Giants hitting each other with hammers

Some thoughts from Harry Bingham, an author published by both Hachette and Amazon …

Unless you’ve been off on a long space voyage, you will have noticed the furore surrounding the contract dispute between Amazon and Hachette. The precise nature of that dispute is unknown although we do know:

  • that Amazon is seeking a substantial improvement in terms.
  • that Hachette is resisting.
  • that Amazon has demoted Hachette’s titles to the same status (more or less) as ordinary self-pub titles – so, for example, the ‘pre-order’ button has been replaced by a ‘Do you want us to alert you when this book comes out?’ version.
  • that Amazon has used other tactics, such as putting the ‘customers who liked this also liked …” bar across the top of Hachette author pages, instead of lower down, as normal.
  • that Hachette’s book sales (and those of its authors) are injured by the demotion.
  • that Amazon, startlingly offered to co-fund a cash pool to compensate authors for any loss of income.
  • that Hachette refused, but did so in a way that kind of implied all this was Amazon’s fault and had nothing whatever to do with Hachette.
  • that, by most estimates, Amazon is coming off worse in the PR war – for example, a large group of authors penned a letter to their readers asking them to email Jeff Bezos to complain against his company’s behaviour.
  • that Amazon contemplated offering to give Hachette authors 100% of their ebook revenues during the term of the dispute – that is, neither it nor Hachette would make a penny from those sales. The catch: Hachette would need to agree and that it has most certainly not done.

[Update 5 August: It now turns out, to everyone’s surprise, that Amazon has NOT been asking for a greater share of e-royalties. In fact, they’re asking Hachette not to price their ebooks at prices that choke off revenues and thereby (a) sharply reduce how many readers buy a given book and (b) also reduce authorial incomes. You can read Amazon’s take here, and further discussion here. Amazon has also suggested that a dollar of ebook revenue should most fairly be split $0.30 to Amazon and $0.35 each to publisher and author. That would get my vote, for sure.]

So far, so routine, you might think. Two very large corporations are having a commercial dispute. That dispute has generated plenty of publicity, so both corporations are also fighting a PR war. Yet the whole thing is a lot odder than that. In particular:

  • Contract negotiations between retailers and suppliers are two-a-penny, in the books market and elsewhere. When Simon & Schuster had a fight with Barnes & Noble, nobody outside the trade itself really noticed or cared, despite the fact that B&N’s actions clearly hurt S&S authors.
  • Hachette has portrayed itself as being ‘partners’ with authors for ‘nearly two centuries’, which has a kind of truth, of course. But while this dispute has been playing out, it’s also been revealed that …
  • British authors are now earning, on average, just £11,000 pa. That sum is about £6,000 shy of a living wage for a singleton, or about £8,000 shy if you’re married with kids. That sum has also fallen 29% in 8 years, and fell in the period before that. This calamitous decline (from a low base) arose long before Amazon became the dominant factor that it is today. In other words, it’s all very well for publishers to portray themselves as ‘partners’ to authors, but it’s a partnership in which they pay authors less than 60% of what they offer their graduate recruits. (ALCS author income data here. My comment here.) It’s also perhaps worth noting that authors are generally less than enthused about how much their publishers value their feedback or input into marketing campaigns.

These things would make you think that authors would be broadly neutral in the dispute. Basically: we’re poor people watching rich guys hit each other with sticks. That’s fun in a schadenfreude-ish sort of way, like watching bankers set fire to each other’s Porsches. Yet authors are for the most part siding with Hachette.

And that’s not because of some sense of financial justice. For all that publishers tend to talk about Amazon the way dairy farmers talk about Tesco, the two things aren’t remotely the same. For one thing, if Hachette is a dairy farmer, it’s got one heck of a farm. The company is wholly owned by Lagardere, which has revenues of €7.6 billion and a market capitalisation of more than €3 billion. That’s a lot of cows.

What’s more, Hachette on its own makes more money than Amazon does! That is: the company’s operating profits from books are greater than are Amazon’s. The Big 5 publishers in total make about 7 times more profit than Amazon does from books. They make about twice as much profit as Amazon does from every single thing that Amazon does. Their profit margins are between 10 and 13 times greater. If one were choosing sides purely on the basis of financial equity, it’s not clear that Hachette would win that contest. (See infographic here for graphical data and sources.)

