Warning -- Take Your Books Off Kobo Now!

[swolf]

My novella is already $0.99 so good luck to them slashing that price.

They lowered one of my $0.99 books to zero.

[HelenHanson]

File under Irony:  I was at the Kobo site when I popped over here to ask a question.  

My problem with the discounting:  The seller determines the price the author receives.  When Safeway discounts milk, Borden's still gets the contracted amount.  Safeway wants to discount. Safeway takes the hit.

[daringnovelist]

Here's the thing:

This is the risk that we opted into (knowingly and overtly) when Amazon offered the 70 percent option.  It's what agency pricing is too, and although we all knew the risks here, we didn't know the power of automated systems.  Things can cascade out of control fast.  This is the sort of thing that can force a big change in royalty offerings and terms.

I do have a question for everybody with this problem (since I haven't experienced it yet): these discount prices which are showing up -- have you ever offered these books at those prices?  Could this be resonance with in the system on old data?  Or does it seem to be random or from some other cause?

(I myself tend use full price or free, and Amazon doesn't match free much, so I don't mind if it trickles through the system all it wants.)

Oh, and Helen: with agency pricing, the seller is NOT supposed to set the price at all except to match a price of a competitor -- which keeps us honest in not signing up for the 70 percent option and then underselling the vendor.  Yes, they all give themselves little exit clauses, but in this case, Kobo is clearly breaking their agreement with Smashwords.

Camille

[swolf]

How smart are Amazon's bots?

There's also a link on your Amazon book page named "tell us about a lower price?" that customers can click on.

[HeidiHall]

I thought the Google Books question was interesting... how many of you who have had your price lowered are with Google Books? Just wondering if that's why mine haven't been discounted (I'm not on GB).

[Asher MacDonald]

Amazon's pricing policy isn't predatory, it's self-preserving. They allow publishers to set their price and in return publishers allow Amazon to price match if Amazon finds the price lower elsewhere. Why should Amazon go to the trouble to sell a book if the publisher will go and undercut that price elsewhere?

Kobo is the problem, not Amazon. Unfortunately for Smashwords, it makes them that less attractive.

[HelenHanson]

Oh, and Helen: with agency pricing, the seller is NOT supposed to set the price at all except to match a price of a competitor -- which keeps us honest in not signing up for the 70 percent option and then underselling the vendor.  Yes, they all give themselves little exit clauses, but in this case, Kobo is clearly breaking their agreement with Smashwords.

Thanks, Camille (I have always loved that name)

I've heard about this problem for some time, thus my reluctance in signing up with SW.  To restate the point for clarity (and my density) -- no one is allowed to discount my work without my permission unless I have it listed elsewhere at a lower price.  Is that correct?

Thanks.

[MeiLinMiranda]

Sony took forever to update a raised price of mine, Amazon caught it, and I got dinged. I contacted Mark and he got Sony to fix it within a few days. Good, since Sony hadn't updated (and STILL hasn't updated) the description changed 6 months ago.

[nomesque]

No. Everyone can discount your book. If Amazon does it for price matching, they reduce your royalty accordingly. If Amazon, or any other retailer, reduces the price for their own marketing reasons they (the retailer that makes the sale) pays you royalties based upon the wholesale price that you set.

Part of Smashwords' agreement with retailers is no seller discounting, except to price-match.

[Terrence OBrien]

Typically predatory pricing is an attack by one firm on another. Price is cut in an attempt to drive the other firm out of business. In international trade it's called "dumping," where a firm sells below average cost, but above marginal cost.

Amazon is not engaged in predatory pricing since they are not making the first move, and they do not go below the competitor's price. They match it. If a competitor sets a price, it is very hard to contend that price will force them out of the market.

We might want to use the term "price matching" here so we have "predatory pricing" available if it actually does occur.

[BTackitt]

Ok, sometimes it takes me a while to think things through. Re: pricematching, I don't think Amazon is out to stick it to the authors, that is an unfortunate byproduct (?)
Amazon wants to keep customers happy, happy customers buy more. Amazon price matches for CUSTOMERS.. It's like reviews, they are not for the author, they are for the buyer... Pricematching not for/against the author, FOR the buyer.

[LeeGoldberg]

I heard from Mark Coker...he says it's a technical glitch at Kobo and that he's getting into it with them. He hopes to have it resolved by Thursday morning. I appreciate him escalating the issues, but even if they resolve it by weeks end, who knows how long it will take Amazon to readjust their prices? And I still will have lost a lot of money in the interim. I will have to seriously consider whether listing my books on Kobo again is worth the financial risk of them accidentally or unintentionally slashing my prices again...my guess is that, for the time being, it is not.

Lee

[T.L. Haddix]

Camille - I never discounted my books at Kobo, so the discount they had was entirely on them.  

Lee - I hate to sound negative, but honestly, given that so many of us have had this experience, and given that it is something that has happened over a period of months?  I'd not take the risk.  I trust Mark Coker, but I sure as heck don't trust Kobo.  You're the first author I know of with big enough sales that this is going to really impact, who has come here and mentioned the problem.  

For everyone who has said "I'm not big enough that it's going to hurt me," let me ask this - what happens if tomorrow, someone in the right place at the right time discovers your book, and you end up getting a thousand sales in the next few days?  Is it going to hurt you then?  We all know it can happen.  It only takes that one person sometimes.  I'm fairly cautious in most things in life, so I'd rather be safer than sorry.  I'm not trying to be a Nervous Nellie.  But it is definitely something that affects all of us.  

[MosesSiregarIII]

Those bastards. They've discounted my free book to negative one dollar! Now you can get my ebook and make a buck at the same time!

But seriously folks, that sucks, Lee. However, this might end up making you more money than it costs you over the long term. I wouldn't sweat it.

[nomesque]

Please take a look at the title of this thread.

An anomaly is NOT a generality, and should not be stated as such.

[T.L. Haddix]

But is it an anomaly?  That's what I'm wondering - because it's been happening for a while.  I just think we've not caught it out big time until Lee's experience. 

[daringnovelist]

For everyone who has said "I'm not big enough that it's going to hurt me," let me ask this - what happens if tomorrow, someone in the right place at the right time discovers your book, and you end up getting a thousand sales in the next few days?  Is it going to hurt you then?

Honestly, I'd have to assume that it's the price drop.

I'm not saying people who have a good income should not be complaining about or that it doesn't matter.  I'm just saying that right now I'm TRYING to get Amazon to offer my books free so in my personal situation, I don't have a problem. A year from now?  Sure, that would be a problem.  And by then either Kobo will have its act together or I won't be distributing through them. (Or perhaps it would be better to say they will have their act together or they may be out of business.

Please take a look at the title of this thread.

I think you may have misunderstood what Terrence was saying.  I'm not sure.  It sounded to me like you were refuting his argument that Amazon was engaging in predatory pricing because Kobo will suffer from this.  Terrence didn't say Kobo won't suffer. What he said was that KOBO IS THE ONE DRIVING THIS.  They're the "predator" except that they aren't doing a good job of it. Amazon is simply reacting to their move.

Part of the problem is that both companies are using automated systems, and once something goes wrong it REALLY goes wrong.

Does anybody know if any of the major publishers are also being hit?  That could get it cleared up fast....

Camille

[Gordon Ryan]

Whoever is driving the discounting, it is beyond reason to expect that an author who already offers his/her book for .99, should see it discounted to .59.  That was done without any contact between retailer and author and, probably, without contact between retailer and Smashwords.

Gordon Ryan

[MarkCoker]

Hi Everyone,

Amazon is having a wet dream over this.

Kobo is very aware of this problem.  I urge everyone here NOT to opt out of Kobo unless you want to compromise your long term potential as a author.  Kobo has been growing quickly, as have our other retail partners, and it would simply be dumb for anyone to abandon them over such a glitch.

