Slate weighs in on Amazon vs. Hachette

This article makes a couple of interesting points.

First, mainstream publishers are screwing authors on e-book royalties:

“Look at Harper’s own numbers,” DeFiore wrote. “$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author. $14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.”

Looks fishy, doesn’t it? And the same basic math holds throughout the industry, including at Hachette.

The 15% royalty on hardcovers has always been justified by the costs of manufacturing, storing, and shipping the physical object.  Those costs disappear with an e-book.  But apparently the publishers are not passing much of that savings to the author.  And Amazon knows this.

By leaving royalty rates where they are, publishers have left their nice digital margins hanging out there for everyone to see. And when Amazon sees someone else’s healthy profits, it’s like a dog smelling a steak. As Jeff Bezos has said, “Your margin is my opportunity.”

The other point the author makes is that reduced profits for publishers means a brain drain as fewer people decide to write books:

If publishers make less money on every book, they are going to pay people less to write and edit them, and talented people will decide to do something else with their time. Consider that it takes at least five years, and usually more, to write a definitive presidential biography. If an advance of $100,000 exceeds the budget that an Amazon-dominated world will allow, then the only author who can write such a biography must be either independently wealthy or subsidized by a full-time job, probably teaching at a university.

Do you buy this argument?  I suppose it could be true for mainstream non-fiction.  It certainly seems untrue for fiction — or, at least, it would be balanced off by an influx of talented writers who are simply bypassing the barriers put up by mainstream publishers. If I earned more from my writing I could quit my day job and write more, but that’s fundamentally a function of success in the marketplace, not advances from a publisher.

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4 thoughts on “Slate weighs in on Amazon vs. Hachette

  1. In every real sense, our great nation was built on and continues to prosper from the successes of small businesses. Would that be the case if everyone who had a business idea had to get approval from a mega-business clearinghouse before opening shop?

    What’s happening is the opening of the writer’s market to the masses. Just as in small business, the writers who do it well will survive and writers without talent won’t. That’s the way nature meant it to be…survival of the fittest. I see no scenario where that’s a bad thing for writers or readers.

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    • I don’t disagree. But I think the fear is that Amazon will turn into a mega-business clearinghouse of its own — one with no particular interest in or affinity for books, other than as one more commodity item they can sell to their customers.

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      • Good point. One of the reasons I use an Android tablet rather than a dedicated eReader is that I can have multiple sources for ebooks. I buy as many books from B&N and Kobo as I do from Amazon, for no other reason than to keep competition alive. Unfortunately, for all of the folks who have Kindles, that’s not an option unless they are tech savvy enough to root their device. Kudos to B&N for having the courage to open their newer Nooks up to Google’s Play Store.

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