Rocket Bomber - article - retail - commentary - Let's Talk About The Business - Then.

Re: Amazon and Monopoly: *I* certainly see this as a distinct possibility, but then I’m just a bookseller and not a fancy Anti-Trust Lawyer working for the Justice Department: apparently they’re cool with how things are going down.

“Number one: Amazon is, by far, the most book-industry-focused company that is actually active in endeavors much larger than the book business. Barnes & Noble and Ingram are just as focused, but they really don’t go beyond the book business. Google and Apple are, like Amazon, leveraging their book activities into other areas and vice-versa, but they have nowhere near the presence in the book business that Amazon does. (Kobo, which is focused on the book business but has just been bought by a much larger Internet retailer, is still a bit of a wild card in this regard.)”

Competing with Amazon is not an easy thing to do : Posted by Mike Shatzkin, 6 December 2011, The Shatzkin Files [idealog.com]

“Amazon’s acquisition of Goodreads is a textbook example of how modern Internet monopolies can be built,” said Scott Turow, Authors Guild president. “The key is to eliminate or absorb competitors before they pose a serious threat. With its 16 million subscribers, Goodreads could easily have become a competing on-line bookseller, or played a role in directing buyers to a site other than Amazon. Instead, Amazon has scuttled that potential and also squelched what was fast becoming the go-to venue for on-line reviews, attracting far more attention than Amazon for those seeking independent assessment and discussion of books. As those in advertising have long known, the key to driving sales is controlling information.”

from an Author’s Guild Editorial : 29 March 2013, http://www.authorsguild.org

The situation wasn’t always this bleak though – in fact it crept up on us slowly. Fair warning: those of you who love bookstores may get a little depressed reading this.

##

“In 1994 Americans bought $19 billion worth of books. Barnes & Noble and the Borders Group had by then captured a quarter of the market, with independent stores struggling to make up just over another fifth and a skein of book clubs, supermarkets and other outlets accounting for the rest. That same year, 513 million individual books were sold, and seventeen bestsellers each sold more than 1 million copies. Bezos knew that two national distributors, Ingram Book Group and Baker & Taylor, had warehouses holding about 400,000 titles and in the late 1980s had begun converting their inventory list from microfiche to a digital format accessible by computer.”

The Amazon Empire: How the Online Colossus Snuffed Out Competitors and Their Next Battle for Publishing : Steve Wasserman, 3 June 2012, The Nation article reposted at Alternet.org

The Wasserman piece linked above is a long read, but a good one. Please note that in 1994, if the figures/fractions quoted above are correct, then in the year Amazon launched 55% of the total book market was selling outside of bookstores! – we have short memories, it seems, