I received the following cheery letter in my email the other day. Reading it chilled me to the bone
Dear Kindle Customer,
We have good news. You are entitled to a credit for some of your past e-book purchases as a result of legal settlements between several major e-book publishers and the Attorneys General of most U.S. states and territories, including yours. You do not need to do anything to receive this credit. We will contact you when the credit is applied to your Amazon.com account if the Court approves the settlements in February 2013.
Hachette, Harper Collins, and Simon & Schuster have settled an antitrust lawsuit about e-book prices. Under the proposed settlements, the publishers will provide funds for a credit that will be applied directly to your Amazon.com account. If the Court approves the settlements, the account credit will appear automatically and can be used to purchase Kindle books or print books. While we will not know the amount of your credit until the Court approves the settlements, the Attorneys General estimate that it will range from $0.30 to $1.32 for every eligible Kindle book that you purchased between April 2010 and May 2012. Alternatively, you may request a check in the amount of your credit by following the instructions included in the formal notice of the settlements, set forth below. You can learn more about the settlements here:
In addition to the account credit, the settlements impose limitations on the publishers’ ability to set e-book prices. We think these settlements are a big win for customers and look forward to lowering prices on more Kindle books in the future.
Thank you for being a Kindle customer.
The Amazon Kindle Team
Dr. Evil still lives and is apparently working at Amazon.com.
Why, you are probably asking right about now, was such a nice letter the cause for fright and revulsion? I mean, isn’t it nice that Amazon is helping me get my money back for overpayment of books?
Not when you realize what really happened. Not when you realize that Amazon has just simultaneously arranged for a huge windfall profit while sucking money directly from publishers it wanted to punish for questioning Amazon’s own predatory pricing practices. Not when you realize that Amazon is crushing the life out of literature under its own burgeoning bottom line.
As early as 2010 you can see the roots of these questions. In an article entitled ‘Is Amazon Evil?‘ by Onnesha Roychoudhuri, we already begin to see the concern of where Bezos is taking us in literature.
What happens when an industry concerned with the production of culture is beholden to a company with the sole goal of underselling competitors? Amazon is indisputably the king of books, but the issue remains, as Charlie Winton, CEO of the independent publisher Counterpoint Press puts it, “what kind of king they’re going to be.”
So what did Amazon do that has brought terror to me as I ponder weak and weary over this flotsam piece of email lore? Gather closer around the campfire, friends, and hear the tale…
Amazon.com decided in their marketing wisdom that no ebook should be more than $9.99 in price and that most of the backlist should be priced much lower. There is certainly prima facie arguments that would seem to logically support that conclusion: an ebook takes up no physical space, can be reproduced and distributed without significant cost and is stored only as data rather than cases of bound paper. Logic would seem to dictate that an ebook which does not require physical printing should be priced far less than a hardback book brick of bound paper.
Logical if you are a marketer with a product, that is. Logical if you assume that the value in the book is found in its paper, its ink and its leather binding.
But the real value in a book isn’t really found it its physical presentation. Sure, we pay more for a leather bound volume than a trade paperback — but the real value in the book is the craft of the writing that goes into producing it. The quality of the literature involved, however, is not Amazon’s concern. It deals in volume … and that is an important fact to remember in what happens hereafter.
Amazon, exerting considerable market-share muscle, decided that their pricing structure had to be the pricing structure for everyone. Amazon would determine the price charged for individual books — not the publishers or for that matter the independent authors who developed those works. Publishers wanted to set their own prices; Amazon wanted to fix those prices according to their marketing model regardless of what the publishers had put into a book. So publishers who paid large advances on books and were counting on big initial sales of hardbacks to help recover those advances saw their $29.00 hardback book being released on the same day as a $9.99 Kindle ebook of the same title.
Nice for Amazon whose only objective is to sell any book cheap but terrible for the publisher and the independent producer/author alike. Amazon was using their market-share weight to dictate pricing. In effect, Amazon was engaging in monopoly practices and price fixing. Of course, in some ways this is no different than complaining that Walmart, Sam’s Club or Costco is driving independent retailers out of business because their sheer size allows them to discount their prices. It is a market fact that when one business gets that much bigger than others in their field they tend to drive the competition out of existence simply through their economy of scale. Anyone remember B. Daltons, Walden Books or Borders?
