Hachette’s Reply to My Letter

So the CEO of Hachette sent me, and likely other writers, a reply to the letter I wrote, which you can see here. I’ll let you form your own opinion, then you can see what I think at the bottom:

Thank you for writing to me in response to Amazon’s email.  I appreciate that you care enough about books to take the time to write.  We usually don’t comment publicly while negotiating, but I’ve received a lot of requests for Hachette’s response to the issues raised by Amazon, and want to reply with a few facts.

  • Hachette sets prices for our books entirely on our own, not in collusion with anyone.
  • We set our ebook prices far below corresponding print book prices, reflecting savings in manufacturing and shipping.
  • More than 80% of the ebooks we publish are priced at $9.99 or lower.
  • Those few priced higher—most at $11.99 and $12.99—are less than half the price of their print versions.
  • Those higher priced ebooks will have lower prices soon, when the paperback version is published.
  • The invention of mass-market paperbacks was great for all because it was not intended to replace hardbacks but to create a new format available later, at a lower price.

As a publisher, we work to bring a variety of great books to readers, in a variety of formats and prices.  We know by experience that there is not one appropriate price for all ebooks, and that all ebooks do not belong in the same $9.99 box.  Unlike retailers, publishers invest heavily in individual books, often for years, before we see any revenue.  We invest in advances against royalties, editing, design, production, marketing, warehousing, shipping, piracy protection, and more.  We recoup these costs from sales of all the versions of the book that we publish—hardcover, paperback, large print, audio, and ebook.  While ebooks do not have the $2-$3 costs of manufacturing, warehousing, and shipping that print books have, their selling price carries a share of all our investments in the book. 


This dispute started because Amazon is seeking a lot more profit and even more market share, at the expense of authors, bricks and mortar bookstores, and ourselves.  Both Hachette and Amazon are big businesses and neither should claim a monopoly on enlightenment, but we do believe in a book industry where talent is respected and choice continues to be offered to the reading public.


Once again, we call on Amazon to withdraw the sanctions against Hachette’s authors that they have unilaterally imposed, and restore their books to normal levels of availability.  We are negotiating in good faith.  These punitive actions are not necessary, nor what we would expect from a trusted business partner.

Thank you again and best wishes,

Michael Pietsch

My reaction to his bullet points begin here. If you want to stay objective, feel free to ignore this part, and leave me comments!

-The claim that Hachette sets its own prices may be true today, but legally, collusion has been proven. Okay, so let’s take that as a promise- from the court decision forward, Hachette is setting its own prices.

-Well yes, the whole point of ebooks is to save on manufacturing and shipping. Rhetorical, but all right, let’s have that clear on the table.

-80%  at $9.99 or lower huh? So what’s the problem with Amazon’s demands?

-What makes the remaining 20% cost so much?

-The marketing strategy here is the same as the hardcover/paperback strategy: higher priced now, to fool the rubes, and lower price later for the regular readers. I had a problem with this from the beginning. Not only does it segregate readers and waste paper, but it encourages lending and pirating.

-It doesn’t matter what the paperback was intended for, it has the capacity of a much greater readership, at a faster rate. Literary equality much? Don’t favor the rich reader who can shell out 20-30 bucks without thinking about it to get the books they want, when they come out. Surprise! The rich man and poor man pay the same for the same product. This just goes to prove the Big 5 are indeed dinosaurs, who cannot think outside the box.

Now, its not that I don’t see where he’s coming from. Publishers do offer authors and readers the extra work that makes a book go from good to great. But here’s the thing: Michael Pietsch claims Amazon is using sanctions against Hachette. My original point stands: How can Amazon reliably post prices and release dates when the negotiation is ongoing? How can any retailer? I disagree with Mr. Pietsch on this point: the actions of Amazon are overwhelmingly necessary.

Is Amazon seeking more profit? Difficult to say. As far as I can tell, our indie author royalties are unchanged, which means the cut Amazon takes for its discounts are on their own account. As front-line distributors, Amazon is in a better position to tell what the market is willing to pay for a book, electronic or traditional. However, the publisher’s costs remain the same, electronic or traditional.

From a reader’s standpoint, I have mentioned there are a lot of things I don’t need to find a great book. We know, in the indie pub circles, that word of mouth is better than any advertising- in fact, I generally hear about books in conventions, author signings (Gail Carriger’s Ettiquette and Espionage) or other events where similar minds gather. Instead of canvassing a subway line filled with illiterate immigrants with ads, why not host more special events? Gather information, spread excitement for the material. We can also cut down costs on marketing, on warehousing, and manufacturing if we adopt a more conservative production method, similar to print on demand. For example, 40% of books are pulped because they are simply not sold- the publisher made an error in their estimates, simple as that. Make less so the books cost less from the outset! Eliminate the practice of consignment at brick and mortar stores! Spend less, spend smart on marketing in the first place! Realistic advances! Most of us indie authors work 2-3 jobs in addition to writing.

Now, I’m not a publishing professional. But it seems to me there are fewer middlemen on the part of Amazon’s approach, and they simply cannot see the publisher’s difficulty in producing a quality product. On the other hand, publishers are so used to mass manufacture and fighting the public to get the author a foothold, they don’t see the other, modern avenues for streamlining cost. It is my hope that from this point on, the distributor and publisher can come together and actually compare notes on the industry, instead of putting forth demands for different price points. Reduce cost on production, while allowing the room for quality. If Mr. Pietsch is right, that Hachette and Amazon are trusted partners, then a cooperation can benefit everybody, the reader most of all.


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