A few days ago I unpacked a piece of Amazon propaganda that was posted on the Kindle forum. Well, Amazon have upped their game: in a lengthy letter sent to Kindle authors today (and posted on a new site Amazon set up specifically for this purpose, www.readersunited.com), Amazon have asked indie authors to join Amazon in their fight with Hachette: we are asked to send opposition emails to Hachette CEO, Michael Pietsch (Amazon even published his email, which is really bad manners) and to copy our emails to email@example.com. We are even provided with the relevant talking points that Amazon would like us to include.
Should you support this effort? NO! Why? Because higher Big Five ebook prices are GOOD for indie authors. Without them we SUFFER. We may even outright DIE.
It is a long established practice in retail to place lower-priced goods directly beside higher-priced goods because by doing so the lower-priced product appears a bargain in comparison, even though it may not be. The principle is applied to everything from restaurant wine lists — where a $100 bottle is set beside a $20 bottle — to the placing of lower-priced Equate brand acetaminophen beside boxes of higher-priced Tylenol on the shelf at Walmart. The restaurant may sell only one bottle of $100 wine for every fifty bottles of $20 wine, but the $100 bottle is what makes the $20 bottles sell so briskly. If the $20 bottle of wine was the most expensive on the menu, then the $20 bottle would in turn sell less briskly than lower-priced bottles on the menu.
So when Amazon ask us to support their fight to lower the ebook prices of Hachette authors, what Amazon do NOT want indie authors to appreciate is that the $20 bottle of wine sells well only because of the $100 option beside it.
Walmart only flourish because of the higher-priced stores that exist in comparison. If every shop were Walmart, there would be nothing to define a bargain and Walmart would not have the market share that they do. But if every shop were Louis Vuitton, there would be nothing to define luxury, nothing to set Vuitton apart from common goods.
In the publishing world, we are Walmart; the Big Five are Louis Vuitton (their mid-list authors are, say, Macy’s and J.C. Penny).
If our ebooks are to remain attractive to consumers, if we are to have any chance of competing against famous authors who names are readily identifiable, whose reputations are established, who get all the press, we NEED their ebooks to be priced higher. If Amazon manage to force the prices of Hachette and the other Big Five ebooks down to $9.99 or less, we will have to lower our prices to a third of that or less to maintain our price deferential. Amazon only pay us 70% if our ebooks are priced at $2.99 or higher; below that our royalty halves to 35%. By forcing the price of authors like Stephen King or Nora Roberts down to $9.99 instead of $14.99 or $19.99, Amazon force OUR prices down too, and with it our royalty. WE LOSE TWICE. Why would any intelligent indie author support such a scheme? Why would any intelligent indie author encourage our competitors to lower their prices? Do you think Walmart actively encourage the likes of Macy’s or J.C. Penny to lower their prices? Of course not. That would be corporate suicide. Yet this is exactly what Amazon are asking indie authors to do, to put on a suicide vest so Amazon can win their war with Hachette. Which should tell you just how little regard Amazon have for indie authors: we are expendable. And while a suicide bomber is promised 72 virgins and an eternal erection for his sacrifice, what is Amazon promising us for ours? Bugger all.
With digital content, Amazon have NO ADVANTAGE over their competitors like Amazon did over physical bookstores.
Moreover, Amazon sell a proprietary format, the Kindle, while EVERYONE ELSE sells the ePub format. This works both for and against Amazon: the proprietary format locks early adopters into the Amazon ecosystem — a business model Amazon adopted from Apple — but any adoption by a consumer of the ePub format is a lost consumer for good. In the world of digital content, Amazon have no option but to force ebook prices down to lure and lock consumers into the Kindle ecosystem. That is what is at the heart of this battle. It has nothing to do with helping authors or readers; on the contrary, it is about chaining us all to Amazon.