I understand this is causing some authors some serious short term pain, so I don't blame Lee or anyone else for being angry. Kobo has already responded to this problem.

We first notified them of it yesterday and by today they confirmed and identified the problem and escalated it.  Some of the authors affected have already had their prices adjusted to normal.  I can assure everyone this was an honest error Kobo made with the noblest of intentions.  Ironically, the error was introduced while they were updating their software to improve the reliability of their pricing systems.  As anyone who's ever worked with software can appreciate, one change in one line of the code in one place and it can have unintended consequences elsewhere.

Someone on the thread made a comment about Amazon's predatory price matching practices.  I would agree.  Amazon knows that these titles are distributed by Smashwords, and they know what the true correct price is because they're spidering the Smashwords.com web site where the author-set price is always displayed.  

This means Amazon has the data to realize that the price change at Kobo was not the author's fault.

Yet Amazon punishes the author.  

Last year, I even offered to share our price list with Amazon so they could use it to satisfy their price parity needs, as opposed to punishing authors for glitches that can occur between us and the retailer.

Amazon knows that each time they give their best-selling authors a firm spanking, that author is reminded how important Amazon is to their daily bread, and it makes that author leery to explore other opportunities.  On this thread alone, there are multiple authors who are afraid to work with Smashwords or Kobo over such concerns, and some might find this new incident with Kobo as validation for their caution.  Such a conclusion would be erroneous and self-limiting, because this event will be over within a couple days and the pricing systems at Kobo will be all the stronger for it.

No Smashwords retailers are allowed to discount.  We negotiated agency agreements will all our retailers last year, and by December 1 all our retailers agreed to give our authors the power to set their own price.  Kobo was actually the first to agree to this.  They moved us to agency in November.

If Amazon had compassion for authors, they would do you the courtesy of shooting you an automated warning email, and give you a 24 - 48 hour grace period to correct the problem.  They could do that with one day of coding (I know they have the talent to do it because last year they hired the former Smashwords CTO who coded the original Smashwords platform three years ago.  He's a smart guy!).   If our retail partners had 24 hours notice, they could all make such price corrections.  Amazon has the ability to do the right thing and give you fair warning.  Will they?

Instead, to date at least, Amazon sits behind their rules, and reminds authors that the authors agreed to these rules in exchange for 70%.  And Amazon's right.  They have every right to do this.  Yet it doesn't mean what they're doing is right.  I wouldn't treat my authors this way.  I encourage our authors to maintain price parity, but I don't mandate it and would never punish them for it.

Amazon understand that each time you opt out of another retailer, or each time you decide not to expand your distribution opportunities, it makes you more dependent upon Amazon and it harms the other retailer.  It's a double win for Amazon.

It pains me every time I see an author hurt themselves by opting out of a great retailer like Kobo.  Amazon's market share is dropping thanks to the great progress of Kobo, B&N, Apple, Sony and others.  We specialize in serving these non-Amazon retailers.  We hope to one day serve Amazon too.

I would encourage all authors here to make a commitment to make themselves less dependent on Amazon.  It's in every author's best interest to support and encourage a thriving and competitive ecosystem of ebook retailers.  Indie authors have this power to make a difference today, starting with your marketing.  If you're promoting your books here on Kindleboards, or on your website, blog or social networks, add links to all your retail outlets, not just Amazon.  Give your customers a choice.  

Last year, people were talking about Amazon's 75+% market share.  More recent accounts show that market share declining closer to 50%, and dropping.  According to the Crains NY story, it was a possible reason Amanda Hocking refused to sell out to Amazon (http://www.crainsnewyork.com/article/20110401/FREE/110409990, because Amazon wanted an ebook exclusive and Hocking and her agent probably realized Amazon's not the only game in town any more.

