Amazon: Disintermediation as a Business Strategy
August 18, 2014
As the conflict between Amazon and Hachette continues, much of the media is quick to paint Amazon as a bully, the poor publishers as victims, and authors as collateral damage. Some of us hesitate to accept this interpretation. Indeed, if a letter cited in an article we found at TechDirt is accurate, Hachette is at least as culpable. The article is long-windedly but accurately titled, “Amazon Offers Authors 100% of Ebook Sales to Get Them to Recognize Its Fight with Hachette Isn’t About Screwing Authors.”
According to Amazon’s letter to Hachette authors, their publisher is not only outdated but has also been uncooperative and downright rude in response (or lack thereof) to Amazon’s efforts at working out a deal. This recalcitrance is the reason the online seller is going directly to authors, offering them a deal wherein they will make more while customers pay less. How? Why, cut out the obsolete middleman, of course. TechDirt’s Mike Masnick writes:
“The whole situation is quite bizarre when you think about it. At the same time you have Hachette and the Authors Guild insisting that they’re trying to ‘protect the book’ by keeping book prices artificially high, they’re loudly complaining that Amazon won’t discount their books. Notice some hypocrisy here? If you want to understand why this is happening, the best explanation I’ve seen so far comes from Hugh Howey, one of the super successful self-published authors who is firmly in Amazon’s camp on this fight. Writing in the Guardian, he notes the perverse incentives of the traditional publishing world on Amazon:”
Here, Masnick quotes the relevant part of Howey’s Guardian article. I second the endorsement of that clear and concise explanation for anyone still unsure of the details behind this bizarre situation. (Check it out if you wish. I’ll wait….)
The Masnick article goes on:
“In other words, everyone really knows that ebooks should be priced lower, but the old publishing world wants to be able to set much higher prices, forcing Amazon to basically make no money at all on pricing the books lower. Given this scenario, it actually makes sense for Amazon to then make this offer to authors directly: it will hand over 100% of ebook revenue, because under Hachette’s proposal, Amazon would make no money at all (or even lose money) on ebook sales anyway.”
It is important to note that others have used a variant of this strategy to good effect, like ProQuest, Ebsco, and Lexis. Publishers must face facts: just as libraries don’t need librarians like they once did, authors don’t need publishers as they once did. We sympathize with businesses that find themselves growing obsolete with the steady march of time. However, to insist that others accommodate an antiquated business model is unrealistic. (Subsidies for buggy-makers, anyone?) Hachette and other traditional publishers would do well to put that energy toward adapting to inevitable changes. Or, barring that, toward laying off their workers as gently as possible.
Cynthia Murrell, August 18, 2014
Sponsored by ArnoldIT.com, developer of Augmentext
Comments
-
- Subscribe to Beyond Search
Feature archive
News archive
-
