Posts tagged Authors Guild
I am forced to wonder, after reading this latest interview with the noted president of the Author’s Guild, if the man has actually a) bought any books in the last decade, b) listened to any of the writers he is supposed to be supporting about what they’d actually like, or c) thought for fifteen seconds about what spills from his fingers onto a computer screen before pressing “send” on interview questions.
Because frankly, what he wrote “don’t make no sense”. But here’s the article, so you can see the whole bit yourself.
I hate to beat on the guy twice in a row, but really – I don’t understand why someone who so obviously lacks even a basic grasp of the industry is in a position he’s in.
Examples of inanity:
The Guild’s beefs with Amazon became pronounced over the issue of the resale of new titles some years ago. This was something that Amazon pioneered. They would sell you a [just-released] book on Day One, buy it back from you on Day Two, and then resell it to another customer on Day Three. This was legal, but certainly not what anybody ever intended.
Traditionally, in hardcover, that’s been basically a split of the proceeds between the author and publisher. (An aside: That’s something we’re fighting with publishers about in the digital world.) So Amazon decides to go into competition with the publishers by reselling the book they just bought. The publisher gets paid nothing, and neither does the author. It’s a pure profit for Amazon.
Now, the reason you don’t see used bookstores within new bookstores is that the used books compete with the new books and the publishers supplying the new books would object.
OK, wait a sec here. My local B&N has had a HUGE used book section for as long as I can remember. They’ve been doing this longer than Amazon has been around. Not only that, but this is not an uncommon practice at B&N superstores. And yes, Scott, they are quite happy to buy back the hardcover I bought a couple of weeks ago (for a fraction of the price) and resell it at a profit.
This isn’t some new gimmick Amazon came up with. B&N has been doing it since before there was an Amazon.
Leaving aside the fact that this sort of buy back for books was not an Amazon innovation, there’s also the bit that this is not unique to books. Video game stores have been doing buybacks for as long as Gamestop and EB Games have been around. And while they’re not doing as well as they once were, that has more to do with game-buying moving online (shipped to your home) than it does any buyback system. Those game stores make a huge profit reselling used games, yet video games as an industry are still a booming business.
Amazon bought a POD service called BookSurge. Then they informed their customers — university presses and some other publishers who the Guild had organized to do POD for Authors Guild members — that they would not list their books on Amazon’s site unless they paid BookSurge more for their services.
True or false, Scott?
Amazon did buy BookSurge, but has consistently LOWERED prices for their services. In fact, Amazon now offers print on demand services through Createspace for less cost than any other POD printer in the US. I know. I’ve looked. Nobody else is even coming close except Lightning Source (an Ingrams company), and they cost more than Createspace.
Amazon taking over BookSurge was a huge boon to the small press industry.
So Amazon says, “We’ll pay you the same amount we pay you on a hardcover.” So publishers think that sounds fine, how can they complain about that? They agree and are then stunned when Amazon announces that they’re going to sell every e-book at a loss, for $9.99. That’s an average loss of $4 to $5 a book.
Why would Amazon do that?
I suppose they could argue they were doing it to sell devices and that may well have been one of their intentions. It had the additional benefit of making it much harder for any of their competitors to enter the market.
So, let’s see. Publishers make the same income. Writers make the same income. Amazon offers books at a loss to them, in order to build market share.
Why is this a problem?
First off, the only people losing money on those sales was Amazon.
Second, anyone else was free to copy their model, lose money on sales, and compete. Since we’re talking about ebooks here, the big competitors are B&N (who could have done the same thing – less depth of pockets would have stopped SOME of it, but they could have competed well with some work), Apple, and Google. OK, B&N might have had some rough times. But Google and Apple both have MUCH deeper pockets than Amazon. Trying to say they could not compete with Amazon’s price cuts is a little ridiculous. Of course they could.
The real issue involved was that publishers were afraid hardcover sales would crash; and they had too much invested in the print infrastructure, and could not afford to have that happen. Thus, price protectionism was initiated.
