If you’ve been on the internet at all, you are probably familiar with the name Amazon. It’s a huge corporation that sells virtually everything under the sun often at a much discounted price than what you could get else where. And therein lies a big problem.
You see, in order to get those lower prices, Amazon has contracts with various manufacturers to purchase products at a much lower price. This includes books. Amazon deals with publishers to get the lowest possible price on books and passes those savings on to the consumers. And while this might seem like a good thing for you, the consumer, it really isn’t.
Because of contract disputes, Amazon is pressuring Hachette, the smallest of the Big 4 publishers, by removing purchasing links, altering prices and delaying shipments of books to consumers. There are probably several reasons for the dispute but the bottom line is Amazon wants to squeeze more money out of publishers and force the larger publishing houses to accept its pricing guidelines especially with eBooks.
While all of us are familiar with eBooks, the market is still relatively new and is going through a lot of growth pains. The price of an eBook varies greatly from publisher to publisher and there’s still a huge debate on whether that pricing is even fair. More disputes arise when you look at how the money is distributed between the publisher and the writer, but this is an argument for another time.
The fact of the matter is Amazon wants to control the pricing of eBooks because it believes (and possibly rightly so) that the future of publishing relies on this format. If they control the pricing, then consumers will come to them for the best deals.
Well of course, however, this convenience has a cost. And the writer is the one who generally has to pay.
When you buy a book, for the most part, money does not go directly to the writer unless you are buying directly from their site. If you follow the money trail from purchase, your money goes first to the distributor (Amazon, book store or other third part vendor) then to the publisher, then the editor and/or agent before the author gets a cut–if they have earned out their advance. For those not familiar with the term advance, it is money given to the author up front by the publisher for the book or series. An author must earn back that advance through sales before they can receive royalties.
Depending on where an author is published at, the percentage they receive from each book varies, but generally it’s not a large number. For demonstration purposes only* let’s say that for a $10 book sold an author gets 10% ($1). If the advance is $5000, 5000 books must be sold in order for the author to earn out that advance and begin to earn royalties. The rest of the split is 50% ($5) for the publisher, 30% ($3) for the vendor and 20% ($2) for the editor.
Now if the vendor convinces the publisher to lower that book price to $9 we get a different set of numbers. While the publisher ($4.50), vendor ($2.70) and editor ($1.80) take a small hit, the writer is the one who get the short end of the stick. Instead of having to sell 5000 books, the author now has to wait until 5,556 books have sold.
Even worse the vendor can convince the publisher to drop the price, but they still want the $3 in fees. This skews the numbers even further so the author is only earning 60¢ per book. This means a book will have to sell over 8000 copies before they earn royalties.
That is a huge hump many authors never climb and therefore never earn out their advance.
The unfortunate part of the scenario is that it is very real and Amazon is the vendor that is convincing publishers to drop prices in order to stay competitive in the Amazon market. And why do they do this even though the publishers know that everyone will earn less money? It’s simple. Amazon has become the largest online market in the world. It is accessible nearly anywhere there is a computer. Consumers find it convenient, therefore go there frequently.
Go ahead and read this post by Harry Connolly on his experiment on trying to direct sales.
Back? Good. If you ask other publishers, big or small, they will tell you that a lot of sales are generated through Amazon. Do they enjoy working with this vendor. Most will say no, but if they want to get sales, you got to do what you got to do.
But what does this dispute between Amazon and Hachette mean to you as a reader?
Well Lilith St. Crow posted that answer much better than I can.
So now the question become what can we do?
The answer is simple yet difficult at the same time. Quit buying books from Amazon. There are many other third party vendors who sell books such as your local book store, another online vendor, the publisher itself and sometimes the author. I’ve taken down the Amazon links in my About Me page so that all links are directed to the publisher to show my support of Hachette and other publishers that are feeling the squeeze of this corporate bullying. Many other authors have done the same.
While this is a difficult step, and potential loss of sales for some, it is the only recourse we have at this moment.
So I urge you, if you are considering purchasing books, don’t do it on Amazon. Do a quick Google search for other vendors, the publisher or the author to find another venue.
IF we don’t large corporations will continue to dictate how we do business.
*Yes I am aware that these %s are skewed a bit and money does go other places but this is an example only.