Amazon Is Creating Competition, Not Killing It

The big topic (again) seems to be whether Amazon is a monopoly, or is heading in that direction, and whether they should be “stopped” (although, I’m never quite sure what that entails exactly).

Barry Eisler dealt with this fear, rather conclusively, back in October in a guest post on Joe Konrath’s blog.

But lately, the hysteria has been ratcheted up a notch by Mike Shatzkin’s sensible prediction that Amazon will soon be responsible for 50% of most publisher’s sales (I can’t link to Mike’s original piece at the moment, there seems to be a problem with his site, but Passive Guy quotes the main points).

The Author’s Guild now has Amazon firmly in their sights. An article at the end of January entitled Publishing’s Ecosystem on the Brink: The Backstory was followed by another yesterday: Amazon, Innovation, and the Rewards of the Free Market. The anti-Amazon views contained therein are hardly surprising, given that the President of the Author’s Guild, Scott Turow, considers Amazon the “Darth Vader” of the publishing industry.

It appears that those labeling Amazon a monopoly (or on the road to becoming one) have failed to take account of the following:

(a) The definition of the word “monopoly” (the OED describes it thus: the exclusive possession or control of the supply of or trade in a commodity or service). I would like to see anyone attempt to make the argument that Amazon has either “the exclusive possession or control of the supply of or trade in” print books or e-books, or that Amazon is on the way to doing so.

(b) The fact that a retail monopolies never occur without the assistance of legislation outlawing competition (such as the Swedish prohibition on the sale of hard liquor outside of government-run stores).

(c) The inconvenient truth that Amazon’s share of the e-book market has dropped from a high of around 90% two years ago to around 65% today, largely thanks to the entrance of fresh competition in the form of Barnes & Noble, Kobo, Google, and Apple.

When a company’s competition contains names like Apple and Google – two of the biggest corporations in the world – and virtually anyone can hang out their shingle and open an e-bookstore, you can’t make the monopoly argument and expect to be taken seriously.

I don’t see Amazon as a threat to competition. Quite the opposite, in fact. Amazon has done more to foster competition than any other player in the industry.

As Mike Shatzkin points out, five years ago the overwhelming majority of all books were sold in bricks-and-mortar stores (he estimates it at 80%). As any self-publisher or author published by a small press will know, large publishers essentially have a lock on those spots, and were only really competing among themselves.

The world has changed dramatically in the last five years. The convergence of four key trends – rise in online bookselling, the widespread adoption of e-readers, the rapidly increasing popularity of e-books, and the ease of digital publishing – have introduced a new level of competition in the industry.

One company has been more responsible for that than anyone: Amazon. Instead of large publishers monopolizing all the spots where most books were sold (stores), Amazon has blown it wide open so that anybody can compete with the large publishers (including self-publishers, Amazon’s own imprints, literary agents, and small publishers).

Out of the all the players, Amazon has had far more influence over the rise in online bookselling, the adoption of e-readers, the popularity of e-books, and the ease of digital publishing. Large publishers had a lock on distribution, but now Amazon has blown it wide open so that anybody can compete with those large publishers

And they certainly are competing. Amazon’s imprints regularly propel books to the top of charts. Self-publishers and small publishers are taking over the bestseller lists. Anybody can upload their book to Amazon (and Smashwords, and Barnes & Noble, and Apple, and Diesel, and AllRomance, and DriveThruFiction, and Xinxii, and Waterstones, and Tesco, and Kobo, and Sony) and sell their work to readers across the globe.

Writers have more choices than ever before. No longer do they have to accept crummy advances, restrictive terms, and laughable royalty rates in the vain hope that their piece of publishing spaghetti will be the one that sticks to the wall.

They can sign with a progressive small publisher, on much more favorable terms, confident that they can’t be excluded from the online or digital marketplace the way they are from most bricks-and-mortar stores.

Or they can self-publish, knowing that simply by uploading to a few websites, they can match the digital distributive reach of the largest publishers, earn over four times the royalty rates, and have someone passionate in charge of the every little detail of how their book is presented to the reading public, someone that is truly invested in its success, someone that knows that book better than anyone: themselves.

And the greatly increased viability of both of those paths is largely down to one company. Amazon are doing more to change the status quo than anyone, and this makes a lot of people mad, because a lot of people have a vested interest in nothing changing.

Large publishers would prefer to have a lock on distribution and to be the sole arbiters of what gets published and what doesn’t. Literary agents would like to remain the gatekeepers who decide which writers can submit work to large publishers. Barnes & Noble is pissed because when they put an indie bookstore out of business, they don’t get to scoop up all their customers anymore; many move online and into the arms of Amazon.

And if you are a bestselling author who shifts huge amounts of print books through those channels (which your publisher has a lock on), you’re probably scared of things changing too. But for the rest of us writers, we’ve never had it better.

A final point. As Joe Konrath pointed out earlier this week, Amazon is winning because they are better than the competition. And sometimes it seems that those they are competing with aren’t even trying.

There is nothing stopping large publishers from raising royalty rates and removing ridiculously restrictive terms. Barnes & Noble excludes international self-publishers and purchases from anyone outside the US, for no good reason. Apple has a horrible e-bookstore. Kobo doesn’t let (most) authors upload directly. Most bricks-and-mortar stores aren’t even attempting to sell e-books (despite the availability of a free platform from Google).

If you’re not even going to try, you will get little sympathy when you lose.

UPDATE: There is a superb post from Passive Guy filleting the latest anti-Amazon screed from the Author’s Guild. Really, really worth reading.

Note: Blogging has been intermittent this month. I’m in the middle of a writing challenge – attempting to churn out 60,000 words in February – and everything else has been shoved to one side. Normal service will resume next month. Please continue your great discussions in the comments. I haven’t had time to reply to all of your comments in the last couple of weeks, but they all get read. (And I have about 26k down, in case you are wondering.)

About davidgaughran

David Gaughran is an Irish writer, living in Prague, and author of Mercenary, A Storm Hits Valparaiso, Let's Get Digital, Let's Get Visible and this here blog thing.
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108 Responses to Amazon Is Creating Competition, Not Killing It

  1. Great post. I agree with every point. Good luck with the 60,000 words! I’d imagine that’s no push over, speaking as someone who has a day job, as well. : )

  2. andyholloman says:

    david – bravo, you summed it up better than i’ve seen anywhere else……

    i think us writers live in interesting times, amazon has blown the door wide open

  3. You can basically translate most of the whining as “we liked our cushy old business model and mean old Amazon is forcing us to adapt or perish!” Well, yeah; that’s what businesses do. Change happens. Companies adapt or die.

    I agree, David. Very hard to feel sorry for folks who aren’t even bothering to try. Frankly, I think about Amazon as something like a forest fire in an old forest filled with deadwood drops. It’ll clean the place out and kill a lot of the trees. But what comes after will be stronger and healthier than what was there before, without the detritus of years weighing it down.

    • James says:

      The problem with forest fires, of course, is that they tend to be hard to control, and kill all the wildlife in the forest that wasn’t able to escape. And sometimes, the trees never grow back. :]

      • Does a lot of damage get done in the short term? Sure. Hey, people are going to lose jobs. Companies will go under. Families will be hurt. That’s unfortunate; it’s also “just business”. When a publisher cancels a writer’s series, the writer might end up going through some hardship. Is the publisher “evil” for doing this? No. It’s just business.

