Amazon retaliating now against Penguin

[sleigh]

Electonista is reporting that amazon is now retaliating against Penguin Books (which includes DAW, my publisher) since Penguin has stopped providing amazon with e-books in the continuing dispute over the pricing of the same.

What amazon has done is to slash the price of Penguin hardcover books to close to the price of the Kindle editions -- a move that electronista is saying will cost Penguin (and presumably, Penguin's authors as well). My books seem to be among those affected: I note that A MAGIC OF DAWN, released in hardcover last month, is priced right now at $11.69. So hey, if you want DAWN cheaply, now's the time to grab it! The hardcovers for A MAGIC OF NIGHTFALL (book 2 of the Nessantico Cycle) and A MAGIC OF TWILIGHT (book 1) remain at $18.96.

Once again, we'll see how this corporate power play works for amazon. Amazon's removal of MacMillan titles seems to have been a fiasco. I somehow doubt that Penguin's going to cave, either.

Comments

[jimhines.livejournal.com]

Publishing accounting is weird. How is Amazon cutting prices going to hurt Penguin? As I understand it, Amazon would be paying a fixed, discounted price for the books, which means slashing prices like this is just cutting into their profits.

I'm sure I'm missing something here. Help?

[shsilver.livejournal.com]

Thanks, I was thinking the same thing. Amazon pays the same to DAW/Penguin-Putnam no matter how much they sell their books for and your royalties should be based on cover price, not on actual sale price.

[sleigh.livejournal.com]

I assume my contracts are similar to other writers... There's a clause that says if books are sold at less than the usual wholesale price, the royalty percentage is based on what the publisher's net profit, not the cover price.

My understanding (possibly erroneous) is that amazon buys at less than the usual wholesale discount.

[sleigh.livejournal.com]

Over on Facebook, Betsy Wolheim responded to my post, and confirmed that amazon does indeed have to pay Penguin the full wholesale price for the books, and therefore "for paper books, the authors and publishers are making the same money." -- which, as she says, makes amazon's policy "beyond stupid."

[sleigh.livejournal.com]

I might be missing something as well, Jim -- but my understanding (possibly entirely wrong) is that amazon has agreements with publishers that aren't the same as the normal distributor/bookstore arrangement, with higher discounts and return-of-profit to the publishers that is tied to the pricing.

Otherwise, I agree with you: it would make no sense for amazon to do this if pricing isn't somehow tied to profit for the publishers, since all it would do is cut amazon's profit and affect the publishers not at all. If fact, it would help the publisher by moving more books.

But... if someone has actual, real knowledge of the accounting issues here, I'd love to hear it myself!

[minnehaha.livejournal.com]

Ah.

Certainly Amazon has the clout to negotiate odd contracts with publishers.

B

[http://users.livejournal.com/la_marquise_de_/]

Oh, good grief. Thank you for the heads up.

[buttonlass.livejournal.com]

I have a question about author's royalties.

I realize that author's tend to negotiate for, or get offered, book deals, and that what you get in advance or on the back end is entirely variable depending on your particular contract for a particular book. That said, does it make a difference how much a person pays for a book? Let's say you get it really cheap at a bookstore on sale and pay half of what the cover says, does that cut your profit? Or really cheap off Amazon?

If this question is too complex to answer here I can ask you again sometime in person. I was just wondering the other day at a book store and thought "I know authors, I'll ask one of them". And here you are being all authorly about sales stuff.:)

[minnehaha.livejournal.com]

In general, royalties are calculated as a fixed percentage of the book's retail price. An author with a 10% royalty will make $2 from each $20 book sold -- regardless of the sale price. Often the royalty is a function of the number of books sold: an author might make 8% off the first 10,000 books sold, 10% off the next 40,000, and 13% off any books thereafter.

B

[sleigh.livejournal.com]

Hey, Shannon! I'll reply briefly here, and if you want more info, then either send me an e-mail privately or you can ask when next we're in the same city (which I hope isn't too long!).

How much a writer is paid is tied directly to the contract that writer's signed, so it may well be different for different writers (and even different books by the same writer). The blanket answer is that in most cases, the royalty percentage a writer receives is indeed based on cover price, not sale price -- which is the case for the vast majority of books that go through the usual distribution channels.

But... a publisher can decide to sell books to a wholesaler or distributor for *more* than the usual discount, and that generally causes another royalty clause to come into effect, where the royalties paid to the author are *not* based on cover price. It may instead be based on the sale price, or on the net profit to the publisher. Remaindered books are a good example: there, the writer isn't getting the usual percentage of the list cover price, but something far, far less.

[minnehaha.livejournal.com]

'What amazon has done is to slash the price of Penguin hardcover books to close to the price of the Kindle editions -- a move that electronista is saying will cost Penguin...."

How does this cost Pengiun? Isn't Pengiun's wholesale price to Amazon fixed, and not dependent on Amazon's retail price?

B

[sleigh.livejournal.com]

I don't know the details of Penguin's arrangement with amazon -- someone else would have to answer that one. But, as I noted above, it makes no sense for amazon to do this unless slashing the price also hurts Penguin.