Hi. Barb here.
I’m not sure the world really needs another take on the ongoing, fraught, negotiations between Amazon and the publisher Hachette, but it’s a main topic of conversation among the writers, readers, agents, editors and booksellers I know. Besides, I’ve been on all sides of this one, as a technology executive, author and publisher, albeit all on a small scale.
The two points I see most often in commentary are
- Amazon is not like other booksellers.
- Books are not like other consumer goods.
I agree Amazon is not like other booksellers. At this point, I’ve seen estimates that Amazon handles between a third and 50% of all combined ebook and print sales in the US. But more important, Amazon has never been about books. Founder Jeff Bezos understood from the beginning that selling books was a way to collect a list of educated, upscale consumers. The value of Amazon has always been in its customers, not its goods.
Therefore, Amazon’s laser focus has always been on making it stupid simple to buy things. And let’s face it, that’s why we keep going back. Because we know we’ll find what we want, can buy it in one or two clicks and it will arrive in a couple of days. (Or if it’s an ebook or a streaming video, it will arrive RIGHT NOW.)
It’s also why Amazon’s Kindle dominates the ebook market. It may not be the greatest device (or App if you’re using it on your tablet or phone), but it is crazy easy to load it up with books.
“The money’s not in the razor, it’s in the razor blades,” is an old business saying. It means that you don’t make money on infrequently purchased hard goods, you make it on frequently-purchased, consumable goods. But to seduce you into the ebook market, Amazon deeply discounted both. They didn’t make money on either the razor or the razor blades, but their shareholders didn’t care. It was about owning the market.
Now they do. Now they need to make money on the blades, but they’ve trained us all to expect ever-lower prices for them. So they need their suppliers, the publishers, to take a lower cut, or to share in the discount.
So that brings us to the other side of the argument.
2) Books are not like other consumer goods.
The crux of this argument seems to be that books are not like other consumer goods because they contain ideas. This is the argument Hachette put forward in their statement and it’s been taken up by many others.
Frankly, I find this idea laughable. Maybe it would have moved me if I lived in an era when books were one of the few ways to transmit ideas, but now, in the era of the Web, I doubt there’s a single idea humans are capable of having that isn’t out there somewhere, with proponents and opponents arguing over principles and esoterica and calling each other Nazis in the comments section. (Unless they actually are Nazis. Then what do they call each other? Nevermind, it’s too easy to imagine.)
What publishers face is a radically restructuring of their cost structure. Right now, they’re caught between a rock and a hard place, laying out, printing, storing, shipping print books and accepting all those returns, and laying out ebooks. And paying Barnes & Noble for endcaps and faceouts and to appear on their bestseller lists (As opposed to the super-secret bestseller list B&N provides to the publishers about what’s really selling.) And then turning around and paying massive marketing dollars to Amazon for online marketing. If you like this book, you’ll like that one! Etc.
Something’s got to give, and my guess is, it’ll be print. We’ll see more programs like the e-first Witness Impulse program Jim Hayman is in. Let’s work together to prove we can sell your book, and then maybe we’ll print some.
When that change really comes, it’s going to cause a lot of dislocation and misery, as all sea changes do, but it’s not going to be the end of books. Not even close. All those games and videos and social media on your devices are a much bigger threat to books than Amazon is. And I think long-form, prose fiction and nonfiction intended to be read linearly (because that’s what we’re really defending here) will survive even those. For awhile at least. For way longer than I need to worry about.
So back to Amazon. I have to say their bullying behavior with Hachette surprises me. Not because they haven’t done things like this before, and not because I think they’re in any way above bullying. But I always say businesses are motivated by either greed or fear. In general they’re motivated by greed on the way up, and by fear on the way down. For a long time now, Amazon has consistently acted out of greed, the publishers out of fear.
As I said in the beginning, the value of Amazon has always been in its customers, not its goods. And it’s been driven by greed. So where does not selling certain goods to your customers come into it, and even more radically, telling them to shop elsewhere? It doesn’t make any sense. The old Amazon wanted every customer it could get and every penny they would give.
