earn out the advance.

        As for credible trad vs self pub numbers, which trad publishers do not have and/or aren’t prepared to acknowledge and share, see
        authorearnings.com

  5. Wouldn’t that raise the red flag that the justice dept went after Apple on?

  6. I never assumed 70% would last forever. That’s one of the reasons I never went Kindle Select. The other being I think it’s stupid to basically tell readers “here or nowhere.”

    But to your point of “support the Big 5,” let’s step back a moment. Assume that Amazon is acting illegally and deserves to be taken to court? Okay. That doesn’t make the Big 5 in the right about anything they’ve done recently or in the past. (Doesn’t automatically make them wrong either.) The actions of Amazon and the actions of traditional publishing need to be looked and evaluated on separate merits. It’s quite possible that everyone is acting badly here.

    If everyone’s acting badly, which I think is likely, then indies still shouldn’t join the publishers. That will just reward one bad actor. And yes, I think the indie “support Amazon no matter what campaign” from those who are doing it is also short-sighted.

    It’s business. We should look at sales and revenue now, consider what might happen if Amazon (followed by others) cuts royalties (which I am sure they will do eventually) and come up with a plan to deal with it when it happens. The smart ones are in this for the long term, and we’ll adapt to whatever changes the industry throws at us. The not-so-smart ones won’t, same as in most industries.

    • I for one would like to see the royalties go on as long as possible, but I do agree that the terms will change at some point, and that authors will have to adapt.

      I hadn’t considered the point about both sides behaving badly, but I wish I had. It’s a good counter to claims that we should take sides. (I can’t wait to use it!)

      • You’re welcome. This is why I think we need to keep emotion out of decision making, as much as possible. We are only human after all. Fear is one of the worst reasons to make a decision, and I see tons of fear in most of the coverage around anything Amazon (or big publishing) does.

        Oh, and believe me. I want 70% to continue as long as possible! I’m enjoying the ride as long as it lasts.

        • This is why I’ve suggested what we need is an author-centric model, not agency, not wholesale.

          There’s reasons businesses consistently steer away from a model that is content-creator centered, and like those other terms. Nothing evil, just wanting to keep control over the creative content within that particular business, and not with those creating the books and movies and music and art.

          re the 70%, even if one big etailer drops the rate, if Apple or subscriptions services or any other author friendly delivery route keeps its rate high, that will be important.

          All in all, things are a-happening fast now! 🙂

  7. William Ockham // 25 June, 2014 at 2:11 pm // Reply

    Wrong. Wholesale vs. agency. I will explain it to you later. Got meetings to go to.

    • Juli has already shot me down, but I’m looking forward to your comment.

      • William Ockham // 25 June, 2014 at 6:49 pm // Reply

        The crux of your argument is:

        Tell me, if Amazon manages to force the major publishers to accept a smaller cut of ebook sales, how long do you think Amazon will continue to offer the 70% option in KDP?

        Every part of that statement is wrong. Amazon is trying to force publishers to take a larger cut of ebook sales. Yes, 50% of X is larger than 70% of Y when X is the wholesale list and Y is retail selling price. Amazon wants publishers take 90% or more of ebook sales while the publishers are trying to force Amazon to take 30%. As bizarre as that sounds, that is what is happening. The real fight is over the spread between the retail list price of a front list hard cover and the same title in ebook format.

        For indies, there is already a big spread between their paper format and their ebook titles, so this issue is not relevant.

        • Exactly. This.

          The idea that there’s any link between these two arguments is a point for Hachette and other publishers who have spread just the right amount of misinformation.

        • William Ockham,

          That’s pretty confusing. Care to offer some example figures to show what you claim?

          • William is talking about the fact that Amazon discounts their titles below the publisher’s recommended price. Publishers usually sell their paper books to stores at a 50% discount from the cover price, assuming the store will sell at that cover price. Amazon doesn’t. They regularly “discount” their books down from cover price.

            So, if the cover price is $10, Amazon buys the book from a publisher at $5 and sells it at $6 (for example). In that case, the publisher is getting 83% of Amazon’s selling price. This is the scenario Amazon wants, because they know they can shift prices and maximize their sales. They can even lose money on books if they want, to make their business more competitive.
            What the big publishers want is to be able to control the sale price of ebooks, so that they can keep them artificially high and stop (in their minds) the switchover to digital. In other words, they want to continue pricing their books the same way we indies do: we set the price, then Amazon pays us a % of sales. So, to display William’s math in a short, clear way…

            (Wholesale) 50% of $15 = $7.50*
            (Agency) 70% of $10 = $7.00
            (Agency) 35% of $15 = $5.25

            *No matter how deeply Amazon discounts the book from $15, they still pay the publisher $7.50. If they give it away for free, they still pay the publisher the same amount. You can imagine what this does for publishers’ profits, yet they prefer agency pricing because they seek control of the industry, not better profits.

          • Jim,

            Thanks for the reply. This really is legerdemain though.

            I constantly warn about not understanding statistics. But this also changes the nature of copyright. The whole industry rests on copyright, and copyright is delicate; which is why it needs a lot of law to support it. Think to make an easing somewhere and it can destroy copyright itself.

            Here, by switching the argument to percentage cut per book, Amazon hides the transfer of *copyright* power to the retailer from the creator. The creator is the author and the author-publisher. Our whole power of negotiation lies in that tiny, one book, monopoly on copies. The publisher is the licence holder, licensed by the creator to publish in particular media. Amazon presumably seeks to solidify its grip.

            By dealing with the control of the intermediary [the publisher], Amazon makes it appear it is working for the author. Don’t be fooled.

