Hachette CEO Responds to Avalanche of Amazon Advocate Emails
Hachette isn’t flinching from the inundation of emails Amazon triggered with their plea to KDP authors and publishers early Saturday morning. In fact, they’ve already started responding to emails sent by Amazon supporters with a form letter of their own.
It’s not clear whether everyone is getting the same response, or if it is reserved just for the most ardent Amazon advocates, but according to the email (quoted below) Hachette CEO Michael Pietsch thanks senders for taking an interest in the matter.
Pietsch insists that Hachette is "negotiating in good faith", a point that Amazon has disputed in the past (in the leaked letter), and then he goes on to make the bogus historical claim that paperbacks were originally "not intended to replace hardbacks but to create a new format available later, at a lower price". That’s not at all true, but to be fair Amazon also played fast and loose with the early history of the paperback book.
Noting that "80% of the ebooks we publish are priced at $9.99 or lower", Pietsch concludes with a call for Amazon to "withdraw the sanctions against Hachette’s authors", or in other words honor the contract which Amazon no longer has with Hachette.
So there you have it, folks. We now have two multi-billion dollar multi-national corporations now engaging in a pr slap fight.
Thank you for writing to me in response to Amazon’s email. I appreciate that you care enough about books to take the time to write. We usually don’t comment publicly while negotiating, but I’ve received a lot of requests for Hachette’s response to the issues raised by Amazon, and want to reply with a few facts.
• Hachette sets prices for our books entirely on our own, not in collusion with anyone.
• We set our ebook prices far below corresponding print book prices, reflecting savings in manufacturing and shipping.
• More than 80% of the ebooks we publish are priced at $9.99 or lower.
• Those few priced higher—most at $11.99 and $12.99—are less than half the price of their print versions.
• Those higher priced ebooks will have lower prices soon, when the paperback version is published.
• The invention of mass-market paperbacks was great for all because it was not intended to replace hardbacks but to create a new format available later, at a lower price.
As a publisher, we work to bring a variety of great books to readers, in a variety of formats and prices. We know by experience that there is not one appropriate price for all ebooks, and that all ebooks do not belong in the same $9.99 box. Unlike retailers, publishers invest heavily in individual books, often for years, before we see any revenue. We invest in advances against royalties, editing, design, production, marketing, warehousing, shipping, piracy protection, and more. We recoup these costs from sales of all the versions of the book that we publish—hardcover, paperback, large print, audio, and ebook. While ebooks do not have the $2-$3 costs of manufacturing, warehousing, and shipping that print books have, their selling price carries a share of all our investments in the book.
This dispute started because Amazon is seeking a lot more profit and even more market share, at the expense of authors, bricks and mortar bookstores, and ourselves. Both Hachette and Amazon are big businesses and neither should claim a monopoly on enlightenment, but we do believe in a book industry where talent is respected and choice continues to be offered to the reading public.
Once again, we call on Amazon to withdraw the sanctions against Hachette’s authors that they have unilaterally imposed, and restore their books to normal levels of availability. We are negotiating in good faith. These punitive actions are not necessary, nor what we would expect from a trusted business partner.
Thank you again and best wishes,
image by www.metaphoricalplatypus.com
Dan Agin August 10, 2014 um 9:45 pm
He’s wrong that paperbacks came on the scene as supplements to hardcover books, with the paperbacks to appear later. There were immediately publishers who started publishing NOTHING but paperbacks, no hardcovers at all. Signet, for example. And all kinds of category fiction publishers. Only publishers trying to preserve hardcover profits used paperbacks as secondary supplements. He’s all wrong about the history.
Nate Hoffelder August 10, 2014 um 9:47 pm
This is true.
Dan Agin August 10, 2014 um 9:51 pm
And since he works for Hachette, he ought to know more about the history of paperbacks in France. Cheap paperback editions of new books almost always appear BEFORE the hardcover books in France, have done so for more than a century. It’s likely that soon these first edition French paperbacks will be replaced by cheap first edition digital books. I’m not impressed with his argument.
AvidReader August 10, 2014 um 9:53 pm
If these two businesses want to have us judge that they are negotiating in good faith, have them give us timelines of this. I don’t expect them to give us terms but timeframes will show whether or not they are talking.
William Ockham August 10, 2014 um 10:09 pm
I was stunned that he started his list of "facts" with the claim that Hachette sets its prices "entirely on its own". Who is he kidding? Go check the prices for Hachette books. They are using the same pricing bands that they agreed to with Apple in 2010.
Chris Meadows August 11, 2014 um 1:40 am
I think my favorite line from this letter is “We set our ebook prices far below corresponding print book prices, reflecting savings in manufacturing and shipping.” That’s pretty funny given that I remember publishers complaining vociferously that manufacturing and shipping costs are the lowest part of the cost of publishing a book, and their absence shouldn’t necessarily lead to a substantial price markdown in an e-book. Trying to co-opt the other side’s rhetoric now, are we?