The stunning thing here is that Turow is favoring the publishers’ move to agency pricing, which cost both publishers and the authors he is supposed to be representing tens of millions of dollars. Because when they went to agency, the publishers involved gave up income on books. The publishers earned less; therefore the writers earned less. The publishers were happy to soak that loss to retain print sales. The writers - and the Author’s Guild – ought to have been outraged.
Most writers are.
You couldn’t read all those books you bought from Amazon on a competitor’s device — you can now, if you have an iPad, but you couldn’t then.
Yeah, actually, you could. The Kindle iPhone app appeared in March 2009. The app also worked on the iPad, when it was released a year later. Yes, the iOS Kindle app was around for a year before the iPad existed. No, Scott Turow has no idea what he is talking about. Again.
Barnes and Noble developed the nook because they really had no choice but to compete with Amazon.
No, B&N created the Nook because they recognized that ebooks were going to largely supplant print. They realized this belatedly, and were therefore well behind the curve. If B&N had been more on the ball, and launched before Kindle, we might have had a 90% Nook majority in the early market, retaining 65% today, and Kindle in the minority, rather than the other way around. Firstcomer to new tech is a big advantage, and Amazon was the company to first create an outstanding combination of retail platform and decent device.
One way that 25 percent of net became the standard royalty for e-books was because publishers said, “We all know they can’t go on selling e-books at a loss forever and sooner or later this pricing structure has got to change.” They told authors they couldn’t agree to a different royalty because everyone knew that Amazon wouldn’t be paying them $14 to $15 per title indefinitely.
First off, those prices are flat out ridiculous for ebooks. There are no returns by bookstores, which account for nearly half the publisher’s share of hardcovers. There’s no print cost. There’s no shipping costs. The fixed costs all remain: but publishers should be able to produce ebooks for less than hardcovers and still pay authors a respectable amount.
To wit: there are small presses out there producing excellent ebooks and print books, with ebooks selling for about $6 a book, and giving authors 70% of net (50% of cover price). The company I am thinking of has EVERY book they produce hit the top range of the bestseller list for its genre.
If they can do that, why can’t big publishers? Feeling a little bloated, are they? Maybe time to trim some of the fat, get lean, mean, and back in the ring. Publishing was a business able to coast along for far too many decades. Honestly, it’s about time something shook things up a bit.
You’re implying that Amazon planned eventually to use the consumer’s habituation to $9.99 books to force publishers to charge Amazon lower wholesale prices for books. They’ve tried to do that recently with some small presses, removing their titles from Amazon unless the presses agree to sell their books at rock-bottom wholesale prices.
This was actually part of a question from the interviewer. No bias here. Again, false information. NO small press has had this happen. One distributor was recently refused the renewal of a contract with Amazon. They have not disclosed the deal. They have not disclosed the details at all.
But since every small press is free to publish direct to Amazon at 70% royalty on ebooks, it’s hard to see how this loss hurt any small publishers. Did it hurt that distributor? Apparently it did. But all the small presses which used to distribute with them can simply go direct to Amazon instead, cut out the distributor, and make more income – for very little (10 minutes or so per book) additional outlay of time. I feel bad for the people working at the distributor, but that is the nature of disruptive change: some business models will become invalidated. Unless distributors can think of some massive new benefits to add to the chain, or cut their fees to a fraction of what they were for print, they simply aren’t necessary for ebooks.
The other thing Amazon could have done once they had the market to themselves — and this is virtually inevitable — is that they would have raised prices to consumers.
That’s part of the less-known history behind anti-trust laws. Once a large company has spent its capital to fund predatory pricing and drive its competitors out of business, there’s no reason to keep selling for cheap. The low prices don’t last.
Right. Look, if what they’re into is maximizing profits, then if they were to have a monopoly there’d be no rationale not to use the monopoly power to increase prices to consumers. Now, if I were on the other side, working for Amazon, I’d say “Show me where I’ve done that.”
Presumably, they haven’t done it yet because they haven’t achieved the monopoly yet. Historically, that’s what monopolies always do.
First off, somehow, Turow is missing that Amazon’s market share has shrunk from over 90% to around 65% or so over the last couple of years.
Second off, can he please name examples of companies with 2/3 or so market share who suddenly raise prices?
