Amazon emails Kindle Direct Publishing account holders, makes its arguments direct to authors and small publishers
If you are an author or publisher who uses Kindle Direct Publishing (KDP) to create eBooks you will be waking this morning to a rather large email from Amazon – a very large email.
The mail was mailed early this morning, just after midnight on the West Coast and is over 1,000 words in length and calls on authors to help Amazon fight Hachette in is eBook pricing battle. The email may be a preemptive move designed in response to a full-page ad that will appear in the Sunday edition of The New York Times, signed by 900 authors. While the ad had yet to appear in print, the NYT featured a major story on the ad and the position of the authors who signed the ad (as well as some who disagree). (This morning another story appeared on the NYT’s website, the is one from David Streitfeld, which attacks Amazon’s email and the retailer’s use of George Orwell in its arguments.)
“We want lower e-book prices. Hachette does not,” Amazon wrote to KDP account holders. “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.”
Amazon again repeats its argument that eBook prices are “elastic” – that when the price goes down, sales go up.
“We’ve quantified the price elasticity of e-books from repeated measurements across many titles,” Amazon writes. “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.”
The email, at the end, attempts to appear to authors and urges them to write an email to Hachette’s CEO Michael Pietsch. It asks authors to copy Amazon on the email, no doubt so that the online retailer can have evidence that many of its authors are on their side.
“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).”
Disclosure: TNM Digital Media LLC is a publisher of both print and eBooks through Amazon, though sales through the services have been miniscule. TNMDM has publishes eBooks though the Apple iBooks Store and Barnes & Noble for the NOOK.
Update: I have to say, the discussion around this email, and the NYT article by David Streitfeld, read like the team discussion boards on ESPN: highly emotionally and very prone to bias based on one’s predisposition to one side or the other. As I said many months ago, taking a position in an argument like this is exceptionally difficult when the actual negotiations are still secret. True, both sides have made statements that hint at their positions, but mostly both sides have made publicity statements. You want the truth? Wait until a court case is brought and both sides have to allow for discovery. I’d love to see the emails and other communications that, for now, are protected by NDAs.
In this battle, I don’t see publishers allowing prices to be dictated by the retailer. But Walmart does it. But when you look at the huge world of retail products, Walmart only represents some products, in some categories. Amazon sells a mush higher percentage books and eBooks produced for the consumer market. Will they eventually have the same power to price that Walmart does? Amazon may believe they need that power if they are ever to be profitable.