Hachette vs. Amazon: Big publishers messed up, small publishers rejoice, investors beware, and ordinary people don’t care
June 2, 2014 | 1:08 pm
Late-night comedy hosts and political radio pundits love Presidential elections. No matter who wins, they’re guaranteed four more years of great material. I feel kind of the same way about the Amazon/Hachette spat currently going on. There are so many great articles coming out, and I am desperately trying to resist the temptation to blog them all!
Let’s see here: the Minneapolis StarTribune has an interesting story about public reactions to the Amazon-Hachette spat at BookExpo. As might be expected, the reaction by the general public was generally positive toward Amazon and “Huh? Who’s that?” toward Hachette. Most attendees were more concerned about autographs than Amazon. “There’s a lot of people who are battling Amazon,” one attendee said.
But my favorite bit of the article has to be this paragraph (emphasis added):
For the publishing world, Amazon’s fight with Hachette upends an otherwise stable moment for the industry. Independent booksellers appear to be opening more stores than closing them and growth in the e-book market has eased to a more manageable pace. E-sales are believed to be around 30 percent of overall sales, well below what Simon & Schuster CEO Carolyn Reidy and others expected a few years ago.
So, there are more bookstores opening than closing now? I remember a few years ago people were concerned independent bookstores were an endangered species. I wonder what might have changed in the publishing industry to bring them back? Could it be one major bookstore chain shuttering and another suffering under pressure from Amazon, combined with publishers suddenly turning all solicitous and mounting a “save the whales” campaign to offer them better terms because of also coming under pressure from Amazon? Perhaps it’s also because they can offer the sort of friendly in-person service that neither Amazon nor Barnes & Noble can? One thing’s for sure, you certainly don’t see record stores making a comeback.
And lest you thought there were only a pro-Amazon/anti-Big Five and a pro-Big Five/anti-Amazon faction, here’s an article from Michael Wolff on USA Today, who thinks they’re all a bunch of doodyheads. He calls out the publishers for their poor business acumen in letting themselves be a punching bag first for Barnes & Noble, then for Amazon, and calls out Amazon for its harsh business tactics.
So, broadly, the fight is between, on the one hand, the incompetents, craven panderers and mid-level corporate bureaucrats in the book business and, on the other, the authoritarian creepos at Amazon. More specifically, the fight is about better and lesser businesses’ acumen and strategies.
The publishers’ fundamental problem is that they gave up their direct path to consumers. They no longer have direct brick and mortar retail outlets, sophisticated distribution networks, and so on. They gave up that power, and it largely has accreted to Amazon. The publishers don’t really have many viable alternatives left to Amazon in their current position of weakness. Perhaps they should get started building some.
And here’s an op-ed in the Financial Times (paywalled, but you can bypass that by Googling the headline) by Martin Shepard, co-publisher of The Permanent Press, who also wrote the blog post Amazon linked in its recent statement on the dispute with Hachette.
Shepard characterizes the complains that Amazon is too powerful as a smokescreen by publishers who have grown fat and lazy and see their decades-long control of the book market slipping away.
From an independent publisher’s point of view, Amazon is a forest in which a thousand flowers bloom. The company offers better terms than other retailers. We used to have to print enough copies to stock every bookshop, knowing that many of them would end up being returned unsold. But Amazon, which holds stock only in a few central warehouses, almost never makes returns. This allows us to shorten our print runs. Its algorithms put our titles in front of customers who might want to read them, surpassing even the best curated boutique. And it pays promptly.
If none of this impresses the biggest publishing houses, that may be because Amazon is also a great leveller. Displaying your books prominently in physical stores costs publishers a pretty penny, giving an advantage to companies such as Hachette that can spend lavishly on marketing. On Amazon, though, every book is displayed the same way. It is easier for titles to find their niche. Independent publishers have a chance.
The “thousand flowers bloom” analogy might be a bit unfortunate, but it’s good to see this point of view reflected in a major media outlet. Of course, the publishing industry partisans counter with the fear, uncertainty, and doubt that Amazon is only being nice to fool everyone and once they have things their way they’ll tighten up the reins. But most independent publishers are well aware of that, and are too concerned about making what money they can make right now to worry what Amazon might do later. After all, the more money they make now, the more cushion they’ll have to deal with it if it happens.
And finally, here’s a piece from investor advice site Seeking Alpha. It’s by and large another run-of-the-mill Amazon hit piece, calling Amazon “massively overvalued, yet massively unprofitable,” talking about all the various controversies surrounding Amazon (employee treatment, sales tax avoidance), and so on. Generally unremarkable, but there’s this curious paragraph:
E-Book Market is Not a Profitable Business, Long Term
Hardware has, and always will be, a commodity. Amazon loses money on the hardware it produces, and hopes to recoup its revenue in the E-book market. The trouble however, is that at some point this business will be commoditized. E-book rights will trade on an open market, and hardware will be produced cheaply oversees by competitors.
E-book rights will trade on an open market? How is that going to happen? What’s it going to look like? Anyone have any idea what this person is talking about? It’s a puzzler.