In a keynote address at Toronto’s International Festival of Authors (IFOA), renowned agent Andrew Wylie praised Hachette’s decision to battle Amazon and encouraged publishers to “stand firm” in their negotiations with the giant e-retailer. If they do, he said he foresees a much brighter future for the industry.
Wylie suggested it was a mistake for publishers to have ever agreed to give Amazon--which he accused of having “taken the business and distorted it radically,” --30% of digital profits as the music industry had given Apple.
Prior to his controversial Odyssey experiment to sell e-books through Amazon in 2010, Wylie said he sought advice from New York lawyer John Eastman, “the person responsible for holding the Beatles back from Apple until the very last moment, at which point I can assure you the Beatles made a better deal with Apple than the rest of rock and roll,” he said. Then he recounted how Eastman asked him why publishers had agreed to give Amazon 30% and suggested the figure could have been zero because without the content supplied by publishers, Amazon’s devices are “useless pieces of high grade plastic. So if they want to give you 30% of their profits, I would trade 30% of book publishing profits for 30% of Amazon’s profits,” he said Eastman advised him.
Turning to the current situation, however, Wylie warned that finally under some pressure to “show the prospect of making a profit, Amazon might want that 30% to become 50%. “Now of course, I can’t know this,” he said wryly, referring to the chill in the industry about talking about pricing following the Department of Justice rulings on e-book pricing. “I’m not allowed to talk to publishers. Publishers can’t talk to each other. No one can have lunch, which is wonderful for everyone’s waistline, but it strains credulity.”
This, however, in Wylie’s view is a turning point. “The publishing industry, up until now has cowered and whined and moaned and groaned and given Amazon pretty much everything they want. Now I think that’s going to stop. …Hachette to their great credit drew a line in the sand,” he said. The deal that Simon & Schuster made with Amazon, which “no one is allowed to know anything about… basically… is back to the agency model and it’s pretty good for authors,” he said.
Wylie added that he thinks there is a strong chance that in the end “Amazon will be told you either do business on our terms or we are going to develop other channels of distribution.” He acknowledged that developing other channels might be costly for publishers, but “the brutality … of Amazon’s negotiating tactics” has made the necessity clear. “If you lose 25% of your sales in developing that other channel, the system gets restored to health after a period of time,” he said, adding with a cutting aside, “as far as I’m concerned, there are at least 25% too many books being published.
As long as publishers “don’t blink” at this crucial time, Wylie said, they will return to a situation in which the extra margin they make from digital publishing can continue to sustain their less profitable print publishing. “I believe with the restored health of the publishing industry and having some sense of where this sort of ISIS-like distribution channel, Amazon, is going to be buried and in which plot of sand they will be stuck, [publishers] will be able to raise the author’s digital royalty to 40% or 50%,” he said. “Writers will begin to make enough money to live.”