Amazon vs. Literary Culture

by hughestim665

Over the past few months, Amazon and Hachette Book Group have been at the negotiating table trying to hammer out the revenue sharing plan for e-books sold on Amazon that are published by Hachette. Currently, they’re at a stalemate that has resulted in both sides slinging blurbs of rhetoric at each other in the hopes of sullying the other into submission. There are consequences to be had by all—that’s what happens when a conglomerate like Amazon goes head to head with one of the Big Five publishers (which are Hachette, HarperCollins, Macmillan Publishers, Penguin Random House, and Simon & Schuster). The consequences are both business related—focusing on those in the publishing industry—as well as culturally related.

Their negotiations essentially revolve around numbers—who gets what of e-book sales. Obviously, as the publishing landscape continues to morph toward a more technologically savvy market, there’s a lot at stake for both sides. Amazon is a giant in the book retail business. More than likely if you have the internet you’ve bought something from Amazon. They’ve become a mainstay and aren’t going anywhere. Hachette, though a big player in the literary world, is part of a shrinking practice—traditional publishing. There is a shift in the publishing industry toward the digital, and the Big Five are struggling to adapt. They’re practically holding the door open for Amazon to walk right in and take over the party, and that’s what Amazon, known for ruthlessly pushing people out of business, intends to do. So, needless to say, the outcome of this whole debacle will hold great weight on how the publishing industry continues to evolve.

Right now, the negotiations are basically at a stand still. Amazon’s most recent move has been making a plea to Hachette authors, who sell their books through Amazon, both e-books and physical copies, by offering them 100% of the revenue of any e-book sales done through Amazon until the negotiations are settled. Hachette swiftly shot down this proposal as they would be losing their normal percentage of sales revenue. Surprisingly, and encouragingly, many Hachette authors also scoffed at Amazon’s proposal under the premise of remaining loyal to Hachette, who paid them their advances. Amazon’s response to Hachette’s refusal was to eliminate the pre-order option on their website of soon-to-be-released Hachette books and to delay shipment of many Hachette titles, some previously next day delivery, for up to five weeks. According to Amazon, the negotiations have gone thusly:

1) Amazon contacted Hachette in January of 2014 to initiate negotiations on their e-book contract that expired in March.
2) Amazon claims to have heard nothing from Hachette for three full months.
3) Amazon extended the contract into April.
4) Amazon reduced inventory and discounts on Hachette titles.
5) Amazon claims it last made a proposal to Hachette on June 5 but hasn’t received a counteroffer.
6) Amazon offers Hachette authors 100% of e-book revenue (neither Amazon nor Hachette get cuts) while negotiations continue.
7) Hachette refuses this temporary offer.

Interestingly, a Hachette spokeswoman has said, “We made an offer in April that was the largest we ever made to any retailer, and in May made another that was higher still. Both offers were rejected.” (Both accounts are according to The Wall Street Journal [ http://m.us.wsj.com/articles/amazon-offers-e-book-authors-100-of-sales-amid-publisher-dispute-1404840227?mobile=y ]).

So, clearly, both sides are talking to each other but are making absolutely no headway. That has led to Amazon pulling a bunch of petty tactics on Hachette titles while the negotiations continue. You don’t have to have a law degree to understand what is happening here: Amazon is trying to bully Hachette into agreeing to their terms, something they’ve successfully done to smaller businesses for years. Amazon’s most recent tactic of trying to appeal to authors is pure manipulation. They’re hoping that by trying to win the authors over to their side, Hachette will feel the pressure and quickly cave in negotiations.

