Still Conflicted about Amazon

The Everything StoreI’ve just finished reading Brad Stone’s The Everything Store: Jeff Bezos and the Age of Amazon. I’m still processing what I learned, and checking other sources for differing perspectives, but my initial reaction is that this is an eye-opening, clarifying, sobering yet illuminating resource for anyone interested in publishing or business in general.
 
I approached this book the same way I’ve always approached Amazon: (1) as an Amazon customer, and (2) as a person employed by traditional publishing. The two perspectives leave me feeling a little whiplashed at times, since they induce two opposing views of Amazon.
 
As a customer, I’ve always been extremely happy. I’m a Kindle reader, a Prime member, and I use Amazon almost every day.
 
As a publishing professional, it hasn’t been quite so easy. In the beginning Amazon was a terrific customer for publishers and authors. Over the years the company has evolved into a ruthless competitor—while still being our primary customer.
 
Along with everyone else, I watched the evolution of Amazon. But until I read The Everything Store, I didn’t have a full understanding of exactly how it all went down. And I didn’t understand Bezos’ approach to his business, which often amounts to a scorched-earth policy.
 
The “customer” side of me loves being wooed and treated well. The “publishing” side of me has to deal with the fact that our biggest customer is also our fiercest rival. This rival has unparalleled leverage over other businesses including publishers, and is not shy about using it to compel cooperation.
 
I’ve loved Amazon over the years. I admire the company for so many reasons. I’m blown away by their innovation and the way they constantly re-evaluate their business and come up with new and better ways to serve their customers.
 
But I don’t like how their domination can come at such a high price. In a couple of notable instances when Amazon wanted to purchase other companies (Zappos.com and Diapers.com), Amazon used its power to launch price wars rather than stay at the negotiating table, bullying the companies into selling at the price Amazon wanted.
 
When it comes to publishers, Amazon has used the formidable power of its technology to remove all of a certain publishers’ books from Kindle sales; and at another time, to remove publishers’ books from their powerful book-recommendation engine, causing those publishers’ sales to drop significantly. Amazon is willing to use hardball tactics rather than negotiation when it suits their purpose.
 
Everyone knows the publishing business is struggling. But it’s not just because of technology and the changing environment. There was a tipping point that changed everything for publishers: the $9.99 e-book introduced by Amazon.
 
While publishers had been in talks with Amazon for months, providing Amazon with files and metadata to start translating books into Kindle e-books, Amazon never spoke a word about a plan to sell the e-books for such a low cost. It was sprung on publishers at a moment when it was far too late to back away. As one publishing executive put it, “It was one more nail in the coffin that no one realized was being closed over us, even while we were engaged every single day in a conversation about it.”
 
At $9.99 for an e-book, publishers could no longer make their margins. All of the economics of publishing began to change. Readers became accustomed to e-books at low prices (which, of course, has been greatly intensified by the massive influx of self-published books at rock-bottom prices). Lawsuits were filed, the “agency model” was born, and Amazon has continued to use their leverage to convince publishers to toe the line.
 
Publishers remain dependent on Amazon, which remains simultaneously their biggest customer and fiercest competitor. It is a precarious place for publishers to be.
 
I’m not advocating a return to the old days. When cars were invented, there was no going back to the horse-and-buggy no matter how badly it hurt the business of the blacksmith and the saddle-maker. We’re in a new world—a better world—and there’s no going back.
 
But there are downsides to a single company having so much power. I think it comes down to this: We know Amazon can negotiate, and behave fairly. But we cannot trust them to do so. When it serves their purpose, they’ll play hardball to get what they want.
 
So here we sit—loyal Amazon customers. Admiring Amazon as a hugely successful company. Working with Amazon to do everything possible to help our books sell. And wondering when the next nail in the coffin will come, and what it will look like.
 
Still, as quickly as we’ve seen the rise of Amazon (and Google, and Facebook, and Apple, and…) we will keep seeing things continue to change. The story isn’t over. Monopolies don’t last forever. If you don’t believe me… can I sell you a Blackberry?
 
The Everything Store is a fascinating and informative story, but definitely not the final chapter in how books are published, sold, and read. I’m excited to see the story continue. And I’m still conflicted about Amazon.
 
What about you?
Are you conflicted in your views of Amazon?
What do you think is coming next in this brave new world of publishing?
 

Comment below, or if you’re reading this via email, comment by clicking: HERE.

 
→Click over to the Books & Such blog, where today I’m highlighting nine interesting takeaways from The Everything Store.

 

TWEETABLES
 
“I love Amazon…but I don’t like how their domination comes at such a high price.”  Click to Tweet.
 
“Wondering when the next nail in the coffin will come, and what it will look like.”  Click to Tweet.
 
“The story isn’t over. Monopolies don’t last forever.” @RachelleGardner on Amazon.  Click to Tweet.
 
“The Everything Store” is eye-opening, clarifying, sobering yet illuminating. Click to Tweet.

 

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  • Mike Bloemer

    I think this article sums up most people’s view on Amazon (at least, most people who follow the publishing business). Very well articulated.

    • don kimrey

      Rachelle, you are tough, smart, and fair. I always enjoy your posts. I’m also trying to sharpen my skills and drum up the courage and initiative to actually submit something for you to consider! Keep up your good work. don kimrey

      • Rachelle Gardner

        Thanks, Don!

  • Lady Quixote (Lynda)

    I did not realize that $9.99 for an ebook is low. In fact, I thought it was quite high, considering that an ebook is delivered “free” over the Internet, with nothing to print, bind, package, ship to stores, plus there’s the savings on store overhead. Can you elaborate on this, Rachelle?

    • Bernadette

      $9.99 will include a cut to Amazon. Out of the remainder the publishers have to pay their editors, proof readers, cover designers, marketing staff etc etc – oh, and the author if there’s any left. And they still have to make a profit too.
      The physical side of ebook production and delivery is certainly cheaper than ‘real’ books – but the rest of it is the same.

      • Lady Quixote (Lynda)

        Yes, I do realize that all of the other non-production and non-store overhead costs of producing and marketing a book are going to be the same. I thought that sort of went without saying, however, as more than one person here has pointed that out, apparently I should have mentioned that in my original comment. ANYWAY, it seems to me that regardless of which way you go, print vs electronic, physical stores vs Amazon, making any real profit off of the hard-fun job of writing is RARE.
        .
        In April 2000 (back in the pre-eBook dark ages) my first novel was published. From the beginning, my annual royalty checks were so paltry that when my husband and I moved in 2004, I never bothered to send the publisher my new address. About a year ago a friend who had checked out my book on Amazon told me that it was now available as an eBook. That was exciting news…. and yet here it is more than a year later, and I STILL haven’t gotten around to letting the publisher know that I’m still alive and where to send my 9-year backlog of royalties. We are far from being independently wealthy — any “extra” money would be immediately put to good use. But it’s just really SAD when you turn yourself inside-out writing a book, then the days and nights of grueling rewrites and edits and meeting your publisher’s demands, only to end up with just barely enough money to treat yourself to a Mickey D’s Big Mac.

