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Why the Lack of a Jeff Bezos Dooms Mainstream Publishing

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Alternatively, I suppose you could title this piece How Jeff Bezos Pwned Publishing.   A few weeks ago, a number of mainstream publishers attended  SXSW, a festival of music and media culture.   SXSW is peopled with macbooks and iphones and music fans.   SXSW started out as a musical festival and has grown to include seminars on new media.   SXSW held a publishing panel called New Think for Old Publishers.   The publishing panel did not go well as the panelists were idea bereft and turned the seminar into a mini focus group.

What struck me most out of the controvery that erupted wasn’t  the lack of new think for old publishers but that the publishers were seeking new ideas outside it’s corporate structure. In other words, it doesn’t seem that there are forward thinking individuals at the helm of mainstream publishing.   Jeff Bezos, on the other hand, is a long range, innovative planner. Say what you want about Amazon being an evil empire (and they are and can be) but Bezos is a visionary and he has created an internet retail empire in just over 15 years.  

The following is the Bezos timeline (edited to exclude some acquisitions).  

  • 1994: Amazon opens its door.
  • May 15, 1997: Amazon goes public.
  • 1997: Amazon submits patent application entitled “A Method and System for Placing a Purchase Order Via a Communications Network.”
  • April 1998:  Bookpages.com. Largest online bookseller in Great Britain.   Telebooks.com. Largest online bookseller in Germany.   Internet Movie Database. Largest online resource for movies.
  • August 4, 1998: Planet All: a web-based address book, calendar and reminder service and  Junglee Corp, a web-based database technology that assists shoppers to find products for sale on the internet.
  • April 1999: Bibliofind.com, Online servicing for finding used, rare and out of print books.
  • September 28, 1999: Amazon granted “1-Click” patent which “describes an online system allowing customers to enter their credit card number and address information just once so that on follow up visits to the website all it takes is a single mouse-click to make a purchase from their website.”
  • Fourth quarter 2001: Amazon shows first net profit.
  • August 19, 2004: joyo.com.At the time of its acquisition, Joyo.com was the largest online retailer of books, music and videos in China. It became known as amazon.cn.
  • Feb 2005: 43 Things. A website funded by Amazon that gathers information about consumers. Secretly (well, not so secretly as it is all over the Internet that Amazon funds this site).
  • April 4, 2005: BookSurge LLC. Amazon buys a print on demand fulfillment company. Later, Amazon would prevent other POD books to be sold through Amazon’s online retail store. Booklocker has sued.
  • April 16, 2005: Mobipocket. Mobipocket was (and might still be) one of the leading ebook formats out there. Amazon would later use the Mobipocket format as the platform for it’s own Kindle format to be used with its Kindle eink reading device.
  • July 6, 2005: CustomFlix. Customflix is a DVD on demand production company.
  • Fall 2006:  Unbox. Amazon unveils its own movie/tv download center.   Later partners with TIVO so TIVO users can download Amazon purchases using TIVO recorders.
  • May 14, 2007:   DPReview. The largest and most trusted review site for digital cameras.
  • August 6, 2007: Amie Street:   Amazon invests in small independent social music retailer.
  • September 2007:  Amazon MP3. Amazon opens its digital music store.
  • October 16, 2007:  TextPayMe. TextPayMe becomes Amazon payments. It was originally designed to allow payments to be sent and received through your mobile phone.
  • December 7, 2007:  Wikia. A wiki service for individuals, Wikia was created by wikipedia founder, Jimmy Wales. (Probably designed, like 43 Things, to obtain consumer information).
  • January 17, 2008:  Withoutabox: Indie film site for Amazon owned IMBD.com.
  • February 4, 2008:  LoveiFilm.  Amazon becomes major shareholder in one of Europe’s largest online rental service for DVDs.
  • June 24, 2008:  Twitter. Bezos personally invests in Twitter.
  • June 9, 2008: Fabric.com. (Crafty getting bigger? Amazon becomes one stop shopping for fabric, yarn, and other textiles)
  • July 2008: An Social Gaming Network. Bezos invests in a company that produces casual games for social networking platforms like facebook. (He has also invested in Atomic Moguls, another startup company designed to bring casual gaming programs to social networks).
  • October 21, 2008: Reflexive Entertainment. Reflexive is a “casusal games developer”
  • January 31, 2008: Audible.com. Largest online retailer of digital audio books.
  • August 24, 2008: Shelfari.com. Social networking for book readers.
  • October 24, 2008: Oprah endorses the Kindle.
  • December 2, 2008: AbeBooks.com. Largest online bookseller of used books. Also a 40% stakeholder in LibraryThing.com.
  • Fiscal Year 2008:   Amazon outsells all other major retailers in the books, music, DVDs area doing $5.35 billion for North America and $5.73 billion internationally.

In the 10 years since Amazon has gone public, it has become a retailing powerhouse in the publishing industry. Piece by piece, it has bought into or bought up companies that will advance its position primarily by buying people.   It seems clear that Amazon believes in buying platforms where the people are.

Mainstream publishing is focused more on creating the market through one hit wonders.   Mainstream publishing spends millions on trying to find the next Brown, Rowling, Meyer, or Roberts where as Amazon spends millions on getting the consumers to its webstore.   This isn’t to say that I think that publishers should have acquired Fabric.com but it does make sense for them to have acquired companies and technologies for more vertical integration.   To have invested in a company like Goodreads.com or a Librarything.com; to have invested in a the secondary book market; to have bought an ereading platform.  