        The trees ALWAYS grow back. ;) And they will here, too. Publishing was a horribly dated and incredibly inefficient business, as it existed in 2008. It was long overdue for upheaval and massive change.

      • Anything is better than the strangling kuzdo growth of the Big 6 (and Apple) stranglehold on distribution with was nothing more than a publishing cartel. Maybe instead of trees we get grassland, but SOMETHING will eventually grow.

  4. Glad to see the blog is still getting some love. Who knew writing 60,000 words in 29 days would be so time consuming, right? Great post by the way. Amazon has really been at the forefront of the ebook revolution; it is only a matter of time before the publishing industry evolves as a whole.

  5. James says:

    “but now Amazon has blown it wide open so that anybody can compete with those large publishers (including self-publishers, Amazon’s own imprints, and small publishers).”

    Er, no. Anybody can *enter* the market, but almost nobody can *compete*.

    But the proof about what’s going on is much simpler–if any author can “compete” with Amazon, then why are so few doing so? E-books have been around for almost two-decades–and were sold online in the 90s by folks other than Amazon.

    But all in all, the Darth Vader-ish caricatures of “big traditional publishers” is tiresome and a waste of time. Amazon’s goal is to control the marketplace of online retail sales–period. They do it with monopolistic practices (many of which are perfectly legal), just like other corporations try to do. Why wouldn’t they?

    Most of all, I’m puzzled by repeated characterizations of Amazon as a “bookseller”, when in reality they’re an *online retailer*, period. They’re a middleman, a warehouse, a drop shipper. They’re not about *creating* goods, they’re about *moving* them.

    Is that wrong? No. But the reality distortion field surrounding Amazon right now for many writers is getting very, very creepy.

    • Hi James. I fear that we have such a vastly different set of assumptions that we may just end up talking over each other’s heads, but I think there are a few misconceptions here.

      I know Amazon sell lots of things other than books, but this post is about authors and the publishing business.

      I’m not saying authors *individually* can compete with Simon and Schuster or Amazon or Google. I’m saying that two alternative paths to seeking publication with a large publisher (going with a small publisher or self-publishing) are a lot more viable than before. And I’m arguing that’s largely down to Amazon.

      Ebooks have been around since the seventies. The Kindle wasn’t the first e-reader. Self-publishing has been around forever. What Amazon did is launch a killer device and married that to the best online bookstore around. They also added a digital self-publishing platform that has shifted (far) more self-published e-books than any other.

      Those actions, collectively, have made digital self-publishing a lot more viable than it was before. The increased viability of that path means that every writer has more choices.

  6. Matthew Iden says:

    Amazon has the twin “misfortunes” of having a strong, singluar brand and being the entity that revolutionized publishing almost by itself. When haters gonna hate, they only have one target to point the finger at. When some cry “monopoly!” this is an argument that is unfortunately easy to grasp for many and the hysteria takes off.

    The Big Six publishers and the many ancillary “services” that attached themselves to publishing (agents, editors, book doctors, et.al.), on the other hand, had the benefit of being part of a silent monopoly that grew over the years. Justified complaints about the industry were difficult to get behind when it was about a couple dozen (hundred?) conspirators. Never mind that the polyopoly :) was more complete, longer-lasting, and more damaging to writers and readers than Amazon will ever be.

    • There are a couple of good words for the people who previously controlled publishing. The best is cartel.

      The cartel members don’t like the fact that Amazon has kicked in their control of publishing. Most of the whining and whingeing comes from organizations such as the Author’s Guild whose very existence depend on that cartel.

  7. Mari Stroud says:

    This is a great post. I’ve tried to follow the logic that makes Amazon into a monopoly a few times, and it always winds up in tears. As you said, there ain’t a dang thing stopping Amazon’s competitors from innovating in order to keep up, rather than whining that they’re being outperformed. Since Amazon exists in digital space, it can’t possibly curb competition they way that it could if we were talking a physical, brick-and-mortar business. What publishers and brick-and-mortar bookstores are arguing for is the transformation of innovation into a vice rather than a virtue, and I can’t think of many other industries that could say that and manage to keep a straight face.

  8. James says:

    I’m also finding it rather bizarre to see writers simultaneously dance on the “grave” of brick and mortar bookstores while (often angrily) claiming that Amazon is all about fostering healthy competition. There’s only one reason Amazon wants brick and mortar bookstores: to function as showrooms for Amazon’s book products.

    And, have any of you followed the effect of Amazon on small, local retailers of things other than books? No? It’s just business, right?

    Right.

    • James, business changes over time. Does Amazon have a negative impact on small, local businesses? Absolutely. Does it help forge new small, local businesses? Yes. To wit: when California passed laws which resulted in Amazon pulling affiliate status from CA, the state lost several thousand full time jobs. On the publishing end, there’s a burgeoning market for editors, cover artists, and book formatters. Scores of new businesses are spinning up to fill that need; these businesses will eventually employ hundreds of people dedicated to helping writers produce new books.

      Change taketh away, but giveth as well. ;)

      It’s not FUN to be in an industry undergoing massive tech change. Wasn’t fun to be a buggy maker when Model Ts started rolling out; but the skills those folks had could transfer to new jobs, with some effort. Ditto publishing. Ditto retail (there are some things folks just don’t want to buy online – find them and start a store selling them).

      Online sales are more efficient than local sales, in many cases. Indie bookstores are (in most cases) as dead as B&N bookstores, because they simply *cannot* compete with the more efficient nature of online selling.

      As for “fostering healthy competition” – you’ve missed the point. Amazon doesn’t want to foster competition at ALL. Amazon is a business, out to make money. They’re thrilled that their competition is basically slovenly, lazy, and inept.

      They will inevitably foster healthy competition by their nature, however; because they will cause the lazy and inept to die out, leaving vacancies which will be filled by other companies. Some of which will excel, and therefore survive, and become worthy competition.

      • James says:

        “To wit: when California passed laws which resulted in Amazon pulling affiliate status from CA, the state lost several thousand full time jobs.”

        To wit: not being able to collect taxes results in states losing not just jobs, but also services, infrastructure, governance, and safety nets.

        Be governor for a minute, Kevin–which do you choose? And if you choose “no tax on Amazon”, then how do you intend to replace the revenue being sucked out of the state before things collapse?

    • Few authors are dancing on the graves of bookstores but it is hard to be sympathetic to people who weren’t sympathetic to you? Did they carry indie offerings? No. Do they offer ebooks which they pretty easily could? No.

      So why should I sympathize?

      On the other hand I’m SUPPOSED to sympathize with Barnes & Noble which like you seem very willing to forget put thousands of small bookstores out of business. Well, I can’t say that I do although I am as willing to do business with them as I am with Amazon IF THEY EVER do as good a job as Amazon does of selling indie published books. So far, that’s a no too.

  9. James, I own a small newspaper. We’ve been crushed by everything from Craig’s List to webs advertising to mobile advertising to you name it. And my advertisers have been crushed by Wal-Mart and Amazon alike. In the end, there’s little I can do about any of this except adapt.

    If Amazon becomes a monopoly — they won’t — then they’ll start making stupid mistakes and jerking around their vendors — people like us — and we’ll take our wares elsewhere.

  10. Great post, as usual, Dave. And I’m cheering you on from the sidelines for that 60k! :-)

  11. josephine wade says:

    Amazon is an online retailer, yes. And because they have only an online presence they were originally looking to see how current technology could strengthen their online presence. That is how the ebook store evolved. My guess is if they had been a brick and mortar store they would have looked to see how the current technology would have benefited them.

    The truth is most brick and mortar stores do not implement current technology to their advantage. They push products, but they do not innovate the way business is done. Most seem to be in a holding pattern of wait and see what the competition does and imitate.

    I am not entirely sure why everyone blames Amazon for doing something most stores could have done faster and earlier. And Amazon isn’t killing the brick and mortar stores, the Internet and things going digital would have done that just fine with or without them.

  12. Pingback: Amazon Is Creating Competition, Not Killing It | Ebooks and thereabouts | Scoop.it

  13. As far as Konrath goes, he’s a great guy, but he sells his self-pubbed stuff exclusively through Amazon now. So it’s in his interest to glorify Amazon. That’s not to say he’s being insincere. I just think it’s wise to take a step back in viewing Konrath’s market analysis.

    • I would say that *everyone’s* views are colored by their circumstances. And I would guess that most self-publishers would have reasonably favorable sentiments towards Amazon. They make it much easier for us to reach readers and make money. That might color *my* views on Amazon (and everything else). I try and examine things dispassionately, and I’ve aired plenty of criticisms of Amazon on other matters. But there is no doubt who I want to be winning this battle. I think Amazon are the vast majority of my sales (and that of most indies), not because they do us any special favors necessarily, but because they put less roadblocks in our way and provide more of a level playing field. They don’t cook the charts, they don’t block the path to our books with co-op, they don’t ghettoize our titles, and they provide simple discoverability tools to readers that lead to our books. An example: B&N can’t even get simple categories right.

      • James says:

        “I try and examine things dispassionately”

        David, calling it “hysteria” and a “screed”, then linking to passivevoice’s article titled “The Authors Guild – Providing Blogging Opportunities for the Clueless, Breathless and Hopeless” doesn’t sound very dispassionate to me.

      • Guilty as charged. I’m not made of stone.

  14. That’s a good point, John. And worth remembering.

    And I feel like we all jumped on and beat up, James. So, James, I’m usually not one to run with the majority or pile on, so forgive me for being with the majority and having appeared to pile on. I appreciate the fact you waded in so bravely and threw some hellish haymakers. And I posted my comments when the situation appeared in doubt. Had I known so many would be posting almost simultaneously, I’d have stepped back and checked my fire.

  15. Valid points, although naysayers won’t listen anyway to reason… some people love the sky is falling mentality to looking at anything, pointing fingers and telling everyone else what the ‘real’ problem is… and good luck with the writing this month!

    Armand Rosamilia

  16. Follow the facts. The are clearly outlined in the piece.
    Today we are inundated in every aspects of our lives with perspectives from every imaginable source, including big ones like: political perspectives, religious perspectives, economic perspectives, industrial perspectives, ecological perspectives and the list goes on and on. Many of these are inflammatory. A good example is, “Amazon is the Darth Vader of the publishing industry.” That is an opinion not a fact.
    Weigh the merits of an argument based upon the facts presented. If a contrary argument is to be made it should also be based upon facts as well. That’s a premise that’s been long abandoned, to our collective shame.
    I applaud any resource that allows individual effort and achievement to thrive.
    Reid Hoffman, founder of LinkedIn, was interviewed on morning television a couple of days ago. He was asked whether or not the social network phenomenon had peaked. He said that it was still in its early stages and that there were so many more possibilities and opportunities regarding social networking that have yet to be developed that it was quite literally an emerging industry, (My take on what he meant). That means that industry will change as well, just like retail has, and not just for books.

  17. Sara Flower says:

    All the best with reaching your writing goal!

    And I don’t feel sorry for companies that in no way benefit indie authors. Amazon certainly has levelled the playing field for us.

    Besides, all of this is just the nature of business. Things change. Some people make Amazon out to be evil (Nothing short of silly), but was it not B&N, Chapters, etc. that put small bookstores out of business?

  18. David,

    I agree with your observations on Amazon. While they are now a publisher (Amazon Encore, 47North, Thomas Mercer etc), they are also a distributor, and as a soon to be self-published author, they are one route among several I will be taking in distributing my stories and novels.

    While there is a tremendous amount of competition in the publishing world, there is also great possibility, and I prefer to see it less as competition and more as new opportunities to reach readers, on a scale that might be below a legacy publisher’s radar but would do well for an individual like myself.

    Thanks for a terrific blog filled with great info. Best of luck with the writing this month. Your novel is near the top of my electronic to-read pile!

  19. I tend to be leery of true monopolies and can see the very real danger in consolidating power in limited numbers of businesses, but – you’re right – Amazon isn’t so much squashing the Big Six publishing houses as leaving them in the dust as they absolutely refuse to change with the times. And it’s mind-boggling how stubbornly they refuse to change. The Big Six have gone so far as insisting on pricing their eBooks higher than their paperbacks and hardcovers! Seriously, what kind of business plan is that? The “let’s drive away customers with our inflated prices and then complain that Amazon’s monopolizing the customers” model?

    And talk about monopolies…For years, the Big Six have drastically monopolized the market and tried to do away with their midlist to the point where literary agents were sending emails and making phone calls to many very talented writers telling them they couldn’t take on their books because they “just won’t sell in this market.” (I know quite a few writers who experienced this.) Well, Amazon doesn’t care about any of that. Amazon takes on all books except for a very few considered inappropriate and lets their customers decide which books sell.

    My guess is it’s just a matter of time before one of the great books on Amazon previously labeled one that “just won’t sell in this market” wins a Pulitzer Prize for Fiction, the same way that the indie press novel TINKERS won a Pulitzer Prize after being rejected by a boatload of people in traditional publishing but going on to be published by indie press after that finally became mainstream enough for its author, Paul Harding, to pull the manuscript out of a drawer and experiment with that route. If Amazon eventually has one of its own books win a Pulitzer, will the Big Six accuse them of stealing away all the great writers with their evil Amazonian monopolizing powers? Probably.

  20. NOTE: There is a superb post from Passive Guy filleting the latest screed from the Author’s Guild. Really worth reading: http://www.thepassivevoice.com/02/2012/the-authors-guild-providing-opportunity-for-the-mentally-impaired/

    • David,

      Good Lord, that article was hard to get through because so many of the Authors Guild statements made no sense and I had to keep going back and rereading them. It felt a bit like reading “Newspeak” in NINETEEN EIGHTY-FOUR or the passages in ANIMAL FARM in which words are given new meanings. The Authors Guild accuses Amazon of having “deep pockets” and making it impossible for their competitors to succeed in the same market with them. Ummmmm, two of Amazon’s main competitors in the book publishing business are Rupert Murdoch’s News Corporation and Bertelsmann AG. How is it exactly that Amazon has squashed its competition? And do Amazon’s competitors not have “deep pockets” and enough resources at their disposal to embark on creating their own digital innovations?

