Amazon

Falling book prices could force authors to abandon their keyboards

9 February 2016

From The Age:

The internet and e-books were meant to signal the death of the physical book. That didn’t happen. The plight of authors is another matter. As they face a perfect storm of relentless commercial pressures and repeated attacks by the federal government, the outlook for authors and their readers, and for Australia’s literary culture, has never been bleaker.

Recent surveys in Britain, the United States and Australia have revealed a serious slump in the income that authors receive from their writing. In Australia, authors have seen their average income from writing decrease from about $22,000 in the early 2000s to less than $13,000 in 2015. For many authors, that means they can no longer earn a livelihood from their work. It’s particularly worrying for young writers, who may abandon their craft altogether. And that’s bad news for readers, who could miss out on the work of our future Tim Wintons and Richard Flanagans.

It’s come to this partly because of market pressures. The advent of Amazon provides part of the answer. It carved out an almost monopolistic space for itself by selling books at a loss. The company has rarely made a profit, with its shareholders seemingly content to finance the remorseless expansion of this retail behemoth. The assumption behind their patience is that Amazon will one day be able to use its market power to raise prices and reap the resulting profits. In the meantime, authors have been the victims of their strategy.

. . . .

It’s not only because of Amazon that there has been a drop of about 30 per cent in the average price of books in Australia. The collapse of Borders and Angus and Robertson saw their place taken by discount department stores, like Target, Big W and Kmart, which added to the downward pressure on prices. As prices fall, so too do the royalties paid to authors. And the effect has been exacerbated by publishers reducing their print runs and consequently reducing the advances they pay to authors. The arrival of digitisation and e-books might have been expected to benefit authors, but the benefits have mostly flowed to publishers and to the Amazons of the world.

. . . .

Now Malcolm Turnbull has declared that he wants to remove the restrictions on the parallel importation of books, which has prevented for decades the dumping of overseas editions onto the Australian market where a local edition is already in print.

Link to the rest at The Age and thanks to Valerie for the tip.

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The 30% Rule of Selling eBooks ~ Go Exclusive? Or Sell Everywhere?

9 February 2016

From author Donna Fasano:

Several years ago, an Amazon rep told me that selling my books via Amazon Select—going exclusive to Amazon—would greatly benefit me as an author. When I voiced some reluctance to remove my books from the reach of Nook, Kobo, iBook, and Google Book readers, he went on to explain that, as long as my earnings from other venues was at or below 30% of my total earnings, then the extra sales I would see at Amazon Select would make up for the loss.

The terms and conditions of Select have changed with the invention of Kindle Unlimited, so I don’t even know if the 30% rule still applies. I currently have 4 of my 18 self-published books in the Amazon Select Program for a second 3-month stint which will end in two weeks. The way I figure it, it’s good to try new things. However, the Kindle Edition Normalized Pages (KENP) Read have shown pretty dismal results/earnings. Before removing the 4 books from Select, I needed more sales information from the various venues where my books are available.

. . . .

The information clearly shows that, during the past 4 months, I’ve only had 1 month where Amazon Kindle sales were greater than 70%.

With the advent of Kobo’s fabulous new Promotions Tab on my Kobo Author Dashboard, I believe my Kobo sales and readership will grow. I’m still learning how the promotional campaigns work and which ones fit best for my books, but it seems that I have gotten it right 2 months out of 4. I imagine I will only become better at choosing and marketing the correct campaigns. I can tell you that during the first week of February, Kobo and Amazon are neck and neck with Kobo at 40.5% and Amazon at 43%. Also, I get a thrill when I see Kobo readers in Nigeria, Qatar, South Africa, Slovakia, Columbia, and dozens of other countries are reading my books.

Link to the rest at Donna Fasano and thanks to Al for the tip.

Here’s a link to Donna Fasano’s books. If you like an author’s post, you can show your appreciation by checking out their books.

