Hachette responds to Amazon advocates’ email on pricing its e-books
August 11, 2014 | 1:24 am
Digital Book World is carrying the response Hachette CEO Michael Pietsch is sending to those people who write him at Amazon’s behest. Since I posted the Amazon letter in full, it seems only fair to do the same for this.
Pietsch (or whoever wrote the response for him) maintains that “Hachette sets prices for our books entirely on our own, not in collusion with anyone” (technically true, I suppose, since he said books, not e-books). He also maintains that the vast majority of Hachette’s titles are priced at or below $9.99, that the ones that cost more are nonetheless less than half the price of the paper version, and that they too will cost less when they come out in paperback.
I think my favorite line from this letter is “We set our ebook prices far below corresponding print book prices, reflecting savings in manufacturing and shipping.” That’s pretty funny given that I remember publishers complaining vociferously that manufacturing and shipping costs are the lowest part of the cost of publishing a book, and their absence shouldn’t necessarily lead to a substantial price markdown in an e-book. Trying to co-opt the other side’s rhetoric now, are we?
I also remember reading that, in the price-fixing affair, the publishers wanted to price their e-books higher than Apple would allow, but Jobs didn’t want the prices so high that consumers found them altogether ridiculous. (And I remember how, even as late as just before the imposition of agency pricing, it was not uncommon to find e-books of hardcover books—or even paperbacks—retailing at more than $20.) The publishers gave in in the end and cut their suggested retail prices for hardcovers’ e-books down to $12 to $15, and now they get to reap the benefit as if it was somehow their own idea.
He also makes some dubious claims about the history of paperback books—in particular that they were intended not to replace hardcovers but to supplement them with subsequent cheap editions of books. As Dan Agin points out in Digital Reader comments, a number of direct-to-paperback publishers started right away, and in France (Hachette’s own native country!) cheap paperback editions of new books have appeared before the hardcovers for more than a century.
Anyway, here’s the letter in full.
Thank you for writing to me in response to Amazon’s email. I appreciate that you care enough about books to take the time to write. We usually don’t comment publicly while negotiating, but I’ve received a lot of requests for Hachette’s response to the issues raised by Amazon, and want to reply with a few facts.
• Hachette sets prices for our books entirely on our own, not in collusion with anyone.
• We set our ebook prices far below corresponding print book prices, reflecting savings in manufacturing and shipping.
• More than 80% of the ebooks we publish are priced at $9.99 or lower.
• Those few priced higher—most at $11.99 and $12.99—are less than half the price of their print versions.
• Those higher priced ebooks will have lower prices soon, when the paperback version is published.
• The invention of mass-market paperbacks was great for all because it was not intended to replace hardbacks but to create a new format available later, at a lower price.
As a publisher, we work to bring a variety of great books to readers, in a variety of formats and prices. We know by experience that there is not one appropriate price for all ebooks, and that all ebooks do not belong in the same $9.99 box. Unlike retailers, publishers invest heavily in individual books, often for years, before we see any revenue. We invest in advances against royalties, editing, design, production, marketing, warehousing, shipping, piracy protection, and more. We recoup these costs from sales of all the versions of the book that we publish—hardcover, paperback, large print, audio, and ebook. While ebooks do not have the $2-$3 costs of manufacturing, warehousing, and shipping that print books have, their selling price carries a share of all our investments in the book.
This dispute started because Amazon is seeking a lot more profit and even more market share, at the expense of authors, bricks and mortar bookstores, and ourselves. Both Hachette and Amazon are big businesses and neither should claim a monopoly on enlightenment, but we do believe in a book industry where talent is respected and choice continues to be offered to the reading public.
Once again, we call on Amazon to withdraw the sanctions against Hachette’s authors that they have unilaterally imposed, and restore their books to normal levels of availability. We are negotiating in good faith. These punitive actions are not necessary, nor what we would expect from a trusted business partner.
Thank you again and best wishes,