Home » Amazon, Big Publishing, Mike Shatzkin » Amazon as a threat to steal big titles from big publishers is still a ways off

Amazon as a threat to steal big titles from big publishers is still a ways off

23 October 2012

From veteran publishing consultant Mike Shatzkin:

When Larry Kirshbaum, the longtime head of TimeWarner Publishing (purchased right after he left in 2007 by Hachette and now the company called Hachette Book Group USA) joined Amazon many people thought — I among them — that Amazon was about to become a threat to take big titles away from the major publishers and, by doing so, also put pressure on competing retailers who would either have to buy from Amazon or do without major books.

An article last week in The Wall Street Journal spells out just how futile have been Amazon’s efforts so far to upend the Big Six.

. . . .

I can’t believe that the high-profile output from the New York office meets Amazon’s original expectations or Kirshbaum’s. If they miscalculated the impact they could make, maybe it was for the same reason I did. An abrupt slowdown in ebook switchover took hold at about the same moment the Kirshbaum era at Amazon began. Big publishers are reporting that ebook sales are now approaching 30% of their revenue, which is about a 50% increase from what they said last year. That follows several years when ebook uptake increased by 100% or more.

. . . .

Amazon as a publisher has advantages and disadvantages against more traditional competitors. They have the advantages of direct customer contact, which pay off in two ways. They can send you an email pitching a book as the logical next one to the one you just read; general publishers can’t do that. And, as the publisher, they have more margin to either pay the author more or charge the customer less, which, either way, increases an author’s revenue through online channels.

But their disadvantages are also significant. For most books, and particularly non-fiction (as both of which the high-profile releases the Wall Street Journal wrote about are), more than half of the sales still come from brick-and-mortar stores.

. . . .

This is not a final answer. Amazon’s share of the trade market — ebooks and online print combined — is still growing and shows no sign of abating. Most publishers would still report that Amazon is their fastest-growing account.

But shelf space erosion — a metric with no reliable index anywhere — seems to have slowed down. That means that, at the moment, we have a more stable book trade than we’ve had for at least five years. It is smaller, but it is more stable.

Link to the rest at The Shatzkin Files

Amazon, Big Publishing, Mike Shatzkin

15 Comments to “Amazon as a threat to steal big titles from big publishers is still a ways off”

  1. A good update to have, but I don’t think a year and a half is sufficient time to have a full judgment on an experiment like this. Marc Andreessen has quoted Bezos as saying: “Amazon is not in business to have a profit margin.” Bezos has shown a willingness to let experiments run a little long to pan out; I’d give this some more time.

    Still – for those of us who worry a bit about Amazon’s market power, it’s good to know that boycotts by competitors are having an effect. For how long is another story.

    • For those of us who want to be able to buy books, boycotts by competitors are an unmitigated nuisance.

      If I want to buy a physical book published by an Amazon imprint, I can only buy it in one place: Amazon.com. By refusing to stock these books, other retailers are driving even more of my business to Amazon. I can’t believe they don’t get that.

  2. I think if my business model depended upon brick & mortar stores always being there, that I would be the one worried. How much longer can Barnes & Noble keep their doors open? A year? Two years? Amazon can afford to wait out the competition, because in the long run, E-books will gain dominance, while print sales dwindle.

    • This.

      Frankly, I still buy more non-fiction in print—but that’s because I can often buy the used print book for significantly less than the e-book.

      Now, I’m fully willing to pay more for a non-fiction reference I need than I would for a novel of comparable length. But when the used print book is $15 cheaper? I don’t have enough disposable income to not go for the saved money.

      (Note that the print non-fiction I’ve bought recently has been actual reference books on herb-medicine interactions. The books on writing, freelancing, or self-publishing, I tend to pick up in e-format.)

  3. I agree with Donald.

    Publishers are measuring success according to an old model: How many books are sold in a short amount of time.

    E-books don’t work that way. The shelf life is forever, and Amazon’s marketing is relentless, and the success of an e-book can be measured over a much longer period of time.

    As for Shatzkin, I do think he gets that. I agree with what he says here:

    “Authors who want bookstore exposure or to maximize their total sales across the US bookselling universe will remain hard to persuade for the forseeable future. But probably a little less so with each passing day”.