Amazon’s Super Bowl Ad

8 February 2016

Since PG is not a huge NFL fan, he just found out about the following:

 

First look at Amazon’s Treasure Truck: Getting a deal from Jeff Bezos’ ‘four-wheeled joy machine’

7 February 2016

From GeekWire:

My Saturday morning routine was interrupted with an alert from Amazon’s notoriously shy Treasure Truck, announcing their very first deal, a GoPro HERO4 Black for $179. That is a screamingly good price on a cool gadget that currently sells for $429 on Amazon, so a perfect opportunity to try the Treasure Truck on its debut. The process was easy and fun.

Wait a second, you may be asking — what the heck is the Treasure Truck? In short, it’s a delivery vehicle for deals, the latest move by Jeff Bezos & Co. to expand beyond their digital roots and into the physical world. The Treasure Truck finally launched in Seattle on Saturday, after an unexplained seven-month delay.

. . . .

Amazon says the Treasure Truck is like a “neighborhood ice cream truck” — a “four-wheeled joy machine” dishing out deals and bringing e-commerce into the mobile era, literally.

. . . .

Here’s how it works. First, to find the Treasure Truck, you have to be in Seattle, and you have to have the Amazon app installed on your phone. You can find it in the main menu of the app to see what’s on the truck today. You can also get alerts about the current deal. Today’s alert came promptly at 11AM.

You actually buy the item on your app, which then instructs you to visit the pickup location. Today the Treasure Truck was setup in a parking lot at the south end of Amazon’s South Lake Union campus. I was lucky that I ordered the GoPro right when I saw it, as the deal sold out in the first 45 minutes of the offer.

Parking lot attendants directed me to a parking spot next to the Treasure Truck which was setup next to a couple of white tents. The tents were staffed by cheery Amazon staffers in blaze orange Helly Hansen jackets toting Fire tablets.

. . . .

Pickup of my purchase was remarkably easy. Literally all I did was give them my name which they checked off the list on their tablet.

Link to the rest at GeekWire (including lots of Treasure Truck photos)

PG usually tries to avoid loading up on too many Amazon stories in a single day, but all too often, Amazon seems to be the only organization in the book business that does anything innovative or interesting.

Big Publishing announces a new idea every year or two. Adult coloring books was the most recent example.

Publishing Industry Speculates About Expansion Plans for Amazon Books

7 February 2016

From Publishers Weekly:

Remarks by the CEO of a mall operator set off a firestorm of speculation in the media and book publishing industry last week about what plans Amazon might have for creating its own bricks-and-mortar bookstore chain.

. . . .

Amazon had no comment on Mathrani’s remarks, which were made last Tuesday morning, and the company declined to elaborate when asked how Mathrani knew about Amazon’s plans.

. . . .

Asked whether the job postings prove that the company is planning to open more Amazon Books locations, an Amazon spokesperson said the only publicly announced store is the one it opened in Seattle in December.

As with most issues that involve Amazon, publishers were reluctant to discuss what the company may or may not do with Amazon Books, although a few executives did speak for attribution. Sourcebooks CEO Dominique Raccah said she does not think Amazon will look to open hundreds of stores, but believes the most likely course of action is a strategic expansion to showcase its electronics—as well as some books.

Another industry executive, who requested anonymity, said a limited store rollout is the most probable scenario. He said Amazon has to be tempted to do something in physical retail given the success Apple has had in selling its devices through the Apple Store.

. . . .

Kensington Publishing CEO Steve Zacharius questioned whether Amazon would open hundreds of stores that focus primarily on selling books that carry low margins, but he observed that if Barnes & Noble, Books-A-Million, or an independent chain announced it would open 400 outlets, “we’d all be jumping for joy.” Given Amazon’s dominant position in selling books, Zacharius said such a large bookstore expansion by the company could be a positive move for the industry—if “the books are sold at a reasonable price, not as loss leaders, so that everybody is competing on a fair basis.”

The head of another midsize independent publisher also pointed to Amazon’s strong market position and concluded that a large Amazon bookstore presence would be “unquestionably bad” for the industry. A big physical store footprint would position the company to take an even bigger slice of consumer book spending, the executive said. This executive feared that, rather than expanding the book market, a chain of Amazon bookstores would make it even harder for B&N to survive—and the survival of B&N is one of all publishers’ top priorities.