        • Lady Quixote (Lynda)

          …..which is why my current work-in-progress is purely a labor of love, with no more delusions of Best Seller status and instant wealth. Breaking into publishing has always been difficult, and then actually making any profit is rare indeed. I read somewhere recently that the average book earns the author around $300 during the first year after publication, and then it goes down from there. I don’t recall where I read that, nor can I attest to the accuracy of that sad statistic, but based on my tiny royalty checks for a novel that I still think was very good (THE SECOND MRS. ROBINSON, published under the pen name Rebecca Rochelle), I believe it probably isn’t far from the truth.
          .
          Originally my novel was published by a new publishing company, Writers Showcase, which I believe has now gone out of business or else been bought out by a vanity press called iuniverse. They promised to promote my novel and get it into book stores, and if they did, I never saw any evidence of it. Sigh… I hope to sell my WIP to a big publisher but… well… Lord willing and the creek don’t rise.

      • Razocarana

        Yet, one can get printed books even for cheaper. How much that cuts into publishers’ profit? Not much, actually, since the publishers set the wholesale price and if Amazon or bookstores or other retailers sale it for lower, it cuts into
        retailers’ margins. The publishers get the same amount of money. I would have thought that this is something Mrs. Gardner would be aware of.

    • Rachelle Gardner

      This is a huge topic, but bottom line is that ONLY the delivery is “free.” All the other costs are still there. Editorial, production, design, formatting (somebody has to create those digital files), metadata, working with Amazon and other online retailers, marketing, publicity, promotion. None of that is free. Not to mention the author, who put hundreds or thousands of hours into writing that book — certainly that isn’t free?

      • Dina Santorelli

        I also think $9.99 for an eBook is quite high, particularly when that same book is available in print — and often at a cheaper price on Amazon. I agree that we have to take into account all the marketing and promotion and editing that goes into making an eBook, but when there’s a print book right beside it, can’t you argue that — for all intents and purposes — there’s hardly any cost that went into making that book available as an eBook? I really do think eBooks that have print counterparts should be priced much lower, which is why I was very excited to see the Matchbook program come into being.

      • Anna Roberts Moore

        Hi Rachelle, this was my big question about why ebooks didn’t cost less. The popularity of ebooks was based on the price dropping considerably. I also think $9.99 for an ebook is high. Supposedly hard back books always cost more than paperbacks because hardbacks cost a lot more to produce. Therefore, to me, all new ebooks should be priced around the same as a brand new album on iTunes. A cd takes as much producing and hard work as a book (not all books and cds are created equally, I know that).

        I think what Amazon is shining the light on is that NEW books cost more than OLD books. It’s just the hardback-ness that made them have a higher price in the past is gone. Hardback books were “better” than paperbacks, thus more expensive. Now all ebooks are the same.

        I think we were ready to see the hardback v. paperback fight come to an end once there were no more hardbacks or paperbacks. But all we’ve gotten is publishers saying “wait, wait, wait, you’re taking away all the money we made on hard backs!”

        I love Amazon. I love WalMart. But I also love books. Good ole paperbacks more than hardbacks. And I like to support my local charity shop by buying used books.

        In my opinion a book is a hard thing to put a price on, and this will be a long-fought battle over who should get the most profit.

        I’m not disagreeing with your post. I just feel it’s time for us to start talking about the price of printed books versus the price of ebooks and where the money is going now that there is very little need for the printing press.

        • Lady Quixote (Lynda)

          I love the replies my comment generated; thanks everyone. It’s not quite as awesome as starting a Twitter Trend, but still very cool. :)
          However, even after reading all the comments, I’m still a bit confused. I am all for everyone in the publishing world getting paid fairly for their hard work. I am also in favor of finding ways to cut costs, so that more readers can afford more books. My hubby and I are both prolific readers. I read an average of 1 or 2 books per week, he reads an average of 1 or 2 books per day! All those books add up. We often have to resort to buying used books from Goodwill and in bulk by the box on eBay. I always feel a bit guilty for not buying new and putting that money in the author’s pocket, though. ….Come to think of it, this is yet another profit advantage that eBooks have over bound books: no one can sell cheap used copies of your book.

          • JosephPote

            Oh, good point on the used book market!
            Over the long haul, e-books may actually be more profitable for both the author and publisher…though certainly not in the short-term first-edition hard-bound print time frame.

        • Carolynn Gockel

          I have a small house with small children. The popularity of ebooks for me has a lot to do with the fact that I don’t have a lot of space.

          Also, the price of paperback books were too expensive before ebooks arrived. From Salon:

          “According to Bowker, the average price for mass-market paperback fiction has gone up a whopping 328 percent (from $1.35 in 1975 to $5.78 in 2000), poetry and drama have increased by 252 percent, and juvenile titles cost a staggering 387 percent more now than they did in 1975. (No figures were available for nonfiction mass-market paperbacks.) Adjusting for inflation, Sahr found that the average price of mass-market paperbacks has gone up almost 40 percent, poetry and drama almost 15 percent, and juvenile titles just under 60 percent.”

          Link: http://www.salon.com/2002/12/03/prices/

      • Netta

        Except authors were never paid what they were worth under the traditional publishing thumb. They still aren’t.

      • Margaret Yang

        Nope. Wrong. It’s not just the delivery that is “free.” You also have to factor in paper, printing costs, warehousing, co-op fees for front table placement etc. etc. Saying ONLY the delivery is free ignores reality. Then again, so does most of this post.

    • Connie Almony

      This, in itself, is a great conversation, deserving a whole blog post. The cost of ebook vs. print book. The dollars made by publisher, writer and seller for each and what is fair to pay a writer in royalties for each. I’ve not seen that discussion anywhere … yet. I hope someone will address it soon, because it is a huge elephant in the room.

    • JosephPote

      Compared to first-release hard-bound books, yes, I can see where $9.99 seems rather low, and makes it difficult to recoup costs of editing, producing, formatting, layout, and (especially) advertising.
      However, compared to paper-backs, $9.99 priced e-books are right there at around the same cost as traditional. In fact, so close to the same selling price, that one must ask why the savings in paper, printing, binding and shipping isn’t being passed on to the buyer.
      Which really boils down to the realization that the publishers have, for years, expected to cover their costs, with some profit, out of the initial hard-bound release, and the paper-back release is the icing on the cake with extended sales to a broader audience at lower production cost.
      It makes sense, and explains why the paper-back has traditionally been released several months after the initial hard-bound release. The e-book mucks up that paradigm, not because they are too inexpensive, but because they are released around the same time as the hard-bound edition.

    • JayneA

      It appears that Rachelle forgot to mention that Amazon paid the publishers the agreed upon wholesale price for the books they were selling for $9.99. The publishers were not taking a loss on those books. They weren’t taking a loss on any other books that any other retailer might have been selling as a loss leader either.