            Now, on the figures as you present them. The idea of sale price related percentage takes is already in the KDP 70% contract. If your book is sold outside Amazon for less than the Amazon price, Amazon takes the right to not just sell at a matching price, but to *cut* its payment to you to the percentage of that *sale* price. *Not*, as you suggest, the original contract price.

            I suggest that it the nature of the Hachette Amazon argument. And it hits at us in the two ways I mention. Whichever it is it harms us, directly or indirectly. At the moment we don’t know for sure what is the focus of discussion, and Amazon’s love of obscurity makes me very suspicious of the deal on the table.

            I am no supporter of the big 5, but as that saying has it, be careful what you wish for.

  8. While I think the ACX’s reduction of revenue split is noteworthy and serious, I have trouble in using it to draw direct comparisons to KDP. These services have very different offerings, namely the ability to produce a product at no up front cost using an Amazon-built marketplace with ACX. Plus, the hosting overhead is significantly higher with audio than it is with ebooks. This isn’t to suggest that Amazon won’t go full-on asshole wrt the KDP revenue split—it’s possible it could. I just don’t think saying “See ACX” is necessarily a reliable predictor of what may—or may not—happen with KDP.

  9. So what happened here?
    We have the “Buchpreisbindung” in Germany. That means that the publisher can set the price that the bookseller can sell the books for. Its something like legislated agency pricing.
    Now interestingly it is possible that the publisher asks for a higher share of the recommended price they themselfs set for the bookseller (Amaz0n).
    So Bonnier can ask for a higher share of the ebook price while keeping the price for the consumer lower than the printbookprice…
    Amazon seems to think that this is unreasonable and is trying to show that a contract has to be beneficial to both parties.

    So what has that to do with the selfpublishing author?
    Well not very much. Selfpublishing authors can only vote with their feet. That means that it is in the interest of amazon to keep as many of those authors in the boat as possible.
    If amazon is about the long perspective they will try to stay the most attractive plattform for Authors and Readers.

    So if you do not know about the “Buchpreisbindung” you do not know the whole story…

    Interesting german article with statements from german Amazon spokesperson here:

    http://www.golem.de/news/amazon-verlag-macht-e-books-teurer-als-printtitel-1406-107436.html

  10. Okay I seem to have found some possible reason for the negotiations happening now.
    Up to 2015 amazon germany is using a tax loophole in the EU that makes it possible to use the very low 3% VAT for Ebooks in Luxembourgh instead of the 19% VAT Amazon would have to pay in Germany (where Ebooks are taxed like an electronic service) .
    Now it is possible that since they are doing this since 2012 the publishers had decided that they were entitled to this extra profit – after all they were also doing the hard work of converting the books to ebooks and so on. In the interest of growing the market Amazon might have relented.
    Well things have changed and with the closing of the loophole Amazon is asking for a different price form the publishers for the ebooks they are providing. From 2015 on Ebooks will have a VAT of 19% while printed books will have a VAT of 7%. All the while the publisher is keeping the price of ebooks (which by law includes VAT) lower than the price of the print books…
    So it sounds all very different now…

  11. I expect better than fear-mongering from you, Nate, which is what “ZOMG Amazon might lower KDP royalties, maybe, sometime” is.

    You’re not exactly wrong, per se, but it’s way more complicated than you allude. Sure, Amazon might stop offering 70% royalties. They might also stop offering 35% royalties. They might, perhaps, simply say “No matter the price you set through KDP, you’ll get 50%.”

    That would actually be huge for books currently priced lower than $2.99. Currently, indie authors get 35 cents for any books priced at 99 cents. And those newly popular “boxed sets”? Nine authors split that 35c, so they make, what, less than a nickel (by my math)?

    Comparing KDP to Audible seems flawed, at best. Two different forms (audiobooks — which are niche — versus ebooks, which are becoming less so). Different sizes (ebooks are often less than 1mb. Audiobooks can be several magnitudes greater). Different delivery.

    I’m not saying Amazon will never change KDP terms. I’m certain they will. I’m also certain that if they offer 50% straight across the board, an ebook priced at $2.50 will earn its author/publisher $1.25, which is likely more than authors make from publishers (if they ever earn out, which is exceedingly rare) anyway.

    • Ah, so fearmongering is what Juli meant when she mentioned emotions. Now I understand. I didn’t see this post as fearmongering so much as raising a concern, and that is probably why it slipped by my filters.

      Okay, so this post was not as good of a idea as I thought, but on the plus side I am learning a bunch of new arguments plus a type of argument to avoid. #silver_lining

      • I admit I hadn’t read all of the comments, and so hadn’t known Juli’s, but yes, I think that’s what I mean. I’d hoped Wikipedia had an article on fear mongering, and I wasn’t disappointed: http://en.wikipedia.org/wiki/Fear_mongering

        And don’t take me wrong; I get your intentions, and appreciate them to a degree. I think what “fear mongering” comes down to is what that Wikipedia article and LBJ’s infamous “Daisy” ad boil down to.

        “The stakes are too hi. Vote LBJ. If you don’t, an atomic bomb might explode.”

        I appreciate that you’re concerned and keep such a pulse on indie publishing. And honestly, I imagine in a few years we’ll look back on these as a golden time when authors got 70% from Amazon sales. But I’m not certain of that, and regardless, Amazon treats indie authors better than corporate publishers ever have (and likely will).

        • Will,

          Comparing Amazon with major publishers misses something that a lot of authors ignore. If you cost your time – and I assume it is worth something – you can get a better idea of where your own interests lie.

          This is going to vary for each person, and by each route, and by individual company. Assuming that your own, uncosted experience is the same as everyone else’s is unlikely to be correct.

          It is also vital to understand the significant difference between print [where physical distribution is often a key] and digital books. Add to that the international implications that arise from US big corporation domination of publishing, and you might see even bigger dangers in sitting back to wait the battle out.

          It is as well to be clear about one’s objectives in writing and publishing too.

      • Nate, I’m not sure I’d characterize your post as fear mongering. Certainly not in comparison to the Salon pieces and others of that ilk. However, I do think the ZOMG! posts are written largely out of fear of change. Fear of change can be crippling to applications of logic. I see it all the time in my day job as a coach.

        Fear leads to us wanting to find the good and bad guys in a situation. I don’t think there is an actual “good guy” in this equation. While I tend to lean more toward the Amazon side, I don’t fool myself into thinking they are wearing white hats. Grey ones? Oh yes.

      • I lean with Juli here, in regard to not seeing your post as fear mongering.

        Certainly there’s a chance that fear can be felt or generated.

        Like, we don’t know if we’ll be hit by a meteor tomorrow. Or today.

        But it’s a reality. We live with it.

        The issues you’ve brought up are, in my opinion, legitimate.

        They mostly revolve around the idea that answers should lie with the middlemen, rather than with the authors.

        Discussing who or what can do to content creators, when the latter have little to no say, seems self-protective and reasonable.

        I’d say it’s like the electorate speaking about its elected officials, but we know how much good that usually is 🙂

  12. This revelation is not surprising at all. Amazon has a long history of squeezing every supplier it can once the supplier is dependent upon them.

    I have been thinking (and commenting) for a long time that authors have a vested interest in steering readers to alternative sites in addition to Amazon, showing readers how easy it is to sideload, etc. — the more readers understand that they can buy from a variety of vendors, the more control authors will maintain in terms of rights and royalties.

    Smashwords is the big one that comes to mind since it publishes directly in .mobi format (no Calibre conversion) and offers the highest rates.

    The idea of waiting until after Amazon cuts royalty rights is frightening … the time to prepare for a disaster is BEFORE it strikes, not after.

  13. It’s definitely a concern, one I share. But I’m with the crowd that thinks supporting these particular publishers doesn’t really get us anywhere. It’s viable retail alternatives we need, and not the flat, price fixed type Apple tried to force, something to keep Amazon on its toes and basically compel the better percentages to remain. Say, for instance, if someone competent were to snap up the recently spun off Nook business and turn it into a viable entity. Somehow, though, were it to happen, I doubt these publishers would ultimately like them any more than Amazon.

    I may be wrong about this since I have no direct experience with audible, but wasn’t the royalty cut there also in conjunction with increased stipends for narrators, more of a trade off than simply a money grab?

    Another issue I see is that these publishers are middlemen where indies are sole proprietors. Amazon may be going after their margins on ebooks specifically because they’re taking those margins in many ways basically by selling authors on the notion that they are providing some level of benefits Amazon is actually responsible for.

    • Dan, not a full trade off, though the costs of audio delivery were, I believe, being somewhat eaten by Amazon etc.

      The reduced royalty holds even if an author, or narrator, is not benefiting from a stipend.

      I don’t want to get into ideas about the stipend, because I’m not a narrator, but several FB sites have very vocal detailed real world experience with how and if this has benefited them.

      For most authors, myself included, getting stipend money to pay a narrator, is very very remote.

  14. Amazon has a pattern of putting the squeeze on its suppliers, sure as zebras wear stripes. It’s not fearmongering to contemplate implications for indies, and to encourage indies to take protective action. If Amazon is putting the squeeze on multiple large publishers *now* around the world, and tries to take 70% away from them for ebooks, why wouldn’t they do the same with indies? Are indies a protected class at Amazon? I think not.

    A lot of the indie discussion around Hachette vs. Amazon has been around taking extreme sides. There’s the camp that thinks Amazon can do no wrong and big publishers deserve to be crucified for their past sins, and then there’s the camp that’s pro-Hachette. A middle camp is more sensible. Regardless of whether indies love Amazon or hate Amazon or are somewhere in between, indies would do well to root for a Hachette victory when it comes to ebook terms. If Amazon undermines agency with the big 5 publishers, it’ll be a bad omen for indies who are now direct and indirect beneficiaries of agency. Every retailer except Amazon and Google wants to preserve agency. If you want to fight to keep your 70%, it’s much more likely if Hachette prevails.

    • Mark, I enjoy two things about your comment.

      First, I always respect when someone takes the time to point out that if 10% of people are on one side screaming their heads off, and the other 10% are on the other side doing the same, the 80% majority is taking the middle ground and trying to be sensible. These people rarely have a voice.

      Second, and this is one I’d like to see trumpeted more often, the ONLY reason indies should even remotely consider cheering for Hachette is because of the price disparity that would be present if Hachette was to “win”. When an indie prices an ebook at $4.99 and a comparable title is $12.99 from Hachette, that’s great for one side – and it isn’t Hachette.

      That being said, I think it’s also worth pointing out that, although indies aren’t a protected class by any means, as a group, they also don’t represent the “additional middleman” that Amazon has always seemed to despise. Yes, Amazon squeezes their suppliers for better margins – I would call this business – and, yes, indies are suppliers too, but what Amazon has squeezed much more than suppliers is the unnecessary middlemen that have occupied large percentages of transactions in the past.

      I have no way of knowing what Amazon truly feels towards publishers, but since we’re speculating wildly today about what we know will absolutely, definitely happen based on little more than feelings, then I’ll say that I can’t imagine that indies are lumped in with the middleman suppliers, which is exactly where most publishers should rightfully be.

      Does this mean Amazon won’t eventually lower royalties for indies too? Of course not, but I do question whether Amazon has the same beliefs as the Big5 – that because they publish content, that somehow means they’re the content creator. If Amazon thinks the same way as the Big5, then watch out indies. Otherwise, I would suggest most of these discussions are nothing more than speculations based on feelings, and that reality is much different.

    • Glad you weighed in Mark, esp like “A middle camp is more sensible.”

      I truly can’t root for Hachette or Amazon with any clarity, and will just remain rooted in seeing better overall conditions for indie content creators.

      That’s not saying much 🙂 but it’s a base I can count on.

      And despite my own problems and glitches and wishing-this-was-that-way about avenues like Scribd and Oyster and Overdrive, I’m really glad you have made those available.

  15. No, it’s not time for indies to join in any fights with Amazon.

    “Indie” means independent, doesn’t it?

    The 70% royalty is wonderful, and it’s Amazon’s choice to offer it. Would I complain if Amazon cut the royalty down to 60%, or even (shock and horror) 40%?

    Of course I would.

    Would I stop publishing with Amazon? No, because I hope that Amazon would stay in business and make money for me in future. Amazon is in business to stay in business, even as you and I.

    Why on earth would INDIES bite the Amazon-hand that feeds them? Can’t see the point.

    If and when Amazon does drop its royalties, each and every publisher (indies included) will need to decide whether the new royalty rate makes sense to them.

    In the meantime, it’s much ado about nothing. 🙂

    • Everyone assumes that if Amazon cuts royalty it will be by a nominal amount and thus indies should not try to prepare for the day when Amazon takes more drastic action. It reminds me of the “Amazon is my friend and will do me no harm” attitude that so many Amazon fans have adopted. When Amazon monopolizes the book market and can dictate terms, I would be very surprised if it eventually did not do a WalMart and expect suppliers to fill its coffers rather than retail customers. If Amazon becomes the only outlet (other than each author or small group of authors having his/her own website), I would expect Amazon to start pushing royalty rates of 15%. Amazon shareholders are starting — finally — to demand profit and dividends. If Amazon won’t raise retail prices, it has got to lower acquisition costs, and when you are the only game in town, you can do that with impunity. Will indie attitudes change when it is too late to make any difference?

      • “Amazon shareholders are starting — finally — to demand profit and dividends. If Amazon won’t raise retail prices, it has got to lower acquisition costs, and when you are the only game in town, you can do that with impunity.”

        This is a key point being overlooked by many. The reason Amazon i s really turning the screws right now is because the investor honeymoon is coming to an end.

        Shares fell by over $100 this year (some rallying since). The Q2 losses are going to be disastrous. Alibaba’s IPO is likely to closely coincide with the Q2 official figures, giving nervous investors the golden opportunity to jump ship.

        Amazon has always been a bubble and the bubble is deflating.

        The odds are stacking up against Amazon – everything from the FAA shooting down the dumb drones idea to the EU putting a stop to the tax loophole in Europe to the US states demanding Amazon collect taxes to the Kindle Fire losing market share to cheap Chinese imports and so to the Fire phone, which may have seemed a great idea when they started development years ago, but now looks to be a big money-loser, forcing Amazon to go for the high up-front cost to try get some cash back into circulation.

        All coming just as the world’s real biggest e-commerce company, Alibaba, sets up shop in the US (11 main.com) and prepares for what will almost certainly be the biggest IPO in US history.

        What chance Alibaba might yet step in and buy Nook?

      • If royalty rates were cut to 15%, which I doubt, but certainly isn’t impossible, it would open the door to the next Amazon, or revive B&N or Apple, or burst Scribd and Oyster and others into dominance, in my opinion of course 🙂

        re Amazon’s profits, from what I’ve read, at the point it has built the number of super warehouses its needs to house and deliver its real money makers, physical goods, those huge number of funds going into structural buildings, would make Amazon instantly profitable.

        I think the only thing I know for sure is, there’s a “lot” of concern among publishers and etailers, Amazon among them, to nail down outlets and infrastructure, before things go fully the netflix no-tv subscription routes.

        Amazon, for whatever faults it has or will have, at this time, still has the most superb customer service this side of friends and family. I can trust them, and have no problems buying from them when needed. And I’m not even talking about books!

        I mention this, because I continually hype a author-content-creator centered model, and I really have no animosity toward publishers or Amazon or other etailers.

        Some things, like the number of TVs sold, or boxes of diapers, or such, are a somewhat zero-sum game, based on need. But entertainment content? Available when we want, how we want? No. Like Joe Konrath and others, I don’t think so. Our books and music and movies are not zero sum, except for time in the day and days that we live.

      • Good comment Richard. But I wish everyone would stop referring to Amazon commercial contract payments as “royalties”. they are not and never were, and we should not be stroking that corporate ego.

        Nor be fooled by the intentional emotive reference to commercial payments by a *retailer* as royalties.

        • I think complaining about authors referring to these payments as “royalties” is a little pedantic. If we’re going to go down that road, we should stop referring to them as “sales” too, but “I leased 8,000 copies of my book” doesn’t really have the same ring, does it?

          Authors use the term “royalties” because it serves as a useful comparison point to a traditional deal. In both cases, it’s the authors’ cut of the transaction.

          The Oxford English Dictionary defines “royalties” as “A sum paid to a patentee for the use of a patent or to an author or composer for each copy of a book sold or for each public performance of a work.”

          So self-publishers use of the term is fine. Just like it was fine when publishing appropriated it from the world of mining.

          Meaning and usage changes over the years. That’s one of the strengths of the English language. What’s the big deal?

        • Part of the reason they are referred to as royalties is for tax purposes. We are not employees or contractors, and we are not partners. The term is used, not necessarily because of the the publishing relationship, but also because that is a particular tax term (look on your tax forms).

          • Maria,

            I appreciate that in the US royalties are treated differently, and I think save Amazon from being tax collector.

            We, as author-publishers should not use the term outside its strict meaning, in order to keep our minds clear on the relationships.
            And the use outside the US of “royalties” is strictly regarding publisher payments related to contract licence terms. We must not get sloppy in our understandings of the business.

            My worries of misuse and confusion increase when I see people using Amazon as retailer who then refer to the company as their publisher. We owe it to newcomers to be clear, and to help in understanding.

            Thank you for clarifying why Amazon uses the term.

    • Except you are assuming that sales will be made for your book. When I worked with KDP, I would post a Word file which was converted into the .awz format Amazon used. Here’s the thing: 2 days after the file was posted, I started to get sales, 1 or 2 at first. Then BOOM! No sales after that, not for weeks. And, you are assuming that a sales is a sale, when it is actually a leasing fee. Calling “royalties” that is a mistake, because it is simply a cut of the retail price charged to the customer to load the Kindle with that book.

      There is a negative history with Amazon, which thinks that it still owns the book after it was paid for. Read about the boy who had his copy of “1984” yanked, with all his liner notes, when some Amazon staffer thought he had stolen it. Read about the woman who had her entire library yanked because she happened to have the same last name as someone else. Read the numerous complaints from KDP suppliers, who asked the same questions over and over: “what happened to my sales?” “Is the sales reporter broken?” “My sales report disappeared” and so on. It has been so since fall of 2012, so it is not surprising how many people like me simply gave up and closed their accounts. Also, the history goes back as far as 2008, when Amazon began to demand that indie publishers use their subsidiary BookSurge to print the books. Several indie publishers started antitrust lawsuits against Amazon for tying-in arrangements like that, price fixing, excessive discounting which made it impossible to make a fair margin, only to lose or be settled out of court because Amazon pours $millions into winning the suits. Now, a major publisher is pushing back against its demands to accept unfair restraint of trade policies, which is also part of its game plan.

      I am not siding with either party, since I see it from both sides, but for an indie publisher like me to deal with Amazon I have to see that it is dealing fairly, and it does not. Amazon will not gain a monopoly, either, since it has so many competitors, and since its competition deals more fairly with suppliers. It is a matter of record that while I was trying to sell ebooks on Amazon, I made more money with its competitors, which means that my books are not bad, they were just prevented from being sold on Amazon. If you look up any of my physical books on Amazon, there is a 1-2 day delivery delay. That does not sell my books there either, because the customers are conditioned to expect no delays. So you tell me what I am supposed to do: wait around and hope that Amazon sells my books, or deal with other retailers with no such baggage attached?

    • In the business world, wholesale means the supplier sells the book to the seller for a set discounted price. Amazon is trying to negotiate for a lower wholesale price so that when it sells the book for less than list price it will gain a healthier margin. But at the same time, it is demanding that the wholesaler/supplier not set the price for the book at more than it is willing to sell, and not sell the book elsewhere for less than what it chooses. This is price fixing. In the business world, a supplier may set the price for however much he chooses, and the retailer can sell the book for however much he chooses, and eat the loss in revenue. That is what is fair. But Amazon is trying to game the system, pure and simple, and gain more market share artificially on the backs of the indie publishers and authors. It will never be the only game in town, but while it is contending with Hachette for “better” terms (read our way or the highway), it has done the same with indies. I don’t deal with cheats and liars. As far as I am concerned, Amazon is both.

      • Theresa – what you describe is not price fixing. Price fixing is what happens when a group of suppliers who all supply essentially the same thing get together and decide to all sell their products at around the same price price, thus “fixing” the price at an artificially high level – higher than what a truly competitive market would allow. This is what the Big 6 publishers (aka the price fix six) engaged in with Apple and Amazon a few years back.

        Amazon has every right to negotiate with their suppliers for the best deal they can get. In fact, they have an obligation to their shareholders to do just that. They are not engaging in anything that would be considered illegal, unlike the publishers several years ago. Oh, by the way…have you ever looked to see who has a higher profit margin…Amazon or any of the current Big 5? Guess what, it’s not Amazon that makes higher profits.

        • Jamie,

          It is a mistake to think there is only one measure of a company. Declared profit most certainly is not the one, even if the measures were limited. While companies may seek improved shareholder value, there are two chief ways to that.

          It can be by maximising dividends. And that is not necessarily directly a reflection of profits. Or it can be by increasing share values. Jeff Bezos has followed a clear policy of reinvesting in the company to make it more powerful and more valuable. This has pushed Amazon share prices high. And probably showing better gain than through a dividend which takes investment money out of the company.

          In business terms the big 5/6 are mature companies, and the growth by investment approach is less suitable. Their route to satisfying shareholders is by dividend payments.

          Declared profit might indicate the policy of the Board, but, equally, it may disguise how successful the company is.

  16. Trad pub writers have already made it clear, via multiple channels and consecutive years, how they feel about indie writers. As a result, I don’t care what happens to them. Really.

    The Amazon 70% Thing is more interesting. Amazon makes few missteps, and the lowering of royalties to 70% could be one of them because the only people who would benefit from it are competitors who can’t compete with Amazon on any other basis (yeah, I’m looking at you, Kobo). Of course, writers too, but–let’s face it–they’re a secondary consideration from a business point of view.

    The basic strategic question is: is lowering the royalty for indies worth the loss in market share? If yes (by whatever metrics Amazon uses to calculate these things), then yes, they’ll reduce the royalty; if no, they won’t. But lumping it together with Hachette is wrong, imo. They are two separate problems with two separate strategies, both of which result in added revenue. Yes, there’s a common element (added revenue), but that doesn’t mean the tactics need to be identical.