I believe Amazon is angling to become a publisher itself. It already has Booksurge, a print on demand fulfillment service. Through its acquisition of Booksurge, Amazon provides several tiers of self publishing services including editorial services.   

In its second year, Amazon is participating in the Amazon literary search with Penguin called the Amazon Breakthrough Novel Award. While fronting the prize money, Amazon uses the editorial staff of Penguin and the readership of Amazon to sort through a slush pile, find the qualitative “Best” work, and then publish it. At this point, it doesn’t matter if Amazon is losing money on this promotion. It’s creating a brand for itself of being a publisher of great works.

Bezos made it onto Oprah with his Kindle. I wouldn’t be surprised if the next appearance he has is publisher of an Oprah Winfrey Book Pick. This would, of course, cement Amazon’s reputation as a publisher and open the door for Bezos to partner directly with authors to publish and distribute its books nationwide.   It’s dabbled in exclusives such as the Stephen King Kindle only ebook.   I doubt Bezos would be at all ruffled to see an Amazon published book at Borders or Barnes and Noble. Perhaps Amazon will test its market power by offering up Amazon print exclusives.   

For authors, particularly those like King, Rowling and Roberts, the profits would have to be better than the deal that they are getting now with a publisher because one barrier between them and the customer paying the money is being removed.   At some point, I believe that Amazon will be a premiere publishing, housing the biggest names in the industry who will share with Amazon some amount of the net profit from the sale of their books in excess of the current amount.   Extrapolating this out further, every author becomes a POD author with some having a greater ability to pay for placement on Amazon’s internet retail store than others.   Amazon laughs its way to the bank because it gets paid on both ends – from the author wanting to publish the book to the reader who pays for the end product.   

Amazon is thinking about 2020.   Mainstream publishing is thinking about how to survive 2009.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

51 Comments

  1. library addict
    Apr 07, 2009 @ 04:39:27

    That's a scary thought.

  2. Elaine
    Apr 07, 2009 @ 06:08:00

    I had avoided ebook readers because of the DRM issues and then my husband got a Kindle late last fall. I gave it the evil eye for several months and then decided to download the most recent Phillips. Despite the DRM, the odd form factor, and not much text per viewing screen, I love the thing. I am even reading it in the bath, carefully wrapped in a ziplock bag.

    For a longtime bookaholic, who taught myself to speed read at the age of seven, this this is the bibliographic version of crack. If a second generation ereader is so seductive, what will they be like in a few more iterations. (I am counting ereading on my Palm as first generation, and it just didn’t work for me.)

    You’re right: traditionally publishing has some real challenges to meet.

  3. Sonya
    Apr 07, 2009 @ 06:20:06

    Whoa. I’m gonna have to read this all over again, because it’s a lot of info. Fantastic post, Jane – great food for thought.

    I’m on Amie Street. I had no idea it was an Amazon subsidiary!

  4. Robin
    Apr 07, 2009 @ 07:00:53

    See, if there were more visionaries like Bezos, Amazon wouldn’t, *couldn’t* become an evil empire, because there would be substantial, meaningful competition and even more innovation. Same with iTunes.

  5. Keishon
    Apr 07, 2009 @ 07:48:41

    See, if there were more visionaries like Bezos, Amazon wouldn't, *couldn't* become an evil empire, because there would be substantial, meaningful competition and even more innovation. Same with iTunes

    Word.

  6. AQ
    Apr 07, 2009 @ 07:59:10

    Jane, I generally agree with most of the points of your argument but I really worry about this.

    At some point, I believe that Amazon will be a premiere publishing, housing the biggest names in the industry who will share with Amazon some amount of the net profit from the sale of their books in excess of the current amount.

    I don’t know if I agree. Look at Apple. It’s a premiere music retailer but I’m not sure it could or should become a premiere music publisher. Unless your premise is that the job publishers are currently doing (regardless of how well you think they’re doing it) can be split between the authors & Amazon instead. Will editing be the author’s responsbility or Amazon’s? Or will Amazon create an editing division that authors can use if they wish? Will the author still get as a good of a deal once Amazon becomes the distributor as well as the publisher and primary retailer? Would that downgrade the importance of Ingrams & Bakers & Taylor? What other pies would Amazon like to get into to?

    Yes, I can definitely see the appeal here for Amazon. There’s a lot of money that could be made utilizing the vertical business units they already have in place.

    But how would Amazon becoming a premiere publisher grow and cultivate the publishing industry? I say that ultimately it wouldn’t because Amazon doesn’t care about books, they care about profit centers. Even if they succeed beyond our wildest expectations, the profits they make from books will be small compared to other items they sell or the fees they collect. Look at all the things you listed. That’s a lot of power to put into one company’s hands when their core profits don’t come from books. It might work great for the best selling authors for a while but what about the other 90%? How will it work for them? And what would the current publishing industry model look like if the publishers lost a good portion of their best seller revenue stream? Would it collapse on itself and what would take its place? Would Amazon still offer the great terms if the big publishers cease to exist as they do now?

    *******

    Speaking of exclusive deals: Why go to Amazon? Why not Target, Wal-Mart or Costco? Aren’t these the companies that are the premiere retailers when it comes to sheer numbers for book best sellers? We’re already seeing exclusive music deals with these retailers. Why not exclusive book deals? Again this does nothing for the publishing industry as a whole–and I think we should be taking a serious look before we slap Amazon and others on the back for being innovative and forward thinking–but it is another option for the type of bestseller author you mention.

    And as far as additional income is concerned creating affiliate links on an author’s website or an Amazon storefront are already ways an author can increase the money they make. Cory Doctorow has talked about the income he generates from his website. Double the income on the same book and he even gives the ebook away for free. Not that that would work for every author.

  7. Louisa Edwards
    Apr 07, 2009 @ 08:03:16

    That panel was mismanaged and ill-conceived, for sure. I’ll be very interested to see if the folks running the panel take and run with any of the suggestions they were given, about greater access to authors and longer excerpts published online in advance of the release–good ideas, but, as you say, still more about surviving the next two or three years than about planning for the way the industry will look in ten years.

  8. Jane
    Apr 07, 2009 @ 08:12:51

    @AQ: The reason I think that Amazon is interested in the publishing end whereas iTunes/Apple is not into content producing is because Amazon is currently doing content production. I don’t believe that Bezos does anything without a plan and why participate in a contest to produce novels if he doesn’t have an interest in content production?

    I don’t know that I’m slapping Amazon down in this post. I’m pointing out that Amazon is positioned and is positioning itself in the future to wield enormous market power in publishing. Actually being a publisher makes sense for Amazon because it already has a structure in place, it’s relatively low cost for Amazon and if it does leach away some of the 20% that supports the 80% of books that fail, then the ability to publish that 80% declines dramatically for traditional print publishers.

    Amazon can invite the 20% to share in net profits and the other 80% would be forced to pay for its publishing. If, in the end, a book breaks out from the 80%, Amazon can invite that author to become a profit sharer. It places almost no risk on Amazon and all the risk on the authors. Right now, the publisher bears almost all the risk.

  9. AQ
    Apr 07, 2009 @ 09:00:14

    No, Jane, overall I’m agreeing with you and I didn’t mean to say that you were slapping Amazon down but rather perhaps you were giving them a slap on the back in congratulations too soon. Because although I applaud Amazon’s innovation and want them to continue to push and prod the publishing industry into change, I don’t want them to become the premiere publisher.

    I’ll also agree that it makes complete sense for Amazon to be a publisher. They’ve been setting themselves up that way for a while now unlike Apple. That doesn’t change the fact that their primary revenue stream won’t be publishing even if they succeed because that changes the dynamics of the relationship between publisher and author and puts a lot more power in Amazon’s hands. One bestselling author doesn’t like the terms and leaves, Amazon doesn’t have a huge incentive to re-negotiate because that best seller is now only one of many.

    I guess I’ve become too pessimistic lately. I do agree that Amazon and Bezos have a plan and it appears to be a profitable one if you look at their historical patterns, results and the willingness of the shareholders to wait for that long-term vision to pay off (seemingly unusual in itself). And I do believe that’s your prediction has a high probability factor to it. But I also think that the outcome of that long-term model isn’t necessarily as rosy as you describe and I’m not sure it’s better for the product creators in the long-term, although it would probably be better for the publishing industry as a business model. Again I’m still left thinking it puts too much power into one company’s hands.

    Would that mean that if Amazon succeeds in their long-term vision that they become too big to fail?

  10. Jane
    Apr 07, 2009 @ 09:05:36

    @AQ: Oh, I don’t mean to give Amazon too many slaps on the back. I don’t think Amazon as a premiere publisher would be good for literature or books in general. All I’m saying is that I see Amazon positioning itself to become a power, equal to Wal-mart at some point.

    What I hope is that publishing starts trying new things and not just pricing experiments. Tor, for example, is trying to create a science fiction/fantasy community, a kind of social networking platform for readers and writers of that sub genre regardless of the publisher. HarperStudio is experimenting with the no advance, no return model.

    I think publishers need to start thinking of running its own bookstore, a coop perhaps, that could compete with Amazon’s growing monopoly on online retail sales. Publishers need to push for a standardized format that would leave Amazon out in the cold unless it adapts and so on and so forth.

  11. AQ
    Apr 07, 2009 @ 09:44:37

    @Jane: Everything you just said.

    Online booksales: Do you think the playing field will change in the next year as Barnes & Noble re-designs Fictionwise to compete against Amazon in the digital marketplace? (I’m assuming B&N has a long-range plan.)

    I was reading an article in the NY Times that talked about micropay and how it was working for applications & content provided via cellphones/telecom while failing overall for pcs/internet content. I don’t own a Kindle but I was struck by the fact that the Kindle model was much closer to the telecom model than the pc model by virtue of wireless, 1-click payment, and no requirement for the pc. I always knew they (Amazon) were clever with the Kindle but the telecom model never entered my mind until this article. Even though you & SBSarah have both discussed reading on cellphones, I always framed my digital book argument around the pc & publishing models in my mind.

    Which only goes to prove your original point, Jane, that publishers need shift their thinking and their business models. There we can completely agree. Well, maybe not on the details LOL but then what fun would that be.

    (There was also an article on added digital book content that I thought was interesting but I can’t find the link. Not for every author or publisher but it is another lesson in directions people are already experimenting in.)

  12. Karen
    Apr 07, 2009 @ 09:46:18

    I’m not convinced that publishers should get into the business of running bookstores, selling ereaders, etc. As a reader, I don’t want to go to each separate publisher’s web site to buy my books. I don’t want to keep track of whether Author A publishes for Harper and Author B publishes for Dell. I might do it for my very favorite authors, but I buy 100+ books per year. I can’t keep track of everyone. I want to go into one bookstore and buy all my books – whether that’s an online store or a regular store, whether it’s an ebook or a paper book. I’d rather spend my time reading than shopping. And I’d rather have the publishers focusing on their business – nurturing authors, quality editing, finding good books – than focusing on becoming book sellers.

    The one exception might be if the publishers all got together and came up with an Amazon alternative, as Jane suggested in her last post. If ALL the publishers were included, I’d shop there – I might be more likely to shop there so my money went more directly to the people publishing and writing the books. But that seems unlikely, given the competition between the publishers. More likely, there’s be one store for one publisher, another store for two or three others, another one for ebook publishers, etc. And I don’t want to spend that much time and effort trying to buy books.

  13. Chicklet
    Apr 07, 2009 @ 10:22:18

    I don't own a Kindle but I was struck by the fact that the Kindle model was much closer to the telecom model than the pc model by virtue of wireless, 1-click payment, and no requirement for the pc.

    This is why I’m hoping that someday the Sony Reader allows direct purchasing through the reader itself, because I have a Mac and the Reader isn’t compatible with it. Makes it really bleeping difficult to buy new ebooks for the Reader, doesn’t it, Sony? If Sony went to a telecom model for future iterations of the Reader, I’d be all over it. It’s the thing I like best about the Kindle — I haven’t bought one because I hate being at Amazon’s mercy in regards to pricing and technical support.

  14. AQ
    Apr 07, 2009 @ 10:33:34

    I found that other NYTimes article I mentioned. It’s called Is This the Future of the Digital Book? By BRAD STONE

    Short article worth a look see if only to prompt ideas, especially for authors on where some of the new opportunities might come from or where established publishers might venture.

  15. Lucinda Betts
    Apr 07, 2009 @ 10:45:35

    I know this is a serious conversation and all, but can I just say that the guinea pigs are the cutest? If there’s anything cuter than their little lips, I don’t know what it is.

  16. ReacherFan
    Apr 07, 2009 @ 10:53:21

    The problem of lack of vision is not unique to publishing. In 1966 a student at Yale University envisioned an overnight package delivery system where computers were used to track and trace packages. His professor told him it would never happen because there was no demand.

    Frederick W. Smith founded a little company called Federal Express. UPS had owned the small package delivery market for decades and ignored this upstart and all their computerization. There was no market for next day delivery because the infrastructure didn’t exist. He built it. The market came to him. He left UPS in the dust playing catch up for years. When I shipped critical product that needed to be tracked, it went FedEx, NOT UPS. So did thousands of others who wanted to service their customers as quickly as possible.

    UPS resisted moving beyond their ground delivery system model, refused package tracking and so many other things. Until FedEx FORCED them to match their systems if they wanted to stay in business. Now we have two huge integrated carriers that do all manner of air and ground freight transport. FedEx owns Kinkos, UPS has its own stores. They both offered all kinds of speciality freight services most consumers never see, but all benefit from.

    Who had been the biggest carrier of small packages 75 years ago? The USPS!!!!!! They never stood a chance of creating such a system, even though they had both the volumes and the pricing. The staggering bureaucracy that is the Federal Government could never be that innovative or forward thinking. They lack the people with vision. They system itself prevents it.

    Unfortunately, old line companies in every industry suffer the same resistance to change because all of their management went to the same business schools that taught the same models. Shortsightedness is endemic. Look at the big 3 car makers. Look at what’s happening to the family owned drug stores and hardware stores when a Walgreen’s or Home Depot get built. Publishers want their world to be like it used to be. The world stands still for no one. People vote with their wallets.

    Jeff Bezos does not force things on a market. He did exactly what FedEx did, created a utility and the buying public decided it was something they wanted. Ebooks are the next natural step in the age of ‘instant gratification’. The same desire to have it NOW that made the market for next day delivery a huge success. Well, unlike a ham or computer, a book can be sent over the internet and you can have it RIGHT NOW! You don’t even have to wait till tomorrow morning, or pay additional delivery charges.

    Is it a shame that the publishing industry refuses to acknowledge that business as usual is no longer an option? Yes. But it isn’t the fault of Jeff Bezos or Bill Gates or Michael Dell or anyone else. Progress happens whether we like it or not. I don’t hate those with the vision to take advantage. In the end, all of the things Amazon offers are purchased with ‘disposable income’ and I decide how that money is spent. No one forces into into their system. It’s up to me whether I use it or not.

    There are so many reasons the old publishers are dieing off that go well beyond ebooks. I wrote an editorial on my blog about the quality of the recent books by famous authors. It was mostly about action thrillers and intrigue, but it applies just as much to other genres and market saturation. And how famous authors and publishers trade on their fame to sell books until people just stop buying them automatically because the books SUCK!

