Amazon Is Ripe For Disruption
From Forbes Business blogs:
Amazon, the great disintermediator that put a spanner — in fact, a set of 25 spanners in a handy case, yours for just $9.99 — in the businesses of many a retailer, is going to face exactly the same fate if it doesn’t start to address its weaknesses soon, particularly in the area of publishing.
. . . .
Amazon has created its dominant position by providing customers with what they want: (almost) any book, at a ridiculously low price, delivered rapidly. The deep discounting that Amazon is able to support attracts buyers who sense a bargain and is often quoted as the reason, along with the Kindle, that it dominates the book e-tailing market. However Amazon has problems and they are not trivial.
Amazon’s reviews system is fundamentally broken and whilst that might seem like an issue that troubles only those of us in the industry who pay attention to these things, it isn’t. As book reviews become more and more unreliable, so more and more buyers will start to get frustrated that they aren’t getting what they were expected and will start looking for reviews elsewhere. That will habituate them to looking outside Amazon for information on books and bring Amazon’s position as the canonical reference for books under threat.
. . . .
Amazon may still be at the top of the tree in terms of market share, but it’s there because people are in the habit of linking to and going to Amazon, not because of any inherent advantage in doing so. That habit is being eroded, slowly but surely.
JK Rowling’s Pottermore, for example, is chipping away at Amazon’s position, not because it directly competes but because it proves to people that Amazon is not the only game in town. Want to buy a JK Rowling book? Pottermore is the place to go. What happens when more big name authors decide that they want what JK Rowling’s got? Especially as what she’s got isn’t just her own site and infrastructure, it’s her customers’ data.
. . . .
Anyone who understands the importance of data understands how badly Amazon fails publishers. Want to know how someone found your book on Amazon? Not a hope. Want to know if your Twitter promo campaign is working? No chance. Want to know where your buyers are? You’ll never find out. Data is gold. Amazon provides iron pyrites. How long are publishers going to carry on sacrificing data on the alter of Amazon’s reach?
Indeed, Amazon actually prevents self- and traditional publishers from innovating. If they want to bundle an ebook with the paperback, they can’t do that through Amazon. If they want to provide extras, cross-sell, up-sell, or invite buyers onto their mailing list, they can’t do that through Amazon. If they want to forge a direct relationship with their customers or create a community theyhave to move away from their reliance on Amazon. It is simply impossible to innovate at the point of sale if you do not control it.
Link to the rest at Forbes and thanks to Anthony for the tip.
, Amazon will pay Passive Guy a small affiliate commission on any of your purchases.
P.G.
I don’t place much credence in this.
As a buyer, I’m not that sure I want an extended relationship with writers. I tend to write a thank you email if I’ve read a good book, I don’t expect a response. (I also review, but that’s another subject.)
Twitter promo?-Gerrawaywivyou. Writers generally don’t have a clue about Twitter. Relentlessly bore the butt out of everyone on their time line seems to be the standard advice.
A Pottermore? From all I heard, that was a dogs breakfast when ole moneybags started it. It works now, I heard, but who cares? It’ll be like Tolkien, protecting it’s legacy while it makes as much money as possible. Pottermore is a niche, and very specialized item. I don’t believe it can be related to most writers experience.
Keeping and maintaining a website still isn’t as easy as advertised. Note P.G.’s own difficulties of late with a (simple-har-har) WordPress site.
Okay if you want a full-time job fiddling with the monkey code the jolt cola pizza-eating jocks mess with/update every month. Then protecting you and your customers from the thieving hackers.
You want to write as well, you need to be at least two separate people.
I suspect Amazon will manage okay:)
brendan
I agree, Brendan. I smell an anti-Amazon zealot.
Out of all the readers who purchase a book, only a tiny minority find themselves fascinated by an author to the point where they want to set up a close and permanent connection.
True, these readers can be important cheerleaders who persuade others to try the author’s work, but, to be commercially successful, an author needs many more readers than their fangirls and fanboys provide.
In short, an author needs access to a huge marketplace, which is what Amazon or a big publisher (maybe) delivers. The more niche-like the author’s books, the more a large marketplace is necessary.