Link to the rest at Publishers Weekly

PG says if your industry’s future is based upon the survival of B&N, you might want to move to a different industry. And Steve Zacharius made sense for a couple of minutes, then his case of Amazon Derangement Syndrome kicked back in.

Amazon hiring for bookstore in San Diego

7 February 2016

From The San Diego Union:

Amazon is coming to town. But instead of catering to couch potatoes, the company is targeting people who prefer to browse or shop in actual stores.

The e-commerce giant is hiring store managers, booksellers and gadget enthusiasts for an Amazon Books retail store in the “La Jolla or San Diego area,” according to multiple job listings posted online earlier this week.

The job posts signal Amazon’s growing interest in the offline world, thus far a mostly untouched region for the company where it can extend its customer service prowess to face-to-face encounters, create shelf space for its growing lineup of hardware products and more efficiently handle returns.

. . . .

The local job postings, however, suggest that the online bookseller is already in the staffing stages for at least one store in the region. The positions currently listed for the “La Jolla or San Diego” Amazon Books store include Store Manager, Assistant Store Manager, Books Lead, Books Associate and Device Lead.

“Amazon Books is a physical retail store that offers a curated selection of books and an array of Amazon devices. We’ve applied twenty years of experience of online bookselling experience to build a store that integrates the benefits of offline and online book shopping,” one of the San Diego job posting’s states. “As a member of the Amazon Books team, you will have the opportunity to work with a stellar team that provides best-in-class customer service to anyone visiting the store.”

In an email exchange, Reg Kobzi, senior vice president for commercial real-estate brokerage CBRE, indicated that Amazon had been looking for local retail space, but would not comment further, citing a confidentiality agreement.

. . . .

San Diego has clearly suffered its share of casualties in the book-selling arena with the growth — and then decline — of large chains and the subsequent rise of internet sales. Wahrenbrock’s, Book Works, Esmeralda, Grounds for Murder, John Cole’s, William Burgett’s are all no more, as is the Borders chain. After declaring bankruptcy in 2011, it closed all of its stores, including three in San Diego County.

San Diego’s Mysterious Galaxy is a long-term survivor in the local market, but that doesn’t mean co-owner Mary Elizabeth Yturralde isn’t concerned about the arrival of Amazon on Main Street.

“Anything that Amazon does is something that needs to be viewed with concern because of their predatory business model,” said Yturralde, whose store operates in the specialized niche of mystery, suspense, science-fiction, fantasy and horror. It’s been in business for nearly 23 years. “They operate in the Walmart mode where they don’t add any value to any community they move into.”

. . . .

Mutter of Shelf Awareness attributes the recent resurgence of independent bookstores, in part, to their efforts around emphasizing in-store perks, such as author events, that Amazon hasn’t been able to copy. Amazon’s brick-and-mortar business plans, then, are sure to make the company even less popular with this group.

“In the book world, Amazon is an evil empire,” Mutter said.

Link to the rest at The San Diego Union and thanks to Chris for the tip.

PG says if you have your heart set on working in a physical bookstore, you’ll almost certainly have a better salary, benefits, working conditions and future at an Amazon bookstore than you will at an indie bookstore.

The Amazon/Wal-Mart comparison is apt. When Wal-Mart opens a new store, it will frequently have something on the order of 10,000 employment applications for 400 openings.

To PG’s knowledge, Amazon hasn’t released the number of job applicants for each opening at its Seattle store, but he bets it is a much bigger number than for any indie or Barnes & Noble bookstore.

Authors United’s Divisive Stand on Amazon

6 February 2016

From Publishing Perspectives:

Last Wednesday’s (January 27) Authors United event on Amazon and book publishing had a curiously provincial air about it. It was staged at Washington’s New America Foundation, a nonprofit think tank that includes “impartial analysis” in its description of its work. The event’s loaded title, “Amazon’s Book Monopoly: A Threat to Freedom of Expression?”, suggests that New America’s grasp of impartiality may be partial, but the intent here was to state that Amazon’s market position will, as one participant put it, cause “long-term effects on the global book trade.”

