Amazon, Hachette, and the progressive obsession with the Big Mean Corporation

Amazon makes my son happy.
Amazon makes my son happy.

As a conservative-leaning libertarian, I find myself at odds with most other novelists on a lot of political issues. Whether it’s minimum wage laws or Obamacare, most creative writers tend to favor progressive ideals over the rights of individuals to enter into voluntary business arrangements without government intervention.

So it’s a little unsettling to find myself in agreement with someone like bestselling thriller-writer Barry Eisler in the Amazon-versus-Hachette squabble. Eisler, who is about as progressive as one can be, reacts to the latest over-the-top melodrama of the anti-Amazonians as follows:

From the beginning, the Amazon/Hachette dispute has functioned as a kind of inkblot test. The parties’ negotiations are subject to a confidentiality agreement, so no one outside Amazon and Hachette knows for certain the details.  But vagueness and ambiguity hasn’t much impeded the reflexively anti-Amazon crowd from being certain that Amazon’s tactics are “bullying,” “monopolistic,” “malignant,” “evil,” etc.  Most of all, in the face of confidential negotiations about which the outside world can only speculate, how many people have been certain that it was Amazon’s position and tactics that were hurting authors, while never even considering the possibility that the other party to the negotiation might bear at least some degree of responsibility, as well?

More on Eisler’s blog.

I know dozens of authors who are self-published or published by one of Amazon’s imprints, and I can tell you that the overwhelming majority of them are supportive of Amazon. Many have signed a petition championed by Eisler and indie wunderkind Hugh Howey to urge Hachette to “stop fighting low prices and fair wages.” (And it’s not just Amazon authors who are supportive; as near as I can tell, the pro-Amazon petition currently has somewhere around ten times as many signatures as the anti-Amazon petition being pushed by bestselling author Douglas Preston.)

The Amazon-Hachette war didn’t suddenly transform my (mostly progressive-leaning) author friends into right-wing apologists for razed-earth capitalism. In fact, many of them seem to feel a little conflicted about throwing their support behind a massive corporation like Amazon. In a recent private Facebook discussion, several of these authors expressed misgivings about various Amazon’s policies and its heavy-handed behavior in the marketplace–but none of them went so far as to take Hachette’s side against Amazon. The overall consensus was that the Amazon-Hachette battle was a dirty business that hurt authors and readers, and that neither side’s hands were completely clean. But there was also a realization that the current fight occurs within a larger context, and that context is characterized by four undeniable facts:

  1. Publishers like Hachette got themselves into this mess. They were happy to feed the Amazon monster as long as they were the ones in control of pricing, and they only have themselves to blame for their short-sighted thinking.
  2. Amazon has historically worked to lower prices and make it easier for readers to get books. Hachette has historically worked to keep prices high and make it harder for readers to get books (creating scarcity by parceling out hardcovers, then paperbacks, and finally overpriced, DRM-infused ebooks).
  3. Amazon has made it possible for thousands of authors (including me) who could not interest a publisher to find success through self-publishing. In terms of royalty percentages, Amazon also treats its authors (both those who self-publishing using KDP/Createspace and those published by one of the Amazon Publishing imprints) better than Hachette treats its authors.
  4. Business is business. That is, anyone who waxes romantically, casting a massive publishing conglomerate like Hachette as the savior of books or the defender of authors, is completely full of shit. Publishing is a ruthless, cutthroat business, and anyone painting it as something else is selling you a bill of goods.

In short: a familiarity with the broader context of the conflict casts doubt on the standard, simplistic, progressive narrative of Big Corporation is Being Mean to People.

Granted, it’s easier to be on the side of a Big Corporation when the opposition is another Big Corporation. But it’s still odd to see my Wal-Mart-hating, Starbucks-despising, McDonald’s-reviling progressive friends rally behind (or even remaining neutral regarding) Amazon, which is arguably the Biggest, Meanest, Evillest corporation at all, by the standard progressive definition. (They exploit their warehouse workers! They put bookstores out of business! They collect your personal data! They fight against paying their fair share of taxes! And sin of sins, they’re destroying literature!)

