Amazon’s Price Fixing Attempt

This past weekend, I received a letter from Amazon.com. I know that I am not the only one who received this letter. I believe Amazon sent the letter to all Kindle Direct Publishing authors. Most likely, you received the letter too.

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I am dumbfounded that Amazon has turned to independent authors to try to get them to apply pressure on a major publisher to lower its ebook prices.

I urge you not to get sucked into Amazon’s argument. If Amazon can begin to dictate the price of ebooks, then you, as an independent author, will soon not have the ability to set the price for your own books either. Isn’t that one of the reasons you independently published in the first place—to have more control over the whole process, including price?

In their letter, Amazon states:

“We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive.”

I am outraged at a number of statements Amazon makes.

First, who determines what an “unjustifiably high” price is? The book seller, the publishers, or the consumer? In a free market economy, it should be the consumer, not the book seller.

Second, “E-books can and should be less expensive” than print books. The reason Amazon gives for this is that there are no printing costs. There is a flagrant error in thinking here. The price of a print book is not solely based on the cost to print the book. Sometimes, the information in the book drives the price. For example, specialty books that contain information that cannot be found elsewhere are priced higher than the average fiction book even if the cost to print is the same. In these cases, the consumer is paying for the information.

Third, Amazon states, “Hachette has already been caught illegally colluding with its competitors to raise e-book prices.” What Amazon doesn’t remind you is that the collusion had to do with steps these publishers took to stop Amazon from steeply discounting their ebooks. It had to do with something called the “Agency Pricing” model which was different from the “Wholesale” model. With the Agency Pricing model, retailers could not discount books the same as with the Wholesale model. Needless to say, the DOJ lawsuit threw out the Agency Pricing model. Therefore, Amazon has the ability to discount ebooks, like they do with print books. Instead, Amazon is trying to get Hachette to lower its prices so it won’t have to discount ebooks and, as a result, keep more money from each ebook sale.

Fouth, Amazon wants authors to send Hachette letters stating, “We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.” I think instead, we should be sending letters to Amazon stating, “Monopolies are still illegal in the United States. The main reason monopolies are illegal is because such entities get into price fixing. Price fixing is an agreement between participants on the same side in a market to buy or sell a product service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level. Whether a price is fixed high or low, it is still price fixing. Your misguided attempt to get Hachette to lower their pricing is an attempt at price fixing, plain and simple.”

Do not be deceived. Amazon does not care about the consumer and offering “affordable” ebooks to consumers. It is a business. Amazon only cares about profits and what will bring it the most benefit.

Needless to say, I will not be sending a letter to Hachette. I for one, still believe in and will stand for a free market economy.

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One thought on “Amazon’s Price Fixing Attempt

  1. I did receive the letter and ignored it. It definitely isn’t my place, nor Amazon’s, to dictate to another business the price point for their books. And while an ebook is less expensive to publish compared to a print, that doesn’t mean the value of the content is worth less, it simply means it can be sold for less than a print book.

    Amazon is only a distributor and cannot dictate what the selling point is. They can, as a business (distributor/book store) decide to lower the price of a book (ie/ from Create Space) to spur sales and in turn take less in profit however, the royalty payment to the author/publishing company remains the same.

    Thank you again for the post.

    Like

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