The author of this piece has not the slightest idea of how much effort and expense is involved in setting up and maintaining a site like Pottermore (which I think is poorly designed and executed). Only a billionaire author could afford the millions in losses required before Pottermore sold its first ebook. I would love to take a look at Pottermore’s accounting records and would be very surprised if JK’s net profits on ebook sales through Pottermore are anywhere close to as high as the 70% she could generate via KDP and other self-pub outlets.
Thanks for this interesting and disturbing post. I have been reading similar things lately–all warning signs for the indie author trying to get a foothold in the shifting landscape of publishing.
Any article that claims that Amazon treats its customers with disdain should be taken with an enormous grain of salt, IMO. Or possibly even treated with disdain. I’m an Amazon customer, first and foremost–I watch video through Amazon, buy dog food from Amazon, have Kindle software on multiple devices, etc.–and the care with which Amazon treats its customers is one of its great selling points. Every disruptive premise in that article assumes that customers will go elsewhere, but with the exception of a broken reviews system (and why won’t every site with reviews have exactly the same problem?), none explains what will motivate a customer to make the switch. Except the assumption that customers feel disdained, and I just don’t see how that matches my experience. Not buying it.
While some of it is the luck of the draw, unlike many authors I’ve heard ranting (self-selected what now?) I’ve had nothing but reasonable success with Amazon’s customer service either as a customer or as an author.
For instance, I needed for several editions of my books be linked (due to the way they were published, which is on me, they didn’t auto-link.) I went on their contact page and it offered me the option of email or LIVE VOICE CALLING. I chose the latter and within 60 seconds I was talking to a live person (who called ME) who was very friendly and very helpful. She missed one of the links and when I sent a follow up email I got an apology and the oversight fixed within an hour.
It’s not like I’ve never had bad customer service in my life, but when somebody rants about how awful $PROVIDER’s service is, my *first* inclination is always to think that the person ranting either doesn’t know how to communicate clearly, is overly confrontational, or both. If you don’t know how to tell them what the problem is and what you want done about it or understand them when they tell you what to do, you’ll probably be unsatisfied with the results. And if you scream at them in the process, they won’t have much incentive to try to satisfy you.
Completely agree. Next to Mortgages and the local grocery store Amazon is where I spend my money and as of yet I have not had a bad buying experience.
Amazon Media sales (Books, Ebooks, DVD, Digital) for 2011 was 7.89B on total revenue of 48.1B. Think they sell a bit more than books, a slightly different story than the article would like to portray.
Agreed, Sarah.
I would spend a lot of money with Amazon even if they didn’t sell books.
Amazon’s sales experience and customer support are both superb, the best in the business. Everyone else tries to copy what they do.
As far as the reviews system is concerned, I really doubt that a typical online purchaser perceives any serious problems with Amazon’s. He/she uses it or doesn’t use it and, like everything on the Internet, takes reviews with a grain of salt. I’ve not seen any other review system that is any better.
The publishing world’s recent discovery that online reviews can be purchased and/or gamed is one more indication of how far behind the technology curve the people in this business are. The first phony review on the internet appeared within 24 hours of the release of the first product review system on the internet.
I speculate that the publishing world’s feigned horror about Amazon book reviews being gamed covers an aggravation that the proletariat can do what used to require the purchase of an expensive print advertisement in the New York Times Sunday Book Review to accomplish.
It’s interesting that publishing is shocked over gamed reviews considering some of their authors participate. :/
I keep wondering how an independent author getting their book reviewed by a friend or other writer is any different from a traditionally published author getting their book blurbed by an author with the same agent or publisher? Or what about all the free copies they send out to book buyers and librarians they have relationships with?
Amazon treats its paying customers great. I expect they will forever and ever unless they become a true Cyberpunk Megacorp Monopoly.
As an author, a supplier, who is nowhere near the dizzying heights of the Konrath, etc. folk… Not so good. The most major problem I had (formatting issues), they had no help for why it happened or how to fix it — and when my spouse told me what the problem was, and I told the Amazon flunky, there was zip-all acknowledgement.
I get better results from poking Smashwords with a sharp stick.
Amazon could definitely take a lesson from B&N in providing data to authors/publishers. I get data by day from PubIt instead of by week from KDP. Given the very quick swings that an ebook can make in a day, this is a necessary level of granularity.
That said, all this granular data tells me that I’m selling 50% fewer units on B&N than I am on Amazon. There’s a lot to be said for data, but staring really close at a few grains of sand isn’t as rewarding as grabbing a fistful of gems.