Those who think I’m making a caricature of knee-jerk progressive anti-corporatism need look no further than that paragon of progressive self-delusion and manufactured outrage, In an article entitled “Jeff Bezos offers authors a bribe,” Andrew Leonard offers the following analysis of Amazon’s offer to pay Hachette authors the full price of their e-books while their negotiations with Hachette are ongoing:

On the surface, it looks great for writers. Typically, a $10 purchase price for an e-book would get split three ways. Amazon would take a 30 percent commission, or $3, Hachette would take $5.25 of the remainder and  give the author $1.75 — the standard contractually agreed to “25 percent of publisher’s revenues.” So under Amazon’s proposal, the author makes out like a bandit — 10 bucks instead of $1.75.

Hachette dismissed the proposal out of hand, and it’s not hard to see why. Hachette is giving up more revenue than Amazon. But it’s even worse when you delve a little deeper, as pointed out by publishing analyst Mike Shatzkin. In the vast majority of cases, Hachette authors would not be entitled to even that $1.75, because those royalties would be applied to paying back their initial book advances. If Hachette agreed to Amazon’s terms it would be pissing away a revenue stream necessary to make good the advances it has already paid authors.

Yes, it looks like a great deal on the surface. But then you dig farther down and it turns out that… well, it’s still a pretty great deal. In fact, I had to read those paragraphs five times before I even understood what Leonard was complaining about. For one thing, he’s (deliberately?) misstating the argument made by the publishing analyst he references, Mike Shatzkin, confusing the $1.75 that the author would ordinarily be getting with the $10 the author would get under the Amazon deal. He makes it sound like Amazon is offering $1.75, and that the author might never even see that much. The fact is, though, that Amazon really is offering the author the full $10 on a book priced at $10, and the author really will get that money.

As near as I can figure, Leonard’s complaint here is that the author’s revenue from Amazon’s offer would be treated exactly like revenue from Hachette, which is to say that the author doesn’t see a dime until the advance is paid out. Well, no kidding. That’s how advances work. That’s why it’s called an advance, you knucklehead.

The fact is, Amazon’s offer is a great deal for Hachette authors. I’m published by an Amazon imprint, and I can’t get anywhere near 100% of the sales price for my e-book sales. That’s a fantastic, phenomenal, amazing deal. So what in the world is Leonard complaining about? The answer is in that last sentence:

 If Hachette agreed to Amazon’s terms it would be pissing away a revenue stream necessary to make good the advances it has already paid authors.

Now we see the crux of the problem: it isn’t that authors are getting a raw deal from Amazon. It’s that poor Hachette won’t get its fair share! Having pointed out how advances work (in case we needed a refresher), Leonard moves on to his real concern: Amazon’s “unfair” treatment of an international publishing conglomerate. A more thorough analysis can be found on the post Leonard cites:

So we have a $10 ebook. Normally, Amazon would pay $7 to Hachette and keep $3. Hachette would notionally divide the $7 as $5.25 to Hachette and $1.75 to the author. What Amazon proposed was that the author would get the whole ten dollars, Amazon would give up its $3 and Hachette would give up its $5.25. 

Shatzkin concludes that this is “not quite fair,” which makes me wonder what his definition of “fair” is. Seriously, try to comprehend this logic: Amazon takes $3 on a $10 sale. Hachette takes $5.25 on that same sale. An objective observer might conclude that Hachette is the one being unfair, as they are taking a much bigger percentage of revenue that would otherwise be going to the author. But no, see, it’s Amazon that’s being unfair, because Amazon is proposing that for a limited time both companies take the exact same amount from the sale: zero.

