Amazon makes its case and it’s pretty compelling

Amazon released its most detailed explanation of their side of the Hachette feud, and it’s a pretty compelling argument. They manage to demonstrate how lower ebook prices will actually help Hachette sell more books and make more money which in turn will help the authors make more money.

An excerpt:

It’s also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.

My favorite excerpt:

One more note on our proposal for how the total revenue should be shared. While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.


Here’s the link to entire piece: Update re: Amazon/Hachette Business Interruption


How to decide which side to take in the Amazon/Hachette dispute

The Amazon/Hachette brouhaha has been so difficult to figure out. It’s hard to know which side to support. Let’s face it, we’re talking about two corporations worth billions fighting over mo’ money. It’s a tad bit difficult to relate. Some authors with major lit-cred have been working hard to sway public opinion in Hachette’s favor because they feel like Amazon has stabbed them in the back. Meanwhile, Amazon has accused Hachette of using its authors as “human shields.” In short, it’s getting nasty. As an indie author, I really don’t have a stake in this fight, but as a reader, I do.

Today it hit me that there’s a very easy way to decide which side you’re on in this thing. I’ll break up this handy-dandy guide in two sections – one for readers and the other one for authors.

The Reader Amazon/Hachette guide:

A. I want to pay higher prices for e-books from traditional publishing companies like Hachette.
B. I want to pay lower prices for e-books from traditional publishing companies like Hachette.

If you selected ‘A’, you support Hachette. If you selected ‘B’, you support Amazon.


The Author Amazon/Hachette guide:

A. I want to help foster and force change in the publishing industry that will ultimately give authors a more equitable share of royalties earned on their books.
B. I want to keep things the same and maintain the current royalty structures that see authors earn a minuscule amount of royalties earned on their books.

If you selected ‘A’, you support Amazon. If you selected ‘B’, you support Hachette.

In the words of Nick Burns Your company’s computer guy, “Oh by the way, you’re welcome!”

A note:  Believe it or not, I’m not one of those indie authors that doesn’t see a future for traditional publishing companies.  I do, but not under the current business model.  They have to adapt to accommodate the changes in technology and retail. The music industry fought to hold on to the old way of doing business until there was virtually no music industry left to hold on to.  The publishing industry needs to get in front of this thing before it’s too late.  The first order of business is to get rid of the current industry standard contracts and form partnership deals with their authors, ones that give authors, at the very least, half of the royalties earned on print sales and more than half on e-book sales.  The second order of business is to ditch six-figure and up advances and scale up marketing dollars.  The third order of business is to hire back all the editors you’ve let go over the years.  They are the major factor in taking an average book and making it great.