The question of whether Amazon technically has a monopoly in the marketplace, of course, is unsettled. It’s something that some of our colleagues find endlessly discussible. And Amazon’s vast size matters here, both in animating this circular debate and in that quality of provincialism. At many points Wednesday, the event—ably webcast live by New America—looked a bit like earnest but presumptive town folk complaining that a rural electrification program might harm the tranquility of the pastures. This is always a risk, of course, when we take on so large an entity as the Amazonian estate.

. . . .

“For the year, Amazon passed $100 billion in revenue for the first time in its two-decade history. It took rival Wal-Mart Stores Inc. 35 years to reach the same mark in 1997, two years after Amazon.com opened for business.”

And contextually speaking, one of the hardest things for some publishing people to do is to keep in focus the fact that Amazon is vastly more than books and publishing. It’s more than lawnmowers and dog beds, too. Its AWS operation, Amazon Web Services, has “a huge lead on rivals in offering cloud-computing services,” Bensinger writes. As a tech company—and that’s what Amazon is—it “easily” outperformed in 2015, writes Bensinger, “other tech giants like Alphabet Inc., Apple Inc. and Facebook Inc.”

. . . .

All of which throws a huge shadow over events like Wednesday’s in which detractors gather to rail at the feet of a colossus.

Authors United, earnestly led by novelist Douglas Preston, was established at the time of the Amazon-Hachette contract-renewal standoff and remains one of the most polarizing efforts in the author camp. It’s seen by many in the self-publishing world as a consortium of bestselling trade authors who place their interests in establishment publishing over the value of opening the market to independent publishing, as Amazon has done. And one of the things that has dogged the United group from the beginning, of course, is that its author-members sell their books through Amazon. In that light, the hand that feeds them looks sorely bitten each time they mount a complaint. Anyone can understand how tricky this circumstance is in such an event as Wednesday’s.

Link to the rest at Publishing Perspectives

PG says this piece highlights how pathetic the Authors United group are and how deeply needy their relationship with their publishers has become.

Remember how AU came into being. After having their hands slapped for a comically inept conspiracy to illegally fix prices by the Justice Department, the business geniuses of Big Publishing moved their price-fixing plans forward one by one as their existing contracts with Amazon expired.

Hachette was first up in the renegotiation of its contract with Amazon. The old contract provided that Amazon would set the price for ebooks, but would pay Hachette amounts based upon Hachette’s list price for ebooks. This provided a direct financial benefit to Hachette and to Hachette’s authors.

For some reason, the aforementioned business geniuses of Big Publishing thought they understood more about pricing ebooks than Amazon did, so Hachette insisted that Amazon must quit selling Hachette ebooks at a discount and, instead, sell them at the price Hachette specified.

Hachette has no problems with Barnes & Noble selling printed books at discount, but ebooks were different – new and strange – like websites.

But the executives convinced themselves over cocktails that they knew the proper price for online digital goods and Amazon didn’t. Besides, they never trusted ebooks even though their accountants patiently explained how much more profit they could make by selling electrons instead of dead trees. The fight went on for awhile and Amazon became nervous about selling Hachette ebooks without a contract in place and either quit or slowed down orders for Hachette ebooks.

The AU folks diligently studied the Constitution and antitrust laws and discovered that the founders of the nation had granted traditionally-published authors a divine right to have Amazon sell their books. Why? Because Amazon is better at selling books than anyone else. So Amazon has to sell Hachette books, contract or no contract.

Eventually, Amazon gave in and Hachette set ebook prices higher than Amazon recommended. All of Hachette’s co-conspirators did the same thing.

To AU’s surprise, instead of increasing, sales of tradpub ebooks declined! Who knew that sales had anything to do with prices?

It’s all Amazon’s fault. First, Amazon would not set ebook prices as high as Big Publishing wanted them set. And authors were harmed. Then, Amazon would set ebook prices as high as Big Publishing wanted them set. And authors were harmed.

The only reasonable conclusion for AU is that Amazon is plotting to harm authors. And books. And the writing life. And culture. And New York. And, probably, baby seals too.

