Amazon’s Deep Discounts Don’t Hurt Authors: They Help Readers

Today, I saw a post on Tumblr (which you can read here).

This is not a rare occurrence. And normally it isn’t bad for my blood pressure. Today was an exception.

The various people in the thread complained about things like Amazon’s “devaluation of literature.” They said that bookstores “aren’t upcharging” on book sales, but simply ask for the price the publisher set. (This seems to imply that bookstores…don’t make any money from selling books? Which is a wild take.)

The thread goes on for a bit, and in the end, the points they seemed to be making were this:

• Traditional publishing has been harmed because Amazon is willing to engage in awful business practices to drive them out of the industry
• The cost of traditionally published books is the bare minimum required for publishing to be a viable industry at all
• Whenever you buy a discounted book on Amazon, you are doing harm not only to the bookstore where you should have bought the book for full price, but also to the author and the publisher of that book

This is goodhearted. It is also wrongheaded.

I should not have responded to this thread. I should have been working on the next book I myself am going to be publishing. But sometimes an itch won’t get out of your brain. So I sat down and wrote the following response.

Warning: it got a little long.

This thread paints a very rosy picture of traditional publishing. And I get it. Publishing has been around for a very long time, it’s created classic works that have changed people’s lives, and there are a lot of good people in the industry.

And on the other side, Amazon does do many horrible things as a business. Their workers are treated awfully, and their CEO is some sort of Bond supervillain who would rather use his money for a vanity space project than to actually help people.

Book pricing, however, is not the hill to die on when it comes to defending traditional publishing. I can already tell this is going to be a long post, so I’m putting the rest under the cut.

(Seriously. It gets very long, and I don’t blame anyone who doesn’t have the stamina to get through it).

tl;dr: If you’re really ticked off at Amazon, buy indie books directly from indie creators on their website, or shop at your local bookstore. Buying traditionally published books full price at Barnes & Noble to pwn Amazon is like cutting your own throat to boycott Coca-Cola.

1. How can Amazon just discount these books willy-nilly?

First things first: Amazon is able to discount books by up to 55% quite comfortably. Why 55%? Because that is their share of the book sale. When you buy a book on Amazon, 55% of the price goes to Amazon. 45% goes to the publisher.

And guess what happens when you buy a book at Barnes & Noble? It’s the exact same thing.

55% of the price goes to Barnes & Noble, 45% goes to the publisher.

Indie bookstore? 55% of the price goes to bookstore, 45% to the publisher.

Point is: everyone’s pricing works by the same rules. Whenever a book is sold, wherever it’s sold, 45% goes to the publisher.

This is true no matter if the book is discounted or not. The publisher still receives 45% of the FULL PRICE.

To put it in easy terms, let’s say the publisher prices the book at $20.

45% of $20 is $9, which leaves $11 for Amazon. Amazon can easily discount the book by $5 and still make a profit, since their cost of packaging and shipping the book is virtually nil—which, again, is because of their awful business practices

(But here’s a newsflash on that: book publishers and book printers use many of the same business practices, and are sometimes far worse. Did you know most of your favorite bestselling books are printed in China by workers that are paid pennies a day? Amazon may be unscrupulous, but “I Learned It From Watching You” applies here).

So the first bottom line is that whether Amazon discounts a book or not, the publisher and the author still get paid, and they get paid the same amount as if you bought the book at full price.

So, me? As an indie author? I honestly love that Amazon will sometimes discount my books. I wish they would tell me when they do it, because then I could tell my audience, “Hey! My book is on sale! I know a lot of you are financially strapped, so if you’ve been waiting for a discount, here it is!”

I have accepted the reality that, if my books are always at full price, there are people out there who would read my books in print, but who won’t be able to. And that sucks.

2. Why don’t publishers just sell more ebooks instead?

Speaking of print, specifically. You know what traditional publishers absolutely hate, hate, hate? Ebooks. They fucking despise the things.

I well remember when The Fault in Our Stars came out, and I went to go buy it like a good Nerdfighter. Do you know what I found? The publisher’s list price for the hardcover was $10.99. And the Kindle version was $11.99.

The ebook cost a dollar MORE.

As I mentioned, a publisher gets 45% of the sale of a print book. On ebooks, they get 70%.

Yet they priced their ebook, of which they get 70% of the price, HIGHER than their print book, of which they get 45% of the price.

