All your base are belong to AMAZON

Eoin Purcell

Sometimes you get tired of being outmaneuvered
In some senses, what Amazon launched yesterday with Amazon Encore is neither that amazing a project, after all there have been several small-press or self-published titles taken on board by large publishers as I’ve mentioned on this blog before, nor is it even that innovative, Authonomy is at its core a way to tap the self published and slush-piled manuscripts out there in the wild.

But the key point is that this moves Amazon directly into the role of publisher as James Bridle makes clear on his post on the topic:

It’s been a while coming, but some of us have been predicting this move for some time: Amazon have finally made it to the penultimate step on the publishing chain. I say penultimate, because although they are now, by any definition, a publisher, they still appear to be cherry-picking from existing books rather than seeking out their own authors.

I think this move suggests a couple of key questions:

    1) Who benefits most from this (and conversely who hurts the most because of it)?
    2) Can it be extended?
    3) Will there be a reaction?

First, Cui bono
On the face of it, this seems like an amazing opportunity for the author, reading her Amazon blog she certainly seems happy. Amazon’s platform (and as Personanondata point out platform is pretty key) allows for so many things that the average (or small press) publisher cannot. View for instance the neat homemade (and windy) video that amazon have on the main product page. The extra push that Amazon can give a product is really impressive. It will certainly be interesting to see how this works. I think it is fair to say then that the author gets a fair shake of this tail, though it would be interesting to see how the royalties split out.

As for the publisher who backed the book in the first place (always assuming that this encore element remains true) the deal is a win-win. So long, that is as rights for the project were acquired to begin with. A smart author would try and retain the rights for any potential Amazon Encore deal if that was even remotely possible. but allowing for the rights being with the publisher, they will surely gain something from the deal, though if the split of revenue is as one sided as in the case of the new amazon blogs-on-kindle deal (70-30 in favour of amazon) it’ll not be a huge amount. So there is a sense that the publishers who are “chosen” will benefit. But a note of caution from two sources Personanondata & James:

Amazon as producer is a subtle but important change in the operations of the largest retailer. I often mull what would happen to some of the largest publishers if they lost their top two or three authors to Google or Amazon. It may be that the Amazon Encore program sets the stage for a much larger program by Amazon to establish their own publishing and media production operation – their content supply – that feeds their retail presence. There may be further ramifications from this seemingly innocuous press release.

Those who suggest they’ll just keep picking stuff up from the little guys hasn’t been paying attention. In the last five years Amazon have, in addition to dominating online bookselling, bought a book social network, a major print-on-demand supplier, a complete end-to-end self-publishing system, pretty much the entire used books marketplace, the biggest audiobook distributor, the best iPhone ereader, and designed, built and delivered the only truly mass-market dedicated ereading device, with a proprietary format that sets them up to be the iTunes of eBooks.*
It’s big, it’s scary, it’s Amazon. But the publishing industry is under so many different pressures at the moment, this is unlikely to be as big as it could be: Amazon don’t want to annoy their major suppliers, not too much, and not yet. They will though, and by that point, they’ll be past caring. Like Google with their ebooks programme, they’ve been given so much leeway for so long, they think they can do whatever they like, and chances are, they’re right.

So, there is a benefit but they might just eat publishers lunch next week, next month, next year or next decade!

Second, Extension
Sure this can be extended and it is clearly being set up to do so. Amazon is in a great place to carry out their program to almost any conceivable scale. That in itself should indicate that they intend to extend. If you don’t believe it look at what Barnes & Noble have done in Classics and Rediscovered titles and you will get the idea.

But add to it the previously mentioned POD set up, they wouldn’t even need to expend extra capital on print runs, they’d be able to deliver books on demand so even if a huge proportion of the titles failed, their costs would be lower than the major publishers and the bookstore publishers too. That competitive advantage would be added to the fact that they wouldn’t have to pay a retailers discount unless they were selling to the retailers themselves. In effect, aside from what the author and their agents can grab from the chain, Amazon with Encore has successfully placed itself in control of the entire value chain of which I wrote some more about last week but didn’t quite count this in.