Google has gained a 2/3 share of internet searching. Did they begin charging more? Apple has a 2/3 share of the tablet market. Did the iPad suddenly shoot up in price? Microsoft has a big share of the operating system market, but as Konrath already pointed out, they’ve gone down in price, not up (taking into account inflation) since they started selling Windows.
So what companies out there got to a 2/3 market share and then suddenly kicked the prices up?
Wait – what would happen if Amazon suddenly got to a 90% market share and then kicked up prices? Take a guess. Readers would all go someplace else.
Amazon is a market leader because they have excellent prices, excellent service, and arguably the best retail site on the internet. The constantly innovate, and they consistently work to try to bring costs to consumers DOWN. They do this because they know that the very instant they stop doing it, some smart kid is going to start a new company in their garage – just like Amazon started – and eat their lunch.
Amazon is not going to raise prices for consumers. Amazon cannot afford to raise prices for consumers. Amazon wants to keep its customers, so it will do everything in its power to keep their costs to customers as low as possible. Even if it means cutting publishers out of the loop because they are insisting on obscene prices for ebooks, and going direct to writers instead. Why do you think Kindle Direct Publishing is so important to Amazon? It’s a means to get inexpensive ebooks out there, after publishers refused to play ball.
And I think a world in which online book selling is driving bookstores out of existence is a pity.
Sad, but true. Physical bookstores can’t compete with online ones. Not just for ebooks, but for print as well. They simply can’t do it. Online bookstores are better for the consumer, or they wouldn’t be showing preference for them over physical bookstores. Like music stores and video stores and camera stores, the brick and mortar bookstore is being phased out by digital change. I feel nostalgic about it, too. But the correct move is to adapt your business model and move on. Nothing Scott, publishers, Amazon, or anyone else can do is going to save brick and mortar bookstores at this point. Books – print and ebook – are moving online. Adapt, move on.
New authors traditionally are nurtured by bookstore personnel, especially in independent bookstores. These people literally hand sell books to their customers, by saying, “I’ve read this. I think you’re going to love it.” Not to mention the fact that a bookstore is a small cultural center in a community. That’s definitely a loss.
I am left again wondering when the last time Turow bought a book was. The average B&N employee seems to be working there because it paid two bucks an hour more than McDonalds, not because of any great love for or knowledge of literature. I’m sure there are some awesome exceptions out there. But frankly? Small bookstores don’t carry enough books to compete. Big bookstores don’t have employees who care. Readers prefer shopping online: preference shown by where the numbers are shifting for sales of books.
The idea that new authors are “nurtured” by a bunch of B&N employees who’ve never heard of them or by a small bookstore owner who refuses to buy copies of non-bestselling books is ridiculous.
The idea that bookstores are an irreplaceable cultural center is only slightly less so. And that’s because some of the good ones really are. But if they ARE cultural centers, they’re likely to survive anyway, because they will have value to people, therefore people will shop there. The stores which people choose not to shop at aren’t having very much cultural value to them.
Again, my concern is for the sake of literary diversity. If the rewards to authors go down, simple economics says there will be fewer authors. It’s not that people won’t burn with the passion to write. The number of people wanting to be novelists is probably not going to decline — but certainly the number of people who are going to be able to make a living as authors is going to dramatically decrease.
Don’t worry, Scott! Right now, thanks to Amazon and their self epublishing initiative, and their lower prices for POD printing, there are more authors earning a living wage than at any previous time in human history. There are thousands of self published books selling over a thousand copies a month right now. Remarkable! Across fiction, the ebook lists are dominated by self published books. It’s thrilling! More authors writing, more diversity than ever, more writers earning a living from their work, instead of the tiny wage paid by the major publishers.
Literature is not in a decline, but a renaissance. Largely thanks to the actions of one company.
Will Amazon always be the writer’s best friend? Perhaps not. But for the last three years, they have been a staunch ally.
As for Scott Turow, I’m going to assume that the bits of libel he had printed in that interview were accidental, the result of ignorance of the industry on his part, and not actual malice. But why does the Author’s Guild continue to have as its president someone who is that ignorant of the business of publishing, and is actively campaigning against the interest of writers?
