Wednesday, May 28, 2014

Amazon and Hachette situation worsens - Amazon's announcement to its forums and what we can do when wanting a book not available in the interim. Timeline of the ebook pricing wars. Free Android app of the day is the normally $5 Mathlab Pro. Amazon launches their Collectible Coins store. Updated.

The Kindle Community Forums is carrying an Amazon announcement that gives some details on the situation with Hachette Book Group, from Amazon's perspective.  I'll post the full text below, as most customers don't frequent the Kindle forums.  I've bolded some of the more salient points.
Initial post: May 27, 2014 4:42:07 PM PDT
The Amazon Books team says:

We are currently buying less (print) inventory and "safety stock" on titles from the publisher, Hachette, than we ordinarily do, and are no longer taking pre-orders on titles whose publication dates are in the future.  Instead, customers can order new titles when their publication date arrives.  For titles with no stock on hand, customers can still place an order at which time we order the inventory from Hachette -- availability on those titles is dependent on how long it takes Hachette to fill the orders we place.  Once the inventory arrives, we ship it to the customer promptly.  These changes are related to the contract and terms between Hachette and Amazon.

At Amazon, we do business with more than 70,000 suppliers, including thousands of publishers.  One of our important suppliers is Hachette, which is part of a $10 billion media conglomerate.  Unfortunately, despite much work from both sides, we have been unable to reach mutually-acceptable agreement on terms.  Hachette has operated in good faith and we admire the company and its executives.  Nevertheless, the two companies have so far failed to find a solution.  Even more unfortunate, though we remain hopeful and are working hard to come to a resolution as soon as possible, we are not optimistic that this will be resolved soon.

Negotiating with suppliers for equitable terms and making stocking and assortment decisions based on those terms is one of a bookseller's, or any retailer's, most important jobs.  Suppliers get to decide the terms under which they are willing to sell to a retailer.  It's reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly.  A retailer can feature a supplier's items in its advertising and promotional circulars, "stack it high" in the front of the store, keep small quantities on hand in the back aisle, or not carry the item at all, and bookstores and other retailers do these every day.  When we negotiate with suppliers, we are doing so on behalf of customers.  Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term.

A word about proportion: this business interruption affects a small percentage of Amazon's demand-weighted units.  If you order 1,000 items from Amazon, 989 will be unaffected by this interruption.  If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors. *

We also take seriously the impact it has when, however infrequently, such a business interruption affects authors.  We've offered to Hachette to fund 50% of an author pool - to be allocated by Hachette - to mitigate the impact of this dispute on author royalties, if Hachette funds the other 50%.  We did this with the publisher Macmillan some years ago.  We hope Hachette takes us up on it.

This topic has generated a variety of coverage, presumably in part because the negotiation is with a book publisher instead of a supplier of a different type of product.  Some of the coverage has expressed a relatively narrow point of view. Here is one post that offers a wider perspective.

"Who's Afraid of Amazon?" [at The Cockeyed Pessamist site].

Thank you.

* How to get a Hachette book you want for your Kindle Fire tablet in the interim
  Note that one of Amazon's recommendations for those seeking a book not available at Amazon at the time you want it is to buy a new or used version from one of their 3rd-party sellers or "from one of our competitors."

    However, Amazon's customers normally want KINDLE versions of course, which poses a problem.
  What I've done is to buy a book I want, then, from Barnes and Noble (where I have a membership because I like their stores) and then get the Barnes and Noble Android app to use on a Kindle Fire tablet.  Others can get a B&N app for their Apple iOS devices, and there's one for Windows devices.  There should be a B&N app for Windows and Mac desktops as well.

  However, the Kindle Fire tablets can't access GooglePlay store, as Kindle Fire tablets are not recognized by GooglePlay.  And the Amazon Android appstore doesn't carry the Nook app.  I go, instead, to 1Mobile's app site which now has over 800,000 GooglePlay apps which they allow to be downloaded to Kindle Fire tablets.  Once you get there, download the 1Mobile-store app (which is used the same way we use the Amazon-store app when we want Amazon apps).

