MacMillan

Recently, a reader took me to task for signing, selling, and publishing my Marty Singer series with Amazon’s mystery imprint Thomas & Mercer. They cited Amazon’s anti-competition practices—their stance, not mine—such as removing MacMillan titles from sale because Amazon wanted to sell books at “unsustainable prices” back in 2010.

However you feel about Amazon and its business practices, I thought many of you might be interested in how I arrived at my decision to sign and why I don’t agree with a somewhat widely held opinion that Amazon competes unfairly and is interested in “denying people the ability to read.”

(I’ll apologize up front for the length of this post, but it contains thoughts about my personal career, the health of the publishing industry, and what I consider to be misguided criticism of Amazon.)

AT THE INDUSTRY LEVEL

As far as my faith in “Amazon as a company” goes, I simply don’t believe the accusations of anti-competitive practices and corporate malfeasance leveled at Amazon—specifically in the realm of contract negotiations, like the MacMillan episode and, more recently, the dust-up with Hachette. The charges have repeatedly been exposed as one-sided, biased, or ginned up for personal or institutional gain.

To reiterate some of the high points:

First, when an author has been “hurt by Amazon,” (emphasis mine to represent a common meme) because their books have been removed from Amazon’s site, it’s because that author’s publisher could not come to an agreement with its distributor—nothing more, nothing less. Amazon has no interest in reducing its stock of best-selling titles or in willfully harming writers; it does, however, have an interest in controlling what it does best, which is sell books.

In each conflict with publishers, the debate has been over retail price, with publishers demanding higher prices (usually to have digital edition prices match print prices). Pricing is the purview of the distributor (Amazon) not the publishers. This is true in the case of MacMillan in 2010 as it was with Hachette in 2013-14.

And it is critical to point out that raising prices hurts consumers and does not help authors. Why? In regards to consumers, digital editions can be produced for a fraction of the cost of a printed book–to artificially inflate a price to match another format is gouging customers.

Regarding authors, books are sold by publishers at a wholesale price to Amazon. Authors receive a percentage of that wholesale price, regardless of what the retail price becomes, whether lower or higher. In Amazon’s case, books have been traditionally sold at low retail prices (with very little margin and often a loss to Amazon), in order to bring the best value to the consumer. Since the author’s royalty is figured on the wholesale, not the retail price, their cut never changes.

Why would publishers fight to keep retail prices high? To protect print sales–it’s difficult to defend $30 for a print book when the e-book costs $4.99. Also, the Big Five have a much more dominant position in print distribution–if B&N could demand similar concessions on the print side of things, they would do it. High prices also line publishers’ pockets (there is an immense profit margin on e-books, so if you can keep the digital and print price the same, you’re raking it in on the e-book). Unfortunately, higher prices simultaneously reduce sales volume (who wants to buy a $30 e-book?), which hurts authors’ overall earning potential, because while authors don’t receive more money from higher prices, they do from each additional unit sold.

Bear in mind that there isn’t a distributor out there that would tolerate pricing demands from its wholesale goods provider, yet Amazon receives criticism at the unfairness of their stance on price control. If you don’t believe me, go to your local Wal-Mart and ask how many of the items on their shelves are price-controlled by the maker of the product. Or, better yet, ask a traditionally-published author (the goods provider) how many times they’ve been allowed to name the price of their next novel to their distributor (the publisher).

Second, those who like to throw around the term “corporate malfeasance” in relation to Amazon rarely address the fact that the only party that’s been legally found in violation of any laws has been all six (now five) New York City publishers and Apple, when they were found to have illegally colluded in a price fixing scheme by the Department of Justice back in 2012.

Using that as background, I’d love to see how the term “anti-competitive” applies more to Amazon than it does to traditional publishing.

Third, if you find my defense of Amazon self-serving, seeing as how I’ve made a publishing career with them both as a self-published author and now as a signed one, yet you are or have been swayed by the arguments of high-profile names like Stephen Colbert, Scott Turow, Richard Russo, Laura Miller, or other members of Authors United…well, congratulations, you’ve just branded yourself a hypocrite.

All of these selfless individuals—ostensibly interested only in the rights of writers everywhere and the preservation of the written word—are published by the Big Five. They all have an inherent conflict of interest when they denigrate Amazon and trumpet the nobility of traditional publishers—namely, their paycheck comes from Big Publishing. They’re entitled to their opinions, but their statements on Amazon should be read and understood in that light.