Question: Why is it a necessary level of granularity?
Also, you can get more or less live updates on sales from Amazon, as I’m sure you know. It’s just that the history isn’t as granular when you look back. Again, I’m not sure why you care, but if you do, you can always just capture your “month to date” sales page on a daily basis.
as an author and a buyer, I’d say amazon is better at refunds and such merchant class usual day to day… from a customer point of view– and grotesquely unavailible to much re author communication except for the very very few who are pub’d by AMZ. Between Zuckerburg and Bezos, Eric and Sergei, Rupert and Dohle… there’s a large group of ‘moguls’ who appear to believe seriously in ‘easier to ask forgiveness than ask permission first’– about way too many aspects of their businesses that affect authors, both legally and financially.
I’d rather see any analyses of AMZ in context with the ethos of the above named, for instance. The author did have some interesting comments about publishers…
but the field of ‘marketing by author’ ought be analyzed along with all the rest for a complete picture, I think.
JK Rowling has worked really hard to bring her work, stayed with it, hit the luck ring, and was ready. Her Pottermore site, I think, and again, just my .02, is not likely something the average author can do by themselves. First of all to build such would take tens of thousands of dollars to do it right and without glitches. You’d need a full time IT, as well as hired correspondents.
JK’s job is the same as ours: to write. Not to administrate. There are not enough hours in the day to raise a family, write, work a day job and admin a huge website with millions of hits per month.
When a writer isnt writing, the next work is not getting done. Will Amazon have competitors. Sure. Will Amazon become less? Dont know. Have to wait and see. One thing is sure, that with the entry of sarah nelson, a former editor let go from Publishers Weekly, and then taking a job at Oprah magazine as book maven, and now migrating to amazon, along with larry kirshbaum, former whig at one of the big 6, then leaving there and becoming an agent, and then woo’ed away into Amazon… and several other old timers from old timey publishing… all that ought be taken into account too in such an article. Why? Because the ethos of old time publishing has melded with amazon, to what end, we dont know. But, old time publishing was slower than a jam jar in winter held upside down… slow to respond to authors and to readers. We shall see.
But if Amazon “sells” or “gives away” its customers’ browsing habits, etc. to 3rd parties (like publishers) wouldn’t that violate privacy and anger customers who don’t want their data available to others?
No, it doesn’t mean that, it means statistical data stored on cookies, which most websites, including Google and Facebook use and share. If you sell from your own web page, this information is crucial for finding out how your customer found you: was it from a Google search, an advert on another site, Facebook, or a pay-per-click campaign. Without this data you can never know if promotion is working or not. For publishers and self publishers it means you could be wasting all your efforts promoting and marketing your books because Amazon won’t tell you how people have found your product.
The innovation point is also valid. If I buy a CD, I’m entitled to make a copy and place it on an MP3 player. So why is it if I spend $20 on a hardback, why shouldn’t I have a discounted of free e-version to read on a Kindle too.
I would argue that you making a copy of your hardback and putting it on your e-reader is exactly analogous to your putting your CD music on an MP3 player. However, I note that you are willing to make your own copy in the first instance and seem to imply that you expect the publisher to provide you one in the second.
The source of the disparity is obvious, but I don’t see why you think that the fact that it exists entitles you to anything in particular.
My point is not that I expect it, but publishers and self-publishers are restricted by Amazon from doing it. Offering a package that enables people to have the freedom to keep a hard copy and have a version on an e-reader could encourage people to buy more hardbacks, which, from a publishers point of view, is attractive.
“but publishers and self-publishers are restricted by Amazon from doing it.”
Robert,
Do you have direct evidence of that?
Not being crochety, I just don’t know and I’d be really surprised if Amz were holding that back.
brendan
Just going on what the article says, which is why I raised the point: “Indeed, Amazon actually prevents self- and traditional publishers from innovating. If they want to bundle an ebook with the paperback, they can’t do that through Amazon.” An being a Forbes’ journalist I would hope he’s checked his facts.
Just to be clear, Robert, the Forbes bloggers are not employees of Forbes and and I don’t believe their posts are run through any sort of Forbes fact-checking.
They can’t because Amazon has not implemented the capability. Why Amazon has not implemented the capability, I don’t know. There would be both development and overhead costs involved: perhaps Amazon doesn’t think that the increase in sales such a capability would bring is worth the costs.