      As of 2011, News Corporation owned the following businesses: http://www.cjr.org/resources/?c=newscorp . These include the following book publishing houses:

      HarperCollins Publishers:
      Amistad
      Avon
      Avon A
      Avon Inspire
      Avon Red
      Caedmon
      Harper Design
      Ecco
      Eos
      Harper
      Harper Business
      HarperLuxe
      Harper Paperbacks
      Harper Perennial
      Harper Perennial Modern Classics
      HarperAudio
      HarperBibles
      HarperCollins e-Books
      HarperOne
      ItBooks
      Rayo
      William Morrow

      HarperCollins Children’s Books:
      Amistad
      Balzer + Bray
      Collins
      Greenwillow Books
      HarperCollins Children’s Audio
      HarperCollins Children’s Books
      HarperCollins e-books
      HarperFestival
      HarperTeen
      Katherine Tegen Books
      Rayo
      Walden Pond Press
      HarperCollins Australia
      HarperCollins Canada

      HarperCollins India (40%)
      HarperCollins New Zealand
      HarperCollins US
      HarperCollins UK
      Zondervan

      As of 2011, Bertelsmann owned the following businesses: http://www.cjr.org/resources/?c=bertelsmann . These include the following book publishing businesses:

      Random House (Book Publishing):

      Crown Trade Group:
      Amphoto Books
      Back Stage Books
      Billboard Books
      Broadway Books
      Broadway Business
      Clarkson Potter
      Crown
      Crown Business
      Crown Forum
      Doubleday Religion
      Harmony Books
      The Monacelli Press
      Potter Craft
      Potter Style
      Shaye Areheart Books
      Ten Speed Press
      Three Rivers Press
      Tricycle Press
      Waterbrook Multnomah
      Watson-Guptill

      Knopf Doubleday Publishing Group:
      Alfred A. Knopf
      Anchor Books
      Doubleday
      Everyman’s Library
      Nan A. Talese
      Pantheon Books
      Schocken Books
      Vintage

      Random House Publishing Group:
      Ballantine Books
      Bantam
      Delacorte
      Dell
      Del Rey
      Del Rey / Lucas Books
      The Dial Press
      The Modern Library
      One World
      Presidio Press
      Random House Trade Group
      Random House Trade Paperbacks
      Spectra
      Spiegel & Grau
      Villard Books

      RH Audio Publishing Group:
      Listening Library
      Random House Audio
      Random House Audio Assets
      Random House Audio Dimensions
      Random House Audio Roads
      Random House Audio Voices
      Random House Audio Price-less

      Random House Children’s Books:
      Kids@Random (RH Children’s Books)
      Golden Books

      RH Information Group:
      Fodor’s Travel
      Living Language
      Prima Games
      Princeton Review
      RH Puzzles & Games
      RH Reference Publishing
      Sylvan Learning

      RH International:
      Areté
      McClelland & Stewart Ltd.
      Plaza & Janés
      RH Australia
      RH of Canada Limited
      RH Mondadori
      RH South Africa
      RH South America
      RH United Kingdom
      Transworld UK
      Verlagsgruppe RH

      RH Large Print
      Smashing Ideas

  21. James says:

    I’m all for Amazon having a lot of success. I’m also all for the e-book distribution phenomenon they’ve popularized, and plan to take advantage of it myself.

    But lumping everybody who thinks Amazon might not be all it seems to be into a box labeled “hysterical” and “screeds” and “clueless” and “hopeless”–and to ridicule and caricaturize agents, publishing companies, and others–seems not just silly, but dangerously myopic. *Especially* if you’re an author who’s waded into the business of publishing. David’s blog post was entirely about dismissing the Author’s Guild post as “hysterical” and a “screed” (those are David’s words).

    What worries me most, though, is that a lot of folks looking to write and self-publish are eating this stuff up–because now they can “publish” an e-book on Amazon. It feels like freedom (and it is, in a way), but Amazon is no more interested in the success and well-being of authors than any publishing company ever has. If anything, they’re less interested. Books, after all, are only a small fraction of their online business.

    And when I see Joe Konrath’s declaration that “Amazon is winning”, my first thought is the same I had about Charlie Sheen: winning *what*, exactly? My second thought–and what happens after a winner is declared?

    • James, there’s plenty of material for you to attack what I did say, without resorting to attacking what I didn’t say. I’m not “lumping everybody who thinks Amazon might not be all it seems to be into a box labeled “hysterical” and “screeds”” Anyone who follows this blog will know that I am someone that regularly criticizes Amazon – most repeatedly on the grounds of the exclusivity requirement for KDP Select and the dangerous precedent its compensation model sets for future subscription modesl, as well as its boneheaded, regressive, and unfair policy of charging a surcharge to most international readers, and blocking a good part of the world from purchasing e-books at all. I try and be clear-eyed about Amazon, but I suppose one man’s clear-eyed is another man’s jaundiced.

      • James says:

        So Dave, you’re not saying the Author’s Guild post is part of the hysteria? And you didn’t called it the Author’s Guild’s “latest screed” in your comment above?

      • I’m precisely doing that. What I’m not doing is, as you said, “lumping everybody who thinks Amazon might not be all it seems to be into a box labeled “hysterical” and “screeds”. That comment makes me sound like a partisan defender of Amazon. As I have demonstrated, I have run many posts critical of Amazon. I have clear reasons for disagreeing with the Author’s Guild. You may agree with them or not, but I’m not dismissing their arguments because they criticized Amazon. I’m dismissing them because they are wrong.

      • I don’t know if you are a regular reader of their blog, and the various articles penned by their President, Scott Turow. The usual revolving content is some kind of attack on Amazon, or some kind of dismissal of e-books and e-reading, or some kind of denigration of self-publishers. It’s an extremely conservative organization which appears to hate everything to do with the digital revolution. And it seems more interested in preserving the status quo than giving a balanced assessment of any development which might actually favor writers.

  22. James says:

    “What I’m not doing is, as you said, “lumping everybody who thinks Amazon might not be all it seems to be into a box labeled “hysterical” and “screeds”. ”

    Ahh. Fair enough. I wasn’t directing that entirely at you and your post, though–only in part.

    And your point about chain bookstores putting little guys out of business? It’s mostly wrong, though most people believe that’s how it went. For another perspective, talk to somebody at Powell’s, for example. Powell’s has been repeatedly battered by Amazon, and despite opening it’s *own* online store, keeps laying off employees and struggling to keep the doors open. Powell’s, by the way, might be the largest “independent” bookstore in the world.

    I’ll say it again, then leave off–authors wading into self-publishing had better pause and listen carefully to all the voices around them, and avoid viewing the world as “Big Publishing” vs. “Amazon”. Because that’s not how it is at all.

  23. James says:

    “I don’t know if you are a regular reader of their blog, and the various articles penned by their President, Scott Turow. ”

    I don’t always agree with Turow either, but I also don’t think the Author’s Guild is some kind of shrill voice that doesn’t have a clue. In fact, the AG has quite a few clues, and have spent many decades in the trenches helping authors. My beef with them right now? They haven’t figured out how to accept self-published authors as members.

  24. swlothian says:

    Another great post that puts a lot of info together in one place. I’m sure that you have readers on both sides of the fence and it’s clear that you generate plenty of healthy discussion. Good job.

  25. BB_Baker says:

    As an unpublished author who is deciding which way to go, epublish or traditional publishing I thought this was wonderfully informative post. Thanks.

  26. asraidevin says:

    I wrote this on Passive Guy`s article, but I want to repeat myself because I can: author`s will be the new competition when they start selling on their own websites. 100% royalities. It`s a bit scary because you`ll be running a business.

    • A business you will probably not make money at. The Big 6 found the idea too hard. Manufacturers = authors/ publishers nearly always need a supply chain. Wholesale and retail are specialist businesses.

      • Unless you are strictly talking about e-books. I know plenty of authors doing well from direct sales, and I’m exploring it myself (if I can find the time to set it up).

      • asraidevin says:

        Whether or not an author can make money at it remains to be seen. Few people are selling directly.
        And to respond to David below I do mean eBooks.

        The only thing Amazon can beat me at is consumer reach. I can’t get as many people viewing my personal website as Amazon can get to stumble upon my book each day, no matter what I did. Aside from naked billboards or going viral somehow.

  27. There’s another reason of Amazon’s success I think it’s worth emphasizing: they leverage technology and breath it, they are a technology company. Everybody else seem to openly dislike technology, or accept it as an afterthought or a necessary evil without understanding it.

  28. Sorry David, Could not agree less.
    .“As Joe Konrath pointed out earlier this week, Amazon are winning because they are better than the competition.”
    Amazon are winning because they are getting away with restraint of trade by ePublishing in Mobi format and selling Kindles at close to loss-leader prices to people who do not know they will have restricted access to eBooks.
    If Amazon are better at what they do than Google and Apple why is that not reflected in the size of their relative bank accounts?

    • Hi Bernie. I can’t see how publishing in a proprietary format is restraint of trade. Do you consider the Apple iBooks format a restraint of trade? The Nook isn’t an open system either. Most users won’t know how to root their device (hell, most don’t even know how to sideload). Is that the same?

      As for selling devices cheaply or at a loss, it’s no different to what happens with, for example, cell phones. Or alcohol in UK and Irish supermarkets. It’s a very common retail tactic where a store will have a headline item for cheap (or at a loss) and hope to make other sales to the customer to make up the difference. In supermarkets, they put what you are looking for at the back, so you have to walk by everything else (and hopefully be tempted) before you get to the check out. Then, while you are queuing, they try and tempt you with impulse purchases like chocolate. What Amazon do isn’t much different.

      As for the relative bank accounts of Google and Apple, neither of those companies make much money from books, whereas it’s at the core of Amazon’s business (well, books and devices – and the devices, especially the fire, act as shopping portals for a whole range of products). Google’s primary revenue source is ads. Apple’s (I’m guessing) is hardware, and probably Mp3s. Amazon is certainly making lots more money on books than either of them (than both of them put together, actually).

      You may disagree, but I think Amazon are winning (the book/device battle) because they have the best device at the best price, with the best store and the best customer experience. Have you ever tried to find a book in iTunes? It’s awful. The Google eBookstore is pretty poor too. Neither gets the basics right, let alone matches the plethora of additional features that Amazon provides its customers.

      • Publishing in Mobi format is no different than ePub or other open or well documented file formats. Indeed, there is open-source software (e.g. Calibre) that will happily generate, display and convert Mobi ebooks. What creates lock-in, and gives more power to Amazon, is DRM, not the Mobi format itself. As far as I know, DRM is optional when publishing through Amazon. The retailer doesn’t mandate it. Those who are concerned about Amazon lock-in should turn to the publishers and authors who insist on using DRM snake oil.

      • That’s a very good point, Paolo. Publishers are realizing now – a little too late – that *their* insistence on DRM has made the walls around Amazon’s garden that bit higher.

        But for me, the true wall is the customer experience of browsing on the Amazon store which no-one else has come close to replicating. Navigating the others is simply a chore. In fact, I know plenty of Nook owners who browse for what they want on the Amazon store, then nip over to B&N to purchase. With the increasing amount of content exclusive to the Kindle, this phenomenon could cause problems for B&N. And if Amazon ever start selling EPUBs (which has been long-rumored), B&N will be in real trouble.

      • Hi David,
        All of those points are valid to explain Amazon’s market leadership but they do not explain the dominance.
        Both Google and Apple will improve their eStores, but while Kindles dominate the eReader market, people are forced to buy from Amazon. I am sure a lot of people do not know this when they buy Kindles.
        That is not promoting competition but restricting it.
        I do not believe it is relevant that you can covert ePub to Mobi through Calibre and then read it on Kindlle as this is not something many people would know about/choose to do.
        You might be able to help me with a related issue, David .. I was told the other day, self-pubs have to distribute exclusively through Amazon and affiliates to receive the 70% royalty. Is this the case? I have my ePub of 7 Shouts converted to Mobi but I have not inquired into Amazon.
        It is strange all the people railing against the Big Six are making excuses for the Big One.
        I am prepared to stick with Google (51% royalty) and see how the eBattle unfolds. But then, I do have a day job.

      • I can definitively state that’s not the case. I’m not exclusive with Amazon and I get 70%.

        There are conditions to the 70%. Your book must be priced between $2.99 and $9.99 (Amazon encouraging that sweet spot again). And it’s only applicable for sales in US, Canada, UK, Germany, Austria, Switzerland, Luxembourg, Lichtenstein, France, Belgium, Monaco, Spain, Andorra, Italy, Vatican City, and San Marino. So, for example, sales in Australia will only, for now, get you 35%.

        I’ve stayed out of Google because (a) they won’t let me in and (b) even if they did I would be very wary of their policy of arbitrarily discounting books.

      • Hi David,
        That is good news on Amazon. One last question. Why won’t Google let you in? You seem a well-behaved sort of fellow who won’t steal their silverware?
        I think Google’s great pleasure in life is using their fancy algorithms. They asked me to set prices for my three books (one as author, two as publisher). Zip, algorithms applied, they actually raised the price of two of the books and lowered the price on the third. At these prices $8 for 7 Shouts, $8 for 24 illustrated short stories, $3.20 for 5 illustrated short stories, they can discount if they wish, as long as they let me know. (As you and others have pointed out it is important to realise the lowest price applies to affiliates as well)
        Also, I found Google’s internet support, with two flesh-and-blood people over a dozen exchanges was most helpful.
        I am not suggesting financially it is a better thing than going with Amazon (70% royalties, much bigger market share: hey, I must be crazy. No, what I am doing is positioning myself as an eBook competitor of the Big Six. minus their money, reach and power. I am more concerned about getting the processes and systems right than maximising profit, at this stage. ( Actually I doubt if I will ever be interested in maximising profit as I think that is rarely socially responsible)
        Google is just something else out there for self-pubs to consider.
        Warning: establishing a Google account is not easy. All the information is there in logical step by step pieces but it seemed to me you had to go to a number of different web pages to find it all.And you need to read carefully.
        I think I have written too much on this topic so this is my last post on it and I will sit back and read the wisdom of other contributors

      • Ann Best says:

        I’m a 71 year old author; my first book, a memoir, published just after my 71st birthday; a woman longing sometimes to go back to the world I grew up in (though I wouldn’t want to go back to the typewriter, I love email and cell phones. But….) Boy, have I seen changes in my lifetime. I learned how to to use the word processer (before the mouse days) when I was 42, and how to do email when I was 56. And now I have even come to enjoy reading books on my Nook (though I have NO idea what SIDE loading is). BUT responding to your comment “Have you ever tried to find a book in iTunes?” I’m crying out YES. Just the other day I tried to do this. I’m LOST and FRUSTRATED. Can’t figure out how to use the application. Forget it. I’m no longer trying to get a book from them for my iPod.

        I just found that you followed me on Twitter, and I’m glad you did so I could come over here and scroll through this incredibly interesting dialogue. I’m interested because a few months ago I self-published a novella on KDP, and whether it sells or not, I’m pleased that I managed to get it up all by myself (I did hire a young woman who said she would do the cover for free, but I paid her something.) So if I never self-publish anything else….well, but I have always loved a challenge. So we’ll see. In which case I’ll probably be back to buy your digital publishing book!! And good luck on completing your 60,000 word project.