In PG’s dream world, Amazon would quit selling all books published by Hachette and the other antitrust outlaws (computer problems!) until each Author’s Union member traveled to Seattle and kissed each of Jeff Bezos’ toes. Three times. And petitioned the Vatican to have Jeff declared a saint. And built a cathedral in Manhattan named after St. Jeff.

What Dallas-based Half Price Books has to say about Amazon opening bookstores: Print is alive

5 February 2016

From The Dallas Morning News:

When the big kahuna in your category wants to expand on your turf, it’s usually nothing for a retailer to get excited about. But here’s an honest reaction from Dallas-based Half Price Books to the prospect of Amazon.com opening lots of bookstores nationwide.

First, Amazon is probably finding out with the one store it opened in Seattle last year, that “it’s not as easy [as] running a warehouse,” said Half Price Books executive vice president Kathy Doyle Thomas.

But more importantly, it’s a bit of vindication for Half Price Books that Amazon wants in on the brick-and-mortar scene. “I’m excited that they see what we believe that the printed word isn’t dead,” Thomas said. “We’ve known for 44 years that people like to browse and shop bookstores.”

Half Price Books with 126 stores in 16 states and sales of $260 million last year, is the third largest U.S. bookstore chain behind Barnes & Noble and Books-A-Million.

. . . .

A little reconnaissance shopping at the Seattle store revealed some issues, she said. “We know how to manage stores with smart intelligent people who have to know about authors and subjects. It’s harder to do that than putting a book in a shipping box,” Thomas said. “Plus, space is valuable and you have to put every square foot to work.”

. . . .

“I worry that they’ll keep other bookstores out of shopping centers if they expand,” she said. There’s been a small resurgence in independent bookstores as entrpreneurs combine cafés and books like Serj Books & Local Food in Downtown Dallas and The Wild Detectives in Oak Cliff’s Bishop Arts District.

Thomas said if Amazon does move forward with brick-and-mortar stores, it may have more to do with the cost of shipping returns. That’s something that online customer service tracker StellaService said is likely encouraging Amazon to at least explore stores in its future.

“If this report is true, it is a clear move by Amazon to respond to how brick-and-mortar retailers have successfully invested in technology to leverage their physical stores to close the speed-and-efficiency gap with Amazon,” said Kevon Hills, StellaService vice president of research.

It would allow Amazon to offer free returns, which only its Prime members get now. “Buy online, return in store” has become an advantage major chains have carved out over Amazon, Hills said.

“Today Amazon can process refunds within a day or two, but cannot compete with retailers who offer ‘free return shipping’ by allowing shoppers to drop off a return at their neighborhood store,” he said. “Best Buy, Wal-Mart, Target, and other brick-and-mortar retailers operate at an advantage because they don’t charge shipping when consumers make returns in stores.”

Link to the rest at The Dallas Morning News and thanks to Darren for the tip.

On the few purchases PG has returned to Amazon, he’s never had to pay for return shipping unless the return was the result of his own mistake – ordering the wrong size, etc. Even with those, a lot of items offer free returns – you’ll see a designation next to the price of the product in the product description.

Additionally, it’s much easier for PG to drop a return into a UPS box than it is to drive to a retail store, figure out where he goes to return something, then wait for the right person to show up and process the return.

Meet the Guy Behind Amazon’s Secret Retail Store Plans

4 February 2016

From Re/code:

The Amazon retail store initiative is being led by Steve Kessel, a longtime Amazon executive whose team launched the first Kindle e-reader and who is very tight with CEO Jeff Bezos, according to three sources familiar with the group.

Kessel is widely respected inside Amazon, where he is known as a low-ego leader with greater emotional intelligence than some other senior executives at the company, according to two sources. He joined Amazon in 1999 and left in 2011 or 2012 to take a sabbatical. He started working on this initiative when he came back, these people say. The specifics of Kessel’s project had been a secret internally for a long time, but his group has attracted more attention since it opened up Amazon’s first brick-and-mortar bookstore in Seattle in the fall.

. . . .

Early Amazon exec Jennifer Cast runs the Amazon Books division and reports to Kessel. She spent a long time away from Amazon before returning in 2014 to take on this role.

. . . .

