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Bait & Switch

November 4, 2011

A few more Amazon entries to keep you infotained.

The first link was brought to my attention by Jo Eberhardt (thanks, Jo) of “The Happy Logophile“. 

This article tells the story of a failure in Amazon’s Auto-pricing for e-books.  It repriced one author’s book to “free” – inciting a huge spike in downloads, each with $0 in royalties.  The whole sordid tale is here.  But the kicker: although Amazon eventually owned up to the mistake, they refuse to refund the author in question for the lost royalties.

Here’s the full scoop from the author himself, with a copy of the correspondance he received from Amazon.  The relevant, draconian, and frightening statement from that correspondance:

As per our KDP Terms and Conditions, we retain discretion over the retail price of a Kindle book.

A lot of digital self-publishing authors like to talk about the freedom and control they have as digitally self-published authors.  But the fact is, at the end of the day, digital self-publishers are as beholden to Amazon as any traditionally-published author ever was to traditional publishers.  You think you have the power over things like pricing.  But, ultimately, that authority is only temporarily delegated to you: Amazon retains that power.

On this issue, for instance, traditionally-published authors hold a significant advantage: first, they are able to negotiate their contracts (whereas those publishing via the Kindle platform have no such ability: Amazon doesn’t negotiate; you take the terms or you leave it).  Second, traditionally-published authors get paid royalties based on the cover price, regardless of the actual final selling price.  If a retailer decides to offer a book for free, as part of a promotion and as a result moves thousands of copies, the traditionally-published author still gets paid

The second link is another perspective on free e-books at Amazon, and concerns the underlying economics of how Amazon generates profits from giving away free content.

Basically, it appears to boil down to two things.  First, Amazon is in the process of creating what is, in effect, a Netflix of books: wherein Amazon provides instant access to digital delivery of the content for a recurring service fee.  This, in itself, isn’t objectionable to me – as long as the producers of that content are fairly compensated for the use of that content.  But there’s something else going on as well: a second side to this.  Amazon’s regular “service” is their “Amazon Prime” membership.  But the real draw to Amazon Prime isn’t the content library: it’s the free shipping for purchases of goods on Amazon.com.  There real model is that content is secondary to the sale and delivery of real products.

It’s an interesting paradigm… but honestly I haven’t processed yet what that means – either in terms of the result of adopting this sort of paradigm for authors (and other content creators), nor in terms of its long-term impact on the industry itself.  It doesn’t strike me immediately as either good or bad… it all depends on implementation.  Given the previous story, however… I’m just not sure I trust Amazon on that implementation thing.

Anyway, there you go.  enjoy the infotainment.

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3 Comments leave one →
  1. November 5, 2011 5:19 am

    If you’re an indie author with several books on Amazon then I think giving one of the older entries away for free can be a great way of generating publicity of your other premium offerings. I saw a similar story recently, may have been the same one, and the affected novel found itself lodged at the top of the free books chart which meant it was also sitting side by side with George R R Martin in the premium chart which can only be a great thing. Obviously this happening without your permission is a total pooper.

    However I’d argue that the majority of people that bought the incorrectly zero-priced book wouldn’t be lost sales. Those people weren’t going to have bought the book anyway, they only downloaded it because it was free. Hell, many of them probably won’t even read it. It’s an irritating trend that I’ve noticed is this glutinous hunger for free books. Some people will only read free or almost-free priced ebooks, just scouring Amazon and downloading as much as they possibly can. The price is suddenly more important than the genre, the title or the blurb.

    Therefore I am hoping that the new Kindle Lending library will even the playing field. Without individual price no longer being a concern, users will start returning to make more constructive decisions on what to read and not have to worry about wasting their money. The obvious comparison is Spotify – I no longer buy albums but pay a flat £5 a month for unlimited streaming. This means that I can listen to far more music than ever before but also discover more. I’ll listen to a track, if I don’t like then so what. But if I do then I’ll go find more by that artist, a decision based purely on what I heard, not the price, the label or the position in some chart.

    • November 7, 2011 11:05 am

      The thing is: the free-as-a-publicity-tool is exactly what the author here in question did: with a free sample of only the first three chapters of the book. So Amazon’s repricing of the whole book based on that was pretty egregious. Sitting side-by-side with George R.R. Martin might be great (though I don’t think that was the case here – the slip-up only resulted in around 5,000 extra downloads) – but that would only be true if it generated enough name recognition to last past that initial “wow, this is free!” bump. I’m dubious of the ability of a whole “free” book being enough to do that in this day-and-age. A lot of professionally published authors in the past have used that as a gimmick, successfully, in the past. But that was before there was such a glut of cheap-or-free e-books out there. At this point… there’s so much stuff in the bargain bin that having a low price is insufficient in-and-of-itself to generate last interest.