      The publishers did not like the $9.99 price due to fears that it would cut into hardback sales of the same book so a few publishers engaged in a price fixing conspiracy and their new contracts with Amazon (and other retailers) set up what became known as the agency model. Under that model they may have controlled the price but they received even less money than they did under the wholesale model.

      I understand feeling conflicted about Amazon or any other giant corporation for that matter but that does not excuse the price fixing scheme implemented by the publishers. The DOJ was involved because it harmed consumers but rarely do people consider that authors and by extension, their agents were also harmed by the actions of the price fixers. Both royalties and sales were reduced because of that scheme. Did my publisher ever consider that my sales may have dropped because they raised the price on my books to $12.99 from $7.99? No, I don’t think they ever did. I have one more book to go and then I’m done with legacy publishing.

  • Bret Schulte

    I agree that such powerful companies can be terrifying, but at the same time I too love Amazon, and Wal-Mart, as a customer, and shop there often. As an author it is amazing to have access to such a powerful sales platform, but also scary to know how easily it could make or break you.

    I obviously don’t have any inside info or numbers, but I followed the developments as best as I could in articles and I remember seeing a lot of proposed ideas for how publishers could gain some leverage: uniting, releasing their own devices, selling ebooks on their own sites, etc. and most of them were non-starters.

    My guess is that publishers will have to adapt by adjusting the margins on their end. If they are forced to lower their prices then they will have to compensate by increasing their output. There might not be much room to increase on the print side, but I know some publishers have toyed with the idea of establishing ebook imprints. I believe that indie authors have proven that the market is larger than the old traditional model and the cost to enter is very low. (I have seen agents/publishers admit to passing on a werewolf story because there were already so many werewolf stories out there, only to then see indie authors sell several more werewolf stories, proving that readers weren’t completely satisfied with or burned out on the current crop of werewolf books.)

    Publishers could bring in a lot more writers and put out a lot more product. In exchange for a reasonable percentage they could offer an air of legitimacy, marketing muscle, cover design/editing, and several other services to the best indie authors. Instead of only taking on the absolute best queries agents could give the really, really good ones a shot.

    Of course, increasing quantity often implies reducing quality and there is a risk of weakening the value of their brand but it is still better to get a percentage of a hundred books than a dozen. And, in theory anyway, having more titles increases your odds of finding the next big thing.

    If you make less per widget then you just have to sell more widgets.

  • cindyfinley

    I’m conflicted. Like you, as a customer, I love the ease and I also love the reviews. But, it is a bit creepy. Like a cyber big-box with continually expanding walls.

  • Yvonne Osborne

    Great post. I did tweet it, and I haven’t done much of that lately. I do love Amazon, but I hate bullies.

  • curlycnj

    My publishing house (Marshall Cavendish) was purchased by Amazon. It has been a huge change, part for the better (royalties every month, e-book promotions) and part for the worse (I feel smaller than a grain of sand in their ocean, rather than a known fish in a small pond). Gotta go with the flow, tho’!

  • Dina Santorelli

    On my way to writing a comment here, I was distracted by another comment and wound up writing a lengthy reply there. :) As always, Rachelle, thank you for a thoughtful post. Like you, as a consumer, I am an Amazon devotee. But I’m also an Amazon devotee as a self-published author. I can argue, and I often do, that it is BECAUSE of Amazon that I am a SUCCESSFUL self-published author. I would say more than 90 percent of my sales of BABY GRAND are through Amazon and as an Kindle eBook. In fact, I don’t know what I would do without Amazon. Has Amazon discounted the price of my book? Yes. I recently changed the price to $3.99, but the book remains discounted at $2.51. As an author, would I rather be able to control the price of my book? Yes. But I imagine Amazon — through all its meta data that I don’t understand — has found a sweet spout that it likes for BABY GRAND, and it’s WORKING. Sales are good. I guess the lesson is that if you want to play in Amazon’s house, you have to follow their rules. And right now I’m cool with that. Truly, Amazon, when all is said and done, has been good to me.

  • http://sharonlavy.blogspot.com/ SharonALavy

    The conflicted feeling will continue. I save money on many items on Amazon. And they just added Amazon Smile where .5% of my purchases will to to the charity of my choice. So I have bookmarked Amazon Smile and always place my amazon orders through them.

    Husband is the volunteer treasurer of a charity group where 100% of the donated money goes to the designated charity. If you send $100 to go to Haiti, etc, $100 is sent. We have 2-3% overhead which is covered by those who donate “Use where most needed” and the balance distributed 4 times a year after the board gets together for prayer and then suggestions of known needs. We come from different areas in Ohio so each knows different needs. Some local, and some abroad. At those meetings we distribute small gift of $500 each to known needs until the balance in the “Where Most Needed” allotment is dispersed or until the Spirit’s prompting ceases. Sometimes we go a bit over the allotment and wait for funds to come in to cover it, and Sometimes we have a few $100 left in that fund. We also use the “Where most needed fund” to pay for the costs of shipping funds overseas to bank accounts of Missionaries in China.

    All this to say, if you do buy from Amazon please check out Amazon Smile and designate a charity. You can change the charity at any time.

  • Connie Almony

    I, too, am conflicted. I’ve loved Amazon for years and still
    buy from them. But when I dropped my Kindle last year I decided to buy a tablet
    that allowed me to buy books from a variety of apps, giving competitors a
    larger opportunity to win me back.

    One thing that has always bugged me about the Kindle is that
    Amazon not only keeps a record of all my reading choices, but knows how far
    along I am in reading the book and has access to my notes and highlights. Isn’t
    that a violation of privacy … or did I sign that away in signing up to use it?
    Either way, it’s a little creepy to me. I no longer enter notes into my device!

    • Rachelle Gardner

      Well, Connie, you know my belief is that privacy is largely a thing of the past. The Kindle thing is the tip of the iceberg. We are all being tracked by our supermarkets, Google, Facebook… everywhere.

  • http://www.struggletovictory.com/ Kari Scare

    I feel the conflict about Amazon that you describe. I could not put my finger on it, but now I can based on the reasons you outline. Most likely, I will still purchase from Amazon, and I may pursue the for publishing an ebook at some point. I have no idea what’s coming next in publishing. I am overwhelmed trying to understand what’s going on right now. Some days, I feel like I should give up being a writer because the market is so tough. But I am quickly reminded that I don’t write for the market anyway. I write for myself. I will write if I never get published because I love to write. So, essentially, it doesn’t matter what happens in the book publishing market. I will continue to write and try to catch a wave in whatever ocean I can. I’m not picky about where I surf.

    • Lady Quixote (Lynda)

      Oh! I love what you said: ‘….I don’t write for the market anyway. I write for myself. I will write if I never get published because I love to write.” Amen to that!