    No matter how you slice this up, books are optional spending and I decide who gets my $$$$’s. I decide if I buy Janet Evanovich or Lee Child in hard cover, or wait for a paperback, or just go to the library or wait and buy it used on eBay – or spend some $350+ dollars for an ebook reader and buy some dedicated download. It’s the same decision everyone makes every day of their lives. If I buy the book at WalMart, am I supporting a less evil empire?

  17. DS
    Apr 07, 2009 @ 11:35:44

    I welcome our evil Amazon overlord.

    Amazon to me is good value plus fast delivery plus very large selection.

    I can remember a time when I had to go to a large city (maybe two or three times a year) to get a decent selection of books.) I met a friend for lunch today and she pulled out a Kindle and bought a book I was telling her about right at the table. How much more immediate could gratification be?

  18. Chicklet
    Apr 07, 2009 @ 13:45:15

    There was no market for next day delivery because the infrastructure didn't exist. He built it.

    Good point. Steve Jobs did the same thing with the iPod. I remember reading an article about the first-generation iPod and thinking, I can’t imagine ever needing one of these. Within two years, I had purchased one and I never went anywhere without it.

  19. joanne
    Apr 07, 2009 @ 13:49:19

    As Karen said @12 (much more eloquently then I could) Amazon is convenient for the buyer. They have the product, they ship and deliver in a timely manner. As much as I love strolling my local book stores and talking about books and authors online, my time and money are important to me. Bottom line? Amazon offers the best prices and the easiest shopping experience.

    And among the differences between Jeff Bezos and the NY publishers? One of them (Bezos) reads sci-fi and the others read the Wall St Journal.
    The one has his sights on the future and the others have their sights on yesterday’s news.

  20. Melinda
    Apr 07, 2009 @ 15:13:58

    E-books are just one part of the *big picture* for publishing.

    One day we will all go into a store like Best Buy and get all our entertainments, including books. These stores will develop as the demand and technology meet. But this is years away. While Kindles and etc. are great tools, cheap books are still read by the masses in paper form.

    But one day, maybe.

    Amazon offers the best prices and the easiest shopping experience.

    I think we live in a great time for reading books that 25 years ago, we would have had to get ONLY from a library extension program. I buy mostly non-fiction from Amazon, and at great prices. I can order a book from England. I can buy a book that’s been long out of print. No publisher will ever offer that.

    Will Amazon print books? Maybe.

    Or maybe one day, authors can sell their own books right off the net, too. Now that’s a nice idea.

  21. Miki
    Apr 07, 2009 @ 16:49:14

    Sigh. I really don’t like where Amazon is going – mostly because I see it turning into the publishing tyrant (like Microsoft is the software tyrant).

    I know there isn’t really a company out there with the consumers’ best at heart. It’s all about the mighty dollar, and the other guys are just ticked off they didn’t think of it first.

    But…

    I was just reading over on another forum a post from a bewildered Kindle owner. He’d been buying electronics from Amazon for years, and somehow reached the “returns” threshhold. His access is banned. Now, Amazon has the right to refuse to sell to anyone they like. But they’ve also blocked his ability to get at the Kindle books he’s paid for (as well as the TV and videos he’s bought there).

    If Amazon is going to be a service provider, as well as a retailer, it’s going to have to somehow create a dichotomy between the branches that doesn’t hurt its service users (if that makes sense – I hope you can tell what I’m trying to say). Kindle purchasers should have access to their books as long as they own their Kindles, even if they can’t buy new (physical) stuff any more.

  22. Evecho
    Apr 07, 2009 @ 19:54:21

    ‘Vertical integration’ can be a dirty word. News Corp did it successfully. See what they own now and they’re not afraid to skew the news for their benefit. I believe News’ goal is simple – control the information gateway and you control what people know.

    In Amazon’s case, I believe their goal is to be like a supermarket chain – control the marketplace, charge suppliers for premium access, create a home brand to offer some competition but not enough to frighten suppliers, and keep enhancing shopper experience with ease, convenience and perceived bargain pricing.

  23. Erica
    Apr 08, 2009 @ 06:38:49

    This is an excellent birds-eye view of where Amazon and Bezos may be headed. I agree that e-books are part of the big picture for publishing, but I think that many firms are not yet poised to reach it yet. Amazon is an incredible benchmark for this. I remember back when Barnes and Noble had their e-book store and then closed it a few years afterwards. Amazon has been able to take that same business strategy and succeed where B&N failed in the past.

    I hope that their goal is not to go into publishing but to allow a wider range of digital media in conjunction with the real publishers in order to revitalize the market and the industry.

  24. Jay Ehret
    Apr 08, 2009 @ 06:45:22

    The answer for publishers is not to become another Amazon. That didn’t work for Ebay. I think a good idea for the big publishers would be to get better, bigger and longer in publishing. Yes, we need the big names for the big books, but provide a platform for anyone to publish.

    And please don’t stereotype. I went to SXSW with a Dell and a Moto Q.

  25. Fran Toolan
    Apr 08, 2009 @ 06:49:44

    well stated, Jane. I think your last line summed up everything. We need to be thinking solutions of the obstacles we will face in 3, 5 and 10 years out – as well as trying to figure out how to make it to next year.

