Amazon Asks KDP Authors to write to Hachette CEO, I wrote to both Jeff Bezos and Michael Pietsch instead

Less than an hour ago, Amazon prompted KDP authors (like me) to write an email to Hachette CEO, Michael Pietsch, supporting their point of view in their negotiation with Hachette. 

It's interesting on how Amazon is finally realizing that it's bullying tactics towards traditional media corporations that are already facing financial challenges are no longer working, and given the enormous size of Amazon, the public now views Amazon with suspicion and as the bully. 

While in its email Amazon makes some valid points about how lower cost will actually increase the size of the business by increasing volume, it fails to mention that lowering prices of popular, top-rated eBooks will also result in increased sales of the Kindle devices, eventually allowing it to sell those devices at profit rather than selling them as a cost. This is called vertical competition, consumers have a annual budget for books in their mind and if eBooks are lot cheaper than books, then the break even point for buying a Kindle vs printed books tilts in favor of the device sooner. Consider the extreme case - if all eBooks were to become free, the only party making money will be Amazon (on sales of Kindle devices). So Amazon asking for Hachette to reduce eBook prices is similar to large TV manufacturers and cable operators asking Movie studios to not charge for showing their movies on cable TV.  

Interestingly, the email also refers to the  $166 million in penalties and restitution paid by Hachette in "illegal collusion", asking us to mention that phrase in our email to Michael. This is very interesting for a corporation that has itself paid,millions to settle workers' lawsuits, and given its horrendous treatment of workers,  and will likely continue to pay similar amounts for foreseeable future, . And talking of settling with government, Amazon recently settled sales tax disputes with not one or two, but more than ten states agreeing to collect sales tax and making the playing field fair to local merchants - Amazon's sales promptly dropped in those states clarifying that it wasn't its superior service that was getting it customers, but collusion with sales/ use tax evaders into those states. 

So ... here is  the email I sent to both Michael (CEO of Hachette) and Jeff Bezos (CEO of Amazon.com) 

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Dear Michael & Jeff,  

  This message is being written in response to a prompt by Amazon. 

   Amazon has asked us (the authors) to write to Michael to support their negotiation for lowering e-Book prices. the email - which I am sure will soon get published by someone, raises some very valid and good points. 

    I agree that the "system" - be it publishing industry, cinema, music or even large corporations - tends to take prize (profits) away from the real value creators, be it authors, singers, or, in Amazon's case, its work force.

      Yes, given Amazon's own dismissive record of treating its workers who really make the company what it is, I can't conscientiously be writing letters to support your position in negotiating with your vendors. Not only you have been treating your workers like &**$, you also have now gathered a bad reputation about treating your other partners - like small Marketplace sellers - whereas your so called "Seller Performance" team stops paying its sellers for months telling them nothing more than that their account is "under review" and you're holding their money in a reserve for months! 

       Sorry, Amazon, you have found your match. Acting as a bully and with your workers and small sellers in your market place has worked for you getting you to the spot where you are, but trying to bully companies of your size is another thing all together. Yes, we have all heard stories of how you get rid of 10% of your workforce every year (and make them sign a waiver of claims by offering a small amount of money right before you walk them out), making your injured workers sign "admission" that there injury was caused because of existing medical issues right when they are being treated by Paramedics (so you can board of highest safety record among all companies), constantly increase "rates" quarter after quarter causing permanent injuries to your warehouse workers. But getting away bullying your un-unionized workforce is one thing, trying to take on other large corporations or state governments completely another. You make some good points in your email to us, but bullying others is NOT the way you can win. So give this bullying a rest, and let the things take their own course. 

That said, Michael, eBooks is the future and their prices *will* go down - the law of pricing dictates that if something takes less cost to produce and distribute, its price eventually goes down. By refusing to lower the price of eBook editions, you're risking your business. More and more readers will go get their books from the value providers/ direct channels. Magazines and news paper tried hard to charge the same price as they charge for print for their so called online subscriptions, but failed. 

 If you keep high prices, more and more consumers will go to the direct channels offered not just by Amazon,but also Nook, Kobo, Google etc.  with higher volume, a larger number of authors with future big hits will be publish directly with direct channels. So might as well accept it. 

But please keep fighting Amazon on principal - this company has been crossing the line into forcing his point of view and bullying far too many times. 

Cheers, 

Kalpanik S. author of Inside the Giant Machine: An Amazon.com Story

Kindle -> Inside the Giant Machine: An Amazon.com Story

Nook-> Inside the Giant Machine: Confessions of a Former Amazon.com Technologist  

Print edition available at rakuten.com (Formerly buy.com) [Best Price], Barnes and Noble,  Amazon.com and several other physical and online book stores. . 

Full copy of Amazon's email to KDP authors can be found at "www.readersunited.com" that Amazon seems has acquired specifically for this issue.