Amazon vs. Hachette, vs. Writers, vs. Readers

by Doc Coleman on July 9, 2014 · 6 comments

in Rants

There is a big kerfuffle going on in writer’s circles. Actually, it isn’t so much going on as it is going on and on and on… It is one of those arguments that won’t seem to die. This is what usually happens when people are arguing back and forth between two choices that aren’t right for the question. It is like asking what should we have for breakfast and arguing back and forth between tennis shoes and a feeling of vague disappointment. Neither one answers the question, and they aren’t really opposing choices in their own right. But people will continue to argue, and will deny the fact that the question itself may not be the right question. This case is no exception.

So, where did this mess start?

Once upon a timeI guess the whole thing starts with Amazon. You remember Amazon, right? Big conglomerate that sells everything to everyone, unless you’re in the wrong country in which case they’ll fight really hard to keep you from being able to buy what you’re looking for. Well, they got started by selling books, and over the years they’ve made quite a lot of profit by selling books that other booksellers (and publishers) had written off as a bad debt. That part wasn’t so bad, although there was some questionable stuff there from time to time.

The problem that starts our little drama happened over the past few years. Amazon, despite being highly diversified, has suffered some setbacks in profitability lately. Wait. That’s an awfully vague way of putting it. Let me rephrase. Amazon is still making a profit, but they’re making considerably less profit than they were a few years ago. This has got Amazon’s stockholders up in arms, and Amazon desperate to squeeze out more profits without actually doing any more work. Because that is what you do in corporate America, apparently.

So what does Amazon do? They pick one of their big publishers, Hachette, and tell them that they’re making too much profit. They tell Hachette that from now on, their costs are going to go up, and a chunk of profit from each sale that used to go to the publisher, will now go to Amazon.

Needless to say, Hachette wasn’t very thrilled by this idea. They sued Amazon, and that is where the whole kerfuffle started. Well, not so much started as exploded.

So what is everyone up in arms about?

Well, they’re arguing about if Amazon or Hachette is protecting the interests of the writers.

Yeah. Really.

There is a lot of venom and righteousness going on, but they’re still missing the point. Neither Amazon nor Hachette are looking out for the authors.

Let’s face it. They’re both corporations. They look after their own profit and do their best to screw over their business partners to eke out the biggest advantage.

Neither of them are looking after writers or readers.

It’s really like a particularly odd poker game.

The readers are the only players coming to the table with money, but you’re not allowed to play with cash. You have to buy chips.

The writers are the only players who come to the table with chips, but they’re not allowed to sell chips at their full value. They can sell their chips to Hachette, or to Amazon, but they can’t sell chips to the players directly. They can sell their chips to Hachette for one tenth of the face value and get paid up front, but everything they get paid comes out of their eventual winnings in the game. Or they can sell chips to Amazon for three times the exchange rate, but they only get paid when Amazon sells a chip to a reader.

Readers can buy chips from Amazon or Hachette. Amazon can buy their chips from Hachette or from the writers. You would think that Hachette would sell directly to the readers and cut out Amazon, but they like to sell large blocks of chips at a time, so they sell most of their chips to Amazon.

Now Amazon wants Hachette to lower the price of the chips it sells them… so they’ve decided to stop selling chips from Hachette to the readers.

So the readers have money, but can’t buy any chips. Writers have chips, but can’t get any money. Amazon and Hachette have neither money, nor chips, but they’ve deciding how to divide the pot between them.

A very weird poker game.

And one with some nasty consequences.

If Amazon wins, Hachette will want to recoup their losses. They’ll no doubt raise prices to do that, and use it as an excuse to cut author royalties, too. If Hachette wins and Amazon can’t squeeze them, they’ll turn to other publishers, and to the independent authors and squeeze them next. Oh, and you’ll be able to forget about those Amazon discounts.

It’s a four-sided poker game, and the only players who can’t win are the ones who are actually bringing something of value to the table. And they can’t even get a cut of the pot. It would be great if the judge in this case would decide that both sides were wrong and the best solution would be to split the contested funds between the readers, in the form of lower prices, and the writers, in the form of higher royalties.

Unfortunately, that’s not gonna happen.

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