Stuck in the middle of this whole charade are the authors, both those represented by Hachette and those who aren’t. Why this matters to those authors outside the Hachette community is because Hachette’s e-book contract with Amazon is merely the first to expire, meaning the remainder of the Big Five are simply waiting for their turn to hash things out with Amazon and, possibly, experience the same thing. Meanwhile, the authors are being punished. When people buy books, a percentage of that revenue would typically go to the retailer (Amazon), a percentage to the publisher (Hachette), and a percentage to the author, as well as any other middle-men involved (probably agents, editors, unions, etc.). As mentioned supra, Amazon wants to eliminate Hachette’s stake in sales until negotiations conclude, awarding all revenue, including Amazon’s, to the authors. It’s a way of saying, “Hey, we know this sucks for you (the author), so here’s some money to ease the pain.” It’s a noble thing to do…ostensibly. But in reality what they’re really doing is trying to decrease Hachette’s position at the negotiating table. Amazon can afford to do this, but Hachette probably can’t. On the P.R. front, what it says is that Amazon is trying to be the good guy while making Hachette look weak for not coming up with this idea in the first place.

Hypothetically, say Hachette did go along with this maneuver. Then, during negotiations, they’ll have to adapt their sales strategy in order to make up the lost revenue of e-book sales and will probably be not that much worse off when things are all said and done. Now Amazon can point to this small sample size and make the claim that Hachette was fine without that revenue, why not just do this all the time and let authors get more revenue of e-books sold at Amazon? If Hachette says no, they look like jerks. If they say yes, they’re putting their financial stability at stake. In the long-run, eschewing that revenue would be detrimental to Hachette as e-books become a more integral part of the publishing industry. So, logically, they’d say no, which gives off the image of not caring about their authors. Amazon’s response to this would be to say to all the Hachette authors that we, Amazon, will give you a certain percentage of e-book revenue, a percentage much higher than what Hachette is giving you, so you should leave the Hachette family and join ours. Next thing you know Hachette is losing clients to Amazon and will eventually go out of business, forfeiting most of their market share to Amazon. If things were to have gone like this with Hachette, Amazon certainly wouldn’t hesitate to do the same with the rest of the Big Five when their contracts are up for negotiation. The only difference would be it’d be the first thing Amazon suggests, knowing how effective is was against Hachette, as opposed to waiting a couple months into the process.

That’s all purely conjecture mind you, just one way this scenario could play out. Luckily, though, authors have responded to Amazon’s tactic with integrity and have sided with Hachette, the publisher that has been on their side from day one. A large group of authors, both Hachette and not, calling themselves Authors United, have signed a petition against Amazon in the wake of these events, specifically the limiting of inventories and delaying shipment of Hachette titles. Names include: David Baldacci, Lee Child, Amanda Foreman, John Grisham, James Patterson, Anita Shreve, Scott Turow, Anne Applebaum, Clive Cussler, Stephen King, Richard North Patterson, and Simon Winchester, among others—debuts, mid-lists, and best-sellers (fr. http://www.thebookseller.com/news/child-grisham-patterson-amazon-protest.html ).

The petition is effectively asking Amazon to leave the authors out of the negotiations, a fair request considering how the authors basically don’t have a representative at the negotiation table, nor do they have a direct voice in how the dispute is settled. Though the letter penned by Douglas Preston claims neutrality, this can be interpreted as a backing of Hachette and the general traditional publishing industry. From the letter: “Without taking sides on the contractual dispute between Hachette and Amazon, we encourage Amazon in the strongest possible terms to stop harming the livelihood of the authors on whom it has built its business. None of us, neither readers nor authors, benefit when books are taken hostage.”

Remember that Amazon is, for now, simply a retailer. They have an e-publishing and self-publishing platform (more on that later) but hardly contend with the traditional publishing industry, who has a lock on selling physical hard copies of books. Amazon facilitates products to the consumer rather than refining those products to the point that they can be consumed. By pointing the finger at Amazon, authors are providing themselves with insurance. Eventually, these negotiations will conclude and a new contract will be agreed upon. If authors signed a similar petition against Hachette, saying that they desired the 100% revenue of e-books during negotiations, they would informally and indirectly be saying that they support Amazon as a publisher over Hachette. What this means is that when the authors would be trying to sell their next book to Hachette, Hachette would most likely pass knowing that the author basically betrayed them during this dispute. That would be bad for the author, who probably wouldn’t be able to find another member of the Big Five to buy their book for the same reason. Very rarely do people forget acts of disloyalty. The publishing industry is very close knit, and agents, editors, and publishers are always talking to each other. The author would be forced to either publish with a small publisher (sometimes an undesirable option, especially if the first choice was one of the Big Five), not publish at all, or with Amazon.