  • Jeanne Rogers

    Hi, Rachelle. Terrific post. It’s on point, and pretty much summarizes the feelings of a lot of business people I know, many of which have coined some very interesting words and phrases to describe their feelings about this goliath. I do have conflicted feelings about Amazon as well. Like you, I am a prime member, I use Amazon everyday, and I am a Kindle reader as well. Some of what they have done to lasso other business is a concern for many, including myself. However, Amazon has helped me fulfill a lifelong aspiration, to write and publish a book. After trying to get noticed in the traditional publishing world, via publishers, editors and/or agents, I took a deep breath and plunged in, like so many others, to CreateSpace. The easy part is over – now the devil called marketing is looming overhead. Amazon does not help with that aspect of the business.
    Thanks, Rachelle. Your posts are always informative, and I always pass them on.
    Best,
    Jeanne E. Rogers, Author
    The Sword of Demelza, A Middle Grade Fantasy

  • Ancient Wisdom

    Hi, I would like to say that Amazon is not rude to its clientele. It doesn’t tell writers that they must wait 3-6 months for a decision on whether their book will be published, and they don’t add, “Don’t expect a response at all if we decide we don’t want it.” Many publishers and agents, as well, have been extremely rude to writers. They mock queries publicly (without saying names) and have made writing a query into a game of sorts. That’s why there are so many seminars on “Writing the Query Letter.” Writers must tiptoe on eggshells and get everything perfect. Many writers are tired of the whole business. It is much easier to self-publish a book and bypass the traditional publishing world.

    • rachelhauck

      Good points. The publishing industry did become more about the publishers than the writers. But when there is “one” of you and 10,000 of “them,” you get a bit cocky. :)

      And to be fair, some writers are really weird and they say and do weird things with agents and editors. I’m not saying queries should be mocked in public, but I bet if you’ve seen a hundred or so weird queries in a year, year after year, you get a bit callused.

      I think Amazon is giving all of the industry and chance to raised mutual respect. :)

      • Barbra Annino

        And when you get cocky, you mistreat your suppliers and your customer base because you think you’re the only game in town. So when a new guy moves into your territory and designs a far better system that not only offers the customers a better deal, but the suppliers, you lose both. Then you go from cocky to desperate, whining about how the new guy plays unfair, when all the while it was your own damn fault for not stepping up your game.

        • rachelhauck

          Yea, that’s the way it goes. You’re the cock of the walk until another rooster shows up.

          Reminds us ALL to be kind and fair because we never know what’s coming behind us!

    • Sebastien Dubois

      This is, by far, one of the most pertinent points I’ve heard made on this whole issue of self-publishing. YES these publishers have always been so far up their own proverbials that it was a God-send the digital publishing revolution came along. I don’t imagine there is one struggling author who isn’t heartened by the stories of all those household known authors (J.K. Rowling, Stephen King, George Orwell and the like) being rejected by haughty publishers who believed it was THEY who could and should set reading trends. That industry had a lot of this coming for a long time. How DARE they tell authors how they should approach them in a letter submission. These are authors and therefore do not need such an edification. So when it came to pass that writers could GURANTEE their work gets published (albeit at a cost) and in new, varied ways and fora, it was always going to be a good thing. The established industry didn’t get their affairs in order and allowed the plethora of self-help publishing cos. and marketplaces (like Amazon) to effect. This is all regardless of Amazon’s integrity (or lack of it as the case may be – I don’t know). I went to the International London Book Fair this year and it was full of publishers and wholesalers cherry picking who they could sell books to. They had no time for aspiring authors and they were awful in their attitudes

  • Donna Everhart

    Like many, yes, I am conflicted about Amazon as well. I use them heavily, to purchase my books (not e-books!) because we don’t have a bookstore here, in my little town. I’m a prime member as well…but what they’ve done with traditional publishers stinks. The idea of paying 9.99 for an e-book vs say 16.99 for a hardcover is a no-brainer for me – I prefer to pay the extra $’s for the hardcover – any day.

    But, there could be a light at the end of the tunnel… I saw this on Shelf Awareness Pro today, and the %’s are all over the place, but still, it was the headline before the fine details that caught my eye:

    AAP
    Sales in August: Adult Hardcovers Jump; E-Books Drop

    There’s more in the details, but I’ve been rooting for hardcover, trade paperbacks, etc to win out. I’m a “traditionalist” I suppose, when it comes to books. Call me old fashioned.

    • Pamela DuMond

      FYI: Those numbers don’t include self-published ebooks.

  • Stephen H. King

    An enjoyable post to read, and I’m sold on buying and reading the book. It’s going to be fascinating in the years ahead watching peer-reviewed case studies come out on the Amazon and Apple models — I imagine we’ll soon have as many available on that as we have on WalMart’s rise to power.

    It’s fascinating to me that you split the issue between how a customer feels and how a person sharing the same business space feels. The businessman/business teacher in me watched with a great degree of approval a decade or so ago as the fledgling Amazon convinced its investors to go five years without dividends so that they could pump every penny they made into researching, developing, and refining the machinery that we now see today as one of the best customer service tools ever built. They impressed the heck out of me in that way.

    Now, they’re being meanies sometimes. Keep in mind, though, that a business model’s purpose is to concern itself with the feelings and desires of its customers, not its competitors. The focus on the latter yields to nothing but cries of “unfair!” if you’re on one side of the battle and “solid business strategy” if you’re on the other.

    It kinda reminds me, in fact, of “You’ve Got Mail,” but with Tom Hanks instead of Meg Ryan now in the role of downtrodden victim. Funny how the solid business practices we relied on 10-20 years ago can become our greatest weakness today, right?

    That said, I’ve still never heard a convincing argument for why Amazon’s pricing structure inhibits the publishers’ margins. Yes, a book costs to develop, and due to overhead and such it costs a publisher a lot more to develop a book than it does me. I’m sure they pay their cover designers and editors and filing clerks and so on a whole lot more than I pay mine. But those are sunk costs. Fixed. You don’t calculate margins based on those costs; rather, margins are there to show you how long it will take to earn them back. The margin is the difference, generally expressed in ratio form, in the revenue produced by x number of sales and the costs of goods, transport, and so on for those same sales. The cost of goods sold for an e-book is precisely zero. The cost of transport/merchandising/etc. for an e-book is one thing under the wholesale model and percentage-based under the agency model, which means that under the agency model the margin is fixed, as far as I know.

    Example: It costs just as much to “shelve” and merchandise Stephen King’s e-book titled 11/22/63 as it does to do the same for my Cataclysm. Now, his book has a 4.2/5 rating, while mine has a 3.8/5 rating, so his is measurably .4/5 better book than mine. He’s won awards and earned a huge following, too, and I don’t, so his e-book is understandably selling for $9.99 while mine is but $2.99. Now, the profit per copy that the publisher enjoys is different in each case, for obvious reason, but the margin in each case is the same: just south of 70%.

    Do they have a variable I don’t?

    – TOSK

    • Rachelle Gardner

      Thanks for the solid input, Stephen. It’s fascinating no matter how you look at it, I think.

