Amazon asks Kindle Direct authors and readers to lobby Hachette in contract negotiation

Amazon’s PR push in the Hachette negotiation seems to have moved beyond simply posting announcements to forums. I just had a rather lengthy email show up in my inbox from “Kindle Direct Publishing,” which begins with the salutation “Dear KDP Author.” I’m not sure if I received it because I created a KDP account at some point while looking into it, or as a member of the press. Either way, I’m reproducing the letter here in full.

The letter essentially expands upon Amazon’s recent forum post about the situation, laying out Amazon’s belief that Hachette wants to charge too much for e-books and discussing Hachette’s history of stonewalling its attempts to negotiate and shrugging off any attempt to remove authors from the line of fire.

It compares e-books to paperbacks, another inexpensive innovation opposed by writers and publishers of the day. (Including George Orwell, who called for publisher collusion to put a stop to their proliferation. Anyone else find it a little ironic Amazon’s citing Orwell here, after the whole 1984 Kindle debacle?) It concludes by asking readers to write to Hachette’s CEO.

Note the amusing little dig at Authors United, the collective who took out a $100,000 NY Times ad asking readers to write to Bezos—both by saying that “authors are not united,” and by choosing to use the domain name for its web version (where it also links to a number of pro-Amazon blog posts and articles, including Hugh Howey’s petition).

Will it have any effect? Difficult to say. In sending it out to KDP authors, Amazon is effectively preaching to the choir. I don’t imagine too many such authors were inclined to be on Hachette’s side already.

However, the web version has the salutation “Dear Readers,” so presumably it’s going to be publicized in other ways, too. Perhaps Amazon customers who aren’t registered with KDP get the “Dear Readers” version? If that’s the case, Amazon might very well be able to reach more people with this mass email than Authors Direct could reach with that New York Times ad.

Nonetheless, it’s at least going to get Amazon’s talking points into the press again.

Dear KDP Author,

Just ahead of World War II, there was a radical invention that shook the foundations of book publishing. It was the paperback book. This was a time when movie tickets cost 10 or 20 cents, and books cost $2.50. The new paperback cost 25 cents – it was ten times cheaper. Readers loved the paperback and millions of copies were sold in just the first year.

With it being so inexpensive and with so many more people able to afford to buy and read books, you would think the literary establishment of the day would have celebrated the invention of the paperback, yes? Nope. Instead, they dug in and circled the wagons. They believed low cost paperbacks would destroy literary culture and harm the industry (not to mention their own bank accounts). Many bookstores refused to stock them, and the early paperback publishers had to use unconventional methods of distribution – places like newsstands and drugstores. The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.” Yes, George Orwell was suggesting collusion.

Well… history doesn’t repeat itself, but it does rhyme.

Fast forward to today, and it’s the e-book’s turn to be opposed by the literary establishment. Amazon and Hachette – a big US publisher and part of a $10 billion media conglomerate – are in the middle of a business dispute about e-books. We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive.

Perhaps channeling Orwell’s decades old suggestion, Hachette has already been caught illegally colluding with its competitors to raise e-book prices. So far those parties have paid $166 million in penalties and restitution. Colluding with its competitors to raise prices wasn’t only illegal, it was also highly disrespectful to Hachette’s readers.

The fact is many established incumbents in the industry have taken the position that lower e-book prices will “devalue books” and hurt “Arts and Letters.” They’re wrong. Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books. On the contrary, paperbacks ended up rejuvenating the book industry and making it stronger. The same will happen with e-books.

Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, 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.

Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger.

But when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move. It was never in George Orwell’s interest to suppress paperback books – he was wrong about that.

And despite what some would have you believe, authors are not united on this issue. When the Authors Guild recently wrote on this, they titled their post: “Amazon-Hachette Debate Yields Diverse Opinions Among Authors” (the comments to this post are worth a read).  A petition started by another group of authors and aimed at Hachette, titled “Stop Fighting Low Prices and Fair Wages,” garnered over 7,600 signatures.  And there are myriad articles and posts, by authors and readers alike, supporting us in our effort to keep prices low and build a healthy reading culture. Author David Gaughran’s recent interview is another piece worth reading.

We recognize that writers reasonably want to be left out of a dispute between large companies. Some have suggested that we “just talk.” We tried that. Hachette spent three months stonewalling and only grudgingly began to even acknowledge our concerns when we took action to reduce sales of their titles in our store. Since then Amazon has made three separate offers to Hachette to take authors out of the middle. We first suggested that we (Amazon and Hachette) jointly make author royalties whole during the term of the dispute. Then we suggested that authors receive 100% of all sales of their titles until this dispute is resolved. Then we suggested that we would return to normal business operations if Amazon and Hachette’s normal share of revenue went to a literacy charity. But Hachette, and their parent company Lagardere, have quickly and repeatedly dismissed these offers even though e-books represent 1% of their revenues and they could easily agree to do so. They believe they get leverage from keeping their authors in the middle.