This isn't the last time you'll see a Smashwords retailer (or Smashwords for that matter) make a mistake.  Remember these are only bumps to a higher road.  I know all our retailers have made improvements over the last 18 months to improve the speed and accuracy of their ingestions from Smashwords.  Overall, things have been working great for a long time now, and they'll only get better in the future.

Thanks, all.
mark

[Gordon Ryan]

Mark, that is what we needed to know: was it an error or policy.  No one wants to Opt Out of Kobo (although I did for several hours) but until we knew it was a glitch and not intentional, it was a good choice.  Thanks for continuing to jump on these issues and explain the situation.

Gordon Ryan

[Matthew W. Grant]

Mark, you amaze me how fast you respond when issues come up!

[modwitch]

Thanks for replying Mark.  I will say that as an outside observer, it's hard to believe this was entirely accidental on Kobo's part (I understand coding issues, but I also know they get blamed more often than they need to be - they're convenient).

However, I don't see price matching by amazon as "out to get us".  We're business people.  We enter into agreements with our various distributors, and all of them claim the right to price match.  If we can't keep pricing in some of our channels under control, why is that amazon's problem?  They price match so they don't lose customers.  

So since it is *my* job to keep pricing in my various channels under control, how can smashwords assist authors in monitoring prices?  It seems like this isn't the first time Kobo has done this, accidentally or otherwise.  Can you code a scraper (or go via APIs) and grab pricing from your major retail partners?  That would set off a red alert for pricing changes in violation of your agency agreements.

[CraigInTwinCities]

If you are using Smashwords, go there right now and OPT OUT of having your books distributed to Kobo, the ereader used by Borders, Chapters, etc.

Today Kobo, without my knowledge or consent, has slashed the prices on a bunch of my ebooks from $2.99 down to $1.99 and 99 cents....and Amazon has followed suit. This is going to literally cost me thousands of dollars this month.

I don't know how long it takes for Kobo to remove your books after you have opted-out through Smashwords, so I have contacted Mark Coker directly to see what he can do before I lose a lot of money. In the mean time, get your books off Kobo now before they do the same thing to you...if they haven't already.

Wouldn't be surprised if this is related somehow to the bankruptcy of Borders...

[LeeGoldberg]

Mark,

I appreciate your efforts, your good intentions, and your fast response...

That said, I won't be opting in with Kobo until I am convinced that they are worth the financial risk. And right now, they aren't. Even if they resolve their problems by Thursday, there's no telling how long it will take Amazon to restore my original pricing. I will have lost a week of sales at my 70% royalty.

You're right, I make most of my ebook income from Amazon....far, far more than I am earning from all the other ebook platforms combined (from Amazon alone, I am on track to earn $80,000 this year on just my out-of-print backlist). That gives Amazon incredible influence over my ebook publishing decisions. So when Kobo makes a big mistake like this, it does more than shake my confidence in them...it costs me financially. In fact, it wouldn't surprise me if I have already lost more in Amazon sales in three days than I've earned from Kobo to date.

This experience also forced me to look at Kobo for the first time...and I was shocked by how far behind they are in terms of updating my listings. They are still using cover art and titles that I changed on Smashwords over a year ago. So either there is a glitch at Kobo or at Smashwords...or in the communications between the two of you. Either way, it doesn't instill a lot of confidence in Kobo in me...or in Smashwords, to be honest. Right now, there is no upside for me in doing business with Kobo...and a costly downside. I'll be back when, and if, they get their act together.

I am all for exploring other platforms for my ebooks....but until those other platforms can prove their reliability, and demonstrate the potential to earn me the money that Amazon does, I'll be favoring Amazon over all the others.

Lee

PS - On Smashwords, in your alert to authors about this problem, you say the glitch is affecting about 20 books. No offense, but that can't be right. Five of my books alone are affected...and from what I have read here, on twitter, and directly from other authors, the count has to be much higher.
 

[Rex Jameson]

Thanks, Mark. That's all I needed to know.