Passive Guy got way behind the blogging curve today, but he’ll make it up to you.
From Michael A. Stackpole:
Amazon’s announcement of their new Science Fiction and Fantasy imprint,47North, has got me looking toward the publishing future. There are certainly plenty of folks, most in traditional publishing and book retailing, who would agree that Amazon is Sauron, and that the Kindle is the One Ring, and that their goal is to completely vertically integrate publishing into a monopoly that squeezes everyone but authors and Amazon out of the picture. The fact that they’ve gone from being a retailer to a publisher with seven imprints (including the New York imprint—how’s that for jabbing traditional publishers in the ribs?), would certainly seem to justify fears expressed by traditional publishers and every other retailer in the world.
Choosing to open a science fiction and fantasy imprint is significant, especially when one notes the line in the press release that says, “47North will publish original and previously published works, as well as out-of-print books.” [Emphasis mine.] Speculative fiction has a good reputation as being a genre with a solid long-tail: backlist sales, when the books are available, remain strong.
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More importantly, the “previously published” aspect of that comment is a key to Amazon’s future. They have access to daily statistics and analysis that tells them which authors are trending or about to trend. Even before the authors themselves can translate daily sales figures into a projected future, Amazon will know which authors are going to be a good investment for 47North. They’ll get to cherry pick talent and promote their “discoveries.” Amazon also has the ability to promote digital sales of books and later on produce a print compilation of digital novels, offering a unique print product. This is actually stated as a plan in their press release.
Amazon will use its demographic data to pick winners out of a vast field of authors. This lack of demographic data has always been a weakness with traditional publishers. Traditional publishers have always been in the position of fighting the last war. The surprise popularity of The Girl With The Dragon Tattoo prompted publishers to search for bestselling crime novels that needed translation—a strategy which has failed to produce another It-Girl success. Amazon’s willingness to promote authors—doubling down on an investment which they realize, by having data and analyzing it, is about to crest, simply makes good business sense. When was the last time traditional publishing ever threw promotional money at a title to lift its sales and boost its trend?
Publishers really can’t ignore that this is a shot across their bows—though I imagine they will. Just the fact that Amazon pays on a monthly basis makes authors look on them favorably. Their willingness to promote is another plus. The fact that they’re willing to let authors publish what they want when they want, regardless of whether or not a committee thinks it will be a blockbuster, is a third factor in their favor. True, in this latter case, publishers make a capital investment in books, so need to be sure that there is a reasonable expectation of a return on that investment, but by lowering overhead and by using electronic publishing as a farm system to develop writers, traditional publishers could successfully lock up talent, gather data for analysis, and guarantee that Amazon will have to deal with them if Amazon wants access to the properties they own.
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For authors, Amazon (and electronic publishing), looks very good. We earn 70% of a retail price we set, and we get the money in sixty days. Amazon spends a lot of money convincing people to buy empty boxes and allows me to supply the stuff they’ll put in those boxes. While some might fear that Amazon—once it establishes its monopoly—will cut the pay rate or otherwise upset the apple-cart, I believe that worry is premature. Amazon’s plan for complete vertical integration requires the compliance of authors. They need what we supply. When Amazon approaches that monopoly position, we know that there will be enough money involved in the business that investors—perhaps even the entertainment conglomerates who own the traditional publishers—will be willing to fund one or more rivals to Amazon’s sales platform and delivery system. The fact that the new Kindles are based on Android means hackers will root them and be happy to supply links to other retail sites. Moreover, users of said devices will become more sophisticated and comfortable in finding those alternate retail sites. But even if Amazon were foolish enough to contemplate pulling a Walmart and demanding that suppliers take less, my guess is that we’d not face that situation for another three years anyway.
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For writers right now, the course to success is rather simple: create inventory. Bring backlist work into inventory. Write new work. Spread your work around to give readers a greater chance of discovering you. Worrying about price points and why you’re not selling like Amanda Hocking is wasted energy. If electronic publishing is a tide which will raise all boats, the point is not to have the biggest boat. The point is to have as many boats as you can on the water. You want to have a fleet or two because that’s how you maximize the benefit of the rising tide.
Link to the rest at Stormwolf.com
Passive Guy says that a business doesn’t have to promise to be an author’s BFF to be very useful for an author’s career.
Certainly, it’s possible that Amazon could change its attitude toward authors in the future and decide to increase its profits by taking a chunk out of authors’ royalties, but low prices seem be in Amazon’s DNA and indie authors are the perfect partners in that strategy.
Amazon’s incremental costs to add another ebook to its store are minuscule. The ebook is perhaps the optimal product for Amazon to sell.
Electronics, computers and video hardware are big-selling categories for Amazon, but Amazon has to acquire a bunch of boxes full of stuff, warehouse them and ship them to be in that business. Amazon spends significant money upfront before it makes any money on these items. If Amazon buys 10,000 gizmos that don’t sell, they lose significant money.
For ebooks, all Amazon has to do is keep its computers plugged in and mail out checks. PG would bet that Amazon’s return on invested capital for ebooks is huge.
Amazon never has to pay indie authors upfront with its own money. Royalty payments don’t carry any sort of risk. Amazon collects the customer’s money, then forwards the biggest part of it to the author, gives a penny to the electric company and another penny to the piggybank it uses to buy new cheap computers, pays Mastercard something and spreads other bits here and there, but none of it is money Amazon has to generate. Amazon’s biggest costs – royalty payments and Mastercard fees – are not payable until after Amazon has collected the money to pay them.
One other point, perhaps the most important one: Indie publishing has changed authors from helpless little children who cry and wait for their agent or publisher to come and wipe their noses into savvy and intelligent entrepreneurs, people who know how to do things for themselves. Indie authors can write their own books, prepare their own books for publishing, find lots of different places online to sell their books and promote their own books through their own efforts.
If Jeff Bezos wakes up one morning and decides to become a Dark Lord, indie authors will take their books and sell them someplace else. Once Amazon shows how to make money with ebooks, it is not difficult for Amazon competitors to replicate an online bookstore. It is very difficult to compete with an Amazon that is acting smart, but Amazon is a serious and difficult competitor only so long as it continues to be smart.
If Amazon chugs a big glass of stupid, it will immediately be much easier for competitors to beat Amazon in the marketplace. Indie authors will be some of the first people to send Amazon down the drain if it turns into Sauron.
UPDATE: After PG put up the post, he thought about Netflix as the perfect example of a company that did a lot of smart things, then made a big mistake with the “We’re going to make many of our customers deal with both Netflix and something called Quickster to keep getting what they really want.”
Netflix was immediately and severely punished for its mistake and has since reversed course in a big way. PG won’t predict the long-term future of Netflix, but he will bet a nickle that Hulu and other Netflix competitors quickly received a lot of new customers while Netflix was on its stupid-chugging binge.