Robert J. Sawyer

Hugo and Nebula Award-Winning Science Fiction Writer

Will self-published authors be Amazon’s next hardball target?

by Rob - May 23rd, 2014.
Filed under: Bookselling, ebooks, Publishing.

Amazon.com is playing hardball with Hachette, one of the big-5 traditional publishers; it’s previously done such things with Macmillan (the big-5 publisher of which science-fiction giant Tor is part).

Note the template, folks: when Amazon feels it’s got a de facto monopoly, it goes after its suppliers, big and small (what Bill Gates, at Microsoft, used to call “cutting off their air supply”).

Right now, Amazon is luring tens of thousands of independent authors with 70% of gross royalties (and Amazon’s competitors, such as they are, have been forced to match that rate). But when Amazon decides to turn its attention to self-published and independently published authors, I doubt the 70% royalty will stand. Once independent authors are entrenched in that business model, and once their customers are overwhelmingly reading via Kindle devices and apps, the squeeze will begin there, too. Why offer 70%, when you can offer 60%, or 50%, or less? Why only charge big publishers for featured listings (co-op advertising), when you can start asking for money up front from indie authors, too?

Right now is the time that authors’ representatives and writers’ groups should be pushing hard, hard, hard for higher ebook royalties from traditional publishers, who are standing pat at 25% of net (effectively, a 17.5% royalty), because right now may be the only time in history in which we can say we DO have a better-paying alternative, and you HAVE to negotiate if you want to keep us.

Because if we don’t, the traditional publishers know they just have to wait it out until Amazon starts lowering their self-published ebook royalty. Remember, 30% — the current cut Amazon takes on an ebook sale — is way less than the cut they, the chains, or independent bookstores take on non-discounted physical-book sales, and no company in any aspect of publishing has ever said, “Oh, you know those economies that come from electronic distribution and new production methods? Let’s pass those saving on to the author, so that they’ll make more.” The current Amazon epublishing model, like everything else that company or any other publicly traded company does, is a part of a long-term strategy with a single goal: maximizing shareholder profit; generosity or fairness doesn’t figure into the equation.

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3 Responses to Will self-published authors be Amazon’s next hardball target?

  1. You’re forgetting a variable here. With hard copies of books, Amazon is only really competing with bookshops and smaller online stores who invariably sell through Amazon anyway.
    When it comes to eBooks, however, their main competitor is Apple. Apple have charged 30% since the start for anything other than the budget section, as they do with apps, so I don’t see them changing. If they don’t move that bar, then Amazon will also be forced to stay there too.
    I’m not saying they wouldn’t want to squeeze that 70% figure, and I’m also no big fan of Apple and their business practices, but I think this is one of the rare times when capitalism might actually work to the benefit of the consumers and the creators simultaneously.

  2. Dave, I’m certainly not forgetting Apple (whose ebook market penetration is tiny compared to Amazon’s, and who at best might be — figures are hard to come by — Amazon’s main competitor in the United States, but not necessarily elsewhere in the world).

    But remember, the question isn’t one of attracting WRITERS — it’s one of attracting READERS. Even on iOS devices, Kindle is a very popular ereading platform. Once READERS are overwhelmingly invested in the Kindle ecosystem — which is surely Amazon’s goal — there will be great inertia; no reader will want to switch.

    Remember, Amazon can always negotiate a sweetheart deal with a Stephen King or a Hugh Howey to keep them as Amazon authors, if that’s necessary to retain readers in their ecosystem — but right now they’re giving a sweetheart deal to everyone, and that’s unlikely to be sustainable.

    And if Amazon does what it’s done with p-books — sell below cost until competitors leave the marketplace — how long will Apple hold out? If Amazon drops its royalty to 35%, and cuts all its retail prices in half, will Apple cut prices, too, also taking a loss on every copy sold? The agency model let publishers set prices across all retailers; if that model doesn’t pertain, Amazon can lose money, for years if need be, on ebooks, just as they did on p-books, to secure a monopoly position; they’ve done it before and there’s little to stop them from doing it again. And THAT, my friend, IS capitalism. ;)

  3. That is *rampant* capitalism without much in the way of checks and balances and which leads to growing structural imbalances. Amazon scares me, a lot… yet, even I have bought a kindle device. Its a monkey on one’s back (try to do without a microsoft operating system, for instance). The kind of capitalism that we really can do without. But how does one resist this without joining the ranks of those over the top anti-globalisation networks that clog up the traffic around Davos every once in a while? Perhaps, eventually, they become the only option. Dystopia rules.