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Is Amazon bad for publishers?

4 November 2013

From Reuters:

Duff McDonald has a wonderful review of Brad Stone’s new book on Amazon in the NYT; he’s a fantastic nonfiction book reviewer. There is one part of the review, however, which could do with a bit more explanation:

Bezos does appear to revel in outwitting even his best partners. The publishing industry, for example, still doesn’t quite know how it willingly gave him the sword with which he would slice off its head…

Publishers were shocked when he sandbagged them with $9.99 e-book pricing in 2007. Where had they been?*

It’s something of an article of faith, in book-publishing circles, that Amazon has been a Bad Thing for the book publishing industry. And certainly it is an article of faith in this review. (Authors, by contrast seem to have gotten more upset at Google than at Amazon.)

What I can’t ever recall seeing, however, is a clear and concise encapsulation of the publishing industry’s beef with Amazon. How is Bezos supposed to have sliced off their head?

. . . .

McDonald makes it seem — and I think he’s right about this — that the industry’s main problem with Amazon is the fact that it discounts aggressively, and sometimes sells books (both physical and electronic) for less than the amount that it’s charged by the publishers. In other words, it subsidizes book purchases, something any industry ought to embrace with open arms. And this industry thinks it some kind of mortal threat?

. . . .

So here’s my question: what’s the argument which says that Amazon has proved itself to be a mortal, existential threat to the publishing industry? It’s not like Amazon has disintermediated publishers, allowing readers to buy millions of books directly from authors. There’s a very small business along those lines, but I don’t think that’s what publishers are worried about.

The only argument I can think of is the one surrounding physical bookstores. The small, friendly, neighborhood bookstore lives on, romantically, in the minds of most authors, and indeed publishers as well. But customers didn’t love them as much as book types did: that’s why they ended up going to Barnes & Noble instead. And as a result, the number of booksellers declined significantly. Then, just as B&N stomped on the small booksellers, Amazon ended up stomping on B&N. Customers value convenience more than they do any real-world book-buying experience — and while B&N was more convenient than the small stores, Amazon was more convenient than B&N.

. . . .

Still, I don’t think it’s really fair for publishers to blame Amazon for the fact that people like to do their shopping online, and that easily-digitizable content is going to exist mainly in a virtual world rather than the real world. Indeed, there’s an argument that Amazon has saved the publishing industry from going the way of the record labels — that it’s made buying e-books so easy that the number of free pirated versions out there is still tiny.

Link to the rest at Reuters and thanks to Bridget for the tip.

Nobody in publishing ever publicly admits this, but Amazon has substantially diminished the power of publishers to be gatekeepers.

PG disagrees with the author over publishers’ concerns about Amazon’s disintermediation of publishers via Kindle Direct Publishing. In addition to accessing the world’s largest bookstore without the need for a publisher, KDP authors almost invariably price their books below the level that publishers do.

From Amazon’s standpoint, KDP authors are doing the same thing that Amazon is doing when it sells ebooks for less than its cost – building the market for ebooks with low prices. In the case of KDP authors, however, Amazon makes money instead of losing money on low-cost ebooks.

And significant numbers of authors are turning down bad publishing contracts in favor of indie publishing their own books. Even worse, when publishers think about it, significant numbers of authors are not even trying to get a publishing contract, so publishers never get a chance at their books (unless it’s after the books have become bestsellers and the author has a huge negotiating advantage à la Hugh Howey).

Amazon, Big Publishing

15 Comments to “Is Amazon bad for publishers?”

  1. I agree with you, PG. Amazon liberated both the writer and the reader. In doing so, it sounded the death knell for the Industry as it is.

    Publishers are wise to utilze Amazon, they can make tons of money through the on-line and e-book sales. And they would be smart to emmulate it, by treating their authors as valued commondities.

    But their life span (as anything other than a service provider to writers) is limited, and it is due to Amazon. However, if Amazon hadn’t done it, someone else would have.

    In fact, it’s really not Amazon that will kill the Publishing Industry “as it was”. It’s digital technology and the freedom and reader access it gives to the writer. Amazon just got there first.

  2. From my point of view of an Indie Author whatever Amazon is doing for its own benefit is good for me, so far. The Big Pubs want to control the market, supply and prices. That’s opposite to Amazon’s policy. In a way the Amazon model is the American model, price for less and sell more. The Big Pubs are operating under the European model of 19th century. Price as high as possible to allow only the elite access to the wares.
    In any case, Amazon has taken the e-books out of the Trad Pubs control. If you think about it should have been the Trad Pubs’ job to develop the e-Reader, not a retailer like Amazon. But that’s history now, and the Trad Pubs will survive as long as paper books are sought after by the readers. Even that model may see an end with the advent of bookstores selling POD books on demand from their own store printers to readers who still like to wonder through book stores.
    Brick and mortar book stores have limited shelves to display the physical books, but with POD books they’ll have as many books as Amazon has. All it takes is some ingenious marketing and advertising of books on virtual shelves in book stores, and the Trad Pubs paper book model is destroyed as well, because Indie Authors will be able to sell paper books as easily as e-books now. This scenario may or may not happen, depending on what readers will prefer most in the future, e-book or paper book.