The Author’s Guild blog has just posted a letter from Scott Turow titled “Grim News”. The post expounds upon how the DOJ’s recent announcement it intends to file suit against major publishers for conspiring to fix prices on books is a terrible thing for everyone, and basically defends the assorted publishers’ actions.
Leaving aside the major issue of trying to excuse publishers taking allegedly illegal actions in the defense of their business model, let’s look at the rest of the issues a minute.
Remember, his thoughts were sparked by the “Grim News” that the Department of Justice has just announced it plans to sue several major publishers and Apple for colluding to price fix ebooks with Apple, via the agency pricing system on ebooks. His thoughts are here.
Scott Confuses “Bookseller” with “Brick and Mortar Bookseller”
It’s an easy mistake to make. We’re all used to thinking about bookstores as those actual places you go to, you know, buy books. But that’s simply not the case for most readers anymore. Most consumer books are bought online. In fact, Amazon alone is thought to have close to half the trade book market in the US, these days.
Are the brick bookstores getting hammered? Sure. First by B&N – then by Borders – then Amazon, and now by ebooks from a variety of sellers. I know a lot of you reading this like the physical bookstores, enjoy browsing the stacks. Lots of folks liked buying CDs from a big CD store, too. That didn’t save CD stores, and bookstores are headed to the same place they did: online. Today most music is bought in MP3; and what’s left of the CD market is mostly either top album sales in Walmarts or online sales. Some music is coming out in MP3 only now, and that trend will likely grow.
We’re about seven years post iPod. We’re also about three years post Kindle. Based on comparisons of the trends in each, it is extremely likely that book buying is going to follow a similar pattern, which means over the next few years almost all chain bookstores will close, most indie bookstores (physical ones) will close, and most (but nowhere near all) books bought will be ebooks.
We don’t have to like it, but we should prepare ourselves for the idea. Ebooks are a replacement media, and are almost certainly the last nail in the coffin of physical bookstores. Nothing publishers or writers do is going to substantially slow that process.
Scott Attacks the Amazon Walled Garden
Scott attacks Amazon for having a walled garden, using it as an excuse for their alleged collusion with Apple. That would make sense – walled garden approaches to commerce limit competition, and aren’t really good for suppliers. But Apple, Sony, and B&N each have their own walled gardens too. It’s about as hard to get most Apple epubs into a Nook as it is to get most Kindle books into a Nook. Just because a company is using the epub “standard” doesn’t mean that DRM makes it easy to transfer the books to a new reader.
I recall getting a free review copy of Stephen King’s “11/22/63″ from the publisher’s website. I know from personal experience that converting a Kindle book to Nook is a LOT easier than getting that book onto the Nook software on my cell phone (yes, my cell phone has both Nook and Kindle apps – why not?). Shame on Scribner for making what ought to be an easy experience into one so painful that, tech savvy as I am, I had to spend half an hour trying to figure out how to follow arcane directions that I had to use Google to find in the first place.
Here’s the other catch: Amazon didn’t make their place a walled garden; publishers gave Amazon the walls. It’s called “DRM” – digital rights management. The little bits of code which prevent an ebook from being converted or copied. Years ago, the music industry figured out DRM was bad for business, bad for sales, and dumped it. The book publishing business has not caught on that the same might just be true for them, so pretty universally big publishers launch their ebooks with DRM.
Yes, I can remove DRM. In fact, just about anyone can remove DRM. But it’s a pain, and unless your Google-fu is strong enough, finding out how can be tough. Most customers probably won’t bother unless they’re driven to do so for some reason. Which means the DRM publishers *ordered* Amazon to put on their books is one of the most powerful tools Amazon has for retaining customers (note: Amazon is just as happy to not put DRM on books; none of my works have DRM on Amazon, because I don’t want DRM on my books – I want readers to be able to read my books where they want to). Once customers have invested heavily in a DRM-laden library from Amazon (or anyone else) they are unlikely to switch venues.
Publishers, you MADE the monster you fear.
Scott Mixes Up His Facts About Booksellers
Once again, recall: Scott only considers bookstores with a physical store “booksellers”. Those online places which ship tens of millions of books per year to customers don’t count.