  17. Hi Nate, I won’t go over the ground other commenters have, but I will say this: treat all the news reports with skepticism. The Guardian piece from Weds, is based on a piece from the Bookseller on Tues, which is entirely based on leaks from Hachette UK execs.

    Even if the leaks are true (which is an unknown) they could be very selective. Here’s a couple of sample scenarios (and I could do about 10 of these, all plausible):

    SCENARIO A:

    Hachette wants Agency. Amazon wants Wholesale. Hachette says OK to Wholesale, but wants some of those Agency percentages and terms (i.e. a 70/30 split, but Amazon to swallow all discounting). As this deal is even better for Hachette than Agency was (or Wholesale was before that), then Amazon says, OK, but then we have to charge you for all the stuff we give you for free: pre-order facilities, co-op, etc.

    Hachette then leaks “Amazon is making us pay for all this stuff that was free like pre-orders. Whaaaaa!”

    SCENARIO B:

    Hachette and Amazon both agree that Agency is dead, but differ on the Wholesale split and how much Amazon can discount. Amazon thinks it should be more like print because it has to swallow all discounting under Wholesale, so it offers a (picking a random number) 60/40 split instead of 70/30. This will actually work out better for Hachette because it’s getting a guaranteed 60% of list, and Amazon will discount heavily (and shift more units). But Hachette doesn’t want Amazon to have power over pricing and discounting, so negotiations aren’t going anywhere.

    Hachette then leaks “Amazon wants to massively cut royalty rates. Whaaaa!”

    ***

    The fact is we don’t know. And I don’t trust the Hachette leaks to be the whole story. At all. Let’s not forget the Macmillan scenario for 2010, when EVERYONE was sure Amazon was the bad guy, and then it turned out that Macmillan was part of an illegal conspiracy to fix the price of e-books.

    The Big 6 mounted the same global media push then – Amazon is destroying the book business! – and everyone fell for it.

    Let’s be a bit wiser this time, and resist what is quite obviously a very sophisticated PR campaign from the large publishers.

    • David asserts in his comment the following:
      “The Guardian piece from Weds, is based on a piece from the Bookseller on Tues, which is entirely based on leaks from Hachette UK execs.”
      This is factually untrue. The Bookseller piece makes it clear that it was based on conversations with a number of UK publishers, and while there may be parallels with the Hachette USA negotiations, the piece was about what is happening between Amazon and UK publishers.
      The Guardian did its own separate research to stand up the claims, as did the BBC which also filed a piece.
      I understand the desire to view this as a battle between two big corporate giants, sadly it is not.
      Philip Jones

      • Hi Philip, Thank you for the correction. This was a quick comment I had dashed out here, but I did expand the thoughts in my last blog post (and noted the correct provenance of The Bookseller’s article). If you take the time to read that, you will see exactly why I’m unhappy with The Bookseller’s coverage of these issues.

        For starters, your reporters really need to learn how corporation tax works. I’ve noted in the comments under several articles that their stated assumption that it’s levied on sales (rather than profits) is incorrect. – Dave

    • “I won’t go over the ground other commenters have, but I will say this: treat all the news reports with skepticism.”

      And that’s why this piece was based on Amazon’s own statement.

  18. The important thing to remember is that Amazon IS a business. And in business, sooner or later, some toxic bean-counter will take a sip from his foaming no-lactose uber-latte and decide that he can best justify his existence by cutting certain expenses. He will kneel at his work station and draw up an Excel spreadsheet, doing his best to maximize his billable working hours and then he will kowtow to his immediate superior and utter the dreaded phrase – “In order to improve our profit margin we need to cut royalties.”

    That’s what businesses do.

    Sooner or later they decide that they can make more money by using a cheaper flour in their pizza dough. They decide that the hinges on the sheds they sell would be more cost effective if they used plastic hinges instead of metal hinges. They decide that the tall glass mugs they used to serve their root beer in would be cheaper if they just used paper cups – thus saving on dishwasher expenses.

    You folks think the Masons have secret rites with which they manipulate time and destiny?

    You think the Luminati are actually running the country?

    Forget it.

    It is the business majors – those folks who are carved and tattooed with certain tribal symbols such as dollar signs and profit margins and a “pucker here” symbol embroidered about their rectal egress who REALLY run things.

    🙂

    Thus endeth the lesson.

  19. The reality is “joining” “fighting” etc. are a waste of time.

    There is only a few things indie authors can do (because they are things we actually control):
    1– produce good content
    2– produce more good content
    3– diversify revenue streams via all platforms
    4– have a business plan that takes into account the possibility of lower percentages in the future

    But to join Hachette or trad authors? Why? What did Scott Turow and the Authors Guild ever do for trad authors, never mind indies? What did any trad author do for indies? I have yet to see a single very successful author be willing to put their contracts on the line and fight for midlist authors. In fact, their agents leverage their success for much better deals than other authors get.

    The Audible-Amazon link is flawed. Spend a day at Audible HQ to learn how much the two are connected. And Audible has competitors such as Brilliance. What’s unique for Audible is ACX which provides much, much more than KDP does.

    Finally, read The Everything Store to see how Amazon operates: mercenary and missionary sums it up.

  20. “they are asking us to pay them significantly more when we sell a digital edition than when we sell a print edition of the same title.”

    Do we read it right ? Could also be that Amazon is talking absolute value, not rate. In which case it’s a way to ask Hachette to decrease the ebooks price. By decreasing the ebook’s price, would indeed get less for the ebook than for the paper versions.

  21. As a small indie publisher, I fully expect an Amazon squeeze on the 70% Kindle royalty at some point. I think you are spot-on in predicting that, Nate. But based on our experience here at New Street, digital sales through other venues (Nook, Kobo, etc.) are, in general, pathetic when compared to Kindle sales. It would help the general situation enormously if other digital distribution channels/platforms would get their acts together and provide Amazon Kindle with meaningful competition. I know all of us pubs would love to have significant presences on robust, competing channels of digital distribution. Nothing would be better.