Shooting yourself in the foot is a key indicator (maybe the key indicator) of a business acting out of fear. Which tells me that inside Amazon the pressure to increase profit margins must be intense. Like coal into diamonds pressure.
In the meantime, as a consumer, if you think Amazon is behaving like a jerk, what should you do? You should do what you would do if your favorite convenience store stopped stocking your razor blades. Go down the street. And while you’re there, in that store that stocks your razor blades, do your other shopping, too.
I’m not saying it won’t be hard, particularly if you live in a rural or shopping-deprived area. And little you, going to your local bookstore, or to Target online, for that matter, to buy your next book may seem like a drop in the bucket. But the machine at Amazon is finely calibrated to notice these things, and they will.
I’m not saying to quit them forever. Getting through a day without Amazon is like getting through a day without using a Microsoft product or Google. It can be done, but it’s a full-time job.
You can go back, but right now, you might want to send them a message. That you want greedy Amazon back. The one that would never withhold goods and would do anything to have you as a customer.
Kait Carson
Charlene D’Avanzo 
Barb, this is the smartest analysis I’ve seen, and that includes the ones in the NYTimes! For decades, publishing and bookstores have operated on the world’s stupidest business model: pay a few authors huge advances that they get to keep regardless, while paying most a pittance; ship books to bookstores and allow them to send back whatever doesn’t sell; promote some books but ignore most (Does Nabisco EVER make a product they don’t promote?). Amazon came along and rationalized the market for book selling, and I can’t think of a single author or reader who hasn’t benefitted. You’re absolutely right that Amazon has been all about market share at the expense of profits. Now Wall Street is demanding to see some profits, and Amazon is reacting in a ham-handed way. I think as consumers, we are going to see prices for everything on Amazon increase. Now that we are addicted to the convenience, we will probably be willing to pay more (or so Amazon hopes). We are all free to shop wherever we please. But if a pizza parlor or a dry cleaner is floundering because they operate with a bad business model, I’m under no obligation to give them my patronage because the successful pizza parlors and dry cleaners are “greedy.” Publishers and bookstores need to look long and hard at the role they’ve played in their own distress.
I agree with everything you’ve said here, Susan.
Thank you so much for this, Barb. For boiling it down to its essence and presenting it so clearly. I appreciate it and I think many others will, too.
Thanks, Sarah.
All of these debates on the Amazon/Hatchette dispute seem to ignore the fact that the major publishers and Apple lost a collusion lawsuit that put the current pricing structure/contracts in place. The debates ignore the fact that part of the reparations required by the courts was a renegotiation between the publishers and the distributors. This process was mandated to be staggered and Hatchette was ‘first up’ on that list. To blame (or not) Amazon for this simply ignores the facts. The truth is, Amazon wants those eBook prices lower and they want to determine what they are, not the publishers.
Cheers — Larry
You’re right I didn’t explicitly include this in my already too long post, Larry. But I don’t think it changes anything I’ve said.
Excellent insight! Thanks for breaking it down Barb. Fear based living be it in business or ones own personal life is destructive. I would prefer the greedy Amazon to the fear based Amazon any day.
Thanks, Kim. When I was in business I always preferred dealing with a greed-based partner. You could always tell what they were going to do. Fear-based companies were just to unpredictable.
Fascinating. I confess to being an Amazon addict (I’m on a first name basis with two UPS drivers as a result). I’ll need to think this one out carefully. If push comes to shove, the stack, mountain rather, of TBRs beside my bed might allow for a period of Amazon abstinence.
Great analysis, Barb!
Thanks, Lea!
I stopped buying from Amazon a few years ago when they defended sellling a how-to book for pedophiles. I’ve been buying from Barnes & Noble since then and am very satisfied.
You can avoid buying stuff from them, but you can’t avoid using them since Amazon Web Services does cloud computing for huge swaths of the web. Which is why I say trying to quit them would be like a full time job.