  However, there is a setting under the top bar's swipedown area -- older Kindle Fires say "More" and "+" for those settings, while the newer Kindle Fires say "Settings" and then the older Kindle Fires have, under DEVICE, an option to allow the installation of "apps from unknown sources," while the newer Kindle Fires have this setting under "APPLICATIONS" (rather than under "Device). Make sure you 'allow' the installation of "unknown apps" by turning it 'On'...
  For Step-by-Step instructions if you encounter any problems, see the article on installing NON-Amazon apps.

Some news stories on the Amazon-Hachette situation to get some history and other viewpoints.

Amazon escalates standoff with publisher Hachette - - May 28

Amazon isn't -- and likely never will be -- a monopoly - - May 28

 This one makes points against the familiar 'monopoly' cries similar to what was voiced when Big5 publishers joined Apple in 2010 in trying to raise ebook prices, pointing to what they described as Amazon's "monopolist" ways.

Points made:
. "Antitrust courts since the 1970s have consistently held that it's not illegal for a company to hold huge market share, as long as they aren't using that power to raise prices for the end consumer."

. "What in Amazon's past practices should make us believe that this is anything more than Amazon pressuring its suppliers to offer a product at a lower price? This has been Amazon's secret to success for two decades, and something Walmart (WMT) (another common media target) has been doing for much longer."

Amazon war with Hachette over ebook profit margins intensifies - The Guardian - May 27.
  This one mentions that, in general, authors and journalists are busily excoriating Amazon, while Stephen Fry tweeted "a link to a commentary by the self-published author David Gaughran, who characterises the current furore as an anti-Amazon PR campaign.  Fry described the piece as a 'sane counter' to the prevailing views on the dispute.
  Here's Gaughran's detailed look at this.

  For reference: Simpler Timeline of key elements of ebook pricing wars -- events noted by the Department of Justice with similar arguments made against Amazon's dealings with Big5 publishers at the time.

FREE Android App of the Day - today, 5/28 only

MathLab (Pro)
- Normally, $5, this app is a graphing calculator with algebra.

Amazon launches its Collectible Coins Store
Collectible Coins area - "Beta" version
  I know nothing about collectible coins but am passing this on for those who are interested in this.

Current Kindle Models for reference, plus free-ebook search links.
New Kindle Fire HD 7" 2nd Gen - $139/169
Kindle Fire HDX 7" 16-64GB - $229/269/309
Kindle Fire HDX 8.9" 16-64GB - $379/429/479
- with 4G added: $479/529/579
Kindle Fire HD 8.9" 16GB - 1st Gen $269 $229
  $299 Price rise ~2/24/14
- 32GB w/ no special-offers: $314
Kindle NoTouch ("Kindle") - $69/$89
Kindle Touch WiFi - $99
Kindle Paperwhite 2, WiFi - $119/$139
Kindle Paperwhite 2, WiFi+3G - $189
Kindle Keybd 3G - $139/$159, Free web
Kindle DX - $379 $199
Kindle Basic, NoTouch - £59
Kindle Paperwhite 2, WiFi
Kindle Paperwhite2 3G, UK
Kindle Fire Basic HD 8/16GB, UK
 from £119
Kindle Fire HDX 7" 16-64GB, UK
from £199. 4G/3G
Kindle Fire HDX 8.9" 16-64GB, UK - from £329. 4G/3G

CANADA - Kindlestore, CDN-$
Kindle Basic, NoTouch - $79
Kindle Paperwhite 2 - $139
Kindle Paperwhite 2, 3G - $209
KFire HD Yr 2012 7" $214,  8.9" $244.
Yr 2013 KFires: HD Gen2, HDX line
India - Amazon India

*OTHER Int'l pages*
Kindle NoTouch Basic - $89
Paperwhite 2 WiFi $139, 3G/Wifi $209
KFire HD Yr 2012: 7" $214,  8.9" $244
Yr 2013: HD Gen2 + HDX line

Australia Kindlestore
France Boutique Kindle
Deutschland - Kindle Store
Italia - Kindle Store
Spain - Tienda Kindle
Brazil - Amazon Brazil
China - Amazon China [?]
Amazon Japan - Japan

Check often: Temporarily-free recently published Kindle books
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.  Liked-books under $1
UK-Only: recently published free books, bestsellers, or £5 Max ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.

