More on why this Amazon deal with Hatchette is such a key thing: Heres a quote from the Atlantic article I reference previously today - its long and you have to get to the 2nd page to see why this dispute is ultimately about what kind of books well get access to in a decade or two. Will it be only The Hunger Games or also serious books non-fiction books that took a decade to research and write. Please read some of this article directly lifted off the Atlantic site, by Jeremy Greenfield. Like nearly every business dispute, this one is about money. But, ultimately, its about so much more than that. We’ll still have lots of romance books and James Patterson will still write his books. But serious nonfiction books wont get published. Those are the books that will go first. Lets assume Amazon wins this negotiation with Hachette and secures pricing control over e-books and a higher payment for marketing services (essentially, a bigger piece of Hachettes profits). Hachette books are once again in stock and available for readers in a matter of days; buy buttons are restored for book pre-orders; the sales resume their flow. When the next publisher is up for renegotiation (either HarperCollins or Simon & Schuster), they will know what they are in for in terms of losses of sales and damage to reputation among authors, if they dont sign. Each publisher that agrees to whatever terms Hachette is resisting now will make it more likely that the next will do the same. More liberal discounting practices will give Amazon the power to continue to gain market share and its easy to imagine a scenario where it controls three-quarters of all book sales in the U.S. At the same time, higher co-op payments would make book publishers less profitable and less likely to invest in riskier book projects. Long-time industry consultant (and partner in Digital Book World, my employer) Mike Shatzkin explained to me what would happen next: Let’s say Amazon goes to 70 percent and they’re basically the pipes for everything and they’re indispensable and you can’t publish a book without them. So, what do they do then? If they’re still trying to maximize profits, we’ll still have lots of romance books and James Patterson will still write his books. But serious nonfiction books wont get published. Those are the books that will go first. Nonfiction books, like Walter Isaacsons biography of Steve Jobs, are expensive and risky to produce and rarely sell well, yet many of these books drive intellectual thinking in the U.S. Robert Caros latest book on Lyndon Johnson The Passage of Power: The Years of Lyndon Johnson took nearly a decade to write—and that means investment and risk. Think of book publishers like venture capital firms. They invest in individual titles in the form of advances and the sunk costs of editing, packaging and distributing a book. Most of those bets lose money. Some make a lot of money (for every Fifty Shades of Grey there are dozens of money-losing duds). It all evens out to an industry where a strong year is one where a publisher clears a 10 percent profit margin. As more book sales flowed through Amazon, it would have even more direct control over what people read. The company would have little incentive, for instance, to surface books readers are less likely to buy. If The Hunger Games is all the rage, then the company is best served pushing that title toward its readers at the expense of other books. Or, much more nefariously, it could discourage readers from buying books with a point of view it doesnt agree with. Jeff Bezos, Amazons founder and CEO, and the companys stockholders, have so far shown little or no bias toward political ideas or pushing one book over another for any reason but profitability, but thats not to say that someday that wont change.
Posted on: Fri, 24 Oct 2014 01:11:59 +0000
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