We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture. We’d like your help. Please email Hachette and copy us.

Hachette CEO, Michael Pietsch:

Copy us at:

Please consider including these points:

– We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.
– Lowering e-book prices will help – not hurt – the reading culture, just like paperbacks did.
– Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.
– Especially if you’re an author yourself: Remind them that authors are not united on this issue.

Thanks for your support.

The Amazon Books Team

P.S. You can also find this letter at

About Chris Meadows (4149 Articles)
TeleRead Editor Chris Meadows has been writing for us--except for a brief interruption--since 2006. Son of two librarians, he has worked on a third-party help line for Best Buy and holds degrees in computer science and communications. He clearly personifies TeleRead's motto: "For geeks who love books--and book-lovers who love gadgets." Chris lives in Indianapolis and is active in the gamer community.

5 Comments on Amazon asks Kindle Direct authors and readers to lobby Hachette in contract negotiation

  1. Quote: ” I don’t imagine too many such authors were inclined to be on Hachette’s side already.”

    Oh, the smarter ones are. They know that Amazon already pays the worst ebook royalties in retailing. For that $0.99 or $1.99 novel, it only pays half what Apple pays. If Amazon can whip a giant like Hachette, the situation won’t get better and may get worse. Don’t forget what Amazon affiliate Audible did back in February to independent authors:

    “In a disturbing move that caused an eruption among self-published authors, Amazon’s ACX division has announced a reduction and simplification of royalty rates. Rates that previously started at 50% and escalated to 90% have been reduced to a flat 40%.”

    Amazon is trying to deny it, but they’d really like to pay ebook authors no more than 40 to 50% of retail rather than Apple’s well-established 70%. Don’t forget that Amazon already pays only 35% for ebooks priced outside $2.99-9.99. Moving to “a flat 40%,” miserly as it is, would actually increase some royalties.

    A few years back, I read a book about WWII’s elite 101st Airborne. The author noted that, if you knew you’d be in combat, the elite divisions were the best place to be. They were filled with brave, capable, gutsy people. They wouldn’t turn tail and run in a fight. If you were wounded, they’d make sure you got medical help.

    Unfortunately, not all our soldiers were like that. When the Germans launched their surprise attack in what became the Battle of the Bulge just before Christmas of 1944, many U.S. soldiers ran away, particularly after word spread that the Germans were shooting prisoners.

    The 101st Airborne had been pulled back for R&R when the attack came, but were rushed into combat so quickly, many lacked winter clothing and rifles. Undeterred, they moved toward the sound of gunfire, persuading soldiers who’d turned chicken to give them their rifles.

    Writing today is a bit like combat in Europe in 1944-45. It is a war. Some writers are gutless and clueless, mistreated by Amazon but too fearful to fight or even admit that they should fight. They seem consumed by a hatred of large publishers who, they feel, have failed to acknowledge their artistic brilliance by publishing them.

    Others, more like the 101st, refuse to be intimidated and assume that, given a chance to fight, they’ll triumph. They welcome the addition of Hachette to their side and aren’t caught up in petty, egotistical prejudices.

    If fact, the story is told that when one member of the 101st Airborne heard that the Germans had taken the last road into Bastogne, leaving them with no way to get assistance and outnumbered five to one, he said, “They’ve got us surrounded, the poor bastards.” Now, the Germans would have to fight.

    One additional note. Much of what Amazon is telling ebook authors is as ridiculous as the propaganda that the Germans dropped on Bastogne. Here’s an illustration:

    “We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture.”

    A seven-year-old running a lemonade stand can see the flaw in that argument. If Amazon really wanted lower ebook prices, it’d pay authors twice as much as it does outside the narrow $2.99 to 9.99 price range, so they could lower their prices. And it wouldn’t charge that outrageous download fee–equivalent to a $400 hamburger–inside that price range.

    It’s Amazon who is cheating authors and paying authors better is the most essential element in enhancing book culture. Paid better, authors will have more resources for writing and publishing. Paid poorly, often half what Apple pays, they struggle, unable to even take their kids out for hamburgers.

    Amazon is the Scrooge of ebook publishing, but with one difference. It is not showing any willingness to change. It continues the same destructive, sub-market payment policies, and it continues to offer the same tired and oft-refuted arguments in an effort to get them on their side.

    It’s your call, Chris. You can claim that authors are stupid enough to take Amazon’s side in this dispute or you can appeal to them to show courage and to fight for decent compensation and an end to Buy-Button-removing, limited-availability bullying that hurts authors, publishers and the entire book culture they claim to value.

  2. Timothy Wilhoit // August 9, 2014 at 10:22 am //

    “Much of what Amazon is telling ebook authors is as ridiculous as the propaganda that the Germans dropped on Bastogne.”

    Ah, Reduction ad Hitlerum. How did I know it would be MWP that would do it? 😉

  3. Timothy Wilhoit // August 9, 2014 at 10:36 am //

    That’s “Reductio ad Hitlerum.” I just love autocorrect.

