Will Amazon destroy the Indy-Publishing Industry?
If you are like most people in America, you’ve probably never heard of two of the companies I’m about to write about: Ingram and Lightning Source. But, somehow, I’m sure you’ve heard of Amazon (least not from me tirelessly pitching book sales over there). If that’s the case, you might be a little puzzled by my statement that Amazon has now decided to go to war against the small and micro-publishing industry. If they succeed in what they’re pushing, then it might well spell the death of indy-publishing in this country.
Some background is necessary for the civilians and innocent bystanders. If you already know publishing inside and out, you can just skip the next couple paragraphs.
BEGINNING OF PUBLISHING LECTURE
Traditional publishing works like this: the author spends years writing their book. Then they spend years finding an agent. The agent sells the book to a publishing company, which then invests the money (and takes the risk) to offset print thousands of copies which are then sold on consignment to distributors and wholesales at a steep (usually 55%) discount. From there, they are sold on consignment to the bookstores at a 40% discount, and are typically returnable for a year.
The break down from the other direction: You pay $16 for a new trade paperback at the bookstore. Here’s how the money breaks down:
• Cover price: $16
• Bookstore: $6.40
• Wholesaler (Ingram or Baker and Taylor): $2.40
• Distributor: $2.40
• Publisher: $3.20, minus the printing cost
• Printer: Depending on the print run size, typically $2 to $3
• Author: $1.60 (maybe, sometimes less)
You can see from the breakdown that the author and publisher really get the short end of the stick in this deal. Particularly because the typical trade book only sells through 50% of copies, meaning the others are returned for credit to the publisher and are either remaindered (sold in pallets for the bargain bin) or destroyed. Publishers have razor thin profit margins. In order to be profitable, they have to print and sell an enormous quantity of any given title.
All of that changed in the last ten years and thanks to a combination of factors—one important one was the very existence of Amazon – it has become possible for tiny micro-presses (such as my own) to profitably sell books in very low quantities. The biggest piece in the puzzle here is a virtually unknown company in Tennessee called Lightning Source. Lightning Source is a book printing company, but two factors make them unique. One is that they are owned by Ingram, the biggest book distributor in North America. The second is that they print copies one at a time, as they are ordered. So, when Republic was published, for example, instead of laying out tens of thousands of dollars as an initial investment, Cincinnatus Press spent very little to get it running. Editing, cover design, some small setup fees, and we were in business. By August, one month after publication, the book had already broken even. Everything since then has been profit.
Here’s the breakdown on that title:
• $16.95 cover price
• Amazon and other retailers: $3.39
• Lightning Source (for printing and distribution): $5
• Publisher/author: $7.61
I put publisher and author together in my case, because I own the publishing company. Right now pretty much all the profit is rolled back into investment for the next title, and because I plan to go offset soon, which will cost some bucks. As a result of this, I was able to bring back into print an important, but slow-selling title, about the World War I veterans’ Bonus March in 1932, and later this year I’ll be publishing a wonderful book by a Florida author about commerce raiders during the Civil War.
END OF PUBLISHING LECTURE
So here’s what Amazon has decided to do. In order to capture more of the money, they’ve bought their own printing company (Booksurge), and have been strong-arming small and large companies using print-on-demand in order to make those companies shift over to printing through Amazon’s subsidiary Booksurge. If you switch to Booksurge, you pay more to print your books, and have to pay a much higher discount to Amazon. Publishing for a micro-press like mine becomes essentially unviable as a business.
By doing this, Amazon is threatening the underpinnings of an entire industry that has sprung up in the shadow of basically two companies – Lightning Source and Amazon. Hundreds of tiny presses publishing innovative and interesting titles that might not be seen as commercially viable by a one of the big media conglomerates in New York, but can do quite well in its own niche. And while sure, we’ll be able to sell through other outlets, the bottom line is that for Cincinnatus Press, more than 95% of sales are currently through Amazon.