  • JosephPote

    A very interesting article! I can’t help but think how similar statements have been made about other new, growing retailers over the years.
    Wal-Mart comes to mind as the largest recent example. Customers keep coming back, despite complaints about service, because the prices are low and the quality is generally decent. Vendors both love and hate Wal-Mart…they want the big contract and feel they can’t afford to leave Wal-Mart out of their business strategy. Yet, they dread the power Wal-Mart wields, and the ruthless tactics they’re willing to employ to improve the bottom line.
    Amazon seems to be the next step in the evolution of smart retailer businesses…with both the good and the bad with which big retailers seem to be associated…

    • Lady Quixote (Lynda)

      Very well said. Amazon is the Wal-Mart of the digital world.
      My son just got a job in management with a book store. I’m praying Amazon and eBooks don’t drive his store out of business.

  • Else

    Having dealt with their customer “service” a few times over the years, I’m not so happy as a customer either.

  • Lanny

    So many of the high-tech darlings of Wall Street are actually clandestine connivers in the board room. The sadistic-cannibalistic tendencies seem to come out, but few of us ever see it. Hence, myths are created about the founders and their billions, which seems to have been the case always.

  • Christina Kaylor

    No one’s mentioned the “review” Jess Bezos’ wife wrote of “The Everything Store,” that is, the don’t dare criticize us, take no prisoners, or the pressures Amazon places on states to keep them from collecting legitimate sales tax or the increasing numbers of “deaths” of independent bookstores, which employ local people and bring money into the local economy. Amazon’s cheap prices come at a cost.

  • Anita Burns

    Sounds like the old Range Wars between the cattlemen and the shepherds. Cattlemen in the end had to compromise–a teeny bit. The biggest animal wins.

  • Anita Burns

    I have several books self-published on CreateSpace. Even though I have, in the past, had two books published by Simon and Schuster. I wanted to try my hand at self-publishing and marketing. Turns out that I made as much money from self-publishing as I did from S&S. But I missed the hand-holding.

    My next book is nearly finished and I’m torn between self-pub and traditional. Things have changed so much now that the only differences I can see is that with Trad Pub it still takes forever to come to print, while Self Pub is near-immediate. I have professional editors, designers, and know marketing, so why go traditional and have to wait, wait, wait, cry over one rejection after another, wait, wait, wait?

    • Roxanne Sherwood Gray

      Anita, who’s “I’m torn between self-pub and traditional,” Rachelle has written a book to help you decide that. ;-)

    • Pamela DuMond

      Anita –

      I hear you. I have 6 books out. The first was published by a small press. I left them when my contract expired after two years. My second novel grabbed the attention of an Entertainment Manager who now shops my books for film and TV. But I don’t have a lit agent. And I too am torn. I could see my WIP going a traditional route. But do I want to take the time to hunt for a lit agent and sit on a property I believe is commercial? I don’t know? Best of luck to you.

  • junebourgo

    A great post Rachelle. A see a lot being said about margins and pricing and agree with it all. But the one paragraph in your post that jumped out with me and opened my eyes is posted below:

    “When it comes to publishers, Amazon has used the formidable power of its technology to remove all of a certain publishers’ books from Kindle sales; and at another time, to remove publishers’ books from their powerful book-recommendation engine, causing those publishers’ sales to drop significantly. Amazon is willing to use hardball tactics rather than negotiation when it suits their purpose.”

    I get that Amazon’s first commitment is to their customer but what about their “clients”? Anyperson or publisher that posts their products on Amazon are clients and should be treated equally. After all Amazon takes their cut equally from all their clients. This seems like unfair business practice and morally wrong. Of course, some businesses have no interest in morality, only money. I’m not that naive and Amazon is one of those. As an author with a publisher who has my book listed on Amazon, am I conflicted. You bet.

  • Meghan Carver

    I’m definitely conflicted, Rachelle, and I share your concerns. Seems to be a terrific reason to support Christian Book Distributors.

    • Heather Day Gilbert

      One thing I will say is that CBD doesn’t carry self-published/indie authors, as far as I know. Nor do most of the larger Christian chain stores. So if your Christian writing falls a bit out of the norm, there’s really no other way to get it to the masses than via Amazon, I feel. Sad but true, and I really hope the big Christian sellers will consider indies in the future. But until then, Amazon is a great way to reach outside the Christian audience, which is great for crossover authors. I’m learning all this stuff as I go. Grin.

  • kentsanders

    This is a wonderful analysis of Amazon’s role in the publishing world and how it has affected traditional publishing. It’s hard to imagine another company being big enough to challenge Amazon or take its place.

  • Merrilyn Williams (Mel Menzies

    As Chairman of the Association of Christian Writers (ACW), I represent 800+ members. Where possible, we collaborate with related organisations, one of which is the Christian Resources Together. This represents publishers, agents and booksellers and, more recently, we authors.

    Here, in the UK, we’re finding that Amazon is not the only adversary when it comes to publishing and selling books. It seems that readers, themselves, are dropping in number and, in the opinion of those in the know, that the church has lost its passion for Christian literature.

    I lead the Book Club in our church and can confirm this. Over the years, numbers have fallen greatly. In the hope of raising interest, I post reviews on the books we read, and a summary of my readers’ discussion. http://www.melmenzies.co.uk/page/book_reviews_questions_&_discussion_summaries_for_book_clubs_&_readers_groups. I’m glad to say that this attracts viewers from all the world, but we have a long way to go. CRT are putting together a Think Tank to discuss the various issues. Hopefully, as you say, the story isn’t yet over.

  • Lisa

    I love Amazon…….just like I used to love Walmart……which was even better than how I’d originally felt about K-Mart. With K-Mart, I was drawn to the affordable prices and convenience. I really loved those Blue Light specials. But then service declined, products became inferior and I missed the good feeling the store gave me. So I moved on. Then fell in love with Walmart. Everything you could want in one store. Great prices, affordability, and recommendations that reminded me of the Blue Light Specials. But then I noticed the service declined, and I was spending more time at the return counters. So, I moved on. But now, I’m truly in love with Amazon. Great prices, affordability, recommendations like the Blue Light specials…………….

  • susaneisaacs

    I knew there was an issue when I could buy my own book on Amazon at a cheaper rate than my publisher’s author-discount rate.

  • Roxanne Sherwood Gray

    I shop at Amazon but I’m conflicted too. I like choices and don’t want Amazon, the “everything store,” to become the only store. When I was first blogging with a group, we were encouraged to provide links to purchase books. Every link chosen was one for Amazon, even if the book was available at other major vendors, like Barnes and Noble. So in a way, authors/bloggers are part of the problem.

  • Bob Mayer

    I’m a bit puzzled at the almost complete lack of blogs and outrage about the price fixing by New York Publishing. The DOJ rules against them with the judge essentially saying that several high ranking people in NY Publishing, which prides itself on being honorable were in essence, lying. This is the industry that then whines about everyone else, especially Amazon? An industry that bilked readers out of hundreds of millions of dollars by price fixing? Readers who are supposed to be their customers?