  3. The success Amazon is having with KDP and the success many authors are having through indie publishing only goes to show that the demand for reading material – primarily fiction – vastly exceeds what the publishers can provide. This should be a win-win-win situation. The readers have a larger selection to choose from. The writers have an opportunity to get their books published and into the hands of readers. And the trad publishers can use Amazon as their “slush pile” to see what works, what the readers want, and what new up-and-coming authors are breaking onto the scene.

    Instead, the trad publishers are trying to protect their “domain” by attempting to discredit indie authors and self-publishing. They are like a man standing on the beach, straining to keep from spilling a single of drop of water from a bucket they have in their hands. But if they would turn around and look they would see an ocean of water – enough to refill their bucket as often and for as long as they want.

    Meanwhile, the readers and indie authors are having a ball playing in the surf.

    • The trouble is, as time goes on, when they pick someone off the slush pile, he or she is more and more likely to say “what’s in it for me?”. And their response to that question will become more and more inadequate.

    • Instead, the trad publishers are trying to protect their “domain” by attempting to discredit indie authors and self-publishing.

      Not only that, but they continue to overprice ebooks. And I’m not saying every ebook should be 99 cents or whatever; the most I’ll pay for an ebook novel is US$7.99. I did pay US$11 and change for The Winter Sea, but that was a rarity for me; I simply had to have it (and I’m glad I read it, but I still feel it was way overpriced).

      I haven’t bought any other novels (in ebook format) that are anywhere near that price, and I’m not going to.

      • Very similar for me. I’ve bought a few books at 9.99 because they were $16 or more in paper and one that was $12, but it was about 1000 pages in print, so I justified it, but generally, there has to be a dang good reason to spend more than six or seven dollars.

  4. And one assumption in that article should be challenged — again. It is common wisdom that small and/or independent bookstores are going under, driven out of business by this technological revolution. But in fact, as Kris Rusch recently pointed out in a blog post, the number of independent bookstores is increasing. Hard to account for that FACT if one assumes Amazon is putting out of business the few pitiful remnants of the independent bookstore.

    So many of this articles are based on assumptions. Does anyone research any more?

    • It’s all opinion journalism now.

    • The number of independent bookstores may be increasing, but the hard reality is that bookstore sales are declining fairly precipitously. Total dollar sales for bricks and mortar bookstores peaked in 2007. Overall retail sales dropped in 2008 (there was that nasty recession), but have since recovered and were up 3.4% in 2011 compared to 2007. Bookstores, on the other hand, are down 19.3%. (2011 was the last year I found data for).

      Very few retail sectors have down worse in the last 5 years. Maybe florists, but that’s about it. Bookstores sales are falling and there is no end in sight. That’s what has the big publishers in a bind.

      • Found the estimates for 2012 (actuals for 2012 won’t be available until March 2014). Comparing 2007 to 2012 (est.), total retail sales are up 8.8%. Bookstores are down 22%.

      • Agree. The number of book stores doesn’t tell us much. How is total shelf space dedicated to books changing? Is one B&N with X feet being replaced with five independent stores with X/10 each?

        • Remember, in 2007 Borders was still a big business. My offhand guess would be that one B&N and four Borders with X feet apiece got replaced by five (or fewer) independent stores with X/10. The total number of non-chain bookshops, we are continually reminded, has increased. The total number of bookshops including the chains may actually have declined; the total square footage (since few of the independents are big-box stores) has certainly declined.

  5. Seems to me the existential threat to traditional publishing is the growing awareness among authors that most traditional publishing contracts are booby-trapped, bad contracts. It is easier to say “no” than to try to navigate that kind of high-risk minefield.

    Their concern over B&M is valid, though, since gatekeeping those outlets is the only real power they have…and it is starting to fray as POD makes its way to independent bookstores.

  6. “The publishing industry, for example, still doesn’t quite know how it willingly gave him the sword with which he would slice off its head…”

    They didn’t hand Amazon anything. They sliced off their own heads with their own stupid sword, by ignoring the needs and expectations of both writers and readers: the only two people at this party without whom the party cannot exist.

    But finally! I have an article to send to my editor friend! He and I have a friendly “rivalry” built around debating Amazon’s pros and cons. As the owner of a small press, he is usually pretty anti-Amazon (though he admitted he liked their fast shipping when his barbecue needed a new part… 🙂 ), and as an indie author who was let down by two agents and wouldn’t have a writing career without the Kindle and Amazon, I’m pro. He always finds gripey articles to send to me about how eeeeevil Amazon is. Now I have one to send back! Thanks, PG! 😉

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