No Win for Readers and Writers: Commentary on Amazon v. Hachette

Readers, like writers, have been caught in the middle of a feud over e-book distribution terms and pricing between the Hachette book publishing company and Amazon.com.  On Nov. 13, the two announced they had reached a settlement. But the terms were not disclosed, and there’s been nary a word about its implications for readers and writers.

If you suspect that this has been a turf war between big companies, you’re right. And if you also suspect the interests of individuals – readers as well as writers – have gotten lost in the shuffle, right again. Both Amazon and various publishers tried to enlist writers in their dispute. But neither side is serving readers’ interest in lower-priced e-books or treating writers fairly.

Many publishers of print books have deals with Amazon to license e-book editions of their entire older “backlists” of printed books. Amazon makes no attempt to verify whether print publishers actually hold e-book rights to these works, much less what percentage is supposed to be paid to authors. In many cases, the rights to license those e-books belong to authors, not publishers.  The writers should be able to negotiate their own deals with Amazon or other distributors of electronic versions of their books. However, that means writers might be competing with bootleg editions issued by publishers of their print books.

This may sound complicated, legalistic, and irrelevant to the reading public.  In practice, it may greatly impact both the prices readers pay for e-books and the earnings of authors. Amazon offers self-published authors 70% of the e-book list price in certain price ranges.  For example, if a reader pays Amazon $5.99 for a self-published e-book, Amazon keeps $1.79 and passes on $4.20 to the author.

For the same $5.99 e-book licensed to Amazon by a print publisher, Amazon keeps the same $1.79 and passes $4.20 on to the publisher.  Amazon tells readers in its terms of service that e-books are licensed, not sold   But almost all print publishers treat e-book licensing revenue as “sales,” rather than licensing of a subsidiary right. Instead of the author receiving $4.20 (or even 50% of revenues usually due to the author of a licensed work), most publishers keep $3.78 and pay the writer the same 42 cents they earn from the sale of a printed book (10%).

Authors should receive a larger share of e-book revenues than of print book sales. The publisher of printed books incurs costs to produce, warehouse and ship the books.  Publishing an e-book version of a print book costs next to nothing.

When authors control their e-book rights, they can set lower prices than print publishers would.  At the same time, when authors earn a higher percentage of e-book revenues from self-published e-books, or e-books for which they are properly paid based on subsidiary rights licensing, that leads to lower prices for readers and higher earnings for authors.

If Hachette and other publishers really wanted to serve writers, they would:

  1. Withdraw e-book editions they have issued for print books whose rights belong to their authors;
  2. Pay authors of backlist e-books at least the 50% share of revenues due them for standard subsidiary rights licensing; and
  3. Pay authors for e-book revenues publishers have previously collected in violation of the authors’ rights.

If Amazon wants to show that it supports writers, it would:

  • Verify who holds the rights to backlist books offered in electronic form and deal only with bona fide holders of e-book rights;
  • Pay writers directly their share of e-book revenues; and
  • Provide authors with the same reporting on sales and revenues that it provides publishers.

Edward Hasbrouck, the co-chair of the Book Division of the National Writers Union, UAW Local 1981, is the author of the Practical Nomad series of travel books.

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