    Yet all I see are blogs like this talking about Amazon.

    I think the people in the current publishing paradigm who are most threatened are agents. They focus on the author-publisher relationship. But the relationship that has become most relevant is the author-reader one. There are times when the agent is an impediment to that relationship. More on that in a blog post.

    Lastly, Amazon didn’t exist in 1994. Publishing had plenty of time to solve their issues with the digital revolution. Unanimously they failed to do so. Their lack of preparation should not be responded to with indignation about Amazon.

    • Libbie Hawker

      This.
      Amazon used its power to remove certain publishers’ books from its search engines and Kindle store as a response to a massive collusion scandal that was specifically intended to punish Amazon for acting like the retailer it is and setting its own prices on merchandise it had already paid the publishers their specified wholesale prices for. Said collusion scandal was such a big deal that the Department of Justice sued over it. Surely, Rachelle, you are aware of this.
      I’m not saying Amazon doesn’t have a lot of power. Surely they do. We just haven’t yet seen them use that power to “compel” any other company that wasn’t taking illegal measures against them FIRST.
      Why do agents and publishers repeatedly ignore the five trillion ton elephant in this room and continue to harp on Amazon? The cat is long since out of the bag. Everybody knows why Amazon did what it did.

    • rachelhauck

      Bob, how did NY publishers “bilked readers out of hundreds of millions of dollars by price fixing?” Readers? Or writers? I’m not sure how readers get money from the industry. Thanks!

      • Bob Mayer

        Do you have a clue what the DOJ case was about? Why are the Big 5 paying hundreds of millions of dollars back to readers that they overcharged? That’s called bilking the reader? Cheating the reader? Stealing from the reader? Pick your word.

        Readers are the customer for the industry. They were overcharged in a price fixing scheme. No one seems very upset about it.

        • rachelhauck

          I know what the DOJ is just don’t have time to keep up with all the changes going on. Thanks for the information. I understand your point now.

  • Nan Jones

    I can’t help thinking that what goes around, comes around. Or, my favorite line from “The Preacher’s Wife”, “God don’t like ugly”.

  • atothewr

    As a self published author, it has been a great place for me to get feedback – with reviews, earn a bit of cash, and have a place to house my short stories. I have some issues with the way they do things, but Amazon has been a great place for me to showcase my talent.

  • Rachel Leigh Smith

    I’m not conflicted about my views on Amazon. I despise them and their tactics. So I’ve chosen to put my principles into action and I do not shop at Amazon. I’ve bought from there one time in the last two years, but it was through the marketplace so they didn’t keep most of the money.

    I decided to get a Nook because I didn’t like how Amazon was treating publishers and authors. And I thought the Kindle looked stupid with the little keyboard on it. Much prefer my Nook and the ability to expand storage with a microSD card, and replace the battery myself without invalidating the warranty.

  • http://www.edgeynoyes.com/ Sam Edge

    I am new to publishing (just 1 year) and I have been able to get 1 poetry chapbook and 2 short non-fiction books to market. It didn’t start out as a business decision it was more of a second half life strategy for me to work less, at something I love doing and from home. I started writing and then looked for where the markets were. If it wasn’t for Amazon Kindle I wouldn’t be even close to where I am today – which is really nothing to brag about but at least I’m in the game. If not for Amazon I’d be on the bench.

    At this point there is absolutely no upside to traditional publishing. However, I can continue to gradually grow a presence through self publishing and in ten years maybe they will be a better option. There has been a huge shift in power and I don’t see it going anywhere. Amazon is a sales driven animal – as long as they keep offering a quality product and a quality price they will remain the big dogs. What I do see is a correction where the playing field is thinned when it sinks in that Amazon isn’t the next .com scam that can be gamed with black hat tricks by the internet marketing crowd who are currently flooding the market with low quality eBooks – some are no more than very thinly veiled marketing brochures ( that does bug me). The market could use a good cull right about now.

    As far as I can tell the only metric that Amazon really cares about is sales and only quality product will sell consistently over time. Isn’t that the way it’s supposed to be? From what I can see Amazon is much more democratic that most large corporations. But I’m sure not losing any sleep over the poor starving big publishing houses that, imho, had a real-live-backroom-old-fashioned-boys-club-monopoly for many years.

  • EW Greenlee

    I’m a CPA and an indie author. My profession has been challenged by the explosion of tax and accounting software for DIYer’s. I understand how those in traditional publishing must feel, with their revenue streams and livelihoods in jeopardy. We CPA’s learned to adapt and cross borders into other professions such as financial planning, investments, insurance and real estate. Any business model that never establishes strategies for contingencies will experience what traditional publishing has.

    If the traditional model is no longer financially viable, and price and volume are the key to survival, then adapt. Add more authors and stop determining what is “worthwhile” to the average reader. My eBooks sell for $2.99. I priced them so that I could generate a 70% margin. I will have 19 stories to my mythology. You do the math of the potential. Let’s say the traditional publisher takes on more authors and gives the author 50% and retains 20%, or possibly a rising author royalty rate on achieved sales plateaus. With volume, all the fixed costs enumerated in this post are recovered quickly. With the computers providing all the marketing and distribution, only the top-sellers make it to print.

    It appears to me that instead of worrying about Amazon, there needs to be more strategy sessions in the traditional publishing meeting rooms. My point, get creative, compete, and adapt. Just my opinion.

    • Ancient Wisdom

      You are right on!!!! I especially like what you said about “Add more authors and stop determining what is ‘worthwhile’ to the average reader.’ There are many readers who crave tons of books in the same genre. If Create Space can print on demand and make money off of each sale, (and not lose money when there are no sales) then why can’t traditional publishers do the same thing and print on demand as well? They could provide copies of books on demand to bookstores. Say one or two copies to each bookstore and more as each of those sells. They wouldn’t lose much money. Print on Demand would save their hides.

  • Rayne Hall

    Amazon is no better and no worse than other big businesses. Like any other business, Amazon is in the business of making money. Amazon’s (Jeff Bezos’) vision is fresher and more long-term than most other businesses, that’s all.
    Of course Amazon is ruthless at times, but fortunately also more ethical than many other companies, and I appreciate that.
    What I don’t like is Amazon’s near-monopoly status, and the quest to dominate the publishing world. I don’t like monopolies and I wish a strong competitor would emerge to keep Amazon honest. For a while, I hoped that Kobo would be this competitor, but that was before Kobo’s unethical practices were revealed.
    If you complain about Amazon being a ruthless competitor, consider this – without Amazon, another powerful ruthless competitor would have filled that void, and that one might have been a lot worse.

  • P. M. Steffen
  • Adrian Chamberlin

    As a writer I’m conflicted, also. I’m still deciding whether to go trad pub and seek the Holy Grail of an agent/mainstream publisher or embrace self-publishing. Many writer friends of mine have enjoyed great success in the latter – and there’s no doubt Amazon has been a boon for this; as much as self-published books are knocked by the traditionalists, believe me, there are some real gems that would never have seen the light of day if it hadn’t been for Amazon and KDP.

    But I’m worried about where the new direction will lead us. Perhaps I’m a bit too pessimistic, but I can’t help feeling that a world where Amazon is the be-all and end-all of publishing (and that day is coming) will be good for no one. I don’t need to comment about their tax avoidance in the UK and predatory business practices in general – let’s be honest, they’re not alone in this – but I wish their competitors hadn’t fumbled the eBook ball so badly. I’d be more comfortable self-publishing if I knew all my eggs weren’t in one basket.

  • Sarah McCabe

    Seriously? The publishers are the ones that engaged in illegal actions to cheat customers out of millions of dollars and Amazon is the one you can’t trust to act fairly? You’ve got to be kidding me.

  • JRY

    “There was a tipping point that changed everything for publishers: the $9.99 e-book introduced by Amazon.” If memory serves and a quick google search turned up several articles that says memory is – the 9.99 ebook price I believe Ms Gardner is referring to was the price that Amazon charged for bestsellers, as a loss leader style marketing technique…reminding me of the heavy discounts brick and mortar stores do for hardcovers – they were still paying the publishers whatever the publishers were charging them.

    • Carolynn Gockel

      I’m not sure how you can’t make money on a $9.99 ebook? You have the art, you have the editing, you have the marketing all set up. To put that print book into an ebook format takes very little time. There is no overhead for storage, there is no cost of production after that first initial conversion to digital, and you don’t lose money on second hand sales.

      What am I missing here?

      • Massim0Marin0

        Maybe it is in fear that a $9.99 ebook will eat into a $20 paperback sales. Are there hard facts that one segment eats into the other based on price?

  • David Stewart

    Good article, but I wanted to say a few things:

    1) I think Amazon is not a monopoly. It could really only become a monopoly if the government made it one. Monopolies are not a real thing in the free market (even Friedman’s “technical monopolies” come with an admission that competition is ever-present), and if Amazon was truly bad for publishers I would expect that they would take their business to a competitor, like Barnes and Noble, or investors would seize upon the market opportunity by making a new company. Perhaps they shall. Your point about the blackberry is a valid one, or course, but I see plenty of competition right now.
    2) I have a hard time believing that a $9.99 e book cannot create good profit margins considering $7.99 exist and are profitable, and they have actual costs associated with them, like printing and shipping, whereas the overhead of a e book is practically nil. I’m making assumptions here because I’m not a publisher, but considering I can email amazon a word document and it comes back as a fully functional e book with a working table of contents I’m inclined to say e books are a fairly cheap medium. I would love to see some numbers that prove otherwise though.
    3) I don’t see how Amazon is a competitor or rival to publishers… are they dealing with authors directly and offering them bigger cuts of the profits than publishers? Is this a reference to indie writers? I though Amazon just sold books.

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  • Barbra Annino

    “We know Amazon can negotiate, and behave fairly. But we cannot trust them to do so. When it serves their purpose, they’ll play hardball to get what they want.” You mean the way publishers play hardball with writers? I have yet to see a blog post by an agent that criticizes draconian, boilerplate contracts and the fact that they all read the same across Big Publishing. When is the last time you were able to negotiate anything but an advance? Royalty rates, rights, and reversion clauses all act in the interests of publishers, not authors. Where is the outrage on that?

  • rachelhauck

    My thoughts on Amazon: What goes around comes around. The NY publishing industry found it out. Amazon will too. As did Ma Bell and other corporate monopolies. But Amazon has opened doors to authors — good and bad — that gives them opportunity to earn make money at their craft. Have to appreciate that…

  • Steve Atkins, Sr

    Well, well, well. When you have a great book (based on other’s opinions), and every query letter is rejected, then authors such as myself are forced to go the Kindle Direct route. It is a win-win situation for everyone except hard copy publishers and agents. The readers are able to get affordable quality books, the author’s income is actually greater per book, and the download is instantaeous.

    Major publishers brought this on themselves by refusing to adapt to new trends, so I don’t feel sorry for them. People (and some businesses) resist change, and it results ultimately to their own demise.

    Yes, I would love to be able to travel and do a book signing tour with hard copy books, but one has to play the cards they are dealt.

    In the future I expect to see that we authors will be able to offer electronically signed ebooks. So, get ready for the future… it is here.

  • Heather Day Gilbert

    I’d honestly say Amazon did right by me with my book launch and allowed me to sub-categorize my historical fiction. This has kept me in the bestsellers’ list for over two weeks now. They also kept my book in the “hot releases” quite a while and keep bumping it in there when I get enough sales.

    I feel that some self-published authors are putting in all kinds of effort–many of us with editing, formatting, cover art, marketing–the whole shebang–and yet we’re charging far less for our e-books. I think this might explain why I keep seeing self-pubbers in the top rankings on Amazon.

    I’m just saying as long as Amazon is doing what it’s doing, I’m ready to ride the wave. I’ve sold far more books through Amazon than through Smashwords or Nook at this point. To neglect them as an outlet for my novel would be disastrous–all my self-marketing attempts wouldn’t go too far.

  • Elizabeth Seckman

    Hi, I am Elizabeth am I am an Amazon addict. I can download a book, get flea spray, and send a baby gift to a friend…all in one stop! And without Amazon, I’d still be getting, “This is good, but not break out good. Sorry,” rejection letters.

  • ctemple27

    What nobody talks about is how to justify expensive ebooks when so many stages can be skipped.

    • Massim0Marin0

      Still hard to understand.

  • Massim0Marin0

    Dear Rachelle,

    I’ve read with interest your post and the informed comments that followed

    We are witness of a (r)evolution in the publishing industry triggered by Amazon and the like. Jeff Bezos has opened the gates and the gatekeepers are looking at each other unsure of what to do.

    Self-publishing has created a marvelous thing: everyone can publish a book, and establish a one-to-many direct relationship with readers that buy and enjoy new voices.

    There’s a terrible monster that haunts the publishing valleys, too: everyone can publish a book, and readers are exposed to the slush pile, for the first time visible to the many.

    Recently, Books-A-Million has declared that its bookstores will be equipped each with POD printers. “Every book is printed because it has been sold,” breaking the old paradigm stating that “every printed book maybe is sold.”

    The advent of cheaper and cheaper flash printers, together with higher and higher print quality makes so that printing books in advance hoping to sell them later is bound to disappear as a business model.

    Books are already in online catalogues available to every bookstore. These last will have their own POD printers in the back office, and customer will access loads of online information about the authors and their listed works. A reader will be able to pay and download to a device with RFID (a short distance wi-fi service, think of bluetooth), and/or click to buy the printed edition. Get a coffee or a latte at the embedded BookStop Café and be served latte, cake, AND a freshly baked book, right on the spot.