He claims “bookstores are critical to modern bookselling”. No – they’re critical to large publishers maintaining their oligopoly on distribution of books. Books are selling just fine online.
He claims “Marketing studies consistently show that readers are far more adventurous in their choice of books when in a bookstore than when shopping online.” To which I reply, “lies, damned lies, and statistics”. There are very few studies out there about book buying patterns performed in the last two years which I have not read. I have never seen data which even vaguely backs up his claim. Citation, please?
He says “Publishing shouldn’t have to choose between bricks and clicks.” He’s missed the point. Publishers don’t get to choose where they sell their product. Readers get to choose where they want to buy the product publishers sell. If readers want to buy books from physical bookstores, they will; if not, they won’t. Publishers don’t get a say in this.
He says “A robust book marketplace demands both bookstore showrooms to properly display new titles and online distribution for the convenience of customers.” A fascinating claim. Why? He never explains. In fact, the majority of fiction ebook bestsellers in my recent genre surveys have no print presence in bookstores, putting the lie to his claim. What he truly means is major publishers need bookstore showrooms to properly display their wares and advertise them to readers so they can charge higher prices for their work.
He claims that bestsellers are OK, but that “For new authors, however, a difficult profession is poised to become much more difficult.” Again, pretty obviously false. Even a cursory investigation of Amazon shows that, on that site alone, several thousand self published ebooks are selling in excess of a thousand copies a month. The reverse of his claim is actually true: as bookshelf space decreases, bestseller advances are going down. However, more “midlist” writers are making excellent returns on their work than we’ve seen in over fifty years.
Scott Thinks Agency Helped!
No, not really. What agency pricing did was allow publishers to set their prices: which they did. At very high levels. In fact, skimming by Amazon one can find hundreds of ebooks from major presses at $10-15. Most of those titles have numerous 1-star reviews from customers protesting the price. Publishers didn’t help themselves with their ebook pricing scheme.
But most devastating for publishers is the loss of a majority of the ebook market.
There’s only one type of book growing in sales today – ebooks. Print sales are declining, and will likely continue to decline in a rapid slide for years yet before they settle down. Ebooks are the growth market. Ebooks are what most readers will be buying – if they are not already – within a year or two. And by pricing themselves out of the market, all existing evidence says that publishers have handed a majority share of that market to self publishing writers and small presses. No, we don’t have all the data to absolutely and positively prove that as fact – but all data which does exist, including all the market surveys I have personally done, support that theory adequately enough.
The folks who will mourn the passing of agency pricing the most are not publishers – it’s the indie writers, the self publishers, who will miss it the most. Agency pricing has allowed self publishers to dominate ebook fiction in a manner which would never have been possible if Amazon and B&N had been able to discount books from major publishers. Once Amazon gets to discount the hit bestsellers (at their expense), indies will have a harder time of it. We can only hope enough writers will have won enough fanbase by the time that happens to make a difference in the long run.
So yes, when agency pricing falls, life will get harder for writers, but not for the reasons Scott suggests.
So what the heck is going on there over at the Author’s Guild?
They’re sticking up for publishers committing allegedly illegal actions. They’re spreading information that’s got more holes than swiss cheese, loaded with false claims and erroneous data. They’re favoring one retailer over another. They’re proving they’ve locked their minds into 20th century retail, ignoring the fact that for better or worse, retail has changed with the advent of the internet.
Perhaps Scott, who wrote this article, really believes this stuff he wrote; it’s certainly being shoved down the throat of the public by enough mass media sources (the owners of whom also own the publishers currently under threat). But shouldn’t somebody over at the Author’s Guild be better informed? It’s embarrassing to see this sort of tripe up on the website of what’s supposedly a writer-focused organization.
Yesterday, the Author’s Guild placed an ill-advised blog entry on their site. It’s such an obvious piece of fluff propaganda that it’s being picked apart around the internet. One of the better commentaries was penned by Passive Guy over on his blog.
I’ll agree with PG’s summary: the writer of said post was clueless.
PG hit the main points pretty well (and I recommend his article), but I want to expand on a couple of them.
