Amazon’s Advantage

The tortoise and the Hare from the Gutenberg Project via Wikipedia
The tortoise and the Hare from the Gutenberg Project via Wikipedia. Who the tortoise is and who the hare represents in this ongoing conflict depends largely on point of view.

Life On Normal Street

Recently, I had the pleasant opportunity of viewing one of Amazon Studio’s new releases, Gortimer Gibbon’s Life on Normal Street. It was an enjoying half-hour program about three kids finding their own adventure on an unusually hot summer day. The first of this kid’s series was done very well. The Main Street setting and the liberal use of magic realism reminded me of some of Ray Bradbury tales from his childhood in Waukegan, Illinois. Created by David Anaxagoras, this story came to Amazon Studios by open submission.

Amazon Diversifies

Amazon Studios is Amazon’s answer to Netflix. The above-mentioned, Gortimer Gibbon’s Life on Normal Street, is just the first in a line of TV pilots and movies from Amazon Studios that can be downloaded and watched on various electronic devices, ranging from a Smartphone to a large flat screen TV. These programs usually cost to view, but some pilots can be watched free of charge by the general public, as was the case with the first episode of Gortimer Gibbons. The point here, is that Amazon is a company that seems willing and capable of expanding its creative efforts. And in the case of Amazon Studios, they are more than willing to deal directly with writers in developing visual content.

Hachette and Simon & Schuster 

Though these two Big Five publishers appear to have received the better part of their deal with Amazon. However, they, along with other large-scale publishers, may face an uncertain future with the paperback bestseller. The high-priced e-book deal these companies cut with Amazon is designed to aid the sale of paperbacks. I don’t know of anybody that believes e-books will replace the paperback, but they will take a larger slice of the pie in the upcoming years. Just how big this slice will be could depend on how well each party plays its own hand.

Parent Companies

Strangely enough, the biggest problem for these publishers may be their parent companies, who may demand maximum profits at the expense of literary quality, fair royalties for writers and incentives to diversify. The Big Five may not be doomed as some the new Kindle millionaires may suggest, but they certainly do face a challenging future.

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Amazon Settles With Hachette, Who Won?

Two grizzly bears fighting, from wikipedia
Two grizzly bears fighting, from wikipedia

“As with most battles, all combatants lost a little something in end.”  Mark Coker, CEO of Smashwords

The News

Last week, Amazon and Hachette came to a tenuous agreement on their feud concerning ebook pricing. The Amazon-Hachette settlement followed an Amazon-Simon & Schuster agreement that went down just a few weeks ago. If you stand back and look at both agreements, they are not all that different. The Agency means of ebook pricing pretty much stayed in tact. What this means is that the publisher (Hachette and Simon & Schuster), gets to set ebook prices in most cases. Amazon gets to some discounting (they wanted much more), but only under certain circumstances.

Good News for the Print Market

Most observers believe that Hachette and the Big Five publishers wanted to keep ebook prices high so that they could discourage ebook sales and push paper sales, which at present  are their main bread and butter. This should benefit authors, who are capable of generating large numbers of paperback sales in the mass marketplace. It is no wonder than best-selling authors such  as Stephen King, Tess Gerritsen, James Paterson, JK Rowling, John Grisham and Donna Tartt, all supported high-priced ebooks to keep paperback sales high.

Thorough Agreement

This agreement that Simon & Schuster first achieved will most likely set the tone for any negotiation between Amazon and any other Big Five or large-scale publisher. Although Amazon did get some concessions, these terms favor the short-term livelihood of the large publisher.

Why Indie Authors Might Be the Big Winner

By keeping ebook prices high for traditional authors, self published ebook authors, who keep their prices low and royalties high, may be the biggest winners. For those working outside a major paper publisher, large sales and high royalties are possible by placing a book in the $2.99 to $7.99 range, not only through Amazon, but with other ebook publishers as well. By maintaining the status quo, Big Five publishers may drive more readers to the Indie market, where ebook prices will probably stay the same in the near future.

The Ultimate Irony

The ultimate irony is that in order to develop and encourage new talent that can create mass paperback sales, companies like Hachette may have to mine the field of self-published Indie authors. This situation may come to exist if  the Agency model does become less lucrative for mid list and first time authors. In this situation, much depends on how much of an overall share the ebook market achieves.

Hachette’s (and other Big 5) Dilemma

After this agreement, Hachette will come under increasing pressure to raise ebook royalties for authors and also to show a better bottom line in profits to its parent company, Legendaire. These could be conflicting demands that will never be met at the same time….or a situation, where the publisher might opt for lower ebook prices to increase sale and profits.