The changes technology has brought to our world in the last twenty years have been incredible, and they’ve had particular impact on content-creators, authors, musicians, and others who might not have a Stephen King sized audience, but nonetheless have build an audience that would never have been possible before the Internet, Amazon and digital printing. Think of horror writer Scott Sigler: he podcast his books, built a huge fan base, and initially published through a small press printing through Lightning Source, just like I am. Now he’s got a movie contract and a new hardcover coming out next week from Crown Books. Crown (which, incidentally, is an imprint of Random House) would likely never have seen the commercial viability of Scott’s books had he not built such a huge base of completely rabid fans with his podcast and print-on-demand titles. Two weeks ago crime novelist Seth Harwood launched his new title to #1 in mysteries and thrillers through savvy internet promotion and the excitement of fans of his podcast. Seth’s publisher: Breakneck Books, which also prints through Lightning Source. Chris Paolini, who wrote Aragon, was originally self-published by his father.
It’s not over yet, and this story only came into the public view on Friday (though I’ve been hearing about the strong arm tactics to get companies to switch to Booksurge for some months). So the question at hand is, what to do we do?
Now, the eight-hundred pound gorilla of the online bookselling world is getting ready to sit on all of us. Instead of embracing the long tail of bookselling, Amazon is going to swallow it. They’ll do harm to themselves in the process, but more importantly, if other directions aren’t found, they’ll likely kill an entirely new, and wonderful industry of small, family owned publishers.
Some links:
Amazon Tightens Noose on Print-On-Demand Publishers; Insists They ... Washington Post
Amazon to Force POD Publishers to Use BookSurge Publishers Weekly
Amazon pulls a Microsoft - Computerworld
Amazon Insists Publishers Use Their On-Demand Printer - Slashdot
Amazon Says It Will Only Sell Print-On-Demand Books That It Gets ... - Techdirt
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They made money on betting on big press runs which lower the cost of the book. And doling them out over time. In 1979 there was a tax court decision that required that publishers pay tax on unsold merchandise. Since then publishers cleared the shelves every year. The entire model changed on how money was made and 'backlist' and 'midlist' books were eschewed. Gentleman's culture gave way to marketeer's. The cultural consequence is obvious and lamentable. There is some green logic to what Amazon is doing, assuming that the book is printed near the sale, but the vertical monopoly is extortionary. Amazon has along with Borders and Barns & Noble has killed independent book dealers and thus extinguishing the lovely character that allowed resonance of the human mind. Today it is not mind but spreadsheet. I would like to see a 'tax' on Amazon that went to independent book dealers so that we could have the best of both worlds.
Thanks so much for posting the email address and phone number for Amazon. I agree on shifting to other outlets, and in fact I'm currently negotiating with a national distributor for my company's books. However, realistically, 95% of the books sold online are sold by .... Amazon. They also represent about 90% of my company's sales, and 100% for a couple of specific titles. They haven't pulled me yet, but if they do, it will be huge blow.
The downside, is that I can't think of any other bookseller on the web that does so well in terms of being able to find similar or related titles. And thats the rub with all of this. If I could, I'd direct all my links to Booksense (www.booksense.com) because they're a network of small independently owned stores. Problems is, their interface sucks and its really hard to find, uh, books. I don't know the answers here. I do know that for me at least this has been a wake up call. Even if Amazon completely backs down, I'm going to be doing a lot to diversify where I'm selling books.
If they're doing this to authors, I can imagine that one day they may want to do this to musicians as well. I don't usually go for "slippery slope" arguments, and I don't see this as one of them. But they are trying to treat creative expressions as if they were shoes or any other commodity. That just isn't right.
Thanks, Charles.
My message to amazon.com customer service: I understand that you are attacking small independent authors and publishers by imposing onerous financial demands on them. I am dismayed to hear this. For several years I have found Amazon to be a convenient and well-stocked source of books and other items. If you persist with your shake-down of small businesses, I will find a new place to shop & no longer do business with amazon.com. I will communicate this information to my friends.
My message to amazon.com customer service: I understand that you are attacking small independent authors and publishers by imposing onerous financial demands on them. I am dismayed to hear this. For several years I have found Amazon to be a convenient and well-stocked source of books and other items. If you persist with your shake-down of small businesses, I will find a new place to shop & no longer do business with amazon.com. I will communicate this information to my friends.