Amazon’s first Kindle, released in November 2007, was certainly innovative, but its key breakthrough wasn’t any particular piece of technology. Sony had already commercialized e-ink display screens for handheld e-books in September 2006. (E Ink, a Cambridge company co-founded by MIT Media Lab professor Joseph Jacobson developed the displays used by both companies.) Amazon’s leap was to marry e-ink displays to another existing technology, wireless connectivity, to bring e-book shopping and downloading right to the handheld device.
Amazon’s innovation, in other words, was to untether the Sony device and put a virtual store inside it.
Not even close.
Amazon produced a decent device, yes. But Amazon’s primary innovation was to create a better user experience on their web store than anyone else. It’s why they’ve succeeded as well in online retail as they have. Yes, lower prices is part of that user experience. But Amazon customers routinely shop there even for items which are the same price elsewhere.
Because Amazon has the best designed retail website in the world.
It’s not about the device. It’s about the user experience.
Pricing – Predatory vs Smart
The article goes on to say:
But it was even worse than that. Amazon had deployed its buy-button removal weapon before, but never so publicly, never on such a massive scale, and never (to our knowledge) as a means of shielding its ability to use a separate anticompetitive tactic: its practice of routinely selling e-books at a loss. Such practices, commonly known as predatory pricing, are a means of using superior capital resources not to innovate nor to provide better service, but to weaken or eliminate competition.
Pricing your products lower to sell more is not an Amazon innovation. Local gas stations routinely battle each other to have the lowest price per gallon on gasoline. I worked at a convenience store, many years ago, which charged less for gallons of milk than any other store in the area. They lost money on the milk. They earned money on everything else customers bought when they came in for the milk.
Walmart is one of the best known examples of price reduction as a tool to build retail. Walmart routinely offers prices on most of their goods lower than other retailers in an area. They’ve built an enormous economy of scale to accomplish this, leveraging their ability to sell massive quantities of product to get that product at lower prices and sell it at lower margins.
Online sales use a different method to achieve lower prices. Economy of scale is less important than economy of expenses. Freed of physical stores, online retailers have dramatically reduced costs to do business. They convert those reduced expenses into an ability to price their goods at lower retail costs to the customer.
This is an advantage which brick and mortar retail cannot compete with. The prognosis for brick and mortar retail? Anything which CAN be sold effectively online, WILL be sold online. Some small retail establishments will be able to survive in niche markets, but brick and mortar chains cannot compete with online retail.
It’s not predatory pricing. It’s smart pricing. Amazon turned a profit last year. B&N did not. Amazon is not the company with issues about how it prices its products…
Who is REALLY locking customers in?
Predatory pricing could, in turn, help Amazon buttress its other critical barrier to entry into the e-book marketplace: its use of a proprietary e-book format, rather than the industry-standard epub format. Kindle owners would naturally be reluctant to switch to incompatible devices after they had sunk money into a personal e-library of Kindle editions. Viewed this way, Amazon’s costs incurred in selling e-books at a loss amounted to an investment in erecting walls around its young, booming e-book marketplace. The more Amazon succeeded in locking customers in to Kindle’s device and format, the less rewarding the market for any potential competitor. Amazon’s investment could pay off handsomely as the e-book market took off.
Again, no. A failure to think this through seems typical here, but let’s consider the issue of formats for a moment.
First, let’s look at this from a publishers’ perspective. Publishers want to sell books. They ought to want those books to be as easy for readers to use, and transport from device to device, as possible. Instead, major publishers are universally adding DRM to their ebooks.
Now, understand, the Amazon format is almost identical to the epub. Converting one to another is easy, and fast. There are free software packages which can convert your entire library at the touch of a button. Users know this – it’s one reason why DRM-free books are more popular with readers, and why indie publishers add the line “DRM free” in their product description.
By adding DRM, publishers are helping Amazon lock customers into the Amazon system. The DRM generates the customer lock. Without DRM, users could easily move the book over to their new Nook, or Kobo reader, or whatever. With DRM as a barrier to exit, however, customers are loathe to leave the Kindle system for a new device.
In other words, publishers are directly contributing to the strength of Amazon’s position by using a technology (DRM) already proven to have no effect in reducing piracy.
Imitating roadkill is not an effective business strategy.