Nevertheless, this authorial taking-of-sides is marked enough that:

  • in addition to that open letter now signed by more than 300 leading authors,
  • and the Colbert skit on TV,
  • and the complaints of Malcolm Gladwell,
  • and some not-very-balanced panel ‘debates‘,
  • we’ve now seen the Authors Guild, the leading authors’ trade union in the United States, deploring the offer of 100% of e-book royalties, stating, “because it is the writing life itself we seek to defend, we’re not interested in a short-term windfall to some of the writers we represent.” That is: no thank you, rich people, please keep your money. (And you’re going to need it: haven’t you seen what he’s done to your Porsche?)

One near-rational point made by the Guild is that a healthy publishing ecosystem requires diversity that that such an ecosystem “cannot exist while entities within it are committed to the eradication of other entities.” And yes: authors have more power in a system with a greater range of outlets for their product at wholesale (publisher) level and at the retail level. Yet the industry broadly welcomed the merger of Penguin and Random House, which created a giant that now controls about 25% of the US market and somewhat more than that in the UK. In other words: some giants are scary and bad and other giants are lovely and cuddly (even though those are the giants who are narrowing the range of buyers for our product and who have been depressing our incomes for years.)

What’s also strange is that the Bad Giant (Amazon) is the one who currently pays its authors 70% royalties on e-book sales, while the Cuddly Giant (Hachette & its brothers) pay those same authors 17.5%. The Bad Giant pays its authors very promptly and gives them real-time data on sales. The Cuddly Giant pays up to nine months in arrears and does the same with sales data. The Bad Giant does not ask you to hand over copyright at all. The Cuddly Giant asks you to hand it over for ever.

This will, I hope, strike you as curious. But perhaps we move closer to the heart of the matter when we take note of the closing lines of the Guild’s letter: “To our knowledge, Amazon has never clearly and unequivocally stated (as traditional publishers have) that books are different and special, that they can’t be treated like the other commodities they sell.”

That sense of specialness is worth something, of course. Even as authors enjoy incomes at less than three fifths of the level of graduate recruits at the big publishers, we can nestle up to that warming sense of specialness. But, as we sup our gruel, it’s worth remembering that:

  • no general purpose retailer considers books particularly special. We don’t bash Sainsburys for not regarding books as especially special, no matter that Sainsbury’s and other supermarkets have, for a long time now, represented more than a fifth of the UK market.
  • And Amazon doesn’t have to love books; it has to sell them. Given a choice between a bookseller who loves his literature but doesn’t actually make sales, and one who moves his lips when he reads but sells the stuff by the container-load, I know which type most authors would prefer. And Amazon, of course, is a spectacularly good retailer. It’s allowed the books trade to ride the digital transformation without (yet) encountering the collapse that afflicted the music industry, the porn industry, the computer games industry, the newspaper industry & so on.

It IS true, of course, that the publishing industry is full of genuine books enthusiasts, which Amazon is plainly not. Writers generally like their publishers and agents. We leave our lunches feeling good about ourselves and the fact that we get to work with these lovely people. But those warm feelings are bought at the expense of (i) decent income, (ii) a fair division of e-book revenues, (iii) prompt payment, (iv) access to sales data, (v) flexibility on copyright terms, (vi) any real input on marketing or, in general, (vi) being treated as a rational, adult business partner.

As for me, I think that, as an author, I don’t particularly have a dog in the Amazon-Hachette fight. They’re both huge companies and will look after their own interests just fine. They are not out to look after mine, nor is it their job to do so.

And, as it happens, I value both companies very much, as they both publish me. In the UK, Orion (part of Hachette) has done a dazzling job with my books, which are building very nicely and getting some very nice comments. I like every single person I work with at the company and I have an excellent working relationship with them. (I should also say that I have absolutely no complaints about my income. Far too many authors are badly paid and badly treated, but I’m not amongst that number. I’m honoured to be published by Orion: they’re great.)

In the US, Amazon publishes some of my backlist already and I’m about to start e-publishing my Fiona Griffiths series direct, after Random House and I failed to find a way to renew our partnership.

Those two financial relationships – with Orion and Amazon – are very different, but highly complementary. Orion gives me a contract and an advance, which enables me to plan my finances and take certain creative risks that might otherwise be daunting. I get excellent editorial support and I get access to channels of acclaim and income (newspaper reviews; bookshop promotions; TV deals) that would otherwise be closed to me.

Amazon, on the other hand, will give me no advance and no editorial support, but it offers e-royalties at a four times better rate than any trad publisher would offer – and also the ability to reach every book buyer in the United States at absolutely no cost. That’s a startlingly good deal and one I’m thrilled to accept.

And meantime – giants hitting each other with sticks? Let ’em thwack each other. And if Amazon is good enough to offer 100% e-royalties for the duration of the battle, then authors should take the money – and hope that the battle drags on … and on … and on.

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