Wait, but Amazon isn’t an actual publisher. An interesting sub-story to this whole issue is Amazon actively pursuing a purchase of Big Five publisher Simon & Schuster. Both Amazon and Simon & Schuster are mute on the specific details concerning this but also are not denying that they’re talking. If Amazon were to obtain Simon & Schuster, they would then own a large part of the book publishing industry as well as a large part of the book retail industry. The implications of this are staggering. Amazon would then own all the titles associated with Simon & Schuster and then be able to obtain all the revenue from e-book sales of those titles without having to divvy it up between them and an outside publisher. Owning Simon & Schuster sure would ease the negotiations of a new e-book contract with them for Amazon. Add this onto Amazon’s already thriving self-publishing niche, in which authors can present their manuscript to Amazon and publish it as an e-book at little cost or publish it as a hard copy governed by print-on-demand, and they’ll basically be a majority market share holder in the e-book industry as well as having a new hand in the traditional publishing industry. It’s the undeniable making of a monopoly within the publish in industry.

The sneakiest aspect of Amazon’s play for Simon & Schuster is their motivations behind it. They truly aren’t interested in selling books, like, at all. They’re only interested in converting hard-copy books into e-books and selling them on their Kindle where they make the real money. Their technology revenue far exceeds their revenue from selling e-books, so why all the fuss? Amazon is now in the market of manipulating trends in literary culture and the publishing industry. The more buzz they can generate about e-books, regardless of the type of press, the better off they’ll be. If they can get more people talking about the Kindle, more stories written about their intentions in the industry, more water-cooler talk about them and what they’re doing, that will be reflected in their sales numbers. All the obsession about the direction e-books are heading is a way to push the Kindle and other e-readers upon the masses. Amazon could care less about what is being published as long as it’s being read on their Kindle.

This is why Amazon’s self-publishing and their probable acquisition of a traditional publishing company is detrimental to the quality of literature being sold. When an author approaches Amazon for the chance to self-publish through them, whether as an e-book or in a print-on-demand basis, Amazon practically foams at the mouth to work with them. E-books barely cost Amazon anything to publish, so they’ll make up their losses through any sales of that book. Print-on-demand incurs a larger cost but still a negligible one as they cover it by taking a larger percentage of any sales. In either sense, Amazon is counting on the author to do all the marketing for the book, which can be a good or bad thing. Some authors are really good at marketing while others stink. The good ones make money for Amazon, not an uncommon occurrence. It would seem, though, that Amazon would lose money with the authors who are bad at marketing, and maybe that’s so. But there’s a hidden audience every author has regardless of their marketing abilities—their friends and family. Say an author has twenty friends and maybe ten family members (probably low-balling it), that’s thirty books sold right there at whatever price Amazon puts them at (usually $9.99). Though you can download an e-book to your computer, more than likely Amazon will still be selling a Kindle or two to those thirty family and friends, which is, again, Amazon’s real goal. So any cost Amazon burdens to help an author self-publish is more than made up for in a certain amount of guaranteed sales. Every sale beyond that is a bonus for Amazon. And then, let’s not forget, some authors get lucky and really rake in the cash, which of course makes Amazon really happy.