If I wanted to include a free e-copy of my books with every paper version sold, it would be very easy to do, although it would require the reader to take a few minutes to go to a website and type in a code. I don’t do it, because I see no reason to do it. Or at least I don’t think it would substantially increase sales of my books.
Hm. Amazon and B&N are both in a prime spot to offer that bundling (or a similar “buy the ebook for $X more” option), though — provided you order the book through them, and ship it to your home address.
It would be very interesting to see what that would do to sales of paper books — and if B&N had the programming chops to pull it off…
STOP LAUGHING! I WRITE FICTION! I’M ALLOWED TO SAY STUFF LIKE THAT! *sulk*
Ahem. as I was saying, if B&N could pull it off, that could give them an interesting potential advantage to keep themselves floating.
Amazon prevents me from booking airline tickets on its site. If I want to buy a ticket, I just can’t do it through Amazon.
@Terrence – Lol.
Well, I bet Amazon is ripe for disruption in the airline ticket booking market then. Won’t they be sorry!
“but publishers and self-publishers are restricted by Amazon from doing it.”
How’s that?
There’s nothing to stop a publisher from, for example, sticking a CD with the ebook onto the inside of a hardback or trade paperback and then selling that composite unit through Amazon, or anywhere.
Correct me if I’m wrong, but hasn’t Baen been doing this very thing for years?
Now granted, a self-publisher couldn’t do this. But it COULD include a coupon code at Smashwords where the customer could get the ebook copy for free in their format of choice.
So again…Amazon is preventing this how, exactly?
I think Baen had to agree not to include the CDs with their books as part of their contract with Amazon.
If I’m selling a PoD book I can’t include a CD with an ebook at least I’m pretty sure Createspace and LSIZ don’t offer this option.
If I have to offer a coupon in my book to Smashwords than its not a short term promotion and its a frustrating step for the average reader to go through. Amazon also would probably knock my book blurb off if it says buy x at Amazon and the n go to y to get freebie.
So Amazon is preventing sales on its website or easy alternative/promotions. Of course that does not mean people can’t go elsewhere but that is one of the points of the article.
“I buy a CD, I’m entitled to make a copy and place it on an MP3 player.”
Robert,
Are you?
I know it is widely practiced. I’m not certain it is entirely legal.
“I spend $20 on a hardback, why shouldn’t I have a discounted of free e-version to read on a Kindle too.”
Audible are playing with something like this, with Whispersynch. (Audible and ebook) Judging by the number of bargains available, it isn’t widely required.
The creators seem to regard every iteration as fully separate and therefore to be priced individually.
It seems a logical step to bundle them and charge a bit less for the packet, but they’re having to be dragged across hot coals, screaming.
brendan (loading coal:)
“I buy a CD, I’m entitled to make a copy and place it on an MP3 player.”
It is now. I’m British and the law was changed a couple of years ago, which was previously very archaic having been formed before the digital revolution. You are right, though, and bundling ebooks with hard copies is logical and I think it will happen eventually, but both publishers and retailers such as Amazon are being too reluctant and behind the times.
Most commonwealth countries have actual law on this matter. i.e. YARTMTC (Yet Another Reason To Move to Canada)
In the US we have to rely on the Copyright Office (it’s fair use) and the RIAA (Grrr, Fine then! Be that way).
RIAA:
“…there’s no legal “right” to copy the copyrighted music on a CD onto a CD-R. However, burning a copy of CD onto a CD-R, or transferring a copy onto your computer hard drive or your portable music player, won’t usually raise concerns so long as:
The copy is made from an authorized original CD that you legitimately own
The copy is just for your personal use. It’s not a personal use – in fact, it’s illegal – to give away the copy or lend it to others for copying.”
Yadda, Yadda, “We don’t like it but we are not going to take your house over it.”
Total wishful thinking. Basically, the author here predicates all of their predictions on the idea that Amazon will lose power because: :
a. Once consumers find out books with good reviews are actually bad, they’ll stop reading reviews.
b. Other sites will cut into their market, not because they do the same thing better, but because they will “prove to people that Amazon is not the only game in town”.
c. They don’t share data with Publishers. Boy, pretty soon Publishers will get mad about this, and Amazon better watch out.
There’s no substance here, just: People will wake up and see that Amazon is bad, and Publishers will get mad.