Sincerely, Dennie Williams
jcliffo@amazon.com
* cust.service@amazon.com
Dear Mr. Addison Gast, I have no idea who W. D. Gray is, or which company he is referring to. Not Xlibris Corporation, that's for sure. (name withheld)Sincerely, Publishing Consultant Xlibris Corporation International Plaza II, Suite 340 Philadelphia, Pennsylvania 19113 Tel: 888.795.4274 Ext.xxxxxx
I can well see that Rev Wright had to bave been wronged, but not to the depth that we were. Also, you helped to take away our "legally earned" life-time health care. For our feelings regarding our service we are condemned and denigrate by Patriots, and you were "awarded the Department of Defense’s medal for Distinguished Public Service." and promoted. Larry and "Patriots." Service to this nation just ain't fair. Pasted is DoD ducument of 11 July 197 which you sit in judgement of. I'm still paying for this some 40 years later to half of what my ingrate succesors receive. No one in this land we both served will redeem my "Honor" for goods and services. They all want that green stuff which you withheld from us and got yours. THE SECRETARY OF DEFENSE WASHINGTON DC 20301 11 July 1970 AN OPEN LETTER TO RETIRED MILITARY PERSONNEL As Secretary of Defense I have principal responsibility for advising the President on all matters ranging across the full spectrum of Defense. For this reason, President Nixon has requested that I discuss with you a Defense matter very important to him -- recomputation of retired military pay. I welcome this opportunity to explain my views and recommendations on this important matter. Like the President, I have long recognized that some form of recomputation is a desirable goal. Since this Administration took office. I have had the Department of Defense continuously studying the problems involved and the steps that might be taken to make meaningful adjustments. I am convinced there is a genuine need to treat the retired members of our Armed Forces More equitably -- we owe this to the men and women who have devoted their lives to a military career. It is true that there are administrative and legal obstacles in the way. Perhaps more important, the introduction of this change may even become a model for other government retirement systems. whether Federal, State or local. Therefore, we must proceed cautiously to insure that our remedy will be both effective and lasting. I am confident, however, that the administrative and legal obstacles can and will be overcome. Unfortunately, there is a much more formidable obstacle in our path that will not be as yielding -- at least -not in the immediate future. Simply stated our problem is the financial constraints the Department of Defense must face. We have submitted a rock bottom budget to the Congress for Fiscal Year 1971 and are presently facing further Congressional reductions. Even more simply stated, the money needed to take this action cannot be made available at this time without crippling other desperately needed Defense programs. For this reason, I am unable to recommend to the President that recomputation of retired military pay be added to the Defense Department budget until these local conditions improve. The Defense Department is the only Federal agency that must fund its major retirement program as a part of its budget. I realize any position regarding these difficult budget problems may not be understood. I know that each of you feels you are being deprived of income that in rightfully yours. I regret this and truly wish conditions were different. But they are not. And if we are to improve then we must face facts as they are, not as we would wish them so be. President Nixon appreciates your many letters and shares your concern. Let me assure you that some form of recomputation of retired pay will continue to be a goal of this Administration and this Department. We all share the President's earnest hope that we can move forward with it just as soon as the budgetary situation permits. Sincerely, S/Melvin R. Laird Memorandum for Record: Thursday, August 22, 1990 Presidential candidate Richard Nixon - Tricky Dick- was not going to win the election in 1968 as his candidacy was faltering. So in September he came out with the Telegram inclosed of SEPT 13. This telegram went to all quasi-military organizations. They played it up. Historically over one-half of all military retirees have resided in six states: California, Texas, Georgia, Florida, Virginia, and North Carolina; in that order. Naturally he got practically all of the retirees vote, plus a disportionate share of their families. California put him over. Within a few months NAUS admonished us to started write and remind him of his campaign pledge. In response he had his Mickey Mouse Secretary of Defense Mel Laird prepare and distribute the inclosed letter of 11 July 1970. The news media did not receive this letter - only the retirees who wrote to the president. At the very moment that they were drafting this letter, especially note paragraph three, they had already been discussing a plan which was to materialize that same year, i.e., eliminate our earned medical benefit CHAMPUS. This was the primary reason I relocated to rural Illinois as others chose to return to their native locations through out America. In short I was now on my own and thrown under Medicare. Mel's statement, "Perhaps more important, * * * may even become a model whether Federal, State or local." - has to be the JOKE OF THE CENTURY. Memorandum for Record - 24 February 2004 I discovered about five years ago through the FOI that only about 500 copes of this "gem" of a letter were produced. Obviously only those who wrote to the president received this letter. This parasite from WI went on to become Legal Counsel, Reader's Digest.
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