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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.

8 comments:

Mike said...

Hmmm. This is no good. I'm reading BookSurge's info, and it looks like they simply pay out a 35% royalty on the sticker price (regardless of page count/book size?).

That'd certainly be a paycut.

Morris Rosenthal said...

Mike,

That sounds familiar, but I haven't read a Booksurge contract in some time myself and don't have any titles with them.

The best place to discuss these issues is on the POD Publishers Group.

Bryan Rosner said...

So what exactly are the financial consequences for publishers who switch from Lightning to Booksurge, apart from the hassle factor? I presume it would be prudent to sell through both Lightning and Booksurge as I don't believe Booksurge offers access to Ingram and BT?

It seems like this shakeup may target only larger (really large) POD publishers, not the average size. So maybe most of us won't need to worry about this.

Bryan
http://www.biomedpublishers.com

Morris Rosenthal said...

Bryan,

It depends on the deal they get from Booksurge and their current discount with Lightning Source, there is no one size fits all answer.

As far as I can judge Amazon's intentions based on the public statements and what they've told publishers on the phone, they want to print all of the print-on-demand books they sell. Maybe one day they'd like to print all the books they sell. The technology will be there eventually, but it would certainly change the calculus for major trade publishers.

Morris

H.X. Sin said...

lightning source was a dream come true for my small print so it seems amoral to jump ship because Amazon wants more.

i do however understand that you can still personally sell your books on Amazon. defeats the purpose of print on demand but you still get the distribution avenue.

as a fight'n man i saw screw Amazon. Let Amazon be the next conclom-co Walmart that has blocked off independent press and original thought. and maybe we should rattle the bones of anyone who moves to booksurge.
www.hxsin.com

Morris Rosenthal said...

H.X.

I'm not with you on the "bone rattling". I think anybody who loses their Amazon presence and wants to sell books would be wise to knuckle under and sign. I can afford to be an idiot at this point in my life, and I could also change my mind, but I'm not going to suggest to anybody that ignoring the world's largest bookstore is a formula for success in publishing.

Morris

ChickenMan said...

Two can play the pricing game. An option would be to double the retail price of the book so you get reasonably money out of Amazon, while having a permanent 50% off sale through your Web site and Amazon Marketplace.

Right now I'm sending everyone to Amazon because they handle shipping so much better than I do -- they're the lazy man's fulfillment house. But I can find my own fulfillment house if they get too uppity.

Morris Rosenthal said...

Chickenman,

I try to avoid all game playing, I'm just a dour dude. In the case of Amazon, some of their contractual agreements prevent you from pricing the book lower elsewhere, though I'm sure there's some legal loophole in terms of special sales, etc.

I agree that Amazon makes a great fulfillment house. But for most self publishers, they are also the main marketing platform. If you have your own marketing platform, you are definitely in better shape to go on your own.

Morris