  26. Chuck Smith
    Apr 08, 2009 @ 07:28:29

    While Jeff Bezos is forward thinking, I don’t think he’s forward thinking enough. Every time amazon sells something digitally, they always manage to mess it up. Unbox was Windows-only and DRMed, Kindle is DRM-ed. They don’t even sell the Kindle outside the USA. This effectively means I can’t buy ebooks at amazon.de. One argues that the publishers require DRM, but Tim O’Reilly has stated that he wants to sell his books on the Kindle without any DRM, but that amazon doesn’t allow him that. I just find it as frustrating as #13 that there’s not many ways to legally buy ebooks for my Sony Reader with my Mac.

  27. Jon Wolf
    Apr 08, 2009 @ 07:55:21

    What happened to the two timeline entries that showed Amazon.com sells eBooks and then dumps eBooks leaving a lot of people in trouble due to DRM?

  28. Mike Cane
    Apr 08, 2009 @ 08:19:47

    >>>Amazon is thinking about 2020. Mainstream publishing is thinking about how to survive 2009.

    Well, yes.

    Amazon is a youngster. It plans for its future.

    Print publishers are grandfathers, counting on their annuities — never thinking the market would sink or change.

    Oopsie!

  29. Patty Miller
    Apr 08, 2009 @ 08:51:02

    I’m reading this and thinking how awesome and awful Jeff Bezos’s empire really is. You can’t help liking and admiring him in so many ways, and yet….As he slowly but surely takes over bookselling, publishing, and ultimately WHAT WE READ altogether, I shudder to think that any person, even a likable visionary polymath like Bezos, could be in control of all printed and online reading material one day, and sooner rather than later. This sends a chill up my spine and it should do for everyone, whether in the book industry or not.

  30. Jennifer McKenzie
    Apr 08, 2009 @ 09:38:41

    Well, yes.

    Amazon is a youngster. It plans for its future.

    Print publishers are grandfathers, counting on their annuities -’ never thinking the market would sink or change.

    Oopsie!

    This.

    IMHO until NY publishers are willing to admit that their business model isn’t working, there will be no forward progress. Innovation is occurring all around them, but they completely miss it. If they offer ebooks, it’s on their terms, trying to fit a square peg in a round hole.

    I’d like to see Samhain take the lead and bring us all into the next innovations, not Amazon. Their combination of new technology with old style distribution might be the answer.

  31. Elizabeth Burton
    Apr 08, 2009 @ 10:23:43

    Are large corporations always looking for ways to become larger? Yes, of course. So are small ones.

    Is Amazon angling to become a publisher? Why not? Barnes & Noble did when they bought iUniverse back in what? 2002? Didn’t work out. And I will say only that Amazon did attempt something of the sort after purchasing Booksurge and discovered it wasn’t as easy as they’d thought it would be.

    I’ve stated this more times than I care to count, but once more won’t hurt. The main reason Amazon insisted publishers and others (Booklocker isn’t a publisher) sign a contract with Booksurge for on-demand books was so they could print them directly in their warehouse instead of stocking them, as they do with offset-printed books. Why they felt they couldn’t just say so, I have no idea; but they suffer from some kind of communications paranoia.

    For that printing to happen, there had to be some kind of legal relationship between publishers and Amazon. The simplest way to achieve that was for the publishers to sign on with Booksurge. Much was made of the fact that, up to that point, Lightning Source had shipped POD books in their database in Amazon boxes. Apparently, those who cited this point were under the misapprehension LSI did this for free. Not.

    So, by having those same publishers signed up with Booksurge and printing the books on-site, Amazon saved money. Something any business, large or small, looks to do.

    The traditional publishing business model was devised during the Great Depression. No other industry, not even farming, still utilizes a business model that’s more than 70 year sold. Unfortunately, it has also become a catch-22–because it was established to keep bookstores open, bookstores have become dependent on it to survive. As long as publishers are forced to accept returns, as long as they make decisions based not on actual feedback from consumers but on what sold big last year or what major celebrity has a book available, the current situation isn’t going to improve.

  32. Robin
    Apr 08, 2009 @ 10:47:50

    More competition = more innovation.

    To me, it’s not just a question of whether one likes or agrees with what Amazon is doing; it’s also about whether one or two visionaries is enough to have a truly healthy publishing culture. IMO it’s not. Every vision, every visionary is necessarily limited, and it’s the interplay among competing entities that pushes the market and the culture forward. Without that dynamic interplay, the visionary eventually becomes the establishment, and the whole cycle begins again (or continues, depending on how long a timeline you’re drawing).

    What is it going to take to spur innovation in publishing? If I knew that not buying books for a certain amount of time would contribute to change, I’d stop buying right this second. But it’s not looking like severe financial setbacks are inspiring core changes in publishing monopolies. So, really, what’s is going to take?

  33. Shel Franz
    Apr 08, 2009 @ 11:05:44

    Got here via Mobileread. I sincerely hope Barnes and Noble has a plan to compete with Amazon for publishing rights. Otherwise, I see a huge scary future for those of us with ebook readers that aren’t Kindles. Amazon gobbles exclusive rights to favorite authors, and we’re left with a paperback sized paperweight that is only good for reading Project Gutenberg material. For Amazon this is an inspired move – for the rest of us it’s a nightmare.