I’m sorry. I don’t mean to be rude. I hope the author doesn’t come here to read this, but these are pretty funny.
How much data do publishers receive from bookstores and other meatspace retailers?
Bookscan had to be invented to allow publishers to even see the number of books being sold at retail. And not all stores provide information to Bookscan.
“As book reviews become more and more unreliable, so more and more buyers will start to get frustrated that they aren’t getting what they were expected and will start looking for reviews elsewhere.”
Doesn’t that depend on the percentage of book purchases made by consumers who look at Amazon reviews? Anyone know the answer?
I note all those folks browsing through bookstores, picking up books, flipping the pages, reading covers, etc. Notice any of them running off to find a review?
Another thing it assumes is that Amazon doesn’t have ways of offsetting the bad reviews. In addition to their attempts to remove some of the bad reviews, and I know some people feel those attempts were excessively heavy handed, I think Amazon is attempting to increase the number of reviews. I have started getting reminder emails asking me to come and review past purchases. If you get 100 legit reviews for every fake review, the fake review will end up meaningless. Personally, I am rarely persuaded by a single review. I don’t consider them meaningful unless there are several dozen. I also look more at why someone liked or disliked the product. It gives me a better idea of the validity of the review.
The other thing with Amazon is that if I buy an ebook or printed book and find the reviews were wrong and I don’t like it, I can easily return the book to Amazon for full credit.
With an ebook it takes less time to return a book than I usually spend looking at a book description, reviews, etc., before I buy the book.
What’s a bit silly about this article is that none of the other major ebook retailers provide detailed customer data either; it’s not just Amazon. Look at all the trouble Apple had getting newspapers and periodicals to sign on to Newsstand. Nevermind the 30% cut, the customer data was the sticking point. Also the ability to bundle print and e-editions was an issue too.
Indeed, Amazon actually prevents self- and traditional publishers from innovating.
That’s just crap. Putting your books on Amazon doesn’t mean you can’t innovate on your own Web site–and you can link to your newsletters and the like in the back matter of the books you sell on Amazon. It’s not an either/or thing–you can reach the casual readers on Amazon AND have lots of goodies for the hard-core fans on your own Web site. Amazon’s the wide mouth of the funnel.
I am not impressed with the article, and I really rather question the motivation of its author. They almost sound as if they have a very vested interest in how publishers and publishing has been done traditionally. The reviews on Amazon may have come into question some months ago, but now I think that it is less of an issue. I have reviews of books on Amazon and on Goodreads. If people really want a book they will buy it when the impulse strikes, when the time is convenient and the price is right. Reviews may or may not really make that much of a difference int he scheme of things.
Also, while you cannot upsell or bundle or sign people up to author newsletters, via Amazon, I think there is a keyword missing in that entire argument. That keyword being, “yet”. These innovations are not available to those who market via Amazon yet, but that is not to say that it won’t be in the future.
True. And if authors make use of their author profiles by including websites, twitter feed, and blog feed they have a way for readers who care to follow/find them.
This article is full of inaccuracies and seems to be just another part of the current concerted effort to discredit Amazon. Amazon does not treat its customers badly – quite the opposite – it’s customer support is one of the reasons why so many people use it.
They don’t treat suppliers badly either – not this one anyway. They’ve opened up publishing for me so I no longer need to sign swingeing publisher contracts. They provide me with sales figures whenever I want to look (not just weekly as one commenter states or 6 monthly like a traditional publisher) and they pay monthly (not 6 monthly). They’ve also answered all my queries promptly.
As for the criticism about them not handing over sales data to their suppliers, I would never expect to be given that and I’d like to hear about any other shop (on or offline) that does so. As a customer, I’m very pleased they keep their sales data about me to themselves and would be far less inclined to use them if they handed it over to all and sundry.
I’ve been working with Amazon since 1999, first as an Associate and a customer and more recently as a self-published supplier. Throughout that time, I’ve seen a steady improvement in the way they work. They seem to listen to criticism and try to get better. For example, after they realised that some of the books being published on KDP were just copied off the internet, they put in checks to stop that happening. I know because they queried my book which can also be read on one of my websites to make sure that I had the rights to the book. The query was polite and businesslike and so was their confirmation that it was okay to keep the book on KDP after they had received my reply.
I’d love to know who or what is driving the anti-Amazon campaign.