Battle of the Ebook Superstars

Haven't done a blog post in way too long…

On the subject of Hachette vs. Amazon of which too much has been written, let me make a few points:

When Amazon says that e-book sales will grow if only they are priced cheaper, I consider this to be bullshit.

John Scalzi is much more polite.  He disagrees by saying that he thinks it might well be a true statement for Amazon, but that it might not be true for everyone else, or for the broad publishing ecosystem in general, but that he has no reason to think Amazon is making up the numbers for Amazon.

I don't feel like being that polite.

Amazon's argument is essentially an updated variation of the famous "Laffer Curve" which Ronald Reagan used to justify the argument that lower taxes meant higher revenues.  Which if it is true at all is true only at certain high extremes of tax rates, because after a point you just can't keep getting more by charging less, whether it's e-books or government or chewing gum.   It also isn't accurate to say that you always get more by pricing something more expensively.  I don't believe e-books should all cost $29.99.  In pretty much any market, there is only so much demand to go around.  The number of readers is finite.  The number of books they have time to read is finite.  The budget they have for buying books is finite.  At the margins, you can occasionally pick up an added sale or get a little more money spent on books than on something else, but not forever or indefinitely.  As an example of this, look at all of the added casinos that have been built in the US with the argument that we'll keep the casino dollars here and people will spend more at casinos.  Nope; not forever.  Casinos are starting to close.  Tax revenues are starting to fall short.  You can't keep getting enough more revenue to support endless casinos by building more casinos, and you can't keep getting more e-book money by cutting e-book prices.

Here's a question which I'm asking Amazon right now, and can't wait for the answer:  What do their studies show about dropping prices from $14.99 to $12.99?  Or $12.99 to $10.99?  What is the exact magic that all e-books which are $14.99 should be $9.99?  Very few e-books by our clients have ever carried a $14.99 price tag, actually.

The marketplace should determine what the right price is for any given e-book based on lots of people competing to sell goods through lots of different places.  It shouldn't be set at $9.99 because Jeff Bezos has a divine revelation when the Kindle was launched that the price should be $9.99.

While I disagree with Amazon on certain things, I also admire them on others.

Their battle with Hachette has been waged much more skillfully and artfully than a few years ago when they were battling with Macmillan.  The Macmillan fight with the buy buttons removed was very aggressive and in-your-face and visible.  WIth Hachette, they've done all sorts of things to make it difficult to buy Hachette books, but they've never actually stopped anyone from buying them.  Yeah, you can't preorder them.  And no, you can't get them tomorrow.  But you can get them.  A good tactician learns from the battles of the past, and Amazon has learned its lessons well.

HarperCollins isn't my favorite publisher to deal with.  They are much more set in their territorial ways than other publishers.  But I am quite pleased to see that they now have a website that sells e-books direct to customers.  Publishers need to have that tool in reserve in order to strengthen their position when negotiating terms with Amazon, B&N, and their other big customers.

Here's my takeaway:  A healthy marketplace should determine e-book prices and compensation, and we don't have a healthy marketplace in e-books.  And both Hachette and Amazon are part of that unhealthy marketplace.  Amazon has too big a share of e-book sales, and the self-published authors who instinctively side with Amazon don't realize that this will not end well for them.  But Hachette is in a highly concentrated industry like the airline industry is, where all the big players tend ultimately to be very much alike, doing as little to compete as they can get away with.  Just like one airline seats by rows and another windows in, one publisher pays an export royalty based on a smaller percentage of cover price and another based on a higher percentage of net receipts.  Especially since not every publisher wants every book, we don't often have much choice on where we sell books to, just like we have little choice on how to sell an e-book if we don't sell it through Amazon.  It's not a healthy market, neither Hachette nor Amazon are 100% saint or 100% sinner, and however their battle plays out it still won't be a healthy market.  But there is one thing that we at JABberwocky have in common with Hachette and not with Amazon.  We are a "single play" company.  We make money by having people buy books, and only by having people buy books.  Not by selling them memberships.  Not by selling toasters.  Not by selling cloud computing services.  Hachette has more of an interest in having a healthy overall marketplace for books, while Amazon can survive very nicely without a prospering book industry, which is a much bigger thing than selling books through the Kindle store.