  29. I read Mike’s article this week and loved it. I feel people are getting on the back of Amazon because of fear. Most of this fear mongering is coming from people wh earn their wage from the traditional model, but the tipping point is happening, if not already happened, so adapt or die. It seems most, however, are turning to whining

    saying that, i feel Amazon could be playing a somewhat dangerous game with the select programme (Apple too with iauthor) because they ask for exclusivity. With this, mentions of a monopoly will follow and will only give the fear mongers ammunition.

    Book publishing is where music was 10 years ago (ish) and Amazon are getting the same flack as Apple did back then. How dare they create competition in a model that’s existed for so long :)

    Matt (Turndog Millionaire)

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  33. W. H. Dean says:

    I agree with James Gill about writers drinking the Amazonian Kool-Aid. When you have writers screaming “AMAZON CARES,” you’ve got a loss of perspective building. Amazon is in the money-making business, not the indie-coddling business. Once you lose sight of that, you’re soon to be road kill.

    At the same time, the AG piece is economically illiterate. The idea that a business can “cross a clear anticompetitive line,” for example, is meaningless from an economic or business standpoint. The idea that it crosses a legislative line is equally dubious, because Amazon has no obligation to sell Macmillan’s or anyone else’s books on any but Amazon’s own terms.

    The same goes for “predatory pricing.” Business just made up this term; they trot it out to appeal to legislators when they’re on the shitty end of the market stick. But legislators—sensible ones—don’t usually act on it because it’s good for consumers. And consumers never complain about predatory pricing. Microsoft was accused of predatory pricing, for example, when consumers got their OS free, and Walmart has made an art of it. Do consumers complain? Do they demand to pay or pay more? No. Vested interests complain.

    One final note. I find it a little rich when people who’ve never run a publishing house presume to know better about running one than the people who do. Maybe the Big Six should innovate; maybe they’re doing the best thing under the circumstances. I don’t know. But the idea that any outsider has the inside track is just silly.

    • I think that’s a bit of a straw man. I don’t see anyone screaming “AMAZON CARES” either here or in the comments on Passive Guy’s piece. I do see a recognition that Amazon give us better tools than their competitors, that they don’t place roadblocks between us and readers – but that’s very different.

      I agree with your assessment of the AG piece (and especially on the way the term “predatory pricing” is thrown around). But with regard to publishing companies, in one sense, all self-publishers are running their own publishing companies, and are in a perfect position to talk about the subject. You may disagree, but out of the three main tasks facing a self-publisher – writing, publishing, and marketing – publishing is by far the easiest. Virtually anyone, with the right attitude, a little investment, and by following a relatively trivial set of steps, can turn out a professional-looking e-book.

      I also think that self-publishers are far ahead of the curve on issues like formatting, pricing, and social media. If you look at the more progressive of the large publishers now, they are only getting to grips with things like low pricing and dynamic pricing and free as a promotional tool – weapons that self-publishers have had in their arsenal for quite come time.

      I see new releases from large publishers that still don’t get simple things right like a clickable link to a mailing list or even not having links in the back-matter to the author’s other titles.

      The Big 6 have got all the big decisions wrong: DRM, pricing, royalties, windowing. I don’t think you need to have worked for them to realize that.

      • W. H. Dean says:

        Hi David,

        The bit about “Amazon cares” is a direct quotation from Kiana Davenport’s comment on Konrath’s blog on the same topic (sure, I moved the caps, but…):

        “And unlike traditional publishers, Amazon cares about authors, they listen to our feedback. THEY WANT US TO SUCCEED.”

        Is her view representative of the majority of indies? Maybe not. But it’s not an uncommon sentiment, let alone a straw man.

        As for the similarities between indies and the Big Six, the scale and market differentiation of the latter make the two things analogous at best. Take price. It might make sense for an unknown indie to slash price to gain a foothold in the market. But is it is obvious that Macmillan should too? If they’re maximizing profit at $14, why cut prices? Why take the chance that you’ll lose your main selling point, namely, quality (where quality = perceived quality, not necessarily the real kind)? After all, by pricing like an indie, you’re comparing your products to theirs.

        As I’ve said before, what matters to the Big Six is profit, which comes from revenue. Units sold or visibility and a lot of the other things indies do and worry about don’t matter to them. Hence, the advice they give, just doesn’t have any value for them.

      • The issue I would have with that is the assumption that Macmillan (or whoever) are maximizing profit at $14. I don’t think there is any evidence to show that higher e-book prices like that are maximizing profit. You may be assuming that they’re acting in enlightened self-interest and all prices are a reflection of what they feel will maximize profit for each book, but I would argue that there are other considerations, such as shoring up print sales and slowing the digital changeover. I think this is where our views may diverge. I think publishers want to slow the pace of digital uptake because they are moving from a market where they control distribution to one where they don’t, and where they face vastly increased competition from new players (such as small publishers and self-publishers).

        That aside, Joe Konrath regularly runs the numbers on his trade-published work and his self-published work to show how much more his is making even at the far lower prices of the self-published work. If you don’t like that example, I would urge you to look at how Amazon price the work coming from their own imprints. They have more data than anyone else on this stuff, and they seem to think the sweet spot is between $2.99 and $7.99 (depending on the author).

      • W. H. Dean says:

        I assume the Big Six is maximizing profit at $14 because that’s what you have to assume in an economic analysis until you can prove otherwise. I’ve also heard Konrath say that they’re trying to shore up paper sales and slow digital. Now, I assume they’re doing this (if they’re doing this) because it’s the more profitable route, not because of some irrational unwillingness to embrace change or a sentimental attachment to paper. Which of those alternatives Konrath believes, I’m not sure. But to believe the latter is wrongheaded, because it imputes something other than the profit motive to them without any concrete reason.

        As for Konrath’s traditional versus indie numbers, I took them to be evidence against the claim that traditional publishers will do better by a savvy author like him (a claim I don’t dispute). But I don’t recall him claiming that these numbers prove that traditional publishers aren’t doing what’s best for themselves. Maybe he does say that.

        If so, he’d have to show that traditional publishers are also making less money than they would otherwise have made by following his lead. That’s not an easy case to make when you add in all the variables like the labour costs associated with monitoring prices and so forth. He can do that (e.g., manipulating prices, etc.) on his books because he’s a one-man, two-genre show. But how does a publisher do that for thousands of books by different authors across dozens of categories (not to mention other variables like sacrificing quality and brand)?

        It’s hard for me to believe that they could do this without spending a whole lot of money for a marginal return. To put it in business terms, I don’t see how Konrath’s strategies are scalable. That’s not proof that they’re not scalable; I’m only saying it’s not a foregone conclusion.

  34. JDM says:

    “(b) The fact that a retail monopolies never occur without the assistance of legislation outlawing competition (such as the Swedish prohibition on the sale of hard liquor outside of government-run stores).”

    Not just retail monopolies. All monopolies. And this is one of the great misconceptions of our culture. When people rail against capitalism, and point to monopolies as one of the system’s ills, they always fail to realize that monopolies are not a product of a free market. By nature, they can’t be.

    GREAT post.

    • W. H. Dean says:

      Actually, there are what are called natural monopolies in cases where more than one provider would be nearly impossible. Electricity lines, phone lines, domestic gas distribution, and for that matter streets, bridges, water, etc.

      • JDM says:

        I just see that proving my point. With whom does an energy company sign a contract, in order to have that exclusive domain?