    • We as indies have to do our part to help the other retailers too. I’ve been very pleased with results on other retailers and I work with ALL the retailers as much as possible to be a partner–this includes talking about other e-readers besides Kindle on my blog, and doing what I can to send them traffic!

  22. Great discussion, passionate views, heat and fire. What more could you want, Nate? Thanks for starting the whole thing off. I particularly liked the comments by August Wainwright, Angela Booth, David Gaughran and Bob Mayer.

    We should remain indies, not believe the hype, keep a sensible outlook, do the things we can do and not get dragged into wars we don’t need to.

    • I would have preferred to have been right, or at least had an argument which survived the first round of debate.

      • lol! What “survived” is a really brave much needed injection into this whole discussion. Thank you much 🙂

      • Whether what you put forward is right or wrong is not important for now. What is important is you proffered an idea that should be out there as part of the whole debate. The question of whether or not independent writers should create an Independent Writers Guild has crossed my mind from time to time. One independent writer is someone to be ignored. But what if it is two? Three? Ten? One thousand?

        It’s funny the level of tunnel vision the corporate side of the industry has regarding independent writers. Both sides tend to view indies as small fry, mere mosquitos to be swatted if they become an annoyance. But they have forgotten what this boom in publishing is composed of: books written by independent writers.

        One mosquito is an annoyance. One hundred thousand mosquitos can kill the cow.

  23. If you start with the big picture, what will benefit self-published authors most is a competitive retail environment, meaning multiple large e-book retail platforms that compete for self-published product. Today, we have dominant Amazon and then a small group of much smaller players…Apple, B&N, Google, etc. If we look at what will have a positive impact on fostering a healthy, competitive retail environment…it will be an agency model for big publishers as it will take away Amazon’s ability to undercut the other e-book retailers by offering discounted product. This is bad for the average consumer as it does lead to higher e-book prices but it is certainly good for self-published authors due to improved competition among e-tailers as well as widening the average sell price of self-published vs. Trade.

    If a few of the current e-book retailers can manage to grow large enough to continue to nibble away a bit more of Amazon’s e-book market share, it should foster more competition for self-published works which should help to keep Amazon’s self-published royalty structure higher than it might otherwise be if Amazon were to keep most of the other e-book sellers marginalized through a combination of the dominant Kindle hardware plus heavily discounted e-books.

    I think there is no doubt that Amazon’s royalty rates will eventually change for self-published works but having multiple e-tailers who are competitive with Amazon will certainly help to keep royalties up as high as possible.

    Given all of this, I am rooting for Big Pub to be successful in their push for agency pricing because I believe it is best for self-publishers in the long term but I don’t believe there is much that can actually be done other than continue to watch the fireworks and hysteria from the sidelines.

    • Timothy Wilhoit // 26 June, 2014 at 7:16 pm // Reply

      “If we look at what will have a positive impact on fostering a healthy, competitive retail environment…it will be an agency model for big publishers ”
      Actually, that was already tried. Four years ago when the Agency model was instituted, we had some nice indie stores and they were all dead or dying by the time agency began being removed. The only two stores that weathered Agency were Apple and Amazon. A bit ironic.

      • Small “indie stores” are not the same as large, well capitalized e-tailers like Apple, Google, B&N, etc. The death of indie stores had nothing to do with agency pricing…do you understand what agency pricing really is? It leads to higher retail pricing for Trade published books and allows for a fixed profit share between retailer and publisher of the retail price…so how does that damage self-publishers exactly? I have yet to see a coherent argument that Agency on it’s own does anything but help self-publishers be more competitive. Small start-up e-commerce platforms fail every day, it’s hard to make a go of a start-up. The way for indies to be successful is not to try to sell through small indie retailers, it is getting your product in front of real eyeballs at large e-retailers – and there needs to be several of them to maintain a competitive royalty environment for self-publishers.

        • I agree there needs to be several of them. One caveat to that though is the several preferably not wink wink, nod nod, behind closed doors all agree to artificially suppress that competitive royalty rate like the Big 5 – type publishers do.

  24. I’m a self-published writer and I think one thing everyone must remember is that Amazon is not the only game in town. Apple, Barnes & Noble, Kobo, and others offer sales channels for one’s ebooks.

    Amazon is very big and very good for visibility among readers. If your sales are doing well on Amazon, then adding new retailers can only increase the availability of your book and hence the sales. Each retailer is different and each retailer has its own quirks and problems. But diversifying how people can get your book is a good thing. It opens up more markets than if you went through only one retailer. Going through one retailer would be foolhardy, especially if that if that one retailer suddenly went out of business or drastically changed their terms.

    Does that argument sound familiar? It should. It’s such an obvious wisdom—”Don’t put all your eggs into one basket”—only an idiot would ignore it.

    If any one retailer upped and announced that my share of the proceeds would be reduced to half what it used to be, then my response would be to accept that and simply make sure my books were for sale through all the other channels first for four or five months to maximize my income, and then add the cheapskate later when it appears that sales were plateauing. Think of that as an anti-exclusive. And I’m not the only writer who would do that, either.

    Independent writers are not a bunch of naive noobs who don’t know what they are doing. We are entrepreneurs, business people who are doing all the functions of getting their books out themselves.

    Business is business, and if a business partner decides they want to change their terms to less-than-favorable, I can always discontinue my current terms with that business as well.

