Taking a Hachette to Amazon in the Market for Dead Trees

Opinion

There’s a strange battle going on right now. Weird enough to fit into the science fiction and fantasy section of your local bookstore, but with enough intrigue to make for a good thriller.

One of the big five traditional New York publishing houses, Hachette, is mired in a guerrilla campaign against mega online retailer Amazon. The conflict revolves around the terms on which Amazon sells Hachette books. Much has been written about the labyrinthine details. It boils down to a pissing match over issues that are neither new nor unusual in the wonderland of publishing.

As a new novelist ducking and rolling through the crossfire, the blows and counterblows playing out in the court of public opinion aren’t the interesting part. The backstory is.

Remember David’s fight with Goliath? That’s how Hachette is trying to frame the skirmish. They paint themselves as the underdog fighting the big online bad guy. Their PR campaign has been relentless, though often contradictory. They’ve even recruited The Authors Guild and Authors United to their side, and last week, such literary lions as Phillip Roth, Ursula K. Le Guin, Salman Rushdie, and Milan Kundera joined the fray. Can the old guard of the traditional publishing world and the small cadre of authors that they benefit defeat the evil Amazon monopoly?

Sounds like a good story, right?

The problem is that the narrative is all wrong. They must have a master PR manipulator on the case because even The New York Times has run a number of stories that are appalling in their partisanship (maybe it helps that Authors United purchased a $104k full page anti-Amazon ad).

So what’s really going on? It’s not David versus Goliath. It’s Goliath versus Goliath. Hachette is owned by a massive international media conglomerate. They have spent decades gobbling up smaller publishing houses in ruthless competition with the other members of the New York big five. Hell, the Department of Justice sued Hachette, Apple, and other large publishers for collusion in 2010. The contract terms they offer to authors are famously draconian, packed with non-compete clauses, unfair royalty splits (on average, 15/85 in favor of the publisher), ridiculous reversion rights, etc.

The big five publishers used to be the gatekeepers separating writers from readers. They controlled all the major distribution channels and could dictate any rules of the road they wanted. New authors had no choice but to comply.

Technology has changed all that. The Internet has democratized publishing and anyone can now publish their own book in both digital and physical formats. That terrifies slow-moving conglomerates like Hachette because their entire business model is outdated and ripe for disruption. They’re scared out of their minds that they will go the way of the typewriter and the buggy whip.

The members of Authors United happen to be the writers who have benefited most from that outdated model. They are the top 1 percent of incumbent allies. It’s just like taxi cartels fighting Uber and Lyft. Those whose wealth came from the old system have the most to lose as that system inevitably changes.

Don’t get me wrong, I’m no Amazon fan boy. Everything I hear supports the popular view that their internal corporate culture is a grinding machine; that they want to increase their market share at all costs; and that they will stop at nothing to dominate and reshape every industry they touch.

But I’m an author myself, so this whole situation matters to me. A lot. So where did I turn in this arm-wrestling match between titans?

I published with a new independent publisher, FG Press, founded by the Boulder, CO-based Foundry Group. They split net royalties 50/50 and their entire business model is based on being author-friendly. But they’re not the only ones. Authors like Hugh Howey, Joanna Penn, William Hertling, James Altucher, and JA Konrath have self-published and achieved extreme success. Big names like Barry Eisler have broken their contracts with traditional publishers to go independent. Reedsy, a UK-based startup, is building a new marketplace for authors to find the editorial and production help they need. New publishing houses are experimenting with a kaleidoscope of new approaches and technologies. Authors are embracing entrepreneurship.

There has never been a better time to be a writer. Let Hachette duke it out with Amazon. Let the top 1 percent of traditionally published authors complain ad nauseam. Let The New York Times wallow in its embarrassing reporting of the story. In the meantime, adult Americans are reading more than they ever have in history. New voices are finding traction in a marketplace no longer constrained by stingy gatekeepers. Storytelling is a part of being human. So go write that damn book you’ve always dreamed of.

Eliot Peper is the author of The Uncommon Series, the tech startup thriller trilogy. When he's not writing, he works with entrepreneurs and investors to build new technology businesses as a drop-in operator and adviser. Follow @eliotpeper

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4 responses to “Taking a Hachette to Amazon in the Market for Dead Trees”

  1. Maggie Meade says:

    You are misguided on quite a few of your points but this one is consistently repeated in one form or another and your form is “The members of Authors United happen to be the writers who have
    benefited most from that outdated model. They are the top 1 percent of
    incumbent allies.” Most of the Authors United signatories are not the top 1% multi-million dollar authors that people [in favor of Amazon] paint them to be. 99% of the authors involved are authors such as myself.

