Rocket Bomber - article - business - bookselling - Amazon - the Book Utility Company


Amazon, the Book Utility Company

filed under , 1 March 2014, 11:07 by

“Therein lies the rub. Publishing on your own website is still just too damn geeky. The siren-call of the silos is backed up with genuinely powerful, easy to use, well-designed tools. I don’t know if independent publishing can ever compete with that. In all likelihood, the independent web will never be able to match the power and reach of the silos. But that won’t stop me (and others) from owning our own words. If nothing else, we can at least demonstrate that the independent path is an option—even if that option requires more effort.”
In dependence : Jeremy Keith, 28 December 2013, Adactio.com

“I made a million dollars last year from self-publishing. I’ve found that, without gatekeepers, I can reach readers much easier. And readers are much more eager to buy me when I control cover, cost, and jacket blurbs, as evidenced by the fact that I’ve made 8x as much as a self-publisher as I did with my legacy contracts.
“Readers don’t care who the publisher is. They don’t care if the work is agented. They care about quality and price, and are able to find books they like without any gatekeepers other than each other and the increasingly adaptive ability for websites like Amazon to understand readers’ tastes.
“As an agent, you could be helping your clients make important decisions about self-publishing. That is, if you are pro-client. That might mean advising them to pass up a bad deal and go solo.”
Questions for Literary Agent David Gernert : Joe Konrath, 24 January 2014, jakonrath.blogspot.com

Neither online sales nor ebooks were original to Amazon, but Amazon has had a lot of success selling their brand to the public and have gained mindshare that in a way is even more important than their market share.

Amazon’s user base makes it a default social media site, smaller than Facebook or Twitter but more important because every Amazon account has a real name, address, and credit card attached — and that’s even before we consider Amazon also knows every shopper’s browsing and buying history.

“One-third of consumers now begin their online shopping expeditions on the site, comparing models, specs, prices and customer reviews for an expansive assortment that spans not just Amazon’s inventory but that of its more than 2 million third-party Marketplace affiliates, which comprise nearly 40 percent of the company’s unit volume. Other features like one-click ordering, tailored product recommendations, a no-hassle return policy and free two-day shipping with a $79 membership in the Amazon Prime program has made it the go-to merchant for more than 200 million regular shoppers worldwide.”
Amazon.com Growth Creating New CE Retail Paradigms, Challenges : Alan Wolf, 2 June 2013, Twice Magazine

“Combine the 2 formats and Amazon may have a market share for some categories of books over 50%. And that market share will continue to grow as more and more books are sold in electronic form, since Amazon’s market share for ebooks is even greater than for print. So we should not be surprised to wake up one day to find that Amazon is responsible for the sale of as much as two-thirds of all the books sold outside of libraries in the U.S. (Note to DOJ: I said ‘wake up’ for a reason.)
“A rival to Amazon will be hard to come by.”
Who Can Rival Amazon? : Joseph Esposito, 22 January 2014, The Scholarly Kitchen

“Amazon has succeeded building an ecommerce and customer relationship platform that customers love. It’s a combination of a superb user interface, extraordinarily skilled analysis of customer data and a genius logistics system.
“The comment in the article about ‘the tools of ecommerce’ being readily available for competitors reflects a lack of understanding about how hard it is to do what Amazon does. Randy Penguin doesn’t have the money or talent to do it. Neither does Apple. (Yes, PG knows Apple sells a bazillion apps and songs each year, but do you really think iTunes is even in the same universe as Amazon’s store?)
“Nobody in the publishing business can displace Amazon at this point and probably forever. The intellectual and technical bandwidth is just not there.”
Commentary on the Scholarly Kitchen post above, at The Passive Voice