    So, if Amazon decides they are going to put the screws to independent writers, then where can independent writers go? That’s an easy answer. Elsewhere. Sure, it would hurt sales for a few months. But if every indie walked away, then where would Amazon be? When you consider how aggressive Amazon management is business-wise, do you really think they want to open THAT door?

    Yes, I will admit, I am new in the market with only one book out there. And, because of that, Amazon represents the lion’s share of my sales. So I could be considered vulnerable to any nasty tricks that Amazon decides to pull. But I have no qualms with walking away if I decide that things are too one-sided. That’s business.

  25. Yes! This is time for the big Publishers and the small publishers and self-publishers to all align their interests!

    Let’s pass a federal law called the Literature Support Act (God knows there are already millions of regulations concerning media). It states simply, ebook retailers must pay at least 70% to publishers (including self-publishers) of the sale price of an ebook. Authors must get at least 50% royalty of the net from an ebook sale (or 100% if the author is also the publisher). Royalties can be against advances to the author. For print books, I’m very open to Hachette’s suggestions for a fair breakdown…

    Oh… Hachette won’t return my call? Is it possible that the big publishers wouldn’t want this regulated in a way that benefited writers? They wouldn’t want writers to be guaranteed a specific royalty or percentage of ebook sales? Even if that meant restraining evil Amazon?

    Let’s stick to the big picture. Is it in the interests of Amazon for there to be a vibrant, healthily and successful self-publishing industry? Yes.

    Is it in the interests of Big Publishing for there to be a vibrant, healthily and successful self-publishing industry? No.

    At least not the way the big publishing operates now. They are anti-writer and, strangely, anti-reader. They are more focused on being able to control what writers can be read and what readers should buy. They favor some genres over others based on snobbery and nepotism. They are much more focused on providing power and money to middlemen than to creators. Specifically, they are actively involved in trying to stall the shift from print to digital. Someday, they might (be forced) to change their overall business model and become more reader and writer friendly. But that’s not where they are now.

    Amazon, on the other hand, has huge incentives to promote and grow the self-publishing industry. It simply makes sense for them on many levels, including undermining the power of big publishing, but also to support their Kindle infrastructure. It is also simply good to have a as many suppliers of books as possible. Does that mean that everything they do will also be welcomed by self-publishers? No. Does that mean they won’t tinker with the economics, including taking more money from self-publishers in the future? No.

    But as far as the 70% boogeyman is concerned, I think there is little to fear that it will be lowered as long as Apple is offering 70% and I think it is highly unlikely Apple will lower it. If Amazon did lower it, they would be handing Apple a huge gift. They would also provide a a huge opportunity for another company to come in and disrupt the ebook market. So I think that specifically is off the table for years at minimum.
    Hachette and Amazon are likely fighting over much more complex issues than simply a 70% cut (if Hachette was even getting that to begin with). Hachette might wisely be more than happy to accept 50% in exchange for better placement of their books or better pre-order arrangements. That might make them a lot more money in the long run. For self-publishers to jump to Hachette’s side, without knowing clearly what it is, is silly. Hachette might be negotiating to make sure that self-published books are never recommended on their pages. Several traditional publishing executives have openly pinned for ghettoing self-publishing. How could we be sure that isn’t part of the negotiation?

    Hachette (and the other big 5 publishers lurking in the background), clearly are trying to use their vast media influence to beat up Amazon. They seem to think they have a PR weapon in being able to spin the media to their side, even though no one knows what’s really going on. Not long ago, they were actively using that same PR machine to smear self-publishing with the “shit volcano” campaign. I think it would be the height of stupidity if a mass of self-publishers bought into this new spin against Amazon so quickly after that media blitz. Better for the big 5 to learn that that their ability to paint themselves as good guys, even as they exploit writers and let down readers, has limits.

    There is still time for the big 5 to embrace self-publishing rather than fight it. It would start with their executives praising the new industry, rather than attacking it, and be followed up with embracing print only deals, rather than colluding to stop them. Even better the big five could support real competitors to Amazon that offered even better terms to self-publishers. That would be something to support.

    But instead, they have their proxies trying to play on self-publishing fears, even as they disparage self-publishers, while their contracted writers claim literature will be destroyed if the big five doesn’t get anything they want (despite their history of bad practices). They hint at government regulation, but who really thinks they would support anything that empowered writers? More likely they would like to regulate self-publishing out of the picture.

    If Hachette or the big publishers have something specific they want to propose that would help their interests and the interests of self-publishers, let’s hear it. Otherwise, it’s absurd for self-publishers to “join” with them in fighting Amazon. In fact, that they and their supporters keep floating the notion that self-publishers might “join” them shows the contempt they have for the intelligence of those behind the self-publishing movement. It has all the hallmarks of a corrupt politician playing on the fears of an underclass to get them to support policies that are directly against their own interests.

  26. Mackay,

    There may be one small caveat to your argument. Now the big 5 offer vanity publishing, a vibrant self-publishing industry might be a very good marketing tool!

    But I think you confuse strategy, tactics and relationships. Alliances are temporary things usually. They signify mostly tactical values which will change. And the problem of odd bedfellows is well known in achieving strategic objectives.

    None of that changes one’s view of the relationships. Keeping the indie movement alive may now, ironically, face its biggest threat in five centuries of print and publishing.

    There are also hardheaded business decisions to make for each person and each company.

  27. Nate: thanks for this post.
    But what exactly are you saying? That Amazon has for years provided extremely attractive royalty rates to authors, in order to get them as customers, and plans at some point in the future to reduce that royalty rate? I have always assumed this would happen: the same pattern is used in all aspects of commerce, so why should it be different in the book biz? Regardless of rates, the fact will remain that many good writers (among whom I include myself) have been turned away by legacy publishing. But we still have a way to publish our books, and that way is Amazon.

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