Today's big news is that Amazon are going to start selling Kindle ebook readers world-wide.
Let me explain why I think this is very bad news for writers.
Astute readers will have no doubt noticed that I provide links to buy my books via Amazon.com and Amazon.co.uk in the sidebar to the right of this web page.
Really astute readers will also have noticed that I don't link to Kindle ebooks — only to hardcovers and paperbacks.
There is a reason for this.
Payola is "the illegal practice of payment or other inducement by record companies for the broadcast of recordings on music radio, in which the song is presented as being part of the normal day's broadcast."
Amazon isn't paying me directly to put those links on my web pages — but if you click through and buy one of those books from Amazon I do get a kickback of between 1% and 4% of the cover price. It's not strictly payola as such, but I will confess to whoring shamelessly for Amazon gift vouchers. In my defence, let me add: this blog is hosted on a server that I rent for the thick end of US $1000 per year. And I refuse on principle to take third party advertising or hang out a tipjar. The Amazon affiliate links are my sole way of directly monetizing this blog, and in a good year they cover as much as 25% of my server costs.
But it's not like I make a lot of money off Amazon. When you see the cover price of a book discounted by 30%, you should ask where that 30% is coming from. Normally, booksellers negotiate a discount off the cover price when buying books wholesale from the publisher or distributor. A normal discount for a small bookshop is on the order of 40-50%. If Tesco decide to push the latest Harry Potter as a special offer, they can get up to 70% off ... at which point the publisher is barely breaking even on manufacturing costs: the reason they put up with this steep level of discounting is that it just about guarantees the title a spot in the top 5 bestsellers, which is marketing gold dust (and will drive sales elsewhere). When you see a hardcover sold by Amazon at 30% below retail, the conclusion you should draw is not that Amazon are giving you a bargain out of the goodness of their heart: it's that they've have bent the publisher over a barrel and are screwing them for 60% to 70% of the cover price. Clawing back 1-4% off that discounted price (a chunk of which discount probably came out of my royalties) is just my way of making the best of a bad deal.
(I'd link to other bookstores as well, but none of them seem to have affiliate schemes — and maintaining those links takes time and energy. I've got about seventeen books in print, typically in two or more editions, before we even consider translations; if Borders or B&N want me to ride herd on a farm of thirty-plus links, some kind of sweetener would be appreciated.)
I don't link to Kindle ebooks because Amazon don't pay an affiliate fee on them. And thereon hangs a story ...
As I've said in the past, the price structure of the commercial ebook market is broken — for a variety of tedious reasons, publishers try to sell ebooks for not less than 80% of the price of the cheapest dead tree edition currently in print. (And then for different but equally tedious reasons they expect us to accept DRM on top.) This is a deeply annoying situation and it has stunted the growth of the ebook sector for a decade or more. Today, even a top-selling ebook edition is lucky to make 10% of the sales volume of a mass market paperback edition of the same book.
When Amazon came along, with the Kindle, a device to which my first reaction was highly unfavourable. My initial fears have been borne out; while Amazon fixed the Kindle's aesthetic problems efficiently, their behaviour towards customers has not been good — as witness the 1984 scandal. Mind you, that pales into insignificance compared to their behaviour towards authors: the gay deranking scandal may have been hastily denounced as an accident, but it shows that they've created a frighteningly efficient machine for imposing ideological censorship, should they choose to do so. What's even worse is that they seem to be close to achieving iPod status in the field of ebook readers. The dangers of a monopsony arising in ebook distribution can't be overemphasized, and should be obvious.
Now, why don't I like the launch of the Kindle in the UK?
Answer: because it looks to me as if Amazon maybe using it to screw authors and publishers.
According to The Guardian:
Although customers will have to order from the United States for the time being, Bezos said in a note to British customers on Amazon.co.uk that the gadget would eventually be sold through the company's British outlet.Let's unpack this, shall we?
"In the future, we plan to introduce a UK-centric Kindle experience, enabling you to purchase Kindle and Kindle books in sterling from our Amazon.co.uk site," he said.
What's happening is that Amazon are making Kindles available in the UK with US content.
The US Kindle store caps book prices at $9.99 — even for hardcovers that normally have a retail price of $23.95 and which would typically cost $16 in dead tree format via Amazon. Amazon gets the books at this price by taking the publishers for a huge, Tesco-like discount (and by saying "screw you" to the small fry like me, who are looking for our points on the referral scheme). They've gained enormous leverage in the ebook market by acquiring first mover position, and they're exploiting this to break down the separation between hardcover and mass-market price points. I make literally five times as much money in royalties per $24 hardcover as I do per $8 paperback. I'd like to be able to make that money off $10 ebooks via Amazon, but my publishers (and their contracts departments) aren't set up that way; we're locked in place with legal boilerplate written years ago.
Why is there no UK Kindle ebook store? And why has it taken them so long?
One nasty suspicion of mine is that Amazon were demanding discounts so ludicrous that publishers would be making a net loss on each book sold after expenses and royalties. It's in line with their established business practices, as far as I can tell. Speaking hypothetically: if this was the case, and nobody was willing to do business with the ebook monopsony from hell, might the monopsony from hell respond by using its market-leading position to punish the recalcitrant European publishers and bring them to heel? And if so, wouldn't facilitating grey market imports be one way to do that?
You might think that if this were the case, it wouldn't harm anyone but a bunch of fat-cat publishers. However, when war breaks out it's not just the combatants who get hurt. There is a convention in English language publishing called the trans-Atlantic rights split. A relic of the days when trans-Atlantic shipping was expensive and slow, it's a provision whereby English Language publication rights to a novel are usually licensed in two tranches — one for North America, and one for the UK and the rest of the world. These days you can also sell World English Language rights, in which case the acquiring publisher typically sub-licenses them to someone local to the other territory. If you're a writer, you prefer to sell separately — if you can negotiate, say, 10 gold pieces for North American rights, you can probably get 4-5 GP for UK/Commonwealth rights — but a world rights sale will only get you 12 GP. The split, in other words, persists because it's in authors' interests to maintain it.
If Amazon are trying to break the trans-Atlantic rights split, that's going to ultimately cost me 20-30% of my (English language royalties) income. Even if they don't succeed, they're going to trigger a damaging price war between my US and UK publishers, or a bout of "let's you and them fight" litigation as British publishers sue to keep US grey-market imports out of "their" Kindles. If this were to happen, nobody would benefit from it — except Amazon, who would get rich off other folks' income stream.
So, to summarize: what have I got against Amazon's Kindle?
1) DRM. (It's unethical, immoral, fattening, and a royal pain in the ass. To be fair: this also goes for other ebook platforms.)
2) Amazon reserves the right to delete work from your Kindle. (Under circumstances which are now a little clearer and a little tighter, but nevertheless still present.)
4) They're using their monopsony position to fuck over their suppliers (i.e. the publishers) in a manner that threatens a catastrophic crash in author royalties in the medium term (up to 5 years). NB: as a reader, you may enjoy the short term price benefit, but you'll pay for it in the long term in reduction of choice.
5) Their actions may start a trans-Atlantic price war between publishers, to the detriment of authors (again, in the medium term).
We desperately need a sane price structure for commercial ebooks, a better answer to English language rights licensing, and solutions that make books easier and cheaper for readers to get hold of while enabling authors and editors to continue to earn a living.
But Kindle — as currently sold — ain't it.