This shows that it’s in Amazon’s best interests, as a business, to publish as many authors as possible through their means rather than in cooperating with traditional publishers to do so. Amazon wants authors to come directly to them and to skirt the traditional publishing route in favor of their quicker, easier publishing methods. Buying Simon & Schuster takes one competitor out of the picture and builds the pressure on the other big traditional publishers. Publishing, in any form, is incredibly attractive to authors of all calibers. When you write a manuscript, you should rightfully be proud of it and want to show it to people besides your best friends and family. You want to share your creation with the world and hopefully make some scratch in doing so. The biggest complaint about traditional publishing, especially from new and debut authors, is the presence of threshold guardians or gatekeepers in the industry. These are interns, readers, agents, editors, publicists, etc. Those people who have a say in whether you are welcomed into the publishing community or not. They have very refined tastes for the manuscripts and stories that they feel they are most capable of selling at a large volume. They have honed their sensibilities to niches and specifics in order to root out the flawed pieces of work that surely won’t sell and to find the big hitters that are just waiting to be made into box office behemoths. They are picky, and that can be frustrating. It’s not uncommon for authors to experience rejection in daunting numbers. Some deserve rejection and some don’t, either way, though, it’s trying, which makes Amazon’s self-publishing option all the more attractive. How wonderful it is to completely bypass the presence of gatekeepers for immediate satisfaction. This is what Amazon offers, and they’re not ashamed about it one bit.

But they should be.

Gatekeepers are uniquely gifted at maintaining a standard of quality within the industry. They’re there to tell an author when to push something to the forefront of their manuscript or when to ease off it. They consume books and movies in order to develop their own tastes and to see what works and what doesn’t. They then give us, writers as well as audiences, feedback in that regard. They correct our grammar, spelling, and punctuation. They notice when a trend is on the upswing and when it’s on the downswing. They keep the crap from ever seeing the light of day, and the entertainment industry and pop culture are better for it. By negating this crucial role in the publishing process, Amazon is allowing any ol’ thing to get published. That means a story that isn’t really a story but an author’s mindless ramblings could get published and read by someone in high school who wants to be an author someday. If that high schooler confuses this piece of crap as brilliant, they’ll aspire to write like that and then will also publish (through Amazon, probably) something equally terrible down the line. Quality is at stake when you eliminate the position of the gatekeeper, specifically agents, who are the first line of defense against mediocrity in traditional publishing.

When an author writes a novel, they submit it to an agent via a query letter (like a cover letter pitching the story in a concise fashion along with some sample pages). Often times the query letter will get rejected for whatever reason and a wave of despair will wash over the author. This is normal, for sure, but discouraging. Few debut authors realize the importance of these rejection letters, though, and often write them off as the agent being a doofus and missing out on the next big thing. The right way to take these letters is to see them as a quality check. Does the author, after ten rejections to the same query letter, view those rejections as the industry being wrong or they, the author, doing something wrong? Maybe it’s the query that needs work and the rejection is just an easy way for an agent to say so. Or, better, maybe it’s the story that needs work and not just the query. When a rejection is accepted like this, the value of the agent/gatekeeper becomes multifold. They’re giving free feedback on not only the query letter but the pitch and the overall story. This is something that is completely missed when the author goes straight to Amazon without even attempting to go through an agent in the traditional sense.

When a manuscript does get accepted by an agent, that agent will edit it and give revisions. After those revisions, they’ll try to sell it to an editor at a publisher, who, if they buy it, will then give more edits, further refining the manuscript to a notion of quality that is upheld throughout the traditional publishing industry. It’s a lot of work, to be sure. Publishing with Amazon suffers no such trial. Sure, there’s some editing, it’d be ridiculous of Amazon not to try and gear what they’re selling toward a certain sensibility, but then you have to ask yourself, what exactly is Amazon editing toward? Their recent activities regarding publishing indicate that they’re solely in it for the money (see the kerfuffle with Hachette). So if they do take the time to edit a manuscript they want to publish as an e-book, they’ll edit it for the purposes of selling it as opposed to editing it for the purposes of making it into a quality story. Their motivations are loyal only to the bottom line, not the integrity of artistic endeavors.