Fourth, if you are tempted to believe that recent industry conflicts have pitted Big Bad Amazon against helpless publishers armed with nothing but the ink in their pens, please bear in mind:

• Simon & Schuster is owned by CBS Corp. which has revenue of over $14bn. CBS owns the most watched network in the US and its operations cover every field of media including cable, publishing, radio, and local TV.
• Penguin Random House is owned by two companies, Bertelsmann with a 51% share and Pearson a 49% share. Until 2003, Pearson owned the RTL Group – the largest commercial television and radio broadcaster in the EU – at which point it was sold to Bertelsmann, which still own the company. Bertelsmann is a giant media company with revenues of around $20bn and interests in more than 200 media companies worldwide, including 54 television stations, 29 radio stations, and the largest magazine publisher in Europe.
• Macmillan is the odd one out as its corporate parent (the Georg von Holtzbrinck Publishing Group) doesn’t have global media interests worth mentioning, aside from 50% of Die Ziet – the most widely read German weekly paper with an estimated readership of over 2 million.
• But Harper Collins picks up the slack by being a subsidiary of the media behemoth that is News Corp. – which owns huge chunks of the media market all across the world, including the US (Fox, the New York Post, the Wall Street Journal) and the UK (Sky, the Times, The Sun).

(List lifted from David Gaughran’s blog, https://davidgaughran.wordpress.com/2014/05/26/amazon-v-hachette-dont-believe-the-spin/)

Just to complete the record: Hachette, the Big Five publisher most people have heard about in the last year, is owned by French conglomerate Lagardère Group, which posted earnings of $7.16 billion in 2013 (http://en.wikipedia.org/wiki/Lagard%C3%A8re_Group).

This is no David and Goliath story, ladies and gentlemen; or, if it is, someone switched the name tags.

Fifth, anything Amazon has done in terms of capturing the digital e-book market was within the grasp of any traditional publisher or major bookseller–they simply missed the boat and capitalism has traditionally had very little sympathy for boat-missers. If Borders or Barnes & Noble had made different choices fifteen years ago, you’d be reading about them instead of Amazon. More to the point, if publishers hadn’t let themselves be lulled into complacency by decades of easy profits (and ever more abusive contracts for writers), they could’ve easily becomes leaders in the digital e-book marketplace.

ON A PERSONAL LEVEL

First, like all of you, I make decisions that are best for my family, my career, and my financial situation. Even if I were uncomfortable with some of Amazon’s publishing or business practices (and I’m not), I find it presumptuous that someone would expect me to forego a potentially watershed advance in my career to satisfy what is, frankly, a vague moral argument that falls apart when you press on it too hard.

If anyone feels that’s a cop out, I invite them to examine their own work history, investment portfolio, contents of their refrigerator, and the car they drive, then decide if they haven’t done the same…and with companies and brands infinitely more easily condemned than Amazon.

Second, I’m pained by the fact that, by signing with Thomas & Mercer, I’m “leaving” loyal and potential Kobo and Nook fans behind, but the irony is that that decision doesn’t lie with Amazon, it’s a policy decision by Kobo and Barnes & Noble. Thomas & Mercer might be owned by Amazon, but they’re still a publisher. Kobo and B&N are booksellers—they could, at any moment, be selling the Marty Singer books if they wanted to. I don’t necessarily blame them—it’s tough to swallow the idea of selling your direct competitor’s titles.

Except…isn’t that exactly what Amazon’s doing? Every Lee Child thriller sold on Amazon might be a Robert Dugoni or Vincent Zandri novel if the largest bookseller in the world refused to sell Random House books and only sold Thomas & Mercer imprints. Instead, Amazon sells pretty much any book from any publisher, regardless of the “harm” it may cause them, because—despite what my email critic says—they’re interested in selling books and giving people the ability to read any book they want.

Third, my last argument is the simplest, yet strongest: without Amazon, you wouldn’t be reading the Marty Singer books.

About a dozen literary agents had a shot at A Reason to Live when I first wrote it and all of them passed. Since the vast majority of agents are in lock-step agreement with Big Publishing’s vision of the industry, I think it’s safe to say that my rejections from them were also de facto rejections from traditional publishers.

Without self-publishing as envisioned and created by Amazon, I would’ve never had been given the chance to release A Reason to Live, expand the series, and forge a career that now—thanks to signing with Thomas & Mercer—includes the potential for world-wide distribution through translation support, the sale of TV and film rights, and exposure to millions of readers.

 

TO WRAP UP

I hope this piece has lent some insight into why I signed with Amazon and will continue to do so as long as their corporate vision matches the goals I hold for my own career. I’m happy and confident with my decision to sign with Amazon for a number of personal reasons, but also because the charges leveled at Amazon are usually found to be without merit or describe standard business practices that thousands of companies follow each day.

I appreciate that not everyone may hold my opinions, but coming to the table with facts and not opinions will go a long way in advancing the conversation. Feel free to have at it in the Comments, below, and I’ll respond as time allows.

Thanks for reading.

Matt