The Nameless Horror

Hachette, Amazon, rumor and giant apes

Everyone else has had their two cents on the ongoing Hachette/Amazon feud, and while I’m barely qualified to comment on it, fuck it, I will too. In part because while I’m not a party to the inner workings of corporate negotiations we’re all picking sides on, neither is anyone else.

What you may hear from some sources - often in quite shrill, earnest tones - is that Hachette wants to control and raise Amazon’s prices for books/ebooks and that Amazon is resisting this. Hachette is the bad guy, desperately trying to screw you, the consumer, and you, its own author, in a bid to keep the perceived value of ebooks high, the bastards.

What you may hear from others - also often in quite shrill, earnest tones - is that Amazon is seeking to wring every last penny from publishers and run them into the ground, eventually fertilizing the ground with the powdered bones of penury-driven authors, the bastards.

Pick a side in this battle between corporations folks, because goddamn those other guys sure are bastards.

Thing is, neither company has actually come out and said openly what the bone of contention is, so all of that speculating would seem to be horseshit largely reflecting the opinions of the writer. Which may or may not themselves reflect on their own past experiences or historical actions by either side that are better understood now, but still don’t grant an inside track on what’s going on now.

The closest I’ve been able to find to a reliable piece of detail arrives with no cite, source or quote, and so might equally be horseshit, in this Guardian article from the early days of the war. In this, it claims that Amazon is seeking to shift some of the cost incurred in discounting from itself to the publisher. (A claim it then contradicts in an actual quote from someone below, saying it’s about profit splitting, a straight fight over percentages.) Given that it’s Amazon who decides when and how to discount, that might seem a little rich; in effect, it’s asking its supplier to take on some of the hit it suffers when it decides to sell products more cheaply in its store and thus draw buyers. In no other industry in the world would this happen.

The thing is, neither company is likely to be acting from a position of Ultimate Evil.

Amazon has always operated on razor-thin or non-existent profit margins, sacrificing income for market share. The remaining space to expand is a little limited these days and the company’s shareholders seem to finally be expecting it to start showing some actual cash in the kitty. It needs to claw back some of the losses it incurs as a result of its deep discounting habits or else run into trouble with its own investors.

Hachette, like any publisher since the dawn of time, operates on thin and unreliable profit margins too, with the shift from physical to digital threatening those even further. If it is to continue to pay authors advances to produce books, an advantage that’s only scoffed at by those with fat enough accounts or self-published sales to ignore such frivolities as contracted income, and to preserve the remaining vestiges of hardcopy book selling and distribution (a separate argument about the validity of which can be made), it needs to avoid shaving those margins even further.

Whether this is a fight about a shift in the standard percentages under the “wholesale model” (a model that Amazon more or less lucked into in the first place, being treated as a wholesaler and not a store, when it first rose from the primordial internet ooze) so that the publisher only offers it products at sales-to-retail prices instead, or whether it’s about who picks up the tab when Amazon decides to drop an ebook’s price 25% for shits and giggles (and sales), or whether it’s some unlikely attempt by Hachette to resurrect the “agency model” post-DOJ, it’s a free market dispute between two capitalist institutions.

Without knowing exactly what’s at stake - and even the notion of percentage-based arguments is only a (probably correct) theory; for all we know, Hachette could be demanding the blood of 100 innocents before signing, or Amazon might have required all Hachette employees swear an oath of fealty on a tiny statuette of Jeff Bezos - it’s hard, then, to say what happens if there’s a winner.

We can speculate. And dear God, have people speculated. So let’s join in. Probably, all the other big publishers would end up facing the same apparently onerous terms if Hachette blinks. Probably, you’d see less (or at least, less constant) heavy discounting of big name ebooks from the Big Five if Amazon crumbles before Hachette’s terrible demands.

Certainly, Hachette has the most to lose directly here. While, if Amazon does give way, whatever mysterious terms it’s insisting on will likely be mirrored by other suppliers across other sectors, something which could hit the Big A hard in the pocket, right now it’s Hachette gambling with an estimated 40% (give or take depending on how you weigh digital vs. paper) of its market, not Amazon. Presumably it feels the risk is worth it, or the consequences of Amazon getting its way are serious enough to warrant it. (The other alternative is that the company is run by some kind of maniac.)

What it is probably not doing - intentionally at least - is throwing its authors (of which I suppose I’m still peripherally one) under a bus, as has been suggested in some quarters of the howling wastes. Its existence depends on (a) people writing books for it to publish, and (b) being able to sell enough of those books to make enough money to pay people to write more, and possibly buy some of its executives jet skis. It can’t - unless run by a maniac intending to flee on said jet ski when the edifice crumbles around them - sacrifice (a) to retain (b). (Arguments about out-sourcing functions, hit-and-hope sales tactics, over-reliance on guaranteed sellers etc. to an extent impact on (a) but overall that part of the process is still required.) It is taking what I would hope is a calculated gamble in order to survive or to forcibly diversify in the face of what it perceives to be a threat. If it succeeds, its authors are safe. If it does not…

One can only speculate. Again. It’s perhaps - and only perhaps - worth noting that when a single entity or a range of directly matching entities comes to control the bulk of a particular market on the basis of low cost to consumers, that control is not followed by price rises, but by cost squeezes passed down to producers. As far as I know, for instance, the UK’s supermarket boom of the 80s and 90s, saw the terms offered to dairy farmers tightened and tightened to the point where the industry is only marginally economically sustainable. There’s no other significant market outside the big chains, who all price match each other, and who all want to give shoppers, shoppers who are very happy with the idea, cheap milk. You either take it in the gut or quit the business.

Amazon is often touted as an innovator and a disruptor of markets. Its principal innovations, though, have been almost entirely economic. Sell more, sell cheaper, deliver faster, divide like an amoeba and move into another market as one saturates, repeat ad nauseam until the whole world is absorbed. The fact that it’s been able to persuade the normally profit-blinded suits of Wall Street that constantly running barely ahead of collapse is a good thing is truly remarkable, but if it’s now required to stop that and start earning a sensible living, if it can’t somehow keep up the factors that made it a giant in the first place, it risks becoming Just Another Store, a fat, multi-celled monstrosity ripe to be killed off by the next fast young thing off the evolutionary ladder. It, too, is presumably taking a calculated gamble in order to survive the transition to middle-age with its adolescent chutzpah intact.

While I’m inclined, as human nature tends to, to support the underdog - the smaller multi-billion-dollar gorilla in this ape battle royale - I’m not sure it makes a lick of sense to pick sides, and sure as hell that it makes no sense to go screaming invective and abuse at those backing The Other Monkey, whichever that is, from your point of view. It’s business. It’s percentages. It’s survival of the fittest in the great corporate jungle. It’s not a noble crusade or plucky last stand against the darkness. Issuing a call to arms is like rallying the populace to your banner with a cry of “GARGANTUSAUR-9000 FOR RULERSHIP OF THE GREAT SKY REALM ABOVE OUR HEADS! DEATH TO GARGANTUSAUR-9001!”, never being sure exactly whose giant scaled foot it was that smooshed your house out of existence.