This makes Amazon acquiring Simon & Schuster a very dangerous thing for the quality that is expected in the publishing industry. Losing Simon & Schuster would be the equivalent of losing the mosquito in the food chain. It’d be an elimination of one of the essential steps (sources of food) in creating a quality product (the ecosystem). What happens next would be a tightening of the entire industry. As more and more authors reroute to Amazon in order to try their luck with self-publishing, having heard the fantastic success stories from the few that have seen some success ( http://www.nytimes.com/2014/07/13/technology/amazon-a-friendly-giant-as-long-as-its-fed.html?ref=books&_r=0 ), the rest of the Big Five would then be losing money to Amazon. Less money for them to play around with means tighter standards. That means they’ll take on less clients, focusing on those that are known sellers and those who have very specific niche markets. The publishers will gear most of their marketing budget to people like James Patterson and Stephen King, knowing that they’re proven moneymakers, sucking dry the funds reserved for finding and marketing new talent. Next, the agents will then have to follow suit and tighten their standards to fit what the publishers are looking for. An agent may have taken on 1% of the queries she received but now only takes on .5% because her tastes have gotten that specific. This pushes debut authors further away from traditional publishing and into Amazon’s welcome embrace. Admittedly, the quality of work that does get through in traditional publishing will probably increase, assuming those publishers maintain a standard and don’t just try to follow trends in order to make a buck. But with Amazon producing more and more work of a lesser quality, the more refined stuff will get lost in the fold and struggle to make it to the consumer’s hands.

It would logically follow that agents would surely side with Hachette and desire to maintain Simon & Schuster as a separate entity from Amazon. Their livelihood is very much at stake. If Simon & Schuster is bought, Amazon would be redefining, if not eliminating altogether, a lot of gatekeeping jobs—editors, agents, and the like. It’s in an agent’s best interest to support the traditional publishing industry in standing against Amazon and their not-so-favorable business practices.

But it’s still all business, isn’t it? The bottom line is inevitably what will make the decision, which is why Amazon will probably come out on top of this, one way or another. What may keep that from happening, and what essentially drives all business and art, is the consumer and their sensibilities. How long would consumers tolerate Amazon flushing the market with crappy, loosely-edited books after having read pristine masterpieces, edited and re-edited, seen by countless sets of eyes before reaching bookstores, for centuries? Amazon is a business that’s acting on a principle that practically defines the field of economics: that people will act rationally. What this simple concept fails to note is that it’s solely referring to financial decisions. It’s an assumption that is essentially wrong—people rarely act rationally. Along those lines, what economics sees as acting rational often has no place in industries that deal in the arts. Economics defines acting rational as making the smart purchase and it doesn’t factor in the nature of the product, in this case, the quality of literature.

Consumers will catch on very quickly that an Amazon exclusive e-book simply isn’t as good as one that has endured the rigors of traditional publishing. The notion that e-books are superior because of ease of access and lack of being cumbersome will never live up to the quality of a thoroughly vetted, traditionally published piece of work. Consumers will gladly end up spending a couple extra bucks for a better product. It will all come down to their awareness of this fact, and willingness to follow up on it. Quality is the crux in literature and holds far more influence over human behavior than Amazon gives it credit for.
Sources:
http://m.us.wsj.com/articles/amazon-offers-e-book-authors-100-of-sales-amid-publisher-dispute-1404840227?mobile=y

http://www.latimes.com/books/jacketcopy/la-et-jc-amazon-and-hachette-explained-20140602-story.html#page=1

http://www.thebookseller.com/news/simon-schuster-talks-amazon.html

http://www.thebookseller.com/news/child-grisham-patterson-amazon-protest.html

http://www.nytimes.com/2014/07/13/technology/amazon-a-friendly-giant-as-long-as-its-fed.html?ref=books&_r=0

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