The ebook, which costs NOTHING for them to produce or distribute.

And the print book, which comes with printing costs, delivery costs, and return costs.

This doesn’t make any sense — unless publishers hate ebooks. Which they do.

Why?

Because publishers create agreements with printers that they will purchase, print, and distribute a certain amount of paper per year. They do that to get discounts on the paper they use. But if they don’t actually sell all that paper, well…then they’re losing money.

But what if a huge portion of their audience would now rather read ebooks? Because ebooks are (supposed to be) cheaper, so they fit better in a millennial budget? And because ebooks don’t take up much space, and millennials don’t have a lot of space in our cramped apartments, which we often have to share with roommates because the economy has fucked us?

Publishers literally do not care. They’ve got to print and sell that paper. Despite the fact that ebooks are better for the environment, better for most customers, and carry NO production costs (other than the writing and editing of the book itself).

Don’t get me wrong: I am the biggest print book lover in the world. I only read print books. I can afford to buy print books, and I can afford the space in my home to have lots of bookshelves with lots of books on them. I LOVE print.

But the way print publishing conducts their business makes absolutely no sense.

So the second bottom line is that publishers themselves are hugely responsible for driving down the cost of print books as low as they can and driving up the cost of ebooks as much as they can get away with, despite that making literally no sense as a business strategy.

3. Why can’t you just buy directly from the publisher?

Okay, so, here’s the thing. There should be an incredibly easy solution to this. You might even have already thought of it while you’ve been reading along.

Why not just head to the publisher’s website and buy the book directly from them, if you want to support them?

Oh that’s right, you literally can’t. PUBLISHERS DO NOT HAVE STORES ON THEIR WEBSITES. IN 2019.

Publishers, for SOME REASON, don’t sell books directly to customers.

Despite the fact that they could do so, easily, and wouldn’t have to give up the 55% they give up when they sell on Amazon or in a physical bookstore.

Why the hell would they not do this???

It’s tied into the previous point. They have deals with paper companies and they have deals with distributors. And despite every sign that they should be changing their business practices (which are the same as they were in the nineteenth century), they aren’t. They want to continue to push high-priced paper books, produced in huge offset print runs. And they want those books to be sold at physical bookstores, because only those sales count on BookScan and the New York Times Bestsellers list.

You might think, “Okay, but this doesn’t make any sense because if it’s ACTUALLY good business, surely the publishers would change over to that model.”

Well, you could say the same thing about a lot of industries. But just like the oil industry would rather spend its resources attacking clean energy than CHANGE to clean energy, traditional publishers would rather try all manner of weird, off-kilter solutions to “fix” declining print sales in bookstores rather than sell to customers in a way that’s better for the customer.

Only new, small, indie publishers (like the one I run) are trying new business models to try and break free from the traditional publishing model.

So the third bottom line is that publishers have (and have always had) a plethora of options that could turn them into legitimate Amazon competitors overnight, and make Amazon prices irrelevant, if that’s what they were really interested in. But sheer inertia keeps them in business practices that are over a century old, which includes over-charging for books.

4. Why are print books so expensive in the first place?

Yes, over-charging. Publishers always charge more than they need to for print books. Here’s why.

It’s an actual running philosophy in the traditional publishing industry that

• 40% of the books they publish are going to lose money
• 40% are going to break even
• and 20% are going to be huge, runaway bestsellers that make the publisher profitable

(This applies to new books by emerging authors. Obviously they know Stephen King’s latest is going to be a huge hit — until it isn’t, because everyone writes a less-than-perfect book sometimes, and his publisher massively over-prints it and has to pulp most of the copies they printed).

When publishers acquire authors, they’re throwing spaghetti at the wall. They sign authors, snatch up as many rights as they can for as long as they can, and go to publication.

But they know that 40% of those authors are going to be failures.

The problem is, they don’t know which 40% it’s going to be.

Some people have better guesses than others. The people at the top of traditional publishing are there because they have a slightly better guess rate than everyone else — and they know how to use marketing clout to make their guesses more accurate, more of the time.

But they’re still guessing, and they still get it wrong, often.

So in order to make enough money to cover the cost of the large number of books that will fail, as well as the large number of books that will break about even, they have to over-charge on ALL books, because then they’ll recover their money on the 20% that become huge bestsellers — which, again, they can’t predict.

