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Amazon: Hachette spat can be fixed with lower ebook pricing

Amazon(s amzn) has characterized its struggle with publisher Hachette as a quest for a “healthy reading culture”, which it is trying to achieve by forcing down ebook prices.

In a statement on Tuesday, Amazon said lower ebook prices would mean more sales and ultimately more money to go around. Of that money, it said Amazon should get a 30 percent cut – the same as it gets now – and the author and publisher should each get 35 percent.

It was previously reported that Amazon’s desire to negotiate a higher cut than it currently receives was central to this whole fiasco. However, this new proposal would leave the split between Amazon and the author/publisher as it has been since its (ultimately doomed) 2010 tussle with the big publishers over ebook pricing.

In effect, Amazon is revisiting that 4-year-old argument. The 35/35 element is a bit of a jab at the publishers, who have the final say on what they and the authors get from their combined 70 percent, as many authors currently receive only 25 percent of net revenue.

In May, as Amazon and Hachette were negotiating new terms, the Kindle firm started delaying shipments of Hachette titles, cutting off pre-orders and generally stoking an industry-wide debate about book retail in the digital era.

In its Tuesday post, Amazon said prices like $14.99 and $19.99 were “unjustifiably high” for ebooks that aren’t specialized titles, because of the substantially lower production and distribution costs they entail, and also because you can’t resell ebooks – a current reality that’s being tested in European courts.

The firm said that, if an ebook sells one copy at $14.99, it will sell 1.74 copies at $9.99. If you look at sales of 100,000 copies, that means a 16 percent increase in overall revenue. It pointed out that more sales make it more likely that the ebook will make the bestseller lists, and that lower retail prices will encourage reading:

“Keep in mind that books don’t just compete against books. Books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.”

3 Responses to “Amazon: Hachette spat can be fixed with lower ebook pricing”

  1. Will Buckley

    “Amazon has characterized its struggle with publisher Hachette as a quest for a “healthy reading culture”, which it is trying to achieve by forcing down ebook prices.”

    Let’s read between the lines here. Amazon is about volume, Hachette is about maintaining a healthy compensation for the book business of which indie writers are part of.

    I’ve spent the majority of the past four years researching and writing about the near complete collapse of the music business and how that impacts indie musicians.

    I’m always amazed how tech seems to get a free pass and established corporations like record companies and publishers are vilified. Had the record companies not caved things would be better for indies. Indie authors should be grateful that Hachette is standing up for your (indies) best interest.

    Think it through. A few of you will develop a cult following of readers and they will pay for your work. If you believe price is the barrier for your work, your wrong. Readers will buy what they want, not what’s cheap.

  2. Whats interesting here is Amazon and NOT Hachette is in touch with what value consumers attach to e-books. Ultimately, one can hope self publishing over takes the obsolete publishing industry in relation to digital and I can readily find ways to reward the author directly so that they, the creators, can realize the maximum value from their work without middlemen.

    I am real tired of middlemen!

    • dave94703

      Ric: If you actually produced and sold a paper book through Amazon, you’d know that, through a combination of forces, Amazon takes over a 90% cut until you sell more than a thousand books. As to their ebook sales monopoly they’re using to threaten Hachette, they have NO costs for making eBooks, unlike Hachette or any real publisher, no advances, no editors, no designers. So for the essentially only distributor of ebooks to be demanding price cuts is really a demand to, as you say, eliminate the (but crucially, OTHER) middleman. Amazon wants to control publishing from author to reader, with no publisher in between. You’ll get your wish if Amazon wins, because there won’t be a publishing industry, just Amazon and self-publishing authors.