  34. ReacherFan
    Apr 08, 2009 @ 11:28:26

    I think the real question is, why has no one, including Barnes and Nobel, been able to compete online? WalMart has competitors. So does Home Depot. Why is it no one is giving Amazon a run for its money?

    I bought at BN for a long time and still hold a discount card there. Their website is as staid and unexciting as their stores. The stores work, the website doesn’t. It appeals to those who read the Wall Street Journal and New York Times. The web is full of shoppers who couldn’t care less about classy, refined appearance. In fact, the understatement works against it.

    I do wish someone would give Amazon some strong competition, but I think others let them get too far ahead. It took a LONG time for Amazon to show a profit. I’m not sure investors are that patient anymore.

    Do I think that in the long run we lose? Yes. I just don’t think it’s all Jeff Bezos fault. He just exploited an advantage – and isn’t that the whole point of a free market economy? Amazon was dismissed as an upstart for too long by old line retail. Now the power has shifted. Whose fault is that?

  35. Hilcia
    Apr 08, 2009 @ 15:07:31

    I think the real question is, why has no one, including Barnes and Nobel, been able to compete online?

    I can tell you why I, personally, stopped purchasing my books from B&N and let my membership card expire this year — taxes and shipping costs. So, it came down to $$. I paid the yearly fee for Prime shipping at amazon, $79.00/year or $6.58/month if you divide it that way, they don’t charge taxes. So, at amazon, if a book is $6.99, I get it for that price and within 2 days I have it without having to pay extra.

    At B&N, a $6.99 book would be come out to approx. $11.00 by the time the extra charges were finished. The 10% off was not worth it for me personally since I purchase so many books per month on-line (10 to 15 avg). So, slowly I stopped buying from B&N on-line. I do love their book stores, but the nearest one is far, so I hardly ever shop there.

  36. Elizabeth Burton
    Apr 08, 2009 @ 15:29:42

    This next is a very boring business discussion, so feel free to skip it.

    About sales tax–the fact is Amazon has already been compelled to start collecting it in New York, and it’s likely the rest of the states that have sales tax are working on achieving the same goal as we speak. And the fact is, anyone who purchases a taxable item online is legally supposed to submit the amount of tax they would have paid on it had they purchased it locally to their state taxing authority–it’s called “use tax.”

    Obviously, the cost of collecting use tax from individuals would be prohibitive, so nobody needs to worry their state comptroller will be sending out the cops. They can, however, enact laws like the one in New York; and in the current economy I’d be very surprised if Amazon isn’t collecting tax on all sales by the end of the year.

    B&N will be very happy about that, as will all the indie bookstores. They have to collect tax–the indies because they’re local and B&N because sales tax laws require it if an online retailer has a physical presence in the state in question. It’s one of the few things indies and superchains agree on.

    Still, it tends to be the shipping that kills you–books are heavy, and the irony is that they’re more expensive to ship media mail in small quantities than if you get four or five at a time. If media mail is even available; most of the time you have a choice of Priority or Overnight, and Priority on a 1-lb package is going up in May.

    Amazon Prime is a loss-leader. That means Amazon loses money on it because they’ve determined they will make enough on sales to cover the loss and make a profit. They were roundly criticized by Wall Street for it–pots and kettles. However, I’ve always assumed their various new policies, such as the one for POD, were related to their need to balance their losses on free shipping and Prime.

    We have a small online bookstore we use for special sales and such, and we offer free shipping for the moment. I may have to reconsider that because my authors just aren’t making the royalties they should on those sales.

  37. Mary Winter
    Apr 08, 2009 @ 16:14:06

    Lovely article. I have to say as a reader, I love Amazon.com. I work third shift. It’s a PITA for me to get to a Brick & Mortar store, and really our Borders is gasping its last breath and B&N has always felt too stuffy for me. Make me pay for thier discount program? Hah! I get discounts for free at Amazon. Plus, I’m a prime member. Like someone said, two days, and yay! books are here, usually a lot cheaper than if I’d gone to a store. Not only that, but as a Prime member, I have substantially increased my Amazon spending, so while it may be a loss leader, the loss may not be as big as people think.

    I used to be a big ebay seller. Ebay tried to become Amazon and boy did Whitman/Donahoe not get it. It’s now a haven for scammers and thieves and many of the small sellers like myself have left in droves.

    As a publisher, while I admit to being concerned, especially about the Booksurge lawsuit and the implications of what Amazon tried to do, I can’t complain. Not yet anyway. *grins* Our print books are there. We have kindle sales that are paid for regularly, and I love being able to easily reach the amazon audience. I could see them becoming a big, evil empire, and when that happens, publishers will have business decisions to make. But right now, Amazon is doing a lot to help small publishers compete. Does it make them money? Of course it does.

    The publishing paradigm is changing, and changing fast. Keep up with the herd, or get eaten by a lion. And I admit to firmly believing that authors need to pay attention to their publishers and find out how they’re adapting, or not.

    There was a lovely Bill Moyers show that had the founder of Ning on there, and he talked a lot about Jeff Bezos’ business plans. It was quite interesting watching, because you’re right Mr. Bezos is a visionary and people like him will be shaping our future marketplace.

