Amazon: Ebook prices are 'unjustifiably high'

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Amazon’s fight with Hachette over ebook prices isn’t ending anytime soon.

For weeks, Amazon and Hachette have been deadlocked in a dispute over how much ebooks published by Hachette should cost, and how much of that revenue should go to the publisher, author, or Amazon. During this period, Amazon has delayed the shipment of Hachette’s books, removed the preorder button for some titles, and made the books harder to find on Amazon’s website.

Over the weekend, the Amazon Books Team posted an open letter arguing for lower ebook prices. According to the letter, many ebooks are being priced at $14.99 or $19.99, which Amazon believes is unjustifiably high, given that ebooks have “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 aren’t sold secondhand.

In 2013, Hachette—along with HarperCollins, Penguin (now Penguin Random House), Simon & Schuster, and Macmillan—was found guilty of conspiring to fix ebook prices. Amazon says the movie was disrespectful to readers and demonstrated a misunderstanding of how ebooks play a role in the publishing industry. According to Amazon, Hachette is afraid that cheaper ebooks will ruin book culture—but its own data suggests that ebook prices are elastic in a way that’s good for the publishing industry.

For example, according to Amazon, a $14.99 ebook priced at $9.99 would lead to more sales. The volume of those sales would be high enough to earn a greater profit for the publisher, bookseller, and reader. In Amazon’s view, lower ebook prices means everybody wins. “Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books,” the letter said. Amazon asked the public to support the company by emailing Hachette, giving out Hachette CEO Michael Pietsch’s email address.

According to a Hachette spokesperson,Pietsch responded to the emails, saying that over 80 percent of Hachette ebooks are priced at $9.99 or lower already— and that more expensive titles sell for less than half the price of their print counterparts. He believes that $9.99 is an inappropriate price for all ebooks: “Unlike retailers, publishers invest heavily in individual books, often for years, before we see any revenue,” Pietsch said. “We invest in advances against royalties, editing, design, production, marketing, warehousing, shipping, piracy protection, and more.” According to Pietsch, the dispute between Amazon and Hachette “started because Amazon is seeking a lot more profit and even more market share, at the expense of authors, bricks and mortar bookstores, and ourselves.”

As the dispute has dragged on, Amazon has proposed several temporary measures until it resolves its contract dispute with Hachette. The biggest was a plan to offer Hachette authors 100 percent of ebook revenue until the dispute is over. Hachette rejected each plan.

Writers are divided on the conflict between the two businesses. In the August 10 issue of The New York Times, a group called Authors United published an open letter asking Amazon to resolve its dispute with Hachette “without further hurting authors and without blocking or otherwise delaying the sale of books to its customers.” The letter was signed by over 900 authors, not all of whom are published by Hachette. The letter did not, however, take Hachette’s side in the argument, instead simply arguing for authors to be left out of the dispute altogether. The letter also includes the email address of Jeff Bezos, Amazon’s CEO and founder, and asks the public to contact him about the dispute. Amazon adopted the name Readers United for its own open letter; it is not affiliated with Authors United.

The Authors United letter was written by Douglas Preston, who is personally frustrated by Amazon’s tactics. “It’s like talking to a 5-year-old,” Preston told The New York Times. “‘She made me hit her!’ No one is making Amazon do anything.” According to the Times, since Amazon started discouraging consumers to buy Preston’s books, the sales of his paperback and ebook sales fell by over 60 percent, and preorders for his novel published last week had thousands of fewer pre-orders than his previous novel.

In its open letter, Amazon cited George Orwell as someone who suggested that authors collude and squash out the paperback format when it was first introduced. “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,” the letter reads. It is an incomplete quote. “The Penguin Books are splendid value for sixpence, so splendid that if the other publishers had any sense they would combine against them and suppress them,” Orwell wrote. “It is, of course, a great mistake to imagine that cheap books are good for the book trade.”

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