Would this deal hurt Hachette more than it hurts Amazon? Absolutely. But the reason that it would hurt Hachette more is that Hachette has grown accustomed to taking over half of the proceeds from every sale, whereas Amazon has deliberately cut into its own potential profits to avoid taking too much. Amazon is essentially saying to Hachette, “Hey, we don’t mind giving up our sales revenue on these books temporarily, because frankly we don’t make that much anyway. Say, how much do you guys make on every sale?”

Instead of focusing on the “unfairness” of Amazon’s offer, an objective journalist might focus on why Hachette normally pockets almost twice as much as Amazon on every sale–and possibly even ask some questions about the short-sighted decision-making that cause Hachette to be in such a terrible bargaining position with its biggest retailer.

Fortunately for Hachette, media outlets like Salon are well-versed in the Big Corporation is Being Mean to People narrative, and Hachette isn’t quite as big, well-known, or hated as Amazon. So greedy, short-sighted Hachette gets to play David to Amazon’s Goliath, irrespective of any facts that might contradict that narrative.

The Salon piece starts to border on self-parody toward the end, when Leonard claims:

So Amazon isn’t just trying to split authors from Hachette — it’s also trying to split authors from themselves — sparking a class war battle as it seeks better margins from Hachette. 

In Salon’s version of reality, authors were united in their love of traditional publishers like Hachette before big, mean Amazon came along and started to divide us by, well, offering us money. The reality of the situation is that before Amazon came along, a very few authors were content with traditional publishers, a lot more were discontent, and many, many more were shut out of the industry completely. But narrow-minded analysts like Leonard can’t see that big picture, so they spend their time grousing about Amazon’s unfairness. The truly hilarious thing about this sentence is that if Leonard is right–that Amazon is starting a “class war” between authors, then Leonard is deliberately siding with the “one-percenters” of the publishing world–the Turows, Prestons, and Kings, rather than the ninety-nine percent of authors who can only dream of the volume of sales enjoyed by those big-name authors.

This is the sort of reasoning that informs all progressive protectionism: a focus on narrow, disruptive effects within the industry as opposed to broader, subtler, societal benefits. Sure, Amazon has pushed prices down, made books more accessible, and made it possible for thousands of authors to bypass traditional publishing, but look at how unfair they are being! Unfairness is, of course, the trump card of progressive politics. Forget the hundreds of millions of people who have been helped in some small way by Amazon’s success; somewhere there must be victims we can focus on! If the “victim” in this case happens to be another huge corporation, well, that’s unfortunate, but we can find a way to pretend that Amazon is somehow hurting a more sympathetic demographic, like authors. People love authors. WHY DO YOU HATE AUTHORS, AMAZON?!! It’s such a transparent ploy that it boggles my mind that a lot of seemingly intelligent people seem to fall for it.

It’s heartening to me that many of my progressive author friends have seen through the bullshit narrative about Amazon that’s being promulgated by outlets like Salon. But I can’t help wishing they would see that Amazon isn’t the only company that gets this treatment. The Big Corporation is Being Mean to People is a useful narrative, and it isn’t always mistaken. But when you take some time to familiarize yourself with the facts and context of a situation, you often find that the narrative has more to do with ideology than reality.

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2 Comments on Amazon, Hachette, and the progressive obsession with the Big Mean Corporation

  1. In Economics 101 we learned about the idealized market known as “perfect competition”. One of the conditions was “no buyer or seller large and powerful enough to affect prices”, others include “no barriers to entry (i.e. no fees, licenses, copyright, patents,…), and “price equals cost”
    There are few, if any, markets that even come close.

  2. Thank you for standing up for us the reading public. I worked for Borders Books for 4 years and the largest discount the publishers ever gave was 30%, unless it was a new book they were pushing. That is why when you went to a bookstore the books were so expensive. In a way the greed of the publishers put the bookstores out of business.
    I am so thankful for Amazon they have expanded my reading beyond the big name authors the publishers and celebrities are pushing. Granted I do read some of the big names because they are good but thanks to Amazon and their Kindle books of the day I have discovered new authors such as yourself that the bookstores would never been able to keep on their shelves because of profitability.

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