There Are No Angels Here

amazon-vs-hachetteWith World Cup fever in full flower – even in America, you proboscis-tilting non-USAers! – it is perhaps meet and right that we gather here to examine whether Amazon v. Hachette is an example of (a) the American-football-style strong-arming ground game, or (b) futbol-style “diving” – that is, clutching one’s knees and falling to the turf after “suffering” a killer-asteroid-length flyby from an opponent so that the entire darby may be temporarily halted while all beautiful-game athletes catch their verdammt breath. I think it’s a soupcon of each.

Amazon’s practice of punitively declining or delaying orders from one of the Big Five trade publishers – the others are Penguin Random House, HarperCollins, Simon & Schuster and Macmillan – has a very large echo in the cable tv business, where “content providers” (Disney; ESPN—wait, that’s Disney too; CBS) have been at war with cable resellers (Time Warner Cable, Comcast, etc. – wait, Comcast owns NBC-Universal, see how weird all this is getting?), but sorta reversed. In cable, the content providers have all the juice. Wanna see the NFL this weekend? Tell Time Warner they’re a buncha greedy late-for-service-calls bums! But in books, it’s as Tom Doherty and Ian Ballantine once agreed, I hope over a cocktail: the book business went to hell when the publishers lost control over their own distribution. To the wholesalers and middlemen who physically deliver books to retailers, they are renewable product like magazines – or loaves of bread – and have to be rotated nearly as often. To retailers, books are lent on consignment and can be returned at the publisher’s expense if they don’t sell, thus the decorative flower-petal stacks of blockbusters you used to see at Barnes & Noble. The idea was to make it easier for bookstores to take risks on unknown authors. The idea got out of hand. But all this is ancient history. People who are still moping about it are schmucks.

Since Alexandria, volumes of info, from the Iliad to Grey matter, have held an exalted status in the general culture. But books, even the finest ones, are no longer bestowed us by patricians or scholars: they come now from big, BIG, profit-oriented corporations. Seventy-five years ago you may have had an argument; that three-martini-lunch gentleman’s game was populated by the artisteic elite. Nowadays you’re encouraged not even to have lunch at all; editors, please dial it back to a drinks date if possible. I’m not saying that book publishing was never powered by heart and intellect. I’m only saying it’s not so any more. Privately owned publishers whose founders are still hands-on (e.g., in our day, McSweeney’s) behave very differently from conglomerates to whom books may be an afterthought, maybe even an asterisk. Many passionate people still work in book publishing: these folks have to auto-motivate, because they don’t make much money unless they’re at or near the top. In the current climate, the Big Five don’t have to nurture, because they can replace you in a heartbeat, get somebody less experienced for less dough, and to advance you don’t necessarily excel, you survive. Today’s book biz is built on bucks. Big Five execs aren’t mean. What they really are is scared.

Amazon is the largest single retailer of books – remember, it began as a bookseller, founder Jeff Bezos reasoning that books were sturdy and easy to ship, and you didn’t have to try on or even touch one before you were ready to buy it – and is more crucial to the industry than even B&N. Yet book sales account for only 7% of Amazon’s total revenue, according to research by Jeff Bercovici of Forbes. So publishers need Amazon far more than it needs them. Furthermore, Amazon owns the e-book market: about 30% of all books sold in the U.S. are digital, and of that market Amazon has a 65% share. Put another way, nearly one of every five books sold in this country is a Kindle file.

Publishers just now are enjoying being on the noble side of the Amazon dustup; agents, booksellers and even some authors have long viewed the big houses as deep-pocketed suits. Now there’s a more monstrous foe: worse than mass-market editions (which first upended the hardcover pricing model), mail-order book clubs (which made trips to the village bookstore unnecessary), superstores (which strangled independents with, um, selection and discounting), and digital books (which – wait, didn’t they provide the monster’s only jolt in the neck in a generation? – were too cheap). Andrew Wylie, of the highest level of literary agency, wrote, “The book industry is overwhelmingly the repository of our nation’s culture. To destroy it is to destroy the culture.” Painters, composers, screenwriters, anyone else wish to speak up? No, the contemporary trade book industry is overwhelmingly concerned with making money, and screw the culture. Any one of the remaining Big Five trade publishers would gladly swap three Nobel laureates for one HUNGER GAMES franchise and throw in a few poets besides.

Amazon is pushing Hachette around because it wants to improve its profit margins, and everybody else is holding their breath not because they’re gallant brothers in arms, but because Amazon’s contract with Hachette happened to expire first. Whatever the company wrests from them will be the same deal it wants from all the others. This happens all the time in other industries; Bezos perhaps appears a tad scuzzy only to those who have been insulated from the real world all their corporate lives. In case you’re not absolutely sure yet that times have changed, Hachette responded by purchasing Perseus (in the movie business you’d call it a “mini-major,” like Lionsgate), making itself even larger. As the long case against Apple and and the then-Big Five (Penguin has since folded into Random House, which temporarily resisted Steve Jobs’s entreaties and was therefore not party to the antitrust action) wore on, one fact remained clear: when the publishers colluded (we don‘t have to say “allegedly” any more), they were no longer thinking about their customers, only their own profit margins. Publishers actually received more money for each e-book under Amazon’s “loss-leader” pricing than they did under Apple’s “agency model.” They weren’t working with Apple to prop up e-book prices because they felt competition was swell. They were defending nothing more righteous than, as federal judge Denise Cole remarked, “consumer perception of the value of a book.”

The printed retail price of a book has little to do with trim size, page count, all the physical factors you might expect. It’s derived from a larger profit-and-loss assumption that includes the expected distribution, the projected shelf life in paperback, and the amount initially expended (the “guarantee,” or “advance”). Why then does the breezily-set 400-odd-page MR. MERCEDES from Stephen King sell for $30? Because trade book prices only go one way, up, and because Scribner knows its “price” will be discounted down the line, even though the publisher keeps roughly half of whatever number it chooses to print on the front flap. Kinda nuts, isn’t it – and here’s another wacko fact: all those “$30” hardcovers won’t come anywhere near paying out Uncle Stevie’s guarantee (huge authors get paid huge money up front, unless they’re “back-end” profit participants, like the biggest movie stars, but star authors are far rarer). As in movies, the publisher finally makes its profit downstream, years later, on the paperback — and digital — editions, which theoretically go on forever. Not this quarter. Much later on.

So Amazon is coming into a genteel industry and refusing to be genteel about it. I think it’s a PR minus for Bezos & company, who are supposed to be looking out for their customers above all – and now they’re making it harder to buy Hachette books? Not too bueno. They may have actually done a lefthanded favor by encouraging people to reconsider their online purchases. I just bought a Hachette book called AMAZON: THE EVERYTHING STORE from Powell’s Books – one of the great indies still standing – and though their site was clunkier than Amazon’s, I had no trouble sailing through the order process, and I felt kinda good about it. But the higher price I freely agreed to pay was pulled forth from nothing more substantial than Hachette’s ass.

Yes, Amazon is acting like a bully, and yes, the industry is doing its best to preserve its ineluctable pricing power. So be very careful before you pick sides in this fight. There’s plenty of venality to go around.

A sticker promoted on the air by Stephen Colbert, a Hachette author.

A sticker promoted on the air by Stephen Colbert, a Hachette author.


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