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New authors may be the losers as publishing titans clash

Amazon and Hachette square off in a battle over the terms of trade

As Book Expo America (BEA) — the annual trade fair for booksellers — gets underway at the Javits Center in New York on May 29, the industry is buzzing about a battle between Amazon and the Hachette Book Group (whose imprints include Little, Brown & Co.).

Hachette issued a statement on its website and CEO Michael Pietsch wrote a letter to his company’s authors thanking them for their support at this difficult time. Amazon eventually posted a statement on its own site acknowledging that it is no longer taking preorders on Hachette titles and arguing that it has the right to do so and is acting on behalf of customers. Neither party has revealed the details of their dispute — just the fallout. But the fresh memory of the 2013 Department of Justice settlement with five of the original “big six” houses (Hachette, Macmillan, Simon & Schuster, Penguin and HarperCollins) has many in the industry speculating that e-book pricing is at the heart of the spat.

Amazon’s statement makes clear that it has altered its arrangements with Hachette because the two companies “have been unable to reach mutually-acceptable agreement on terms." It also warns ominously: "we are not optimistic that this will be resolved soon.”

In short, publishers want to set the price of books and pay distributors (like Amazon or Apple) a fee on every copy sold. This is called the agency model. Amazon wants the wholesale model, in which the publisher sells the book, at a 50 percent discount, to the distributor, which in turn sells it to the customer at a price of the distributor’s choice. Apple had agreed to the agency model in determining the price of e-books. This led the DOJ to file an antitrust suit alleging that Apple had colluded with the publishers to increase the cost of e-books by letting them set the prices.

The current negotiation stalemate between Hachette and Amazon became public when authors and readers noticed a number of issues with the publisher’s titles, including:

  • unusually lengthy delays in shipping to customers; 
  • titles either missing or unavailable, or being offered at list price (rather than at a discount);
  • altered discounts on Kindle editions for those titles; and
  • new banner ads suggesting alternative titles from other publishers available at a lower price.

Click on the Amazon link for Joshua Ferris’ just-released novel “To Rise Again at a Decent Hour,” for example. The book is priced at $26 in hardcover and $12.99 as a Kindle edition. The page features a banner ad advertising “Similar Items at a Lower Price," consisting of a seemingly random selection of novels published by non-Hachette houses. And this is for a novel Amazon has anointed “book of the month” for May.

Many writers and readers would likely revolt at the suggestion in Forbes magazine that “most books are very close substitutes for each other,” believing that the wonder of books lies precisely in the fact that they are unique creations by very different individuals (and that reading Joshua Ferris is nothing like reading Michael Cunningham).

The Authors Guild weighed in, calling Amazon’s behavior “an attempt to extort better contract terms from the publisher"; James Patterson wrote a Facebook post warning that “the quality of American literature will suffer”; and several critics declared they were going to “quit Amazon because of its monopolistic tactics.” Throughout, much of the focus has been on blockbusters like Donna Tartt’s “Goldfinch” (which has remained available, at a discount, on Amazon), or the forthcoming J.K. Rowling pseudonymous novel (which has been made unavailable for preorder). But while a battle between book industry titans is unlikely to affect the standing of such well-established writers, it is potentially ruinous to the careers of first-time authors being published by Hachette this month.

Industry insiders say the window of opportunity for a debut to establish a new author is during the first three weeks after publication. If sales are poor (and without Amazon, which is responsible for an average 50 to 80 percent of all sales, they very likely will be), a book is potentially dead out of the gate.

“As a first-time author, you have so much to prove — that you can produce a good book, but then that it can actually sell,” said author Daniel Schulman. “If my book isn’t seen as a success, regardless of the reason, it can affect my ability to sell a second one.”

Schulman’s first book with Grand Central, “Sons of Wichita” — about the conservative political-donor Koch brothers — was gearing up to a great start upon release. Enthusiastic advance reviews and an early interview on MSNBC pushed the book into the top 300s on Amazon. Another early interview, with NPR’s “Fresh Air,” propelled it into the top 75. Then, on May 20, the book was published. Since Grand Central is a Hachette imprint, Amazon had it priced at $27 and with shipping delays of three to five weeks. That may have cost it many of the impulse buys that follow a rave review or media hit.

Chad Harbach’s debut novel, “The Art of Fielding," published by Little, Brown in September 2011, quickly became a bestseller. “I remember watching Twitter explode the night that Michiko Kakutani’s review went up and then watching the Amazon ranking soar,” Harbach’s agent, Chris Parris-Lamb, recalled. “Amazon is the most review-sensitive of all booksellers, and I’m quite sure we wouldn’t have reached as many of those early readers if people had been told they had to wait a month to get the book, and pay $26, instead of getting it in two days for $15. I shudder to think about what that would feel like.”  

That’s a fate Daniel Schulman potentially faces. “Dan’s book is at a critical point when it could tip over into bestsellerdom or miss that narrow window of opportunity for authors who aren’t a known entity,” said Schulman’s agent, Howard Yoon. “Dan spent two years working really hard on this book, he did everything right, only to get caught in the middle of this battle.”

Schulman is feeling the pain. “My book has still been selling, which is great. But how much better would those numbers be if it were readily available on Amazon?”

The Amazon-Hachette showdown is expected to be the talk of BEA this year, from the air-conditioned halls of the Javits Center to the evening cocktail parties hosted by publishers and agencies. Meanwhile, in a show of solidarity, both and a number of independent bookstores are offering Hachette titles at a 30 percent discount or less. 

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