In Amazon v. Hachette, I Side with Amazon

I’m an author and a small publisher, so you can imagine that the health of the ebook market is of interest to me. There’s a feud between two industry giants — Amazon and Hachette — and I have to say I side with Amazon.

I'm in deep with traditional publishing, but the times are changing.

I’m in deep with traditional publishing, but the times are changing.

In a nutshell, here’s the conflict. Hachette is one of the top trade publishers in the book business. They see themselves as advocates for authors because, I suppose, authors are the talent that bring them their profits. Intellectual property is valuable to authors (and should be) and it’s threatened by Amazon’s insistence to drive the prices of ebooks down.

The two have locked horns and have huffed away from negotiating solutions. Hachette wants to limit ebook distribution and the types of price controlling Amazon enforces, and Amazon wants to place controls to lower the price of ebooks for consumers. I share two concerns with Hachette, and if you’re an author (or creator of any intellectual property), you should be concerned too…

  1. Profits. Cash flow drives the business, and the intellectual property my authors and I create need to be increased as much as possible. I rely on the royalties of my books to do the good work of the ministry I run (Monument Publishing sells the books, Training Minds runs the programs). If Amazon thinks only of the consumer, they are missing much of the problem. They must keep authors in their equation in order to keep profits high.
  2. Control. Amazon is the reselling powerhouse, they know that, and they take that power to wag the dog in the competitive wars out there. I’m a Kindle Direct Publisher member, and I’m forced to abide to strict and complicated rules on how I price my ebooks. It doesn’t take a genius to figure out that Amazon is leading writers and self-publishers by the nose to drive down ebook prices.

These concerns may make it sound like I’m siding with Hachette, but I’m not. Why? Because my mind is absolutely blown at how quickly the book publishing industry is changing. When you witness the results of both organizations’ solutions, Amazon is the clear winner. Hachette should follow suit, and here are a few reasons why.

1. Lower Prices Don’t Necessarily Mean Lower Profits

How high should a book be priced? This can be tricky to answer. Simple economics can’t be disputed. The higher priced, the fewer buyers; the lower priced, the more buyers. This is Amazon’s strongest argument to authors, saying essentially, “Look, don’t you want more people to buy your books? Then help us lower prices.”

Lower the price and you get lower profits. Right? Not necessarily. This is where economics gets a little more complicated. An ebook at $10 won’t sell as many books sold at $2. Let’s say this difference sells at a 1:10 ratio. I sell 10 books at the $10 price, and 100 books at the $2 price. The $10 gross would be $100, the $2 gross would be $200.

Of the two organizations, Amazon gets it. They get the bigger picture. Customers are demanding electronic formats, no doubt about that, but they are also demanding lower prices. Authors and publishers should let this demand guide their pricing strategy into broader markets and larger profit margins. That’s just plain good business.

2. Ebooks Cut Expenses and Add Value

It’s no secret why customers appreciate ebook formats. They’re easy to download, they don’t clutter a shelf, they cost virtually nothing to store, and they are easily transferrable to their devices (or at least they should be easy). But the advantages for publishers are incredible (and customers aren’t fooled to think otherwise). This morning, Kindle Direct sent out a letter (you can read it in its entirety here) that sums it up nicely:

With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive.

I must be honest: I haven’t seen the huge dividends from my ebook publishing that I have with my book publishing. But I’m changing, and I like the change. I still have a lot of print publications that are the lifeblood of the work I do. But I can’t tell you how awesome it is to have digital solutions that maximize the impact that the publications are intended to do.

Emphasize that: maximize the impact the publications are meant to do. That’s what it is all about, really.

Take, for instance, my yearly sourcebooks. We sent out over 500 orders last week to homeschoolers nationwide. Blue Book is my bestselling sourcebook. It is nearly 200 pages, coil bound, with teaching material and three spotlight cases to kick debaters off in the year. The book comes with a digital access code to 10 more cases set to release later in the year (October 1), an additional 350-or-so pages. Impact: 550 pages of sourcebook material to kick the team-policy debate off in the year. That’s an awesome sourcebook!

I have digital elements to all five of my sourcebooks, and it is little off my back to provide as much as I possibly can. For instance, Red Book NCFCA Edition comes with Stoa’s 2011 Red Book for free. Why? The resolutions are almost identical, so I dropped a PDF of the outdated sourcebook into the digital download database for customers.

Such is the power of digital formats. Red Book owners get two Red Books for the price of one, and I didn’t have to lift a finger!

This is the new normal, and Hachette should roll with it. Customers expect a bigger bang for their digital buck, and authors and publishers should welcome the challenge to provide it.

3. Ebooks Don’t Compete with Just Books.

I get the sense that Amazon has a better understanding of who Enemy #1 is. Hachette (representatives of authors) thinks it is Amazon (representatives of consumers), but I don’t think Amazon thinks it is Hachette. Again, Amazon gets it:

The enemy of the book business is not the digitization of books. The enemy are those things that draw people away from reading.

You’re probably struggling with this and don’t even know it. In my family, my teenagers are big Vine contributors and YouTube viewers. They seem to only read in their schooling, and even then it is difficult to keep them focused. This is a multimedia world, and books (electronic or physical, it doesn’t matter) aren’t the standard any longer. As a parent and home educator, my job is to increase the value of books to more effectively compete with the multimedia forces that bombard consumers.

Authors and publishers need to face this reality, too. As the KDP letter stated,

Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.

Yet again, Amazon gets it. It makes much more sense for authors and publishers to embrace the changing dynamics of the book business and increase the value of their intellectual content. Amazon’s point should be heeded: we must do what we reasonably can to lower the prices of ebooks. Otherwise, the market will go elsewhere.

Remember, I’m an author and publisher, and I’m supposed to line up with Hachette’s views more than Amazon’s. But in the case of the development of the ebook industry, I side with Amazon.

Are you a debater? Join me in Colorado in July for the Training Minds Camp!