  4. One of the things that MWP always ignores is that Apple has to offer up something to convince people to sell their books through them. Apple is a bit player in the eBook market. When you are in that position you need to offer up something to entice people to come to you.

    As is always pointed out Apple has no eInk device so voracious readers shy away from them.

  5. Quote: “One of the things that MWP always ignores is that Apple has to offer up something to convince people to sell their books through them. Apple is a bit player in the eBook market. When you are in that position you need to offer up something to entice people to come to you.”

    Hardly a bit player. Industry guessers say Apple is #2 in ebooks with about 20% of the market to Amazon’s 70%. Ever other ebook retailer but Amazon would die to get that ‘bit player’ market share. And Amazon is playing some nasty politics with the DOJ to try to cripple Apple. Amazon does not see Apple as insignificant. I just wish Apple would get more aggressive.

    Bob’s actually touched on the root of the problem, and it’s certainly not one I ignore. I repeated point out that Amazon bullies, in part because of its corporate culture and in part because its huge size lets them get away with it.

    The answer is, of course, to shrink Amazon’s market share. It was once 90%. It is now 70% and could go lower. The fact that it is playing nasty with giants like Hachette (and now Disney for DVDs) suggests that its not that confident.

    In the end, Amazon may be done in by the very nasty behavior that its putting so much trust in. I’ve recently pointed out one reason. Here’s what it is:

    Children’s book and textbook publishers are frustrated by reflowable ebooks formats. They need what’s called a fixed format layout instead, one where they control just how a book looks much like PDF does with print. A standard for that exists: fixed format ePub.

    Amazon hasn’t shown them any sympathy because, as Bob notes, it doesn’t have to do that. Just a few weeks ago I contacted Kindle support asking how some textbooks I’m planning could be created in the Kindle KF8 equivalent of fixed layout. I was told that my only option was to hire third parties to hand code the book for thousands of dollars.

    At this point, you have to understand the nasty game Amazon has been playing with children and textbook publishers. To market their book digitally, they feel they must have a Kindle version because of that 70% marketshare. But those thousands of dollars to create it through third parties has meant they often couldn’t afford iPad or Nook versions. Amazon got what it likes most, an exclusive without having to offer anything in return.

    Just a couple of months ago, that situation changed. Amazon, like you say, thinks it has no reason to be nice to authors and publishers while Apple does. That’s been the scene for the last few years at Adobe.

    Adobe wants InDesign to be a one-stop publishing solution. It wants users to be able to take one carefully formatted document and export it as PDF (for print), reflowable formats (for smartphones) and fixed format (for tablets). For the latter two, there’s the industry-standard epub and Amazon’s own proprietary formats, Mobi and KF8. Adobe would like to support all of them.

    Apple has worked closely with Adobe and the latest upgrade to InDesign is marvelous. It can take a ready-for-print version of a book and also export very good reflowable and fixed format epub. A publisher can create a print version of a book and within a few minutes also export reflowable and fixed format epubs that display well on iPads, Nooks and any other epub compliant reader.

    Amazon, I know from a reliable source, absolutely refused to help Adobe create Kindle export capabilities for InDesign and it hasn’t updated its own ID plug-in for years. That’s the don’t care, don’t have to attitude that Bob is talking about.

    Amazon is relying on that huge market share to force publishers to spend thousands on a Kindle version, but it does not yet seem to realize that those publishers now literally need only spent pennies for ePub version for all the other ebook vendors, especially Apple. Everyone else’s versions are easy. Only Amazon’s is hard.

    What will publishers do? Some will still go to the expense of an Amazon version, but I suspect many won’t. Knowing that a lot of their readers are using tablets that have readers that can display ePubs from several sources, they’ll just publish it in epub from InDesign. Readers with every sort of device but an epaper Kindles can get and read the book.

    The only one left out in the cold will be mean-spirited Amazon. There won’t be a Kindle version.

    Oh, and there’s one other major difference between Amazon and Apple than marketshare making Apple behave better. It’s top-down pressure. Apple makes state-of-the-art hardware. That’s where its heart is. I imagine the iBookstore is profitable, but I doubt there is corporate pressure to create huge profits. That leaves those in the iBooks group free to spend money on apps that make the iBookstore platform easy to use and profitable for authors (those flat 70% royalties).

    Amazon has a different set of priorities. It sees digital sales as a major slice of its future. Covertly it hopes to create a digital market where competitors are few, suppliers are cowed, and the public is duped, so it makes huge but hidden profits on the sales of movies and ebooks. There’s enormous pressure from the CEO down to achieve those goals.

    The Hachette and now the Disney dispute are about the middle of those goals, much like putting the DOJ onto Apple was about the first. Alas, the public has yet to figure out just how deceptive Amazon can be in what it displays on its webpages.

    I like my Kindle 3 and my sister loves her Kindle Paperwhite, but from what I hear the sales aren’t that impressive any more. Why spend about $100 for an epaper reader when you can put that money toward a tablet that can do far more?

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