Amazon will indeed open up more bookstores, but it also plans to eventually unveil other types of retail stores in addition to bookstores, according to two sources familiar with the plans. It’s not yet clear what those stores will sell or how they will be formatted, but the retail team’s mission is to reimagine what shopping in a physical store would be like if you merged the best of physical retail with the best of Amazon.

One source says the team is experimenting with some of the ideas discussed in this retail-store-related patent application that Re/code uncovered last year. One of the experiences discussed in the application would allow customers to pick an item from a shelf and automatically be charged for it upon exiting the store without stopping to pay at a checkout counter or kiosk.

. . . .

Amazon is currently hiring for a new Amazon Books bookstore in Southern California that has yet to be announced, according to job listings. One listing, for an Amazon Books assistant store manager in La Jolla or San Diego, says: “You love the excitement of running a bookstore. You have a flair for leading teams and adjusting your leadership style based on the situation. You enjoy reading and keep yourself updated on the latest in the digital devices front. You are part of the store leadership team.”

There are no immediate plans for a rollout of 300 to 400 stores, two sources say, but they could not rule out that eventual outcome.

Link to the rest at Re/code and thanks to Christian for the tip.

Amazon’s Q4: An E-Commerce Enabler Rather Than A Retailer

3 February 2016

From Seeking Alpha:

  • Amazon’s promising business model is based on being an e-commerce enabler rather than a retailer.
  • Amazon’s real value is embodied in its unique experience, knowledge, systems and credibility gained in e-commerce which will be monetized by rendering service like FBA and AWS.
  • Amazon’s own retail activities may even become irrelevant as a direct earnings contributor as profit margins on AWS and FBA will dwarf those ever achievable in retail sector.

Amazon published a remarkable set of excellent results in Q4 and the whole of 2015. They demonstrate that enabling others to conduct their e-commerce results in much higher profit margins than when Amazon would only strive for growing is own online retail business.

Compare Amazon to the guys that sold tools and victuals to the fortune seekers going to Klondike during the gold rush. These were the firms that made the real money. This concept of what is the essence of Amazon is still little recognized. I may be wrong – nothing is certain in the field of investing. New ideas develop from unintended results. But I do believe that when Jeff Bezos started his venture in 1994, his mission was to be a new, revolutionary factor in bringing goods to consumers via the internet.

Sometime in the execution phase of this idea, the insight must have gradually taken shape that more had to be gained by making others retail (or “dig for gold”) and that Amazon would be better off to sell to these guys all the unique tools and things Bezos had acquired and learned in the pioneering years. This initially vague notion has gradually become ever more clear with each step set on the road to serve other retailers. It turned into the crystal clear vision to see these other retailers not as competitors but as customers.

The amazing set of quarterly earnings figures that Amazon released on January 28 seemed to confirm this thesis. Services grew three times (47%) as fast in Q4 2015 than the sale of goods from Amazon’s own stock (15%) resulting in a 22% overall growth in revenue of $36.7 billion. Operating earnings were up 87% to $ 1.1 billion, taking the operating margin to 3.1%. A memorable fact as it was the first time for the operating margin to exceed again the 3% level since Q1 2011.

. . . .

I suspect that sales of goods that move over Amazon’s own ledger, contributed hardly, if at all, to the encouraging earnings obtained in 2015. There is much in Amazon’s financial reporting that can and must be improved but as least we know the level of profitability realized last year on the AWS’ cloud computing services: 28.6% for the final quarter and 23.7% for the whole of the year.

But AWS accounted with a turnover of $ 7.9 billion for just 28% of Amazon’s net service revenues which totaled $ 27.7 billion. The largest part of it stems from annual payments for Prime subscriptions and payments for a range of fulfillment services. From the current state of Amazon’s reporting it can only be guessed how much the operational margin on these activities must have been, but I think there is all the reason to expect that the margin is high, and much higher than most investors probably assume so far.

Link to the rest at Seeking Alpha

PG says the thesis of this article neatly applies to indie authors. Other than with Amazon Publishing and Kindle Scout, Amazon doesn’t buy indie books, then resell them. Instead, for the large majority of indie books sold, Amazon provides indie authors the tools to sell their own books.

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