Amazon makes a direct offer to Hachette authors: 100% ebook royalties

[Top100EbooksRank]

https://gigaom.com/2014/07/08/amazon...e-full-letter/

The full letter

“Dear XX,

I wanted to ask your opinion about an idea we’ve had that would take authors out of the middle of the Hachette-Amazon dispute (actually it would be a big windfall for authors) and would motivate both Hachette and Amazon to work faster to resolve the situation.

Our first choice would be to resolve a dispute like this through discussion only. We tried that already. We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.

We agree that authors are caught in the middle while these negotiations drag on, and we’re particularly sensitive to the effect on debut and midlist authors. But Hachette’s unresponsiveness and unwillingness to talk until we took action put us in this position, and unless Hachette dramatically changes their negotiating tempo, this is going to take a really long time.

Here’s what we’re thinking of proposing to them:

• If Hachette agrees, for as long as this dispute lasts, Hachette authors would get 100% of the sales price of every Hachette e-book we sell. Both Amazon and Hachette would forego all revenue and profit from the sale of every e-book until an agreement is reached.

• Amazon would also return to normal levels of on-hand print inventory, return to normal pricing in all formats, and for books that haven’t gone on sale yet, reinstate pre-orders.

Here’s an example: if we sell a book at $9.99, the author would get the full $9.99, many multiples of what they would normally get. We can begin implementing this arrangement in 72 hours if Hachette agrees.

We haven’t sent this offer to Hachette yet — we’re sending this to a few authors and agents to get feedback first.

What do you think? Would this be helpful, especially for midlist and debut authors?

Can we talk on the phone later today or tomorrow once you’ve had a chance to digest?

Thanks and look forward to talking.”

Statements from Hachette and Amazon

Hachette:

“Amazon has just sent us a brief proposal. We invite Amazon to withdraw the sanctions they have unilaterally imposed, and we will continue to negotiate in good faith and with the hope of a swift conclusion. We believe that the best outcome for the writers we publish is a contract with Amazon that brings genuine marketing benefits and whose terms allow Hachette to continue to invest in writers, marketing, and innovation. We look forward to resolving this dispute soon and to the benefit of the writers who have trusted their books to us.”

Amazon:

“We call baloney. Hachette is part of a $10 billion global conglomerate. It wouldn’t be ‘suicide.* They can afford it. What they’re really making clear is that they absolutely want their authors caught in the middle of this negotiation because they believe it increases their leverage. All the while, they are stalling and refusing to negotiate, despite the pain caused to their authors. Our offer is sincere. They should take us up on it.”

*Hachette previously described Amazon’s proposal as “suicidal” in a statement to the Wall Street Journal; the story has since been updated and that reference removed.

[fjtorres]

Money quote:

We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us. After our last proposal to them on June 5th, they waited a week to respond at all, promising a counteroffer the following week. We are still waiting a month later.

Puts everything into context.
Especially the unavoidable next move: no contract, no talks = no listings.

[Rizla]

From the letter, it sounds like there are some spoilt babies running Hachette, but maybe my reading of the letter is un-nuanced? It seems that Hachette have been behaving like major dicks, have thrown their authors under the bus in the process, and Amazon are outing them? Is that right?

[hki908]

From another point of view, oh wow, a good reason to be signed with a publisher. If you were signed with self publishing through amazon, they would not be offering you 100% royalties, now would they? In fact if amazon were controlling all publishing, they could pretty much set up to pay as much royalties and just as much as they wanted. In fact it is not cool they are offering more royalties to people published by a company they are in conflict with than they offer to the people who publish through them and only them. Way to respect theri authors.

This seems to me the equivalent of trying to break a strike.

[tubemonkey]

Originally Posted by Rizla

From the letter, it sounds like there are some spoilt babies running Hachette, but maybe my reading of the letter is un-nuanced? It seems that Hachette have been behaving like major dicks, have thrown their authors under the bus in the process, and Amazon are outing them? Is that right?

That about sums it up

[ProfCrash]

Oh that is genius. Pure genius. If Hatchette turns it down it is because they think that they are benefiting from dragging out negotiations. If Hatchette accepts it you can guarantee that the negotiations will be wrapped up in a week or so.

LOL seriously brilliant.

How are Authors responding to this?

[fjtorres]

Originally Posted by ProfCrash

Oh that is genius. Pure genius. If Hatchette turns it down it is because they think that they are benefiting from dragging out negotiations. If Hatchette accepts it you can guarantee that the negotiations will be wrapped up in a week or so.

LOL seriously brilliant.

How are Authors responding to this?

Hachette already rejected it.
Took only ten minutes, give or take.
(Why free the hostages before the SWAT force drops in?)

It is pretty clear at this point that they want to run out the clock until their settlement prohibition against no-discount agency expires.

