John Scalzi jumped on it before I could. I could have written a similar post but I’m sort of tired of the whole business and I wanted to work on my book. You can read Amazon’s original post (on their Kindle message boards, which still seems weird) right here.
Which isn’t going to stop me from offering up one or two additional points that Scalzi didn’t cover.
First, people are talking about this release as though it fully identifies the source of the dispute between Amazon and Hachette, but we don’t know that’s true. I don’t doubt that it’s part of the dispute, but the PR piece opens like this:
With this update, we’re providing specific information about Amazon’s objectives.
A key objective is lower e-book prices.
It’s not “The key objective is….” It’s not “The sole remaining disputed contract point is….” It’s “A key objective is…” That suggests there are more, some of which might not sound so sympathetic if they came to light. Is Amazon planning to raise co-op fees? Do they want POD rights from publishers for books that aren’t in stock? Are they pushing for some form of exclusivity, as they do with KDP Select? We don’t know, so lets not pretend that this is the sole source of conflict between the parties.
Second, Amazon does not seem to understand windowing, which is where publishers release an expensive edition first, then lower-priced editions later. That’s why books in hardcover will be followed a year or so later by a mass market paperback. An author’s superfans will buy the expensive version right away because they can’t wait; more casual fans wait for the price to drop. So, when Amazon says this:
We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.
it shows they don’t understand that those hypothetical 74,000 sales are not necessarily lost, not if the ebook price drops at a later date. Maybe you won’t catch all of those readers, especially since the lower price comes well after the initial marketing push, but you’ll definitely capture some of them. Long term, those numbers don’t work.
Self-published authors and ebook readers *hate* windowing. Just mentioning the word calls up the threats of torrents and warnings of obscurity, but indie authors fuck around with the prices on their books all the time. When they do it, it’s just to drive sales, hey, not big deal. When publishers do it…
Third, several of the commenters in Scalzi’s post are arguing that Amazon will not try to drive ebook prices down below the $9.99 cap they’re currently arguing for. In other words, once they get this price cap, they’ll stop.
Even if you believed that (and I’m not convinced myself), holding prices at a specific cap for the long term is driving prices down, because inflation.
Anyway, let me tack on the usual disclaimers: I sell books on Amazon. I buy books from them sometimes. I self-publish my own work through their site and they represent the bulk of my sales. I’m not picking sides in the Amazon/Hachette dispute, just picking over publicly stated positions. I’ve worked in their first distribution center at a time when I really needed a job. Long term, I support a diverse publishing and bookselling market. Short term, I’m glad Amazon’s shareholders are beginning to demand that Amazon show a profit; the ability to operate at a loss has been one of the company’s biggest advantages.