Has everyone conceded the US ebook market to Amazon?
Let’s try, just for a minute, to stop cheerleading. In the recent weeks, it’s seemed like publishing has become an all or nothing sporting event and that we all have to pick sides. You have to cheer for self publishing versus traditional publishing versus some other path. But that type of thinking is short sighted and obstructive. A self publishing “win” is a vibrant and robust publishing community that has both publishing houses and avenues for business minded authors to advance on their own.
The downfall of traditional publishing would only hurt self published authors along with readers because it would result in a huge contraction of the market for books. I’m a firm believer in the saying “a rising tide lifts all boats.” The more robust the publishing industry is, the more readers are brought to the table and that helps every author and every publisher. According to one poll, over a quarter of Americans hadn’t read a book in 2013.
In the data that has been scraped, the most transparent information reveals that Amazon is doing a spectacular job of selling its own books. If you look on any Amazon tablet or Android Amazon App, you’ll see a parade of Amazon titles promoted in its Kindle Select 25. If you look on the Kindle bestseller list, on any given day there are at least 3 or 4 titles in the top 25 that are Amazon published titles. I believe that the scraped data revealed that at least a quarter of the top 100 are Amazon published titles from 47 North, Thomas & Mercer, Montlake, Amazon Encore, and the like.
Amazon pushes its own books on the Kindle devices through front page, full screen ads. It allows additional free downloads of books (referred to as borrows) of its books in exchange for reviews. Each “borrow” counts as a sale which is why you see so many pre order books at $4.99 at the top of the charts. Those are Amazon titles that Amazon promotes through special programs, coupons, discounts, and marketing campaigns.
Why is this important?
Sony has announced that it is closing its US Reader store and it has stopped introducing new ereaders to the US Market. Barnes & Noble has reduced the funding for Nook by 74%. Kobo, which is supposed to take over all the US Sony accounts has announced it is withdrawing funding for promotion within the US.
Kobo has since stopped investing in marketing in the US, closed its office in Chicago and is focusing on other markets. Its market share and revenues are now negligible there.
For Sony and Kobo (owned by rival Japanese companies), the market share they are looking to conquer is international. B&N has no clear digital future.
That leaves Google and Apple. As the market for Android devices becomes larger, both in the US and in other regions, Apple will lag farther behind in the content department. It has evinced no desire to allow its apps and content on any device other than the iOS systems. Thus, Apple’s marketshare in books extends only as far as its marketshare in devices which is still dominant but still fading (although losing ground in non US markets rapidly).
The most recent data from IDC shows that for Q3 of 2013 Android made up 81 percent of devices shipped. You read that right—four out of every five smartphones shipped in Q3 were built on Android. Meanwhile, Apple’s iOS scraped by with a sad and distant second place figure of only 12.9 percent.
While Google is interested in scanning books in furtherance of search engine dominance, it has shown less interest in moving content. There is little advertising or promotion of the actual book content (as opposed to say the Nexus phone).
The effect of this is that new and emerging authors have decreased visibility as the dominant marketing spaces of these digital marketplaces will be devoted to proven sellers. It will be harder for new authors or lesser known authors to break out because there won’t be any individuals assigned at these digital marketplaces to help readers discover new books and new authors. The same sellers will appear on the front pages of these digital marketers over and over. It’s already happening. As you know, I visit about four to five retailer sites every morning to look for Deals to include and the same titles are discounted and the same titles are promoted on the front pages without much variation.
A couple of weeks ago a well known British author wrote an ill advised piece for Huffington Post asking JK Rowling to quit writing because she’s sucking all the air from the publishing media. (There were also aspersions cast about young adult and middle grade novels) But Lynn Shepherd isn’t wrong to some extent. There’s only so much media that can be devoted to books and visibility shrinks as the market gets smaller.
The reason that it took so long for Borders to reach its expected end was because publishers had a vested interest in keeping it in business. It had far less to do with ensuring that there was a viable competitor to Amazon and far more to do with creating opportunities for discovery. With shelf space decreased, print runs languished and digital discovery for those books also were reduced. We know that showrooming is an important tool for discoverability. Showrooming, where customers go to a physical retail store and then buy online, is an increasing problem:
Among the people on its panel who reported buying items on Amazon after looking at the same item in physical stores, Placed found that Bed Bath and Beyond, PetSmart and Toys ‘R’ Us were the retailers that Amazon showroomers visited the most, with Amazon showroomers 27 percent, 25 percent and 21 percent more likely to visit the three stores, respectively, than the average consumer.
In store placement has a direct effect on online purchasing and this is as true for books as it is for toasters. When books have both digital and print, digital sales often decline if there is no visibility in stores. (Obviously this has no effect on self published authors who have no print presence).
Recently Amazon announced that it was reducing the royalty rates of self published audio books. For any new self published audio books, the royalty earned off every sale has been reduced from 50-90% to a flat 40%. Under the old system, with every increased sale you received a higher royalty. Amazon can do this because with the purchase of Audible, Amazon represents the primary path of audio book delivery. Even iTunes has Audible integration. In other words, there is no real competition for Amazon.
In sum, an Amazon dominant marketplace results in two things:
- Reduced visibility for all books.
- Reduce profitability for all authors.
Now I know that some who read this will complain that I took a strong and active stance against Agency Pricing. That’s true and I’d do it again. Competition based on price is singularly focused and requires huge volume in order to make up those whisper thin margins. Amazon is not competing solely on price and never has. It offers amazing customer service, selection, and a robust feature set.
And apparently the digital marketers have folded up their tents and left the US marketplace to Amazon. It may be in four years there will be a new competitor that we cannot foresee. Let’s hope so because an Amazon dominated landscape isn’t good for anyone. Not readers, authors or publishers.