  38. Besse Lynch
    Apr 08, 2009 @ 16:39:48

    books=language/communication
    I have no interest in letting one corporation or one person have complete control over all publishing/communication. Every day small independent bookstores all over the country are pushed out of business by Amazon. These are people who respond to their community’s needs as best they can. You can trust that Amazon and Jeff Bezos do not care about your community. The old adage is true… Be careful what you wish for.

  39. ReacherFan
    Apr 08, 2009 @ 17:08:33

    @Hilcia

    Today I placed an order at Amazon for 11 books. The shipping is free. The 4-for-3 promotion saved me an additional $13.49. The total was $64.91

    At BN it would have been, which at BN would have been $74.79 [with my 10% discount + tax) and shipping is still free for me. So the 4-for-3 is the bulk of the price difference.

    So, while sales tax gives Amazon an advantage, the real cost advantage for me is that 4-for-3 buy.

    @Mary Winter

    Jeff Bezos is a visionary, and an opportunist, which makes him a successful visionary – a rich one. And I completely agree, EBay has indeed turned into a rip-off bizarre. Their effort to be an alternate Amazon Marketplace was ill conceived, badly executed and failed to factor in the nature of their core customer base. I used to buy there a LOT and haven’t even looked in over a year. They screwed the the very people who made them what they were, the small sellers. Those are the ones I usually bought from because of the rather esoteric items I hunted. Now that Whitman is done wrecking EBay, she’s looking for political office. I’m sure California is thrilled.

  40. Mary Winter
    Apr 08, 2009 @ 17:15:11

    @ReacherFan

    I took advantage of a 4-for-3 special (got my books today), when I bought the Smart Bitches book. The thing is, if I’d gone into a local store I would have spent less money because I wouldn’t have even known about the other books. Thanks to some commentary on the SB thread I looked at the additional books offered, went on a link-y binge and found four Zebra Debut historical novels that I can’t wait to read. Added a book from my shoping cart to the total order (because I was getting one of those books free) and Amazon, the authors, and I are happy campers. :) They get the business/royalties and I get more books.

    I wouldn’t have made those extra purchases in person, because I would have said, “well, I have a TBR pile at home….” and walked out of the store.

  41. Elizabeth Burton
    Apr 08, 2009 @ 17:16:31

    Besse,

    Small independent bookstores go out of business because their profit margins are, for the most part, too slim for them to continue when there’s a drastic decline in sales. A solid, thriving business can compete against a larger one–there are many small local businesses who have succeeded despite the presence of Wal-Mart.

    The fact of the matter is that bookstores are begun on the basis that, unlike other retailers, they will be able to “borrow” their stock, and ship it back for credit if it doesn’t sell in order to replace it with newer stock. This is the system of returns begun in the late 1920′s by the publishers who feared they wouldn’t have anywhere to sell their wares. A system which has since come back to bite them in the gluteus maximus. In some cases returns run as high as 50% of books shipped.

    Returns are charged against sales. That means every book returned are royalties some author doesn’t collect. Losses from returns translate into less money for publishers to sign up new authors.

    It’s simplistic to blame Amazon for the demise of independent bookstores, many of whom are as much victims of skyrocketing commercial rents and other factors as anything else. If you were to survey those bookstores that are operating successfully, you’ll likely find most if not all are owned by people who also own the real estate.

    Here’s the truth: books are a losing proposition for Amazon, too. At least, they were until quite recently. It may be that’s improved with their various streamlining efforts, but the image of them as some sort of ogre swallowing up the publishing industry is based on emotion, not facts. This is precisely why Amazon has diverged into all those other areas of commerce–they make more money. Those other areas subsidize the book department.

    I will also point out that small presses who choose not to accept returns are essentially barred from being included in those small independent bookstores. Because we aren’t willing to shortchange our authors and, probably, put ourselves out of business, we have no other recourse but to put our faith in Amazon.

    I for one would love to support local booksellers. I do, as much as I can. And more and more of them are coming to discover there’s a difference between subsidy presses who use digital on-demand printing and publishers who choose to do so for reasons both economic and environmental. Much is made of the fact that indie booksellers are active hand-sellers, providing personal recommendations you can’t get at a Barnes & Noble. So, how hard could it be, if they find a Zumaya book they like, to stock one or two copies and do just that?

    We inventory-free publishers aren’t asking for special favors, and most of us are willing to be as accommodating as our own welfare allows. However, if we don’t sell books, we won’t last long, and for most of us the majority of those sales are made through Amazon.

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  43. Heather Massey
    Apr 08, 2009 @ 20:16:06

    Thanks for another thought-provoking piece, Jane. This will be an interesting discussion to revisit in about five years–or maybe less.

  44. Ann Bruce
    Apr 08, 2009 @ 23:55:19

    @Besse Lynch: The small bookstores in my area cater to the literary and sci-fi crowd and they have limited operating hours. Amazon is open 24/7 and has 99.9% of the romance books I want to read.

    Amazon didn’t take my business away from these bookstores. These bookstores decided to not cater to me.

  45. Karen Scott
    Apr 10, 2009 @ 05:43:07

    Amazon didn't take my business away from these bookstores. These bookstores decided to not cater to me.

    So sad, but true.

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  51. MikiS
    Apr 24, 2010 @ 15:23:39

    @гoлЬeтти: В английском, пожалуйста?

    (That’s a request for English, for the non-Russian speakers!)

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