    • W. H. Dean says:

      JDM,

      You’ve got causality backward: electricity distribution isn’t a natural monopoly because the state regulates it; the state regulates it because it’s a natural monopoly. It wouldn’t be economically feasible for (even) two companies to run power lines to every household—and this is to ignore the rather obvious fact that we wouldn’t be able to walk outside if our neighbourhoods were lined with competing power lines.

  35. Darren Kirby says:

    Amazon Kindle and CreateSpace are great, but how come no one is talking about another option to read a writer’s potential audience – audio books! Does no one realize that Amazon owns Audible, and that Audible has ACX, which allows writers to author their own audio book version of anything in their library? So now, a writer can publish their own ebook, their own print book, and their own audio book, and be just like everyone else.

    This truly is an amazing time in the writing and publishing industry!

  36. This post nails it. I’m not an Amazon fanboy—but I am most definitely a free market fanboy. Apple’s recent announcement that they will be improving the feature set offered to small presses (pre-orders/coupons/70% royalties across the board) is yet another sign that this Amazon lead shake-up of the book industry is resulting in a more nimble, diverse, and consumer friendly reading market.

    “Barnes & Noble is book publishing’s sole remaining substantial firewall. Without it, browsing in a bookstore would become a thing of the past for much of the country, and we would largely lose the most important means for new literary voices to be discovered.” -AG

    This was the comment that drove me the most crazy.

    First off, B&N is the reason getting to a bookstore is such a chore. They were the ones that ran all those mom-and-pops out of business. Second, the recording industry made similar arguments in the mid-90’s. They even used similar phrases:

    We’re the curators. We’re the cultivators. You can’t produce fine arrangements without us.

    But the digital upheaval that occurred in the recording industry did not kill off indie musicians. It opened up miles and miles of sunshine. Websites like YouTube and Pandora and SoundCloud sprouted up, and they deliver more new bands to my ears every single week than all of those music chain stores did in their entire lifespans. (And now I don’t have to drive downtown to pick up a CD that may or may not be there; I get to save my gas money for awesome concerts.) I fail to see how the e-book revolution will be any different. After all, these publishers are certainly having no trouble discovering my work on Amazon ; )

    B.

  37. Everybody likes to talk about how great it is for self-published authors who are selling tons of books and making tons of money in this new paradigm. And why not? It’s fun!

    Let me add that a self-published author who doesn’t sell much also benefits highly from Amazon’s open door policy. Maybe more. I’m not selling enough books to make a living yet. It drives me crazy, ha. BUT … I have readers. I actually have fans. I get fan mail and eager inquiries as to when the next book will be out.

    The readers who love my books love my books. There’s no way that could have happened without Amazon.

  38. John Hayden says:

    A great post, David! Seems to me we should all be thanking Amazon. Without their pioneering efforts as an online bookstore and creator of the first widely adopted reading device, the Kindle, none of the new opportunities for unknown writers would exist. It’s true they were not the FIRST to sell books online or the first to develop a reading device. All they did was figure out how to gain acceptance in the mass market.

    It would probably have been easier and just as profitable for Amazon to sell only ebooks from the major publishers, but they decided to accept books from unknowns. They could have charged authors a significant price to get online, but they did it for free. Undoubtedly their business decisions have served their own interests, but their success was not predictable ahead of time. (Read “The Black Swan,” by Nassim Nicholas Taleb.)

    It appears, at least for the moment, that there’s a convergence between the nterests of Amazon and the interests of most authors and readers. Amazon has an ulterior motive in this whole business. They drastically reduced prices of their entire line of Kindles, with the intention of making the Kindle Fire the preferred customer gateway into online sales of retail merchandise. Many people believe that Amazon has the lowest prices and greatest ease of shopping and delivery for nearly everything. Walmart should be very afraid. Meanwhile, authors and readers benefit greatly.

    As long as the Web is free, Amazon will never monopolize the book business. Amazon will never be the only player. But Amazon invented the game and remains by far the most accomplished player in the game. Amazon deserves superstar status.

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  41. “No longer do they have to accept crummy advances, restrictive terms, and laughable royalty rates in the vain hope that their piece of publishing spaghetti will be the one that sticks to the wall.”

    LOL! Exactly.

  42. The topic of eBook pricing is quite fascinating. I am sure both Amazon and the Big Six use complex algorithms to predict ( and his has to be a prediction rather than certainty) their average optimal selling price.
    It may seem strange the Big Six appears to have an optimal average price of $14 and Amazon of $6 (based on the average of $2.99 and $9.99 – the range for the 70% royalty to self-pubs).
    (Let’s put aside the possibility Amazon is understating its maximal price point and the big Six are overstating theirs, both for strategic purposes.)
    It is possible that both are right for their businesses.
    And the optimal pricing for self-pubs is likely to be something different again.
    I have no answers and i am not even sure how you begin to work out a methodology for determining optimal pricing for self-pubs.But I think discussion on the topic could prove fruitful.

  43. Some interesting arguments on both sides. I view Amazon as a means to an end – no more no less. And since the vast majority of my eBooks sell there (almost four times as many as Barnes & Noble), they’re a big part of my means. I intend to go DRM-free for future books and will announce it on my blog, but I’ve looked at the process for converting those titles to other formats, and don’t have high expectations that readers will go through the trouble. We’ll see.

  44. Dave says:

    Great piece Dave

    One of my favorite takeways from the Passive Guy piece was that if Traditional Publishers had even the thinnest of chicken legs to stand on in terms of a monopoly lawsuit, trust and believe, that Mr. Bezos would already be in court. Of course, he’s not.

    This development just bleeds irony that an industry with such a long standing history of dictating so much for so long, to both consumers, content providers and retailers, is now crying foul over Amazon’s exploding success. Success they’ve so clearly earned through their innovations and investments.

    Konrath’s posts is (as usual) another spot on report of cold, brutal, hard truth. Traditional publishers are not only faced with a proverbial 600 lb gorilla competitor in Amazon, not solely for being “out-innovated”, which happens, but for the fatal practice doing absolutely nothing in the face of monumental change.

    The steady flow of comdenmation and vitriol for Amazon from the numerous industry and trade info sources is interesting as well. The uglier this contest gets the more the individual news sources and organizations will show their colors; who’se an unbiased reporter of the publishing trade, committed to informing authors and readers…and who’se a PR lapdog for the Big 6.

    It’s only Feb. Gonna be an interesting year.

  45. Chad says:

    Yes, very persuasive and well-informed article. And I also agree with most every point. I will say, however, that for all the good things you argue on behalf on Amazon one basic point that keeps even innovative people frustrated with Amazon (both from a small publisher’s POV, as well as an author’s), is that they take so much off the top. 55%? At that rate, after paying for production and shipping, a publisher ends up making about $2-$3 for every $15 title sold (yes, print versions). And until royalties are split down the middle, authors even less.

    • Print is a different world with all sorts of associated costs that don’t exist in digital. Amazon are taking 55%, sure. But what do other bookstores take? What do B&N take? It’s pretty similar. Print books have to be stored and sorted and shipped, requiring all sorts of labor costs and system costs and real estate costs and fuel costs and other costs. Digital has little or none of that. And Amazon only take 30% (of most books). I’m fine with that split.

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  48. Steve says:

    Enjoyed the post. Much to think about.

  49. Brett Henley says:

    Dude, you nailed this coffin shut IMO.