“8. It has been happening quietly but it has been happening: we increasingly have two separately-operating book businesses: Amazon’s and everybody else’s. This starts with the numbering system: Amazon uses its own ASINs, rather than depending on everybody else’s ISBNs. It extends to the titles available: Amazon has an untold number, but certainly hundreds of thousands, that it either publishes exclusively or which authors or small presses publish exclusively through them. And it has service offerings from Kindle Owners Lending Library to its recent Matchbook offer to pair ebook and print sales, which range from ‘extremely difficult’ to ‘impossible’ for any other publisher-retailer combination to match. How far can this go? Can Amazon create a closed world which is more profitable for an author or publisher than the whole world that includes everybody else? Or have they already?”
Nine places to look in 2014 to predict the future of publishing : Mike Shatzkin, 1 January 2014, The Shatzkin Files www.idealog.com/blog
“1. What’s going to happen with retail shelf space for books? The market for the kind of narrative reading that comprises the bestseller lists has gone anywhere from half to three-quarters online, ebooks and print combined. The rate of movement has slowed, but it hasn’t stopped. It has now been two full years since Borders shut. Barnes & Noble continues to close stores as leases expire. Independents are, anecdotally, reported to be holding their own, but they’re definitely challenged to deliver on the online component and, so far, the successes have depended on individual entrepreneurs running good local stores, not any formula that is replicable or scalable. When will we see a stable ‘floor’ for bookstores, a sustainable foundation from which year-to-year fluctuations won’t persistently be down? I don’t think it will be in 2014, but it’s the most important bunch of tea leaves to read for some segments of the business.”
ibid.

“There’s this tendency among advocates to compare the absolute worst of the enemy with the perfect, best case scenario on your own side. The crowd that is hostile to self-publishing often likes to compare the worst dinosaur porn (which still sold, though, and made more money than many other titles) to one of those wonderful, Never-Neverland publishing companies that to this day invests massively in editors, doesn’t use exploitative covers, spends its untold riches on making the book’s typography absolutely perfect, has a workflow that spits out beautiful, error-free ebooks with ease, gives every author a personal PR rep, and has a multi-million dollar marketing budget for every title.
Of course self-publishing looks bad when you compare it with a piece of fiction that’s less realistic than the more deranged parts of Alice in Wonderland.
“The reality is that book retail has been steadily deteriorating over the years and publishers themselves have been compromised by decades of cost-cutting. Most book sales are online. Titles today get much less editorial attention than similar titles did years ago. Covers have always been completely disconnected from the book’s actual content.
“In terms of marketing, quality, distribution and design the difference between a competently published book and a competently self-published one is now less than you think. Competent self-publishing is getting easier every year as tools and services improve. Publishers offer less and less as they try to stay competitive through cost cuts and ‘optimisations’. Over time publishers seem to be devolving into self-publishing services that offer little but demand everything.”
Except, except, except : Baldur Bjarnason, 23 January 2014, Studio Tendra

We may already be at the point where Amazon is Too Big To Fight. Not that it can’t be done; I’d be willing to bet most stupid/funny t-shirts are sold from non-Amazon sites and iTunes (which truly and horrifically sucks) still beats Amazon in music sales. Freedom is still possible even under the Eye of Bezos, so long as his attention is elsewhere.

“Amazon is the largest online retailer globally, and it got to be that way because of books. Jeff Bezos started Amazon in 1994 after identifying a market that was poorly managed by traditional stakeholders, and made it more convenient for consumers to access the products they wanted. Early investment in the Kindle platform, consisting of ereading devices, tablets, and apps, took foresight that was lacking in the traditional book industry and helped Amazon come to dominate the ebook market worldwide.”
Comment: How I learned to stop worrying and love Amazon : Anne Treasure, 21 November 2013, sbs.com.au

The Authors Guild Should Embrace Amazon as a Friend to Writers and Readers. Until publishers make these changes, the Authors Guild should be celebrating Amazon for increasing readership, increasing the diversity of published voices, lowering prices for readers while also increasing royalties for writers, and revolutionizing reading in a way that keeps it relevant. Blaming Amazon for the move of goods out of physical stores and onto online stores is ridiculous. This is the inevitable result of the creation of the internet. This is the freedom of shoppers to choose. It was going to happen, no matter what. And here’s something that I doubt has been said before: Thank God it was Amazon.
“Think about it for a moment. It could have been WalMart or Costco or a number of other massive retailers who began shipping books at a discount through an online portal. It could have been a retail giant that sells everything that began to sell books online. Instead, it was an online bookseller who branched out into other products. There is a massive difference. The love of books remains at the heart of Amazon. Those who have worked with the people behind that smiling logo know this. From Jeff Bezos (who married a writer and started out by selling books out of his garage) down to the people I met on the factory floor of the CreateSpace printing facility, I’ve never been around a group who loves books more. The Authors Guild should be championing Amazon for what they’ve done for readers and writers. The pressure for fairer contracts and wages is coming primarily from here. The champion for the status quo and more abuses is coming from the guild of my profession. Dystopian novels can’t satirize this sort of thing without being mocked for being ridiculous.” [emphasis in original]
Bread and Roses : Hugh C. Howey, 24 January 2014, hughhowey.com

