Hugh Howey outs Hachette for seeking book market price dictatorship
June 16, 2014 | 12:25 pm
I can’t do better for my small contribution to the Amazon/Hachette controversy than to link to Hugh Howey’s latest nasty surprise for traditional Big Five publishers, “Big Publishing is the Problem,” where he reproduces a slide (shared above from his site) from a recent investor briefing that reveals just what Hachette is trying to do.
As he says, “Hachette is strong-arming Amazon and harming its authors because they want to dictate price to a retailer, something not done practically anywhere else in the goods market. It’s something US publishers don’t even do to brick and mortar booksellers. It’s just something they want to be able to do to Amazon.”
TeleRead readers won’t need much reminding that conspiracy to shore up the agency model of publishing was exactly what the ebook price fixing case against Apple was about – and remember that the only reason the Big Five publishers weren’t convicted was that they settled out of court. And, as the slide shows, Hachette is trumpeting to investors its “control over business models” through its “Agency model implemented with e-retailers … in order to retain control over ebook pricing.” And here’s what Denise Cote’s ruling had to say about that:
To ensure that the iBookstore would be competitive at higher prices, Apple concluded that it needed to eliminate all retail price competition. Thus, the final component of its agency model required the Publishers to move all of their e-tailers to agency. Apple expected that this proposal would appeal to the Publishers. After all, it would allow them to “fix” their “problem” with Amazon’s pricing.
Savvy investors might wonder whether Hachette can really make its claim stick. But all the same, it is still out there trumpeting its actions in support of a business model that landed it a big out-of-court fine and its partner Apple in the dock, and put it into the crosshairs of another, European investigation that it and its partners only dodged by cutting a deal.
“Publishers are waging a war here for higher prices and lower royalties,” Howey insists. “Publishers are also colluding with one another to offer lockstep digital e-book royalties of 25%, which is indefensible … Their own authors defend them, partly because they don’t spend any time investigating or understanding the business in which they are engaged.”
I don’t fully agree with Howey that Amazon “forsakes profits in order to pass along the savings to” readers and authors – or at least, not with any altruistic motives for that. But Amazon is at least aligning itself with the interests of its two key constituencies, while the Big Five too often persist in business practices hostile to both of these and to their partner distributors. Be thankful for the supply of useful idiots prepared to cheer them on, eh.