Excellent post, Barb. Made the whole muddle much clearer to me. I’d just listened to half of the Diane Riem show on NPR this morning and some of the same ideas came out. Like trying to tell Amazon what we think by going somewhere else. A guy called in from rural somewhere and he didn’t have anyplace else to shop. So you’re right about that.
I started with a Nook and had a preference for B & N, but as more writer friends have gone indie, I’ve wanted to be supportive and shifted to Kindle. For me it’s more about the super swift convenience. It’s like magic. Oh I want to read her book. Poof! That quick I can. The Nook isn’t quite as simple. I’ll share this and try to buy from B & N more. 🙂
Super swift convenience + inventory. You went there because your indie friends books were there. Your indie friends books were there because it is stupid simple to put them there and because when you put them there, they sell because there are customers there. (At Level Best we sell both print and ebooks through Amazon and B&N. No comparison. Amazon sells like 10x what B&N does.)
Be glad you listened to Diane Rehm. On the way home from errands this morning I listened to On Point and Roxana Robinson, President of the Authors Guild, whose role was (I guess) to defend traditional publishing. She was so ignorant about what the author experience with Amazon, I had to turn it off.
Thanks for a thoughtful, well balanced post. When Amazon pulled this on a different publisher a few years back, I boycotted them for a while, even stopped reviewing everything there. I did eventually go back to putting book reviews there because I know it helps authors, but I stopped with my movie/TV Show/Music reviews. Those are strictly elsewhere (my blog these days).
I was upset when they increased their free super saver shipping last fall. I get why they did it, but I still didn’t like it.
Both times, I switched to Barnes and Noble. I found the prices to almost match on books. DVD’s are another story. However, the free shipping (still at $25 at BN.com) is much, much faster than at Amazon. Amazon will sometimes take a week to ship out your free shipping order, like they are punishing you. B&N sends it out without 24 hours most of the time.
I see myself sticking with them for the long run. Heck, I’m even thinking about upgrading to B&N’s faster free shipping plan. Why? It’s only $25 instead of the $99 that Amazon charges and you get more discounts including in the store. I haven’t quite pulled the trigger, but it’s close.
Interesting. I find B&N a little limited, and since I don’t get out all that much prefer their stores to their online presence. However, I am taking a little Amazon break…just a break.
Very astute analysis of the situation. Thanks for taking the time to put this out in such a clear, concise way. Just last night I realized I hadn’t bought the latest book of an author whose next book I want to read. I hopped onto Amazon….and then thought, “No, I can wait. I’ll order it at the bookstore tomorrow.” I’d like to say it was a decision to make a protest on my part, but it was more like an feeling of unease about Amazon. As you pointed out the decision to go elsewhere isn’t easy for many people, but for me I have 5 bookstores within easy walking distance…it’s people like me who really should think twice before doing it the quick way.
Yes, Terry, this exactly what I’m talking about.
Barb, your post just goes to show not everything astute has been said about the Hachette/Amazon conflict. One of our writers’ credos should be: There’s always a better way to say it; there’s always a fresh POV; and there’s always something new to add to the discussion. Thanks for taking the time to lay out your smart points in such an organized, concise way.
You’ve given me a lot to think about. Thanks for all of this information.
I like your analysis, Barb, and I agree with most of it, but I think you left something out. Amazon treats it’s authors better than Hachette does. Authors who publish ebooks thru Amazon priced between $2.99 and $9.99 get a 70% royalty. [to keep it simple, let’s just consider that price range.] As the publisher Hachette gets the 70% royalty, NOT the author. The author gets whatever Hachette deigns to give them, often only 20%. The big-money authors who are bloviating about this, like James Patterson and John Grisham could care less about that. They’re already making millions.
Wow. I’ve stayed out of this convo almost entirely–not feeling smart enough to contribute, and, while bring grateful to Amazon and anyone who supports authors, also having a huge bookstore bias and investment.
But Barb, your well-balanced and incisive take made me at least chime in enough to say…this.