To Howey’s point, Bezos may love books; I have no way of confirming or denying that. But my bet is that Bezos loves money more.

“I have seen the future of Amazon.com, and it looks like Wal-Mart. This may come as a surprise to those who are accustomed to thinking of Amazon.com as a bookstore. After all, books are what the company is known for, and Amazon.com promotes itself as ‘Earth’s biggest bookstore.’ But books are just the tip of the iceberg. It’s widely known that founder and CEO Jeff Bezos, when he was starting out, made a list of products that would be well-suited to Web sales. Books topped that list — but they’re clearly not the only things on it. In fact, Amazon.com’s recent acquisition of Junglee Corp. (announced as this column went to press) confirms the bookseller’s intention of getting into a broader retail market: Junglee makes software agents that facilitate online shopping. Why do you think Bezos chose a generic name like ‘Amazon’ anyhow? It’s sheer size that Bezos cares about, not just books.”
No mere bookstore, Amazon.com wants to be an online retail giant : Dylan Tweney, 10 August 1998, Net Prophet [dylan.tweney.com]

[blockquote]

“Amazon had three things going for it in the early days (four, if you count the drive and ambition of Bezos): Books already had a computerized database (since 1986 in fact), books already had a nation-wide distribution network built to service bookstores (Ingram et al., op. cit.), and one of those book warehouses (one of the largest) was just six hours away in Oregon.
“Amazon’s twist on book delivery was the cash conversion cycle: they sell you a book, then they buy it and ship it, then they charge your card, and only at some later date do they lazily get around to paying their source for the book. (standard payment terms on books used to be 90 days – plenty of time to deliver book, claim payment, and then sit on that cash or park it in a short-term CD.)
“Amazon didn’t even need a lot of inventory to launch (they used a garage) because of this neat trick — and of course I know they do things differently now, with distribution centers all over the place and same-day delivery in some markets (integrated verticals are more efficient, and cost effective) — but this is how they built an empire on nothing. Well, not nothing nothing, I mean: Bezos was a former investment banker (presumably not worrying about rent or groceries) and was able to tap his Dad for a quarter million. (well, that’s not quite true: $100,000 came from his dad, the other $145,000 came from his father’s trust fund — the more I dig into this the more it spikes my blood pressure)
“So Amazon was a truly Great idea (though not 100% original) and had some really great implementation — but the ‘great idea’ wasn’t the website or the back-end software or servers, or even the product. Amazon succeeded because of timing, luck, starting with ‘a’ (a big deal in the pre-Google Yahoo Directory days), and most importantly: because of creative accounting. Amazon was not launched by a genius and engineeer who invented something amazing — Amazon was not a new iteration of an old service, computer-aided and internet-enabled, to add value to an older sales model — Amazon was not the obvious and organic outreach of a bookseller determined to reach all readers, no matter how isolated —
“Amazon was the brainchild of a banker, and exists to make money. (Extra points go to Bezos for figuring out how to make money without returning any to his shareholders.)”
[/blockquote]
Let’s Talk About The Business, Then. : Rocket Bomber, 8 May 2013 — minor edits for clarity.

“Back in 1994, Jeff Bezos was a young senior vice president on the rise at a thriving Wall Street hedge fund. But when the explosive growth of the World Wide Web caught his eye, he saw an even bigger opportunity: online commerce. Two years later Bezos, CEO of the Internet bookstore Amazon.com, is one of a crew of young entrepreneurs using cyberspace technology to steal real-world customers from traditional businesses with strong consumer and industrial franchises.”
The Next Big Thing: A Bookstore? Amazon.com is leading a wave of digital shops out to invade established industries. : Michael H. Martin, 9 December 1996, Fortune Magazine archived at money.cnn.com

“Bezos first got the idea to start an Internet enterprise in 1994. While surfing the Internet in search of new ventures for D.E. Shaw & Co. to invest in, he came across the statistic that World Wide Web usage was growing by 2,300 percent a month. Bezos immediately recognized the expansive possibilities of selling online and began exploring the entrepreneurial possibilities of developing an Internet business.
“He drew up a list of 20 potential products he thought might sell well via the Internet, including software, CDs and books. After reviewing the list, books were the obvious choice, primarily because of the sheer number of titles in existence. Bezos realized that while even the largest superstores could stock only a few hundred thousand books, a mere fraction of what is available, a ‘virtual’ bookstore could offer millions of titles. The die was cast. Bezos passed up a fat bonus, packed his wife, MacKenzie, and their dog, Kamala (named after an obscure ‘Star Trek’ character), and headed for Seattle.
“For Bezos, Seattle was the ideal city for his new business. Not only was it home to a tremendous pool of high-tech talent, it was also in close proximity to Ingram Book Group’s Oregon warehouse. While MacKenzie drove, Jeff spent the trip pecking out a business plan on a laptop computer and calling prospective investors on a cell phone. With $1 million raised from family and friends, Bezos rented a house in Seattle and set up his business in the garage.”
Jeff Bezos: The King Of E-Commerce, unattributed and undated (from ’5 years ago’) article at Entrepreneur Magazine’s website [entrepreneur.com]

I Don’t Hate Amazon. No, really. I’m coming to terms with them, and of course, like everyone else, I’m an Amazon customer. [primarily for MP3 music files; iTunes sucks.]

But is Amazon a “savior” of authors and readers, rescuing us from the predations of the Evil Publishing Companies and leading us to the promised land?

“Amazon achieved the position it has in the book ecosystem through a combination of brilliance, execution, natural forces, and some good luck but, above all, focus. It had to take some big chances with pricing and margin to get where it has gotten, but that’s not really necessary anymore. Doing some very logical and natural things, like the new Matchbook program and rolling out more subscription and pricing offerings (like their new ‘Countdown Clock’ discounts for new Kindle titles) will keep their share growing and their competitors scrambling. They will also almost certainly be coming after publishers for more margin (as will their equally dominant counterparts on the store side, Barnes & Noble), but it would seem unlikely that they’ll see the need to extend themselves to sign up authors or build out their ability to distribute print to other people’s stores.

“[T]he good news for publishers is that the business they now have will look less and less appealing compared to other worlds Amazon might conquer. That should save them from having a bulls-eye on their backs, but it will remain a very challenging environment where their biggest customer is the most powerful force in the marketplace and growth outside that customer is harder and harder to achieve. The publishing activities of Amazon will continue to get bigger; the industry of other publishers will continue to get smaller. But we are probably in for a period of slow and steady shifts rather than cataclysms.”
Amazon might lose interest in total hegemony over the book business before they achieve it : Mike Shatzkin, 5 November 2013, The Shatzkin Files www.idealog.com/blog

“I think printed books and eBooks will exist side by side for a long time yet, even as LPs are still around alongside the iPod. And they will definitely come in handy after the zombie apocalypse, because they don’t require batteries. Just be careful with your glasses, Burgess. There’s no adjusting the font size on paper.”
Scott Pearson, 3 November 2013 : Enemy Lines: Dispatches from a Cranky Writer scottmpearson.tumblr.com/