And third, reaction
In many ways, there is nothing publishers can do. Amazon is a major customer and now (or for some time quietly) a competitor. No action that publisher can take in the short term will change that. In order to really reaction, publishers will need to change the came with a much longer term and strategic move. So far most of the discussion seems to centre on the idea of community building and niche curating. I think this is certainly a useful suggestion though as I have mentioned before, the other arm of Amazon’s tool shed (self-publishing & POD( suggest that even that niche strategy may not be a feasible bolt hole.

Conclusion
The long and the short of it is the best reaction is to wait-and-see, to plan and to strategize and quietly (or nosily if you wish) put in place the blocks that will move your position away from an over dependence on Amazon. To that end I am pleased that Ireland is as yet somewhat immune to the Amazon leviathan. Despite our proximity to the UK market, sales through Amazon remain somewhat restrained, firstly by postage and secondly I think, by the more conservative nature of the Irish consumer who seem to be a bit slower in embracing internet retailers (not that some people aren’t taking advantage of the bargains available online).

Still tired of being outmaneuvered but thinking through how best to react in the long term.
Eoin

PS: For those who don’t get the title reference see here

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12 comments

  1. Cherry picking, yes, but from books that other publishers had a chance to pick up but didn’t for whatever reason. The difference is that the initial cost (preparation, printing) still lays with the self published author, but amazon is able to – at no cost to itself – gather marketing data from the books sales and reviews before they have to spend a penny on the book. I don’t think this is going to be POD either, because amazon stated they are teaming with a distributor to have the books in bookstores. Plus, POD is still more expensive than mass producing books.

    1. Hey Argonaut,

      I think if you look at the program as it stands you are right on the cherry-picking, but I suspect going forward this will move to books that have been previously unpublished, it is a fairly logical step.

      As to the POD element the key factor there will be whether the capital employed to print a full scale print-run is too high and the return on that capital is too low to warrant using POD, which although it delivers a higher price per unit has the merit of reducing the capital employed in a given project and keep stock to a minimum, in a well managed supply chain that can yield significant savings. Given that they own the pod presses, I wouldn’t rule out Amazon’s ability to profit more from POD than a traditional print in bulk model!

      That said, if the trade orders are very high then clearly an traditional run would be sensible! There is a part of me though that doesn’t see that happening (at least for the first title).

      The value of the sales and marketing data that Amazon is gather by the way is truly very valuable. It would be interesting to see the number behind this decision and get a sense of what other books might be on their horizon.

      Eoin

  2. Yup – that data is incredibly valuable, and Amazon is holding onto it very very tightly. They know who the customers are, what they are reading, and what they might want to read…sort of stuff that comes in handy when you are either producing content or picking it up cheaply from bloggers. Just as they have with publishers, Amazon is dangling a carrot in front of bloggers-the promise of quick cash and wider distribution — but they’re not being entirely clear and/or forthcoming about what they’re asking for in return. The “rights granted” clause of the Amazon Blog contract is murky at best. And, looking at their history, I’d wager they will be looking to exploit everything they can get away with out of bloggers and authors.
    Great post, btw.

    1. Their first author is using a reputable agent. I googled her, Kevan Lyon, formerly of the Dijkstra Agency and now on her own, so I hope they’ve achieved terms similar to what traditional publishers would offer.

      As far as publishing the unpublished – this can only be good for authors, one more competitor in the business. Though if they published an unpublished author they wouldn’t have the marketing data they have for the self published and it would be more of a gamble.

      1. For authors I think this sure offers some incentives, though it’s hard to know whether the terms will be favourable even with an agent!

        Depending on the type of data collected by amazon and I strongly suspect they have the right kind as Kat points out, they will have good info on who would be a better risk that most individual publishers do!

        The question of how good this is for authors will become very relevant when the only choice is amazon in ten, twenty or thirty years time!

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