This wouldn’t be a problem if these publishers understood their customers better and could more accurately predict how many copies they were actually going to sell.

It wouldn’t be a problem if they weren’t so obsessed with big print runs and could adapt to the new world of POD publishing, by which books can become profitable much faster.

But they don’t understand their customers. And they resist change like my kids resist baths: kicking, screaming, and biting.

We talked before about that $20 book. $11 of the sale goes to Amazon, and $9 goes to the publisher.

Well, the publisher printed that book for about a buck fifty, and it cost them another fifty cents to get it distributed. For MEGA bestsellers, they paid even less. For HUGE books, like thick epic fantasy novels, they pay about four or five bucks — but then, they sell those books for $30-$40.

Seriously, these are the profit margins we’re talking about here. I, a literal nobody, recently price quoted a hardcover print run. If I ordered 10,000 copies, I could get them for $4 a pop, on a huge 900-page epic fantasy tome. Traditional publishers, with locked-in contracts and MASSIVE print runs for people like Sanderson? They get them dirt cheap.

Yet they overcharge, because it makes up for all the books they know are going to sink—even if they don’t know which ones.

Now, to be clear, you could view this as a great thing! It allows them to take a chance on more authors, by making more money off the “sure bets” (who are never really all that sure) in order to finance some brave new up-and-comers whose voices deserve a shot.

That would be great, if that’s what actually happened. But in reality, traditional publishing is notorious for continuing to marginalize already-marginalized voices and creating lackluster marketing campaigns for marginalized authors.

They could seek out kickass stories by awesome queer authors and authors of color and throw John Green levels of marketing dollars behind them. But they don’t. And when they’re criticized for their lack of diversity, they say “but we just don’t receive enough submissions.”

It’s a straight white people club that knows how to market to straight white people and that’s about it. It’s the industrial version of the Southern Strategy. Even if they wanted to market to queer people and disabled people and people of color (they don’t) they wouldn’t know how. And rather than learn, they wallow in their inertia. At most, they publish books about characters of color and queer characters written by straight white people and call it a day.

And when 40% of their authors fail, these publishers RETAIN the publishing, distribution, film, and audio rights to the failed books. The author has to fight tooth and nail to get them back, and usually ends up PAYING THE PUBLISHER for the rights to their OWN work.

Because otherwise, that author will never be able to do anything with that work again. The book will languish in the archives of a publisher who never cared about it in the first place.

That’s why no, traditional publishing’s model of over-charging on all books, so that they can lose money on many books, and try to get rich off of a few books, does not earn them a pass in MY book.

So the fourth bottom line is: the reason print books are so expensive in the first place, and why Amazon can provide such steep discounts and still earn good profits off of their 55%, is that the cost of print books is artificially inflated to finance a spaghetti-throwing business model as publishers search for another The DaVinci Code.

5. So are bookstores just doomed or what?

It all sounds pretty grim so far. Amazon is crushing the traditional publishing industry with the power of low prices and swift distribution. They’re too powerful! They’re dominating the industry and soon they’ll be all that’s left!

That’s just what people said about stores like Barnes & Noble in the U.S., and other major-chain booksellers around the world.

Barnes & Noble swooped in and suddenly they were the biggest game in town. They absolutely crushed any small, independent, mom-and-pop bookstore that was in the neighborhood before they got there. True, smaller bookstores had better staff who were more likely to read and were way more emotionally invested in books. But Barnes & Noble could churn out sales. They offered:

• Better prices
• Better selection
• Superior search and discovery
• A lightning-fast order and delivery service in case they didn’t already have your book in the store

Guess who does all four of those things better than Barnes & Noble?

You got it. Amazon.

So Amazon is eating Barnes & Nobles’ lunch. They’re absolutely demolishing them — in some cases literally, as Barnes & Noble continues to close down stores around the country and, like the corporate shitheads THEY are, abruptly lay off huge numbers of workers with no warning and little to no severance pay.

Bookstores are doomed!

Except…wait. No, they’re not. Indie bookstores are actually flourishing. They’re seeing sales like they haven’t seen in years…in fact, not since Barnes & Noble arrived on the scene.

Amazon is better than Barnes & Noble at selling books. But indie bookstores are better than anyone else at CARING about books.

Most customers now buy books in one of two ways:

• they order books online (probably from Amazon) or
• they go out for a book browsing experience.