    This dispute has far reaching consequences and will impact more than just eBook or Indie authors or those with the big 5 publishing groups. This is a journey down a slippery slope on the Amazon mountainside. From books to DVD sales, what is next? Amazon have also used its unfair tactics on Disney and Disney DVD sales. Amazon delayed shipment, took away pre-orders and stopped discounts on Disney DVD sales. Disney alas capitulated to Amazon’s demands and now sales of Disney DVDs are back to “normal”. What consumer good or publishing firm is next?

    As a Hachette author, I am deeply affected by this battle. But understand this, this “battle” is about more than just book sales. It’s about one company wanting to control the [free] market for any and all goods it is able to. I am pleased that you have found success and satisfaction with your indie publisher. For now, Amazon is leaving Indie and eBook authors alone. For now….

    • Maggie, thanks for your thoughtful response. With both sides of this debate overshadowed with link-bait and bombastic claims, it’s a pleasure to engage in a real discussion.

      Amazon wants to dominate all the markets it touches, just as the Big 5 have dominated the business of publishing for so long. Unlike many indie authors, I’m not an Amazon fan boy. They do what they do, and they do it well. That doesn’t mean I want them to achieve monopoly status.

      The Big 5 have acted JUST as badly for years. If I’m not an Amazon fan-boy, I’m even less of a fan of their tactics. Amazon is a retailer and what they’re doing isn’t nice, but it’s not fundamentally different from other retailer/supplier negotiations. The Big 5 aren’t nice either and PR puppet shows aren’t going to convince me one way or the other (same goes for Amazon).

      Big publishers are struggling to adapt to the present and the situation they find themselves in vis a vis Amazon is evidence of their lack of technological acumen. This is especially unfortunate for a creative industry made possible by advances in technology (from the printing press to paperbacks).

      The silver lining here is that this could be the kick-in-the-pants they need to get their houses in order. There is good news on this front:

      -HarperCollins just launched their own retail site after a history of never doing direct-to-consumer.
      -A few publishers are experimenting with subscription services.
      -Random House launched a new author portal that provides a fantastic dashboard.
      -Contracts are inching towards better terms based on new digital landscape (I’m glad you’ve had such a good experience with Hachette, some folks I’ve heard from haven’t been as happy).

      Is this enough? Hell, no. To be honest, from my work in the tech startup world, I’m always hopeful but skeptical when large incumbent companies try to scramble to catch up. It can happen, but it requires strong leadership and an enormous amount of internal stakeholder engagement. This is even more difficult for the Big 5 because of their convoluted ownership structure.

      Usually it’s the goofy new kid on the block who lays the foundation for tomorrow even though people think he’s a bit of a joke today (look at how the Big 5 treated Amazon in 1999). In that vein, there are some new developments I’m keeping an eye on:

      -Medium is building an incredible platform for writing/reading. Stephen Levy just left Wired to join their effort. Walter Isaacson pre-released chapters from The Innovators on Medium.
      -BookVibe, BookBub, and others are experimenting with new promotion concepts.
      -Wattpad and 20Lines are building large audiences.
      -Authors are trying out more and more direct-to-consumer sales strategies.

      None of the above depend on Amazon. Are they the answer? Far be it from me to say. I don’t know what books will look like in five or ten years. I certainly don’t know who will shape what they look like.

      But what I do know is that people love to read and people love to write. Amazon, the Big 5, new indies, nobody is going to change that. And that gets me excited for you and your readers.

  2. Maggie Meade says:

    And thank you Eliot for your response that lacks personal attacks and nonsense. Allow me to address your point about the “BIg 5 dominating publishing” and the “BIg 5 behaving badly”.

    Granted, the publishing industry of the Big 5 can be seen as “bad” because of their contracts and their extreme scrutiny and [ridiculously?] high standards when it comes to signing and publishing new authors. It is frustrating trying to navigate and get the attention of one of the Big 5 and this angers many would-be authors who cannot get a manuscript in the door. I totally get that. Were it not for the success of my website and the exposure it offer, I may not have received a book deal myself. I am not naïve.

    However, when the Big 5 behave badly, what is at stake? Careers and works of new, aspiring authors are the items that “are at stake”. In all fairness, the inability of would-be authors to get their books published or to get more favorable royalty terms does not have a drastic impact on the free market as a WHOLE (caps for emphasis, not for screaming and being rude). Quite frankly, if I am getting an unfair deal when it comes to royalties and control over my own book, then isn’t that really just my problem? I do appreciate that many in the literary world who are “pro-Amazon” and anti Big 5 wish to ride in and save [me] from the evil doers. In the end however, my unfavorable terms hurts no one and does not harm the book world; the plight actually helps those who want to see the Big 5 go down. I hope this makes sense.