    So many compelling/good points that I don’t even know where to start.

    Love this -> “If you’re not even going to try, you will get little sympathy when you lose.”

    Fact – publishers are pissed because their toys are being taken away

    Fact – retailers are pissed because someone is beating them at their own game, handily.

    Truth – publishers are mad because they no longer hold the key to the gate, or control the gate itself.

    • This is honestly the first time you’ve ever heard of a retailer opting not to sell someone’s product over a contract dispute?

      Shoot, if you’re going to give Amazon flak for that, you’re tar-and-feathering EVERY major retailer in the world today.

      Every business does this. It’s business.

      • James says:

        “This is honestly the first time you’ve ever heard of a retailer opting not to sell someone’s product over a contract dispute?”

        Nope. In fact, I think it’s a textbook example of market competition.

      • Kevin O. McLaughlin says:

        Oh, I’m sorry then – I misunderstood you. I don’t know if this case is so much about market competition (the two businesses are not so much in competition as they are supplier and retailer) as it is a typical trade dispute. But it is another example of Amazon leveraging their current competitive advantage.

  50. James says:

    “Oh, I’m sorry then – I misunderstood you. I don’t know if this case is so much about market competition (the two businesses are not so much in competition as they are supplier and retailer) as it is a typical trade dispute. But it is another example of Amazon leveraging their current competitive advantage.”

    It’s Amazon competing by continuing to try and control distribution–and distributors. To put it another way–if Amazon’s “creating competition” as Dave says, then why is it incredibly difficult to negotiate terms with Amazon on distribution?

    • Ah, I see. I think you missed the entire point of David’s article. OK, sum up:
      Amazon encourages competition by being smart. By doing smart things. By making smart business moves. By innovating. It encourages competition by excelling.

      Businesses which don’t push, which don’t drive to excel, which don’t strive to dominate do NOT generate competition, because they either a) die very quickly or b) exist in a type of industry where competition cannot happen (or they’d have already died).

      By being brilliant at what they do and proving someone can make a lot of money being that way, Amazon encourages competition. By breaking down old barriers that propped up companies which should have ceased to exist DECADES ago, Amazon opens the door for new competitors to come in.

      Are they they big boy on the block right now? Yes. Does that mean they have a lot of power, right now? Yes.

      Are they going to be some other hot company’s lunch the instant they stop being as competitive, as driven, as customer oriented as humanly possible? Absolutely.

    • And – it’s actually really easy to negotiate terms with Amazon. You take their terms, or you leave their terms.

      See? Simple.

      If YOU have something THEY want badly enough they’re willing to change those terms, make you a special deal? Well, then, count yourself lucky. Most businesses working with them deal with the same terms as everybody else.

      In other words, IPG is whining because they used to get a special deal, and Amazon is saying no special deal for you anymore… If IPG wants a special deal with Amazon, all they need to do is create something that Amazon NEEDS to sell so badly that they’ll put themselves out and make a special deal for it.

      Amazon doesn’t need very many things that badly, but there are some.

      That’s how ALL large businesses work. Amazon’s no different from anybody else. It’s normal. Accepted. Standard. Practice.

  51. James says:

    “In other words, IPG is whining because they used to get a special deal, and Amazon is saying no special deal for you anymore…”

    Wrong. Unless by “special” you mean “not bad enough to bankrupt you”. What *do* you mean by “special” deal?

    “Amazon doesn’t need very many things that badly, but there are some.”

    Ha–that’s a good one. Amazon’s primary business is distribution–PERIOD. Retail distribution. They depend *utterly* on other people making and offering products for sale to stay in business. In other words, Amazon’s entire business model hinges on wanting products to distribute very badly.

    “That’s how ALL large businesses work. Amazon’s no different from anybody else. It’s normal. Accepted. Standard. Practice.”

    Really? Name three companies who operate exactly like Amazon.

    • By special I mean special. IPG is a book distributor. If they can’t survive on 70% of list price for ebook sales, they’ll go out of business. I know Amazon isn’t offering them *worse* than that because that’s what Amazon offers to everybody as the baseline. Which means the old IPG deal was better than the KDP deal in some way, which means I really don’t feel bad about my competition losing an edge over me. ;)

      Amazon’s primary business is *retail*; not distribution. They’re different. In a business as big as Amazon, there’s often distribution involved as well. But for example, for ebooks, the “Big Six” still go from their shops (manufacturers) through Ingrams (distributors) to Amazon and other retail outlets. Don’t confuse retail with distribution, though. Distribution is all B2B (business to business), and retail is about dealing with consumers.

      Amazon is a retail company. They have a right, like any other retailer, to decline to stock any product. If they decide that you, as a manufacturer, are more trouble than you’re worth, they’ll stop stocking you. Just like any other retailer will.

      (And no two companies work *exactly* the same, let alone four, so that’s a straw man. I didn’t say Amazon was identical to anybody else – they’re clearly unique in many ways. The point is, the practice you posted is normal, and something common to business.)

      • James says:

        “By special I mean special. IPG is a book distributor. If they can’t survive on 70% of list price for ebook sales, they’ll go out of business. I know Amazon isn’t offering them *worse* than that because that’s what Amazon offers to everybody as the baseline. Which means the old IPG deal was better than the KDP deal in some way, which means I really don’t feel bad about my competition losing an edge over me. ;)”

        IPG receives 70% of list price from Amazon? I’d be grateful for any information that shows that. Can you point me to it?

        “Amazon’s primary business is *retail*; not distribution. They’re different.”
        Now you’re being semantical. Amazon’s infrastructure is utterly a distribution model, built to service a virtual “retail” showroom (amazon.com).

        “But for example, for ebooks, the “Big Six” still go from their shops (manufacturers) through Ingrams (distributors) to Amazon and other retail outlets. Don’t confuse retail with distribution, though. Distribution is all B2B (business to business), and retail is about dealing with consumers.”

        Still semantical–or maybe we just don’t understand each other. I’m talking about the business functions. Amazon’s physical infrastructure is distribution. They make money on retail distribution of wholesale goods. They don’t design or make anything (no, not even Kindles or the Kindle UI–that’s contracted out to third parties).

      • James, since the KDP deal is available to all, it’s the baseline “minimum” that anyone can get. Other deals with some companies are better; none are worse.

        However, I think we’ve crossed the line into being rude to our host at this point. If you’d like to discuss this further, please feel free to email or tweet me. =)

  52. James says:

    “James, since the KDP deal is available to all, it’s the baseline “minimum” that anyone can get. Other deals with some companies are better; none are worse.”

    Kevin, I’m not sure what to tell you–I think you either misunderstand how Amazon deals with book distributors, or what IPG is. Either way–agreed, we’re not clarifying anything here.

  53. Col says:

    I always find it interesting when I read articles about small businesses teaming up with Walmart to try and take down Amazon. Seriously, they got small businesses thinking that Walmart is their friend and Amazon is the enemy. If anything, Amazon is the only thing keeping Walmart from further destroying more small businesses. At least with Amazon one has the ability to sell their products via their third party set up, something you can’t do with Walmart.

    All the people that want to destroy Amazon with all this talk of sales tax need to remember one thing, it will come down to Amazon or Walmart and quite honestly, Amazon is the lesser evil of the two. Walmart is threatened by Amazon that is why they are tricking small businesses into supporting them on fighting Amazon….very bad move, help Walmart destroy the enemy so then Walmart can resume destroying you in the end, dumbest move on the small businesses part.

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