Indie bookstores always have and always will deliver a better experience than Barnes & Noble. All Barnes & Noble had going for them was selection and speed — and now Amazon is kicking their ass at both of those things. So why would anyone shop at B&N anymore?

Turns out, they wouldn’t. So Barnes & Noble is slowly shutting down, and indie bookstores are booming.

So the fifth bottom line is: NO MATTER HOW THE BOOK GETS PURCHASED, YOU ARE SUPPORTING THE AUTHOR THE SAME AMOUNT. If you love your indie bookstore, shop there. If you are economically disadvantaged but want to own your favorite book, buy it on Amazon for a discount. If you’re really poor, ask your local library to order a copy so you can at least read it. The book’s author will love you the same, regardless.

Don’t worry about your local indie bookstore shutting down. They’re doing fine — better than they have in decades. And authors, publishers, and booksellers should really care most about only one thing: YOUR experience as a reader and a customer.

6. Amazon is winning for the same reason indie bookstores are booming: because they care about the customer.

I have to reiterate, again, that Amazon’s business practices suck. The way they treat their employees is unconscionable. I wouldn’t work with them at all if it wasn’t vital to my business.

But it IS vital to my business (and to bigger publishers as well) because Amazon has the biggest book-buying audience in the world. If I’m not there, I’m missing out on 90% of my sales.

But here’s the thing…WHY does Amazon have the biggest audience in the world?

Because their entire corporate philosophy consists of putting the customer first.

That’s why they invest so much in customer service, and why their customer service is consistently excellent (if you’re a customer — their support for authors and publishers can be lacking). That’s why Amazon Prime exists in the first place. It’s why they price drop!

It’s Amazon’s whole game plan. “We’re going to have three things: low prices, fast delivery, unparalleled selection. And we are always, always, always, going to give the customer more and better of these three things.”

And it turns out that customers love that! Who knew?

No, these are not the ONLY things customers care about. Like I said, sometimes customers want the book browsing experience. And that’s why indie bookstores are making a resurgence. Because Amazon can’t replicate that experience, and they’ll never be able to.

But on the experiences that Amazon does want to deliver — boy, do they ever deliver.

And yes, they are doing this to make money. Yes, they are hoping to defeat the competition. No, it’s not true that Amazon is ever going to be the only place to buy books. Yes, they are already the largest bookseller in the world and their actions dominate the industry.

But WHY? Because they put the customer first. They put the customer above PROFITS.

This is not a defense of their business practices. It is an explanation why buying full-price books from Barnes & Noble is never going to fix the problem. Even if every book reader in America magically became “woke” overnight, a huge percentage of them would STILL shop on Amazon.

And I, for one, don’t blame them. I don’t blame a single person who chooses to shop on Amazon.

What are they supposed to do, pay higher prices elsewhere as some sort of a boycott? That’s cutting off your nose to spite your face. Yes, those who can pay the higher prices, especially directly to the publisher or artist, can do so, and yes, their support is greatly appreciated. (And yes, you can buy our books directly from us).

But this comment, the last one on the preceding thread, is just elitist, and it’s what ticked me off enough to write this whole thing in the first place:

It’s ok to be upset that you can’t afford $26 for a new hardcover, but make sure that that anger is directed, not at the people whose labor makes books possible, but at the people on top (like Jeff Bezos) who have devalued your own labor such that you can’t afford it.

Traditional publishers aren’t the ones whose “labor makes books possible.” They’re the ones who make ebooks more expensive and who waste millions of books each year in pulp mills. They’re the ones who refuse to sell directly to customers, which could drastically reduce costs.

AUTHORS and EDITORS make books possible. No one else.

Traditional publishers make books into money. And frankly, they’re not even as good at that as they should be, and they take too much from the author.

Meanwhile, Amazon makes reading possible for more people than ever before. It comes at too high a cost. I look forward to the day that their business is overthrown in turn — or to the day where Legacy Books can subsist solely off direct sales, and no longer needs to contribute even a small percentage of our sales to Amazon.

I think that day is coming, and maybe sooner than we think.

Amazon has already taught authors that we don’t need publishers. I think soon we’ll realize we don’t need Amazon either, and we’ll build a new system that doesn’t include them.

But in the meantime, I want you to read. My books, sure, but I just want you to READ. And if Amazon’s low prices are what enable you to finally pick up a book and enjoy it (whether in print or ebook), then I am grateful.