    Now when Amazon “behaves badly” there is far more at stake and while many find it difficult to see and brush it off as sour grapes from authors, many of us get it. I am not pleased with Hachette for many reasons but am pleased for some reasons. I sometimes do regret not self-publishing or going with a small indie house but never did I want to toss out a eBook on my own. I digress. If we look back to the Disney DVD issue and the increasing chunk of market share in other areas, we might one day find that Amazon is the only place to buy something we need. The potential for abuse and unfair treatment ot both purveyor and consumer is incredibly high.

    One need only look at the new Paul Ryan book and how Amazon is treating it; it’s the only Hachette imprint book that is selling at a discount and available immediately. Is this because of a mistake in the Amazon algorithm? Is this because Paul Ryan complained on CNBC and hinted at possible antitrust issues? Is it because Paul Ryan might one day be a government force that Amazon wants on its side? You tell me. It’s something to think about and be concerned about.
    Amazon’s bad behavior has far-reaching and potentially devastating consequences that make the Hachette spat a tiny grain of sand. Do you believe that Amazon should be able to tell vendors what prices they will sell their goods for, be it books, or rice or radios?
    I am eagerly looking foreword to continuing to watch as publishing evolves. I am especially interested in the Harper Collins endeavor; let’s hope it takes off. I do believe and hope that there will be a lot of creative talent that will come to “press” as it were. I and my kids’ love to read all types of genres so the more the merrier. But, maintaining quality and intellectual property rights may be the biggest issue that the electronic book market will face. I have had my book/website copied and pasted into a Kindle book, selling for $1.99, on more than one occasion. Let’s hope that there will be some type of gatekeeper that will evolve.

    • Thanks again for your in-depth thoughts Maggie.

      I agree that the world of publishing/readers/writers is a bit of a teacup. But that also happens to be where the storm is (for the moment). If bad behavior from the Big 5 is unfair to writers, it’s certainly the writers’ problem. But given that the entire business of the Big 5 is to be a support system for writers, that’s an existential problem for them. I think that many of the developments we’re seeing on the indie side are a reaction by writers to how messed up the incumbent system is. Workarounds are the seeds of tomorrow.

      That said, I don’t think the Big 5 are Evil. I think they’re Out of Date. Even their onerous contract terms might have made sense in the 70s, but not today. What’s happening in publishing right now isn’t surprising. It’s the reality of digital. What IS surprising is that publishers are so surprised themselves. Unfortunately for them, time travel may be a fun literary device, but it’s not a viable business strategy.

      Amazon is not a monopoly (although I’m sure they’d like to be, most companies would; the Big 5 have one of the least credible commercial track records to be complaining about this). Certainly not one that controls the entire ‘free market.’ They took in $74B last year. They’re extraordinarily successful. Google, Exxon, and Apple are too. They’re ruthless and profit-oriented. Their tactics are no different from what other retailers have implemented before (B&N for example). That doesn’t excuse them, it just shows what we already know: they’re a business.

      Amazon has also done extraordinary things for readers and writers. Kindles are fantastic reading devices. I use a Paperwhite and there’s no better product for reading long-form digital content. They’ve made books more affordable and the world’s backlist accessible to everyone everywhere. They’ve pioneered a platform that has empowered thousands of new authors that might never have gotten a chance with the old publishing guard. They’re pioneering many other markets at the same time.

      They’ve been able to do this despite the fact that for years they never owned any content! Amazon’s success is a prime example of how the Big 5 have been sitting on their thumbs.

      Again, I’m no Amazon fan and I think they represent the present, not the future. The only gatekeeper I hope controls that future is readers. People know crap when they see it. Same with beauty. I’d take grassroots over command-and-control any day. Plus, this creates a whole new opportunity for publishing: professional quality curation.

      For the record, I hope people steal Uncommon Stock. I pushed FG Press to never use DRM and I’m thrilled they agreed. If people are so motivated that they’ll steal my book, it must be worth reading. My experience with piracy is that only a small percentage of people do it because it’s annoying, most folks find it much more convenient to buy legitimately. But pirates also happen to be hyper-digitally-aware and they can become immensely influential hardcore fans!

      So if anyone reading this steals Uncommon Stock, do me a favor and recommend it wherever you discover new books!