I also remember reading that, in the price-fixing affair, the publishers wanted to price their e-books higher than Apple would allow, but Jobs didn’t want the prices so high that consumers found them altogether ridiculous. (And I remember how, even as late as just before the imposition of agency pricing, it was not uncommon to find e-books of hardcover books—or even paperbacks—retailing at more than $20.) The publishers gave in in the end and cut their suggested retail prices for hardcovers’ e-books down to $12 to $15, and now they get to reap the benefit as if it was somehow their own idea.
Mike August 11, 2014 um 12:46 am
What you all gonna do when AMZN crashes? 800+ PE now.
That’s not a bubble. That’s the Hindenburg.
David Taylor August 11, 2014 um 1:39 pm
That’s what I used to think about AMZN’s p/e until I read about Amazon’s business practice of ploughing all earning back into new projects/buildings/inventory.
They have a plan to keep earnings low to grow their business and NOT pay taxes.
If you look at it properly then the high p/e is irrelevant.
Mike August 11, 2014 um 2:59 pm
You folks who follow this site need to get some basic accounting lessons.
There is a difference between expenses and purchasing assets. While assets are expensive they do not go on the income statement at 100%.
A building might be depreciated for as long as 20 years. Even software development might be depreciated.
So to put it bluntly, "you are wrong."
Mike August 11, 2014 um 12:48 am
BTW you all need avatars!
Add JetPack comments.
Nate Hoffelder August 11, 2014 um 6:29 am
I’ve tried it. Jetpack slows down my blog.
Mike August 11, 2014 um 11:01 am
Have you tried it lately? You only have to activate the modules you need.
Nate Hoffelder August 11, 2014 um 11:14 am
Not lately, no.
David Emil Henderson August 11, 2014 um 5:05 pm
RE: "…paperbacks were originally “not intended to replace hardbacks but to create a new format available later, at a lower price”. That’s not at all true…"
I would hesitate to challenge the truth of that statement without regard to its context. I’ve been buying books forever, and the pricing of them seemed to depend on a multitude of factors.
(1) Hardcover editions by celebrated authors often were issued at premium prices for the legions of eager fans who wanted to be among the first to brag about reading the book . After the sale of those hardcovers ran its course, the publisher would issue a paperback edition for those who didn’t mind waiting in order to save some money. And sometimes long afterwards, mass market paperbacks would appear in bargain racks for impulse buyers.
(2) Publishers have always set prices at various levels depending on the demand for the authors. "A-List" authors could sell at higher prices than "B-List" authors.
While it’s true that lower priced items will sell at greater numbers than high-priced items, a 1,000-page book by an outstanding writer should never be discounted to the same price as a 300-page book by a novice, whether it’s a print or eBook. The value is not in the physical format, but in the intellectual content.
fjtorres August 11, 2014 um 6:38 pm
Paperbacks were in fact first used as replacement for backlist hardcovers.
And then they were used to deliver new titles that were not deemed hard cover worthy.
If paperbacks were not hard cover replacements, then why fight Ballantine and force him to stop doing simultaneous hardcover/paperback releases?
Not buying his spin.
Jan-Marie August 11, 2014 um 6:17 pm
who cares about the history of it all the bottom line is that authors are the ones being affected. Since the event of Amazon we have had to lower our prices to very low levels. All in the name of volume. However frankly what ends up on my bank account AFTER Amazon has taken ALL their cuts makes it hardly worth even writing and putting books on Amazon.
Ted Parkhurst August 11, 2014 um 6:24 pm
As a small press publisher for 35 years, I watch the development of ebooks, near-monopoly entities like amazon.com, and book-buyer habits closely. My hope is that the reading public will continue to recognize the added value that even a very small publisher contributes to a book by a) selecting it from the flood of proposals we see, b) honing the content through several levels of editing, proofreading, as well as c) marketing , advertising, production, piracy monitoring and defense, and so on. Amazon.com created a new channel for some writers. I give them credit for adding some excellent content to the marketplace. They have also opened the floodgates for a great deal of ill-conceived, often unedited or poorly-edited content that is not a value at any price.
Chris Wendt August 12, 2014 um 6:50 am
This situation is very similar to what happened in the editorial photography industry with the advent of the digital camera. There were disputes among content providers and publishers, including Hachette, over pricing, and standard and workflow. The digital camera and digital imaging workflow and digital asset management came into its own right as a viable method of capturing, processing, distributing images over several tumultuous years in the early 2000’s. One People Magazine went digital for its image workflow, the rest of the industry, from photographers on down, had to scramble to stay in the game. Thousands of staff photographers' jobs disappeared, having been replaced not only by self-employed professional stringers, but by very occasional content providers, aka lucky tourists and others walking around the streets of New York, or attending major events everywhere and anywhere. Consolidation quickly followed in the rights management, research, and storage/search/access and distribution parts of the business. Thousands of wet darkrooms and hundreds of film processing labs dried up and simply disappeared, forever. Thus, this discussion of the Digital REVOLUTION and its effects on the publishing industry will resolve itself within a few long months or after a few short years. If Michael Pietsch would like to learn more about this, he can find me at chriswendt117 at gmail etc.
Sheogorath July 13, 2015 um 2:43 pm
"Hachette sets prices for our books entirely on our
own, not in collusion with anyone."