A New Amazon Mandate? Say it ain’t so, Jeff

The essential difference between modern publishing and the traditional publishing model that was in place from the Great Depression to the mid 90’s is the increasing power of the retailer. When the majority of books were sold to thousands of independent bookstores and libraries, the publishers were the more powerful party. Preceding the shift to the retailer as king was the merger mania of the 80’s and early 90’s, when a few mega-trade publishers were left standing where dozens of large publishers and hundreds of mid-size trades once stood. A new generation of book retailers took a lesson from the mega-trades and the bulk of the trade books are now sold through a mere handful of retailers. In 2001, the American Booksellers Association settled their suit alleging price discrimination against Barnes & Noble and Borders for a fraction of their legal costs. Amazon was barely on the radar when the lawsuit began. By the time it ended, Amazon was selling around a billion dollars of books a year.

Amazon’s North American media sales ran neck-and-neck with the entire Barnes & Noble chain in 2007, with both leaving Borders in the dust. Perhaps more surprising is that Amazon’s overseas media sales are nearly on par with their North American sales, at $4.6 Billion. Put together Amazon’s media sales at home and abroad and they easily top the combined sales of the Borders and Barnes & Noble book chains. Amazon has grown from the world’s biggest bookstore in terms of titles stocked to the world’s biggest bookseller in terms of copies sold. Such a concentration of retailing power makes Amazon a “must have” outlet for publishers, and to date, nothing has been easier for publishers than getting Amazon to sell their books. The options were many, from a direct relation through Amazon Advantage for small publishers, to a hands-off distribution relationship, to having books printed by Lightning Source or Replica on demand and sold new through Amazon. The growth of Amazon to date has been a huge boon to self publishers, and as witnessed by my Amazon Associates account approaching ten thousand item sales, I’ve played my small role in their growth.

The most sophisticated book retailer in the US today in terms of vertical integration of publishing and bookselling has been Barnes & Noble. But Amazon has been building their internal media production capacity, with the acquisition of Booksurge for on demand printing, MobiPocket for ebooks, CustomFlix for DVD’s and most recently Audible, for audio books. Publishers have waited eagerly for Amazon to start offering competitive and creative services, and Amazon offers a number of flexible new options through their CreateSpace division. But there were also some early signs that Amazon’s increasing internal capabilities could lead to their eliminating existing options used by many publishers. When Amazon dropped Lightning Source ebooks a month after making the MobiPocket deal, I wondered out loud at that time whether Lightning Source on-demand books could be far behind.

It appears that Booksurge has chosen this month to make a push to grow their list of publishers, but the tactics used most closely resemble the Godfather’s “offer you can’t refuse.” According to Angela Hoy, Lightning Source publishers

"…are basically told they can either have BookSurge start printing their books or the 'buy' button on their Amazon.com book pages will be 'turned off.'".

What’s troubling about this and other stories I’ve heard of from Lightning Source publishers is that BookSurge reps have had the gall to hide behind the claim of better serving Amazon customers. Since Amazon can already have any of these books drop-shipped within 24 hours, the main benefit I can see would be for customers enrolled in Amazon Prime. When policy boffins in Massachusetts decided to push “universal health care” in the 90’s, they started by legislating away the availability of major medical policies in the state. The option for citizens became, join an HMO or go uninsured, with the expected results. The state later pointed at the very uninsured they’d created as a reason a mandate was required. I see the Amazon Prime program is a sort of HMO for book buyers, a luxury version of mail-order (2nd day delivery) on all orders for a flat annual fee. People who choose to buy into the Prime program have a high motivation to utilize the service and order as many items as possible through Amazon, since the bulk of the delivery cost is pre-paid. And that’s fine, as long as consumers and publishers have a choice.

By allegedly attempting to strong-arm publishers into using Booksurge, which is a losing financial proposition for many publishers compared to staying with their current printer, Amazon may well make a few more books available for Prime shipping. If they choose to see this as a benefit for their customers rather than an audacious attempt to build their own vertically integrated publishing operation at the expense of competitors, I suppose they may sleep easier at night. But Amazon is a huge corporation with plenty of room for mistakes, and I’d like to believe that some rogue operators in their publishing division have been overstepping their responsibilities. Otherwise, it bodes ill for the future of the publishing industry to see the new retailing behemoth so rudely throwing its weight around. I just hope that we’re seeing the behemoth’s grafted on tail wagging its body, and the head at Amazon will find out what’s going on and put the tail back in its place.