    He’s right when he says less with each passing day.

    However, he also overlooks the fact that authors may choose to sign with Amazon not just out of curiousity or annoyance with the current system, reasons he acknowledges, but also because Amazon may offer other attractive things. It may offer more of a partnership. It may offer more money. It may offer more control. It may offer more inspiration and support.

    There are things that can tempt authors and become more important than wide sales, or even getting their books into bookstores. If publishers really want to hang onto their big name folk, they need to re-think the way the work with writers.

    • The Big Six already provide more of a partnership, money, support, etc. to the big name writers than they do to the mid-list and new writers.
      The thing is that amazon can provide this type of support, including more money, to mid-list and new writers. Wait until some of these mid-list and new writers join the ranks of the big names, do you think they’ll want to jump from Amazon to the welcoming arms of the big six?

      • If Amazon were providing the same ‘support’ to writers that the Big Six do to even fairly big names, KDP would have crashed and burned. They’ve succeeded because they don’t demand exclusivity, non-compete agreements, or 75 percent of net, they don’t impose arbitrary limits on how many titles a writer can sell, and they don’t delay publication by anywhere from one to three years after completion of a book.

        • We’re not talking about KDP, which along with along with the whole Self/indi-publishing revolution, is the biggest game changer in the industry.
          We’re talking about Amazon’s publishing imprints, like Thomas & Mercer, where they do provide editorial, design and marketing support, as well as larger royalties and less restrictive contracts than the Big Six.

  4. “An article last week in The Wall Street Journal spells out just how futile have been Amazon’s efforts so far to upend the Big Six.”

    An effort is futile if it fails to meet its intended objective. How do we know Amazon’s objective is to upend the Big Six?

    • I”m quite sure one of Amazon’s objectives is to upend the Big Six. I’m also reasonably certain that their in-house publishing imprints have little to do with it. Thomas & Mercer is not a game-changing innovation and won’t put any trad publisher out of business. The Kindle Store is and will.

      If I were Jeff Bezos, the most I’d expect out of a line like Thomas & Mercer would be to offer reasonable and honourable contracts to writers, thereby reducing trad publishers’ ability to make profits by ripping off their suppliers. If Amazon’s imprints so much as break even, this will put paid to the propaganda line that writers have to be crassly exploited for publishers to survive.

    • Lance, I think you are right, the Big Six do roll out the red carpet for their big name folks. But I think the carpet they roll out is frayed and worn. I don’t think, at the heart of it, that they really know how to treat any writer well.

      Amazon is not saddled with years of a culture that considered writers as 3rd class citizens, and they are rolling out a red carpet that is vibrant.

      To add: I think your point about the mid-list becoming big names is very well said.

      Edit: whoops. Posted this on the wrong thread.

  5. I should point out that an increase of 50 percent the year after an increase of 100 percent equals the same amount of increase in absolute terms.

    Let us assume, strictly for convenience, that the total size of the trad-published book market is fixed. This past year, ebooks represented 30 percent of their sales. That was a 50-percent increase over the previous year: therefore, in that year ebooks represented 20 percent. If that in turn was a 100-percent increase over the year before, then in that year ebooks would have been 10 percent.

    Exponential growth curves (especially when expressed as percentages of a larger market) cannot continue forever. That ebook sales from the Big Six (& assorted others) have settled down to a linear rate of increase is no knock against ebooks; it was to be expected about this time. That they are maintaining this linear increase despite the massive incompetence, occasional malfeasance, and obvious reluctance of the Big Six to sell ebooks at all, shows the enormous strength of the ebook in the marketplace.

    Meanwhile, I should be very interested to know whether that 30 percent is based on volume or dollar value (I suspect the latter, as that will produce a smaller number), and how it compares with the market as a whole — in which self-published authors, most of whose sales are nearly 100 percent ebooks, are a significant and rapidly growing element.

  6. Terry Goodkind has self published his latest title on Amazon. Once he starts raking in the higher royalties, I doubt he’s going to keep quiet about it.

    I can just see him at some conference, bending his collegues ears about how they can do it as well.

    Don’t stand around in front of the publisher’s doors or you’ll get run over – sooner or later – by the stampede of authors.

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