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  1. Thanks for the cockeyed pessimist article reference, and the Stephen Fry tweet (:grin). These more or less match my views. I'm not at all sure that this is Amazon looking for better terms from Hachette (as most media coverage assumes), but rather just the opposite: Hachette looking for better terms from Amazon as eBooks are now a bigger part of the big 5 pie than paperbacks.

    I suspect most of this revolves around the mass market segment. It is important to keep in mind that in the US everything else (educational, technical, professional, religious, etc) is just as big (or slightly bigger) than the mass market segment. eBooks haven't penetrated as much here, and book production costs are much higher here than in the mass market segment.

    Mass Market profits are used in many cases to subsidize the less popular more "worthy" (from a big 5 editor's perspective) book projects. Call me a cynic but many mainstream journalists also write books -- most of which fall into that non-mass-market part of the pie. To the extent that margins on eBooks are low means that over the long term there will be less "blockbuster" mass market profits to subsidize the book projects that all those mainstream journalists want to write during their sabbaticals (:grin). So the whole Amazon/eBook phenomenon is not only anathema to the log term health of the big 5, but also to those book writing journalists hoping to score a big 5 book contract and advance. ::D

    Is it any wonder that so much of the coverage has been anti-Amazon?

    1. Edward, what you point out makes sense, yes. Thanks for the quick input.

      I think that, in addition, both Amazon and Hachette are trying to get more out of the new arrangements, so the clash is no surprise considering that, as well. Amazon does have to think about its stockholders after what's happened recerntly too.

  2. I have little to no sympathy for Hachette. Nor do I buy into the notion that ebooks have a smaller margin than physical books. I find it hard to believe that authors and editors are working on non electronic versions of books prior to printing. That alone eliminates 'special' costs involved in publishing electronic versions of books. Maybe I"m wrong, but I'm not conceding the point until someone walks me through the entire process with an explanation to the contrary.

    So that $12.99 newly published ebook is garnering the publisher a lot more than the $14.99 hardcover (discounted in the bookstore, of course) I buy in Barnes & Noble. IMO, this is nothing more than Hatchette trying to re-establish agency terms since their 2 year moratorium is over.

    I blame the publishers for not moving with the times. They need to take a look at what happened to Blockbuster and, I dare say, to what will happen to television and advertising (albiet long down the road) and adjust and accommodate the present that we're in, not the present that they want to hold on to. Amazon was pretty much mocked at every turn when they introduced the Kindle and when it became apparent that ebooks were taking off, the publishing industry tried to kill it instead of embracing the customer base.

    I also think its a load of hooey that Hatchette is so concerned about their author base that they won't ink the deal.


    1. Jazz, I agree. Did you follow the link to "Gaughran's detailed look" ? (Tweeted by Stephen Fry.) I may put it in red because it's the best analysis I've read, with good backup for what he writes.

      The Big5 were fairly open in 2010 that their main fear was that cheaper e-book prices would "devalue" their print books, giving this reason often.. Whether e-versions come first or come afterward, the actual direct costs of those will always be lower and therefore the margin will be higher -- but they get hit by the lower price point eating into the higher prices they're used to setting for the print books.

      I agree too that with Hachette being the first to renegotiate terms, the other Big4 will be pressuring them to hold the line. Amazon can't afford to let them have a deal that all the others will then require too, so they're at an impasse.for awhile.

      Yah, that 'dinosaur' reaction won't help. As for their interest in their authors, I see that Amazon's calling their bluff with that proposal re the fund to mitigate losses for the authors. BUT, I remember that in 2010, while the Big5 were advocating higher pricing for e-books, at least one of the companies lowered the author percentage from 25% to 20% of net.


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