What could the six big publishers in New York do about it? Stop selling to Amazon? So they decided that is exactly what they would do but, in making that decision, they also knew that they needed some avenue to distribute ebook copies of their publications — it was simply impossible to ignore such a market. So they entered into an agreement with Apple for exclusive distribution rights through their devices in order to keep the prices of ebooks more consistent with the price of physical books. At least, that was their argument
So what did Amazon do when challenged with their own attempts at price-fixing? They called up the United Stated Department of Justice … and complained that the big six publishers were engaging in a conspiracy with Apple to attempt price-fixing!
Read that again: the price-fixing Amazon blew the whistle on the big six publishers for price-fixing. And, according to the DOJ, that was exactly what the publishers and Apple were doing. Conspiracy to fix prices through a cartel is illegal; but fixing prices on your own because you’re bigger than everyone else in the marketplace apparently is not.
Now, since Amazon was trying to push prices LOWER (which the public would perceive as a good thing), no one wants to take Amazon to court over their predatory practices. But publishers and Apple trying to push prices HIGHER… well, that lawsuit works on the evening news.
So, the pirates turned in the privateers for piracy… but this is where the story takes a very strange turn.
This settlement provides for $69,000.000 (sixty-nine million dollars) to be set aside into a fund “for payment to consumers who purchased qualifying ebooks from April 1, 2010 through May 21, 2012. If the Court approves the Settlements, eligible consumers like you will receive automatic credits to your E-reader accounts. The credit can be used on any purchases of E-books or print books.”
What this means is that much of this “sixty-nine million dollars” (and please read that number in your best Dr. Evil voice) is going straight back to Amazon — that’s because this settlement is being administered as ‘credits’ to your account which means that when you buy an ebook with those credits, Amazon is going to keep their profit margin on THOSE sales as well as the original sales profit they made on those books effected by the settlement.
As an ebook reader, it sounds like a good deal: you’re getting ‘free books’ as part of the settlement. So what if Amazon played the system and robbed a bunch of publishers in the process?
You should care because there is more to the written word that paper, glue, binding and boards. Publishing isn’t just about printing; it’s about a group of creative, dedicated people who produced craft and quality in the books they produce. The real value is in the writing, it’s in the editing, it’s in the production, it’s in the layout, it’s in the process that insures the words that you see are polished to shine with meaning and impact. I have no object to you paying to read the ‘slush pile’ then by all means go ahead. But if you want a level of quality in what you read, you should expect to pay more for it than for what your neighbor just uploaded from his blog.
Two years ago, my wife and I started a serial novel project called ‘Dragon’s Bard.’ We offered an extremely exclusive, limited-edition production of a series of novels written in serial installments exclusively for our subscribers. Each subscriber then received a signed and numbered edition, each registered with us, of a hardback copy of the completed novel. These books are available in very limited quantities online currently for $93 US. Early subscriptions for our next book in the series go for around $53 US. Each one comes with ebook downloadable versions of the completed work in both mobi (kindle) and epub (Nook) formats. These books are at their best double the full price of a hardback novel — in some cases three times the price — but they are exclusive and rare treasures.
But Amazon wants you to believe that you should pay the same for this book as the pamphlet on Internet Gambling that some guy just cobbled together one afternoon from content stolen from other people’s websites.
Should ebook prices be lower than physical books? Absolutely… but that price should be determined by the market
, the publisher and the writer — not Amazon. Until that changes, the tail is wagging the dog. By artificially limiting what publishers and independent authors can charge for ebooks, that limits what publishers can PAY you as an author can earn for your book. That dream you had of making it big with your best-selling novel whether through a traditional publisher or through your own independent press just had a very low an arbitrary ceiling placed over it.
So raise your goblet to Amazon! You’ve given us a chilling tale this Halloween … and made it look like a gift.