[ProfCrash]

It doesn't matter to Amazon that Hachette rejected it, that only supports Amazons case that Hachette doesn't care about the authors or settling this dispute while laying out the pace of the negotiations with Hachette. After being on the receiving end of so much crap, Amazon just put Hachette on the defense.

I love that one of the authors is arguing that he couldn't take the full royalties because of his advance. The only place giving you full royalties would be Amazon so Hachette would still be getting their money back on other stores sales.

[eschwartz]

Originally Posted by ProfCrash

Oh that is genius. Pure genius. If Hatchette turns it down it is because they think that they are benefiting from dragging out negotiations. If Hatchette accepts it you can guarantee that the negotiations will be wrapped up in a week or so.

LOL seriously brilliant.

How are Authors responding to this?

Seemingly, with mistrust of Evil Amazon, who wouldn't do it if they didn't have a plan to screw the authors in the long term.

But maybe that is just Patterson & Ilk.

[darryl]

The OP quotes Hachette as wanting a contract "whose terms allow Hachette to continue to invest in writers, marketing, and innovation."

What does this even mean? Continued investments imply investments that Hachette are already engaged in. Is this a plea for more money for Hachette. It's authors, with the exception of a very few, would seem to receive better terms from Amazon. As for marketing, I would say that Amazon's marketing of it's products is certainly not second to Hachette's. Anyway, would not Hachette have terms in at least some of it's author's contracts allowing recovery of such marketing costs? Is Hachette expecting Amazon to subsidise the continuation of it's old business method's by contibuting to Hachette's marketing costs of books which do not sell. And the only recent innovation I can think of which Hachette participated in was agency pricing!

Long live Amazon. Yes, it may later obtain and abuse monopoly status, but it is far from that position at the moment, and certainly a far preferable choice to dominate the market than our wonderful traditional large publishers.

[Barcey]

Originally Posted by fjtorres

Money quote:



Puts everything into context.
Especially the unavoidable next move: no contract, no talks = no listings.

I wouldn't say that it set the context any better then the Hachette selective leaks. It does demonstrate that there are always two sides to any disagreement though. It also makes the Hachette authors look silly when they've been claiming they know what the disagreement is about and it's all Amazon's fault.

What, you mean Hachette wasn't telling you the full story?

[TimW]

Originally Posted by fjtorres

Hachette already rejected it.
Took only ten minutes, give or take.
(Why free the hostages before the SWAT force drops in?)

It is pretty clear at this point that they want to run out the clock until their settlement prohibition against no-discount agency expires.

Amazon making the overture about giving the authors 100% of proceeds of book sales is fascinating stuff. As you mentioned on Nate's site, the truly astonishing part of the story is: Amazon has had no contract with Hachette since March. They would have been well within their rights to remove the buy buttons four months ago. I wonder if they're thinking (hindsight is always 20/20) that they should have done that, pulled the buy buttons. Would the circus have been just as bad? Yes, probably even worse. Amazon actually handled it about as well as could be expected.

However, I don't think they would have let it drag on this long, had they realized Hachette was holding the ball and probably ALWAYS intended to wait out the Agency clock. (Hey DoJ! Can we get a shot clock violation call on Hachette??) Speaking of the DoJ, it's a 100% certainty that they know everything that's been happening. The interesting little story (several weeks ago) about the DoJ letters written to Hachette, HarperCollins, and Simon & Schuster "Hey guys, are you still colluding?" gives me the impression they know a LOT more than the general public. When the DoJ gets enough evidence, there will be a new antitrust lawsuit filed and this one won't be settled so easily.

[ProfCrash]

If there is any truth to the statements that Hachette is taking forever to respond to Amazon then Hachette is kind of screwed. It is hard to take the high road when you are not even talking to the other party.

Amazon never had to send the deal to Hachette. They sent it to authors for their feedback knowing that it would be leaked. It gets their version of the story out to the authors, potentially decreasing the author anti-Amazon crap, and offers a solution that would be great for the vast majority of the authors affected by this mess.

[Crusader]

Excuse me for being skeptical but I don't believe either version of the story. Hachette isn't the evil incarnate it's made out to be, nor is Amazon the dashing hero trying to save the day. This offer from Amazon is more a PR stunt than anything. It's easy to offer something you know will be rejected.

Like they say, there's always 3 sides to a story. I'd be interested to know the truth.

[eschwartz]

Originally Posted by Crusader

Excuse me for being skeptical but I don't believe either version of the story. Hachette isn't the evil incarnate it's made out to be, nor is Amazon the dashing hero trying to save the day. This offer from Amazon is more a PR stunt than anything. It's easy to offer something you know will be rejected.

Like they say, there's always 3 sides to a story. I'd be interested to know the truth.

Wow. It's almost like Amazon set up a PR stunt to counter Hachette's PR stunt. Oh, wait...

No one said Amazon is the dashing hero trying to save the day. But their business model does favor authors/consumers more than Hachette's does.