“Still, I don’t think it’s really fair for publishers to blame Amazon for the fact that people like to do their shopping online, and that easily-digitizable content is going to exist mainly in a virtual world rather than the real world. Indeed, there’s an argument that Amazon has saved the publishing industry from going the way of the record labels — that it’s made buying e-books so easy that the number of free pirated versions out there is still tiny. (Amazon has made it easier to find second-hand books, which publishers don’t directly benefit from, but at the same time it’s at the forefront of pushing e-books, which can’t be resold after you’ve bought them. Net-net, let’s call that one a wash.)
“Publishers have always been conservative, and Amazon represents a massive change in their industry. What’s more, the move from small booksellers to B&N to Amazon has been a move where the booksellers have ever-increasing amounts of leverage over the publishers; it’s understandable that the publishers don’t like that. But I just can’t believe that Amazon is, or would ever want to be, an existential threat to the publishing industry.”
Is Amazon bad for publishers? : Felix Salmon, 3 November 2013, Reuters Analysis & Opinion blogs.reuters.com/us/; Felix Salmon blogs.reuters.com/felix-salmon/

“Amazon has always been about disintermediation and squeezing margins. What better way to do so than by cutting out one of the foodchain’s biggest pieces, the publisher. Horror stories have always been told of how certain bestsellers were rejected by editors from multiple publishing houses. And just how much value does the typical publisher add to a book these days? That’s become a very difficult question for publishers to answer, especially in light of all the self-publishing options that offer significantly higher royalty rates. Amazon continues creating new imprints and adding staff. Don’t let flops like Tim Ferris’ latest book throw you off; Bezos always takes the long-term view, so a few high-profile disappointments won’t deter Amazon’s plans.”
Kindle Singles and the future of ebooks : Joe Wikert, 21 October 2013, jwikert.typepad.com

“In an Amazon world, particularly with free Prime shipping, the idea of a shopping trip begins to feel inefficient. If you think of something you need, just pull up Amazon and order it, then get on with more important things in your life. PG routinely orders all sorts of non-book things from Amazon that he formerly bought at various retail stores.
“If you hear about an interesting book (or, more likely, read about one online), why worry about making a mental note to look for it out the next time you visit a bookstore? Just download the sample and check it out at your next break. Watching TV and see someone talking about an interesting book? Pick up your tablet and download a sample or buy the book if it really sounds great.
“Browsing for books is something PG sort of does all the time, not just when he’s visiting a bookstore. For him, serendipity happens constantly and almost everywhere.”
The Absence Of Serendipity, Or, Why I Hate Shopping At Amazon : 22 November 2013, The Passive Voice

The Guardian reported that 98 UK publishers went out of business over the past year, an increase of 42% over the year before

“Indeed, as the paper points out, it is ‘niche academic and educational publishers’ that are ‘particularly vulnerable,’ because their business model is under attack by digital piracy as well as secondhand book sales on sites like Amazon Marketplace. Cork said, ‘The arrival of Amazon has transformed the secondhand book trade from a fairly minor nuisance to a serious threat. Where once you had to trawl the secondhand bookshops if you wanted to get hold of a cheap hardback or academic book, you can now be fairly certain of getting hold of what you want at the click of a button, and the publisher will not make a penny.’
“Another factor, of course, is the explosive growth in sales of ebooks, whose lower price has also helped to undermine publisher’s margins.”
What’s Driving UK Publishers Out of Business? : Dennis Abrams, 8 November 2013, Publishing Perspectives : The Guardian article cited is “Ebooks and discounts drive 98 publishers out of business”, 4 November 2013

“After writing more than 20 books, with major publishers behind them, I have found it increasingly difficult to get new ideas accepted. It is also frustrating as a writer to have a non-fiction book that is up-to-the-minute when ‘completed’, only for it to come out maybe nine months later and seem slightly dated.
“So I have ventured into the self-publishing ebook market with Breaking the Silence: The Films of John Pilger. My original book about the journalist’s documentaries was published by Bloomsbury in 2001, but that was 12 years ago and Pilger is still going strong, with an even greater body of work. Suggestions that the book might be updated have been declined – the general feeling of publishers seems to be that it has ‘been done’.
“In setting about doing the job myself, I soon discovered some major advantages. Once written, an ebook can be published at the click of a computer’s mouse. When I started, Pilger was making his latest documentary, Utopia (in cinemas now and on television and DVD next month), and I have been able to give the book added impact by tying in with its release. How many of the big publishers can do that?”
Fact: Self-publishing my non-fiction as ebooks makes sense : Anthony Hayward, 19 November 2013, The Guardian online, books section http://www.theguardian.com/books