    No more distribution costs, no more returns. Every single printed book is printed because it has been bought. Bookstores will have never ending catalogue and be able to sell any physical book.

    Dinosaurs that will disappear are those publishers who still believe that their service and added value to writers is primarily to get published, and writers need to put up with everything else for that privilege. This business model is no more sustainable because the basis for it is no more. It will disappear and those who don’t change business plans will be soon forgotten and crumble faster than IBM did when the clone PC and the primitive Windows operating system made through to the market.

    All the best,
    Massimo Marino

    PS
    I also see the end of the query process. Agents will perform like professional sport scouts. They will look proactively for the writers online, after all, a promising athlete doesn’t go to every scout house and run 40 dashes in his front yard hoping the scout’s lurking. The athletes play their game, and the writers will write their novels. In both cases, the audience is there already, scout or not scout, and that is what it counts.

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  • Gillian

    Thanks for the roundtable, Rachelle. I read the book and was impressed with Bezos’ innovation. However, I appreciate the labor, risk, and dedication of small business owners. I have never shopped Amazon. I may do so in the future, but only when the last independent bookstore closes doors. I need to walk into a bookstore regularly in order to maintain any kind of endorphin high.
    I have a WIP ready to go. I’ll begin with Trad Pub and if I”m not happy then I’ll move on to Amazon. Bezos anticipated and reaps the rewards. Traditional Publishers could still compete. All business now is about fluidity.
    This is a matter of choose what suits you.

  • Russell Blake

    I’m conflicted. I’ve sold about 350K ebooks, mostly on Amazon, in the last 30 months, and made more than I would if I’d sold twice, perhaps three times that many via traditional publishing. I’ve built a readership, which has gotten value at a reasonable cost, and I’ve made out well. I hire editors, proofreaders, cover artists, formatters, and still have more than enough left over for tequila.

    The publishing paradigm was a pyramid, where a tiny fraction of authors at the top made enough to live off their books, and the rest languished. But those at the top made reasonable money as they were able to negotiate better contracts due to having performed, and supported an entire industry, including all the laggards, middlemen, bureaucrats. It’s like the old record company model, where you signed 100 acts, they all got one record, one video, and you waited to see which two or three hit, while the rest fizzled. You didn’t know which would hit, but you needed your compensation model to make you enough from those that did to cover all the duds. Which meant that the artists got terrible contracts, because otherwise all the infrastructure people who didn’t actually create the music couldn’t get paid well for being middlemen. That sort of describes traditional publishing.

    I personally have no problem with that model. It’s essentially unfair, but I accept it as such, because the world’s never been fair, and I understand that. I also had no interest in participating in that game. Which is why I didn’t publish until Amazon turned publishing on its ear. But I bear no ill will towards the business – I got to decide whether I wanted to play or not. I chose not to. Now, I’ve built a brand that’s accelerating, and my dealings with those in the trad biz have been nothing but cordial. They’re mostly smart people, some of whom recognize the need to change. They don’t despise or hate me, nor I them. I am not the problem. Neither are they. They are an industry with an antiquated model that will have to adapt if it is going to survive – turning to indies who have proven their chops and built a market to reduce their risk and increase their hit rate. But they’ll have to pay more to get those indies, which is fine, because with lowered risk, comes lowered reward. The biz won’t like that, but it will eventually adapt, and will still be here a decade from now, only perhaps in a different form. Those that don’t adapt will remain in tar pits, pining for the good old days.

    Amazon is not the problem. It’s not B&N’s problem – B&N is B&N’s problem. Apple is Apple’s problem. Amazon saw an inefficient business model and figured out a way to streamline it, creating value for customers and authors. That’s what good businesses do. Bad ones cling to arcane models because they think it represents the easiest way to make the most money. There’s a word for those entities in business. They’re called, “lunch.”

    Amazon is eating Trad Pub’s lunch. So Trad Pub now needs to work smarter and better, to evolve, and yes, compensate its artists who can deliver at a higher rate than in a pretend universe where it needs to make massive profits from each artist to offset all the duds and support all the unnecessary infrastructure. Here’s a hint: increase your hit rate, and streamline your operations. Poof. You’re suddenly more competitive. Sure, you have to pay more to get the better indies, because they won’t sign a crap deal, but instead of putting out 3000 books to sell a ton of maybe 10 of them, you can still sell a ton of 10, and a really good number of another 500 to 1000. That’s the opportunity I see for Trad publishers. I think the smart ones will figure that out. They’ll watch, they’ll cherry pick the indie pile, they’ll do decent contracts because otherwise they’ll get told to pound sand by authors who are earning serious bank doing it themselves, and who might want to work within the trad pub world, but are simply unwilling to give away massive amounts of money to potentially increase their unit sales to a point where their trad pub compensation equals their self-pubbed compensation.

    This is an exciting time. The trad pub business can innovate. It can develop a new, more viable model. Readers can win. Authors can win. Publishers can win. But like tycoons in the deep south, trad pub can’t bemoan the good old days when labor was free. They have to adapt and build better mousetraps.

    Ten years from now, those that do, win. Those that don’t will be distant memories. Which is as it should be. In all businesses, there should be evolution.

    I dearly hope someone competes with Amazon successfully, too. That day will inevitably come. It will be welcomed. It will keep them honest.

    I don’t mind others competing with me. It keeps me sharp and focused. It makes me produce my best work. It requires that I make better decisions. It’s healthy. It’s how organisms stay vital.

    I see a future where trad pub can prosper, while authors can also prosper. The key is in increasing the hit rate, and lowering overhead. Readers have shown that they’re willing to pay $10 for a quality trad pubbed ebook. Not as many as three years ago, but still, many. Maybe $7 is the new normal. Fine. Whatever. Increase your hit rate, and lower your overhead. Make people work smarter and better. Just like I’m forced to to compete.

    The problem is that the industry was so accustomed to not really having to innovate or compete, it became moribund. So now everyone’s got to either learn new tricks, or fade to black. I say, bring it on. Exciting times. Get with it, or turn out the lights on the way out.

    As it should be.

    • Massim0Marin0

      Amen.

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  • http://www.sonyamacdesigns.com/ Sonya McCllough

    When one company convinces another company to play post office on Sunday when Saturday delivery is an issue all year, it’s past time for a post it note.

  • :Donna Marie

    Rachelle, I am most conflicted about Amazon BECAUSE of the bullying. That’s the biggest reason. Unfortunately, my pocketbook (practically empty) still dictates that I will buy from the place I can get the most bang for my buck, and Amazon often fits the bill. I don’t like bullying and I don’t like monopolies :(

  • Kathy Clark, a.k.a. Bob Kat

    The industry consolidation along the new technology lines is still pretty immature. I think there will be alliances formed to oppose some of the practices and initiatives of the Amazons in the world. Authors have to stay fluid to grow their fan base.

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