      Pursuant to the above, I think it’s no surprise that I agree that the vast majority of the free downloads in a case like this were not “lost sales”. As you piont out… there seems to be this hunger for free or super-cheap e-books among those who have e-readers, and many of those would never have looked at a book that wasn’t in the damn-near-free price range in the first place. As this author pointed out, their weekly sales leading up to this incident were in the single-digits. But it’s impossible to fully disaggregate the true lost sales from the glut of “downloaded because it was free”.

      My problem with Amazon doing this is simple: although a retalier may have a right to price things they sell as they see fit… when they advertise their KDP as a “self-publishing platform” but take ultimate pricing authority out of the hands of its participants, they’re absconding with a very important part of the “do-it-yourself” mentality that is part of the self-publishing community. How can you say you have control over your product when you don’t even really control the price? In this regard… Amazon has become something other than just a retailer – given their effective-monopoly power in the e-book market, they have in effect become the market for e-books, and using their heavy-hand to control pricing is anti-competitive and wrong.

      I’m also skeptical of the relative fairness of the “monthly-fee-supported Library” model for purposes of fairly compensating artist/creators (including authors). As a consumer, it’s great, sure. Who wouldn’t leap at the chance to pay a very-low, flat fee for unlimited content consumption. But consider the Spotify situation. You say you’re paying £5 per month for unlimited streaming. Now I recognize that every user is going to be different… but I wonder how many different songs and how many different albums will you typically listen to in a given month? Or a given year? Previously… you’d have had to have purchased each album separately. There’s a clear flow of money starting from the purchase of the album back to the creator (with caveats specific to the music industry as have been pointed out to me in the past that make it a particularly bad example of fairly compensating artists… but outside those specific caveats the logic is clear). In a Library-rental model, though… it’s less clear to me how an artist is compensated, and how that compesnation is related, or not, to actual use of the content.

      Likewise with books. Let’s say you have a similar model of a monthly fee with unlimited e-book downloads. How do you compensate the creators of the books: the authors? Is there a per-book-download royalty? If that’s the case… then the flat monthly fee is a tenuous position. Super-readers will read dozens of books in a month. Slower readers may only get one or two a month. (Or you might have even slower readers, like me, who can do one book every few months.) You can’t directly tie the compensation to books read/downloaded, because the fees paid by the super-readers would end up being split to a ridiculously small number to compensate each individual author, whereas the fees paid by the slow readers each month might not get split at all. A read by a super-reader would in effect be worthless, monetarily, to an author. If there’s a per-read royalty/compensation, it has to be divorced from the actual usage by individual readers, and made in aggregate – it would have to be a relatively flat fee per read to each author, regardless of who read it. But that means that certain readers – i.e. the super-readers – are actually too-expensive to service: their monthly fee doesn’t stretch far enough to pay each of the authors and still turn a profit on that customer. In this case, the slow readers end up subsidizing the fast readers. Except that the slow readers have little or no incentive to participate unless the monthly fee is very low. If I don’t read but one or two books per month, or (as is actually the case with me, substantially less), then the monthly fee has to be less than the cost of the books I would’ve read in that month in the old market. So to keep the slow readers in the pool, somewhere along the way someone has to take a hit – and ultimately that comes down to the authors: they’re going to end up making so little per read that it would be impossible to say they were fairly compensated, as compared to the old system.

      So… yeah… logically speaking, I don’t see how this model makes it feasible for authors. As an author, I wouldn’t want to participate in a market like this unless I could make as much or more per read/download as I could per sale of the book in the old model… but I can’t see how that the subscription-library service provider could make that work for both authors and readers at the same time. You’d have to somehow prove that I’d get substantially more reads in the new model than sales in the old… but the thing is you can’t prove a counterfactual.

      It makes marginally more sense in the music arena because it’s easier to make the argument that you’ll get more individual “listens” to a song than you would “sales” of a song or album. Even casual music listeners will probably listen to a favorite song multiple times. But even among popular authors – reading a book is such a substantial investment of time for many people that many people are still likely to read most of their favorite books only once, or maybe two or three times if they’re hard core fans. It’s unclear how many people really re-read a book they’ve read before. And given the format of the book, it’s unclear whether the technology exists to allow a subscription library service to make note of how many times any given reader has read a book. (If it’s downloaded and saved on their device, then they can read multiple times from a single download. If it’s re-downloaded every time they want to read a chapter, and never saved locally… then you’d need some means to track what a reader was reading at any given time, which is pretty Big Brother-ish.)

      Anyway… yeah… I could go on… but I’m not terribly enthusiastic about the subscription library service model for books. Thinking about it logically makes me very suspicious of it.

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