A truly competitive, open market has no indispensable player that can call the shots. The book publishing industry has such a player, and Amazon is poised and by all appearances eager to use its muscle to rip up the remaining physical infrastructure of book retailing and the vital book-browsing ecosystem it supports.
Here’s the thing. Amazon isn’t so much ripping up competitors as it is stepping over them, while they lie carpet-like on the floor.
Imitating roadkill is not an effective business strategy.
For bookstores? We know the brick and mortar bookstore is dying fast. We know online bookstores are the new thing, for ebooks and print books. Already, most books are bought online in the US, and that percentage will only grow.
So why, then, are there so few decent online bookstores?
Comparing Kobo, iBookstore, B&N.com, and most other online bookstores with Amazon is like comparing my three year old’s tricycle with a Jaguar or Ferrari. The other sites all look decent, mind you. But they lack the power, tools, features, content, and overall *feel* of a good store. Amazon has probably the best online retail store in the world. All a competitor has to do is copy them, and they’d at least be in the ball game with a fighting chance. Instead, they’ve produced webstores which simply don’t do the job well. They’re frustrating to use. They don’t allow users to browse well. They are not good shopping experiences.
Let’s bring it back around to publishers a sec. It’s ironic that the Author’s Guild is complaining about an Amazon monopoly, when the folks actually being investigated in the US and EU are the Big Publishers and Apple, for allegedly colluding to fix prices through the agency system they introduced and then forced on Amazon.
But the agency system is a triple disaster for publishers. On the one hand, it set them up for a class action lawsuit – led by Amazon! – and Justice Dept. investigations. On the other hand, it allowed publishers to set fixed prices that Amazon could not discount, which has resulted in self published books (generally about 1/3 to 1/2 the price of those from major publishers) taking a majority of ebook sales in many types of ebooks (of the top 200 bestselling science fiction ebooks on Amazon, 152 were self published as of Feb 14th 2012; across all fiction genres, the top 25 list in each genre was 72-92% self published in January).
More insidiously, the agency system actually shored up Amazon’s market control.
Because the agency system ensures that all ebooks are priced the same everywhere. Retailers cannot discount them, unless they find the book someplace elsewhere at a lower price. When all prices are the same everywhere on a product, what sells goods?
Service. Convenience. Ease of use. Powerful user tools, for an internet site.
All things Amazon has in spades, and all things none of their competitors have been able to manage. The result is predictable: Amazon has easily managed a majority share of ebook sales. They’ve had time to get popular now, so they’ll be harder to knock out of that seat than ever. But there’s no reason a new online bookstore couldn’t get some serious market share away from Amazon or (more likely) Amazon’s sleeping competitors. All the new store would have to do is provide as stellar a shopping experience as Amazon does. Ideally, an even more stellar one. When prices are the same everywhere, it all boils down to the user experience, and right now, no other store comes close to Amazon.
Honestly, I’d love to be in that field right now. I think the ebook world is ripe for a hot new company to come up and smack some heads around. More, I think Amazon would welcome some serious competition, even if it came from a small spitfire company. Remember, Amazon started as a small spitfire company, too. They know too well that companies which linger for long without serious competition begin to slow down and stop innovating, which is death when that next spitfire rolls up his sleeves and goes to work. And Amazon certainly isn’t getting any competition from other bookstores right now.
They’re not getting any real competition from major publishers in that business, either. You’d think, if a new publisher sprang up offering better royalty rates, better contract terms, and better marketing efforts, that big publishers would at least think about stepping up their game. Instead? No change. So big publishers are faced with three issues:
- Midlist writers leaving them to self publish.
- Bestsellers leaving to go publish with Amazon imprints.
- The sure and certain knowledge that most books they turn down will be sitting there for sale as competition soon afterward. Probably at 1/3 to 1/2 the price they sell books, too.
But like the other bookstores, publishers seem more inclined to play carpet than they are to step up and actually compete.
Folks, I don’t have time for people who refuse to compete, and then whine because someone else is doing better than them.
Publishers and bookstores alike can survive – and thrive – in this, if they look at the Amazon moves as challenges to be matched and surpassed, rather than unfair business practices. You want to win, get in the game. Otherwise, go home and stop whining.