“A friend of mine who is a longtime independent sales rep says that even the successful indies are finding it necessary to sell books and other things — cards, gifts, chotchkes — to survive. The mega-bookstore with 75,000 or 100,000 titles or more was a magnet for customers in the 1970s, 80s, and 90s. It isn’t so much anymore because the multi-million title bookstore is available through anybody’s computer. This is a fact that makes the number of successful stores a weak indicator of the distribution potential available to publishers. If replacement stores carry half the inventory of the ones that go out, we can have a lot of indie retail success stories but still a shrinking ecosystem into which publishers distribute their books.”
The future of bookstores is the key to understanding the future of publishing : Mike Shatzkin, 23 January 2014, The Shatzkin Files www.idealog.com/blog

“And there’s one presumption that seems like a real doozy: Knowing that a large portion of book sales are still in paper, Howey assumes the continued existence of bookstores. These days, that seems like a very shaky assumption. Recently, Jeff Jordan, formerly CEO of OpenTable and now an investor at the firm of Andreesen-Horozwitz, declared that the tipping point for e-commerce, particularly for media, has been reached. This is not a particularly data laden or insightful declaration; his post includes unsurprising monotonic trend lines for digital sales for consumer goods categories. However, Jordan is right to point out the inexorability of this transition: conversion to digital commerce is likely to be a unidirectional phenomenon, because at heart, digital distribution is cheaper.”
Been Down So Long : Peter Brantley, 25 January 2014, PWxyz blogs.publishersweekly.com/blogs/PWxyz/

“Here’s the hard truth about bookstores — and yes, I need to write a long post on this — no bookstore carries every book published that week, let alone that month or that year. When I was travelling last week, I stopped in bookstore after bookstore, from Hudson News to Powell’s to some other indies whose names my tired brain can’t remember, and none of them had one of my favorite mystery author’s latest book. He’s a New York Times bestseller and his book came out the day I left. I had special-ordered a copy, and figured I would regret it, because I’d see it everywhere. Instead, I saw it nowhere.
“That’s pretty common these days. Not even the Times bestsellers are getting physical shelf space.
“Why? Because bookstores now have virtual catalogs, and the authors their customers buy less frequently aren’t on the shelf, but in the virtual catalog.”
The Business Rusch: Pricing Part 2 Or (Discoverability Part 7 Continued) : Kristine Kathryn Rusch, 22 January 2014, kriswrites.com

“This has really been Amazon’s secret sauce from the beginning. The book publishing industry scratched its collective head for years as Jeff Bezos and his crew grew a giant online bookseller without keeping much margin and had Wall Street shovel money at them to grow and invest. The widespread wisdom in publishing in the late 1990s was that Amazon was performing some kind of parlor trick that would shortly come to an end. Instead, they built on their customer base, their tech, and their reputation for service to expand way beyond book retailing. And today they can afford to run a profit-less book retailing and publishing operation (if they want to; I have no evidence that they don’t make profits and don’t claim to know), taking the margin out of the game in a way that would squeeze any competitor trying to make a profit from book retailing.”
Book publishing may not remain a stand-alone industry and book retailing will demonstrate that first : Mike Shatzkin, 29 January 2014, The Shatzkin Files www.idealog.com/blog

Of course, I’m sure I’m just overthinking it.

“In the old days things were much clearer. All you had to do to call yourself a writer was publish a book, which meant you needed someone else to publish it – and someone else to buy it. It may have been a myth that published authors were making money out of writing, but the illusion left the word ‘writer’ meaning at least something. If the cosy settlement that existed for a while between copyright law and the printing press was ‘just a blip’, as Neil Gaiman suggests, if the prospects for making a living out of storytelling are as bleak as the surveys report, then we can’t expect to reserve the term ‘writer’ for authors who have found commercial success.
“Maybe we should just admit defeat. Maybe the digital revolution has simply revealed the tensions in a concept that exploded into meaninglessness long ago. Maybe we should abandon the idea of a class of people who are different, a class of people who are ‘writers’, and just get on with the glorious, messy business of reading and writing.”
Does digital publishing mean the death of the author? : Richard Lea, 23 January 2014, The Guardian online, books section http://www.theguardian.com/books



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