Amazon, which has been on an intense buying spree (print-on-demanders BookSurge; book networking site Shelfari), lists publishers as its competitors in SEC filings. Editors and retailers alike fear that it’s bent on building a vertical publishing business—from acquisition to your doorstep—with not a single middleman in sight. No HarperCollins, no Borders, no printing press. Amazon has begun to do end runs around bookstores with small presses. Two new bios from Lyons Press, about Michelle Obama and Cindy McCain, are going straight-to-Kindle long before publication.
Amazon, in short, plays hardball. When Hachette Livre UK couldn’t come to terms over Amazon’s U.K. payments, Amazon removed the BUY NEW button from its listings for the company’s key books. Hachette’s CEO responded with an open letter, saying, “Amazon seems each year to go from one publisher to another making increasing demands in order to achieve richer terms at our expense and sometimes at yours.”
The ultimate fear is that the Kindle could be a Trojan horse. Right now, Amazon is making little or nothing on Kindle books. Lay down your $359 and you can get most books for $9.99. Publishers list that same Kindle version for about $17.99, though, and—as with all retailers—charge Amazon roughly half that price for it. Which means that Amazon keeps only a dollar on each book, while the publishers make $9.
But Amazon may be offering a sweet deal now in order to undercut publishers later. If their low, low prices succeed in making e-books the dominant medium, they can pay publishers whatever they want. “The concern is they want to corner the market,” explains one books executive, and then force publishers to accept a genuine 50 percent discount. “If they took over as little as 10 to 20 percent of the market,” says an agent, “publishers simply would not be able to exist.”
Amazon has already put the power back into indie mom and pop stores and consumers with their third party marketplace for used and new items. Check Barnes and Noble and the bookstore giant has got in on the deal as well. What if Amazon moved into publishing as well? I'm eager to see how this will change the industry.
The article itself is a highly interesting one in that a lot of industry professionals come out and a lot of what was usually kept behind closed doors.
If you think marketing is impossible, talk to the people in sales. Their job—forcing books into a shrinking handful of outlets—involves all the supplication of publicity without all the fun and free booze of book parties. And it has the added bonus of bleeding their companies dry.
Borders Group, which controls 10 to 12 percent of the bookselling market, is on death watch, putting publishers in an even less enviable negotiating position with bookstores. The remaindering and shredding of books—a cost borne largely by the publisher—is a relic of a consignment model developed during the Depression that makes no modern sense. Publishers also pay for placement in big bookstores, which they call “co-op,” under a complicated arrangement meant to cover up the fact that it’s payola (or, as some call it, extortion). Those 300 copies of, say, American Wife stacked precariously at the entrance? Bought and paid for by the publisher. “You feel raped having to pay for placement in a store you’re selling to,” says an agent.
“You can’t turn a camel into an alligator. I’d rather we have several soft years when investors get out and people who care about the values in the business reinvest.”
It certainly is an interesting time to be in this business right now!
Read the full article here at the NYMag website: http://nymag.com/news/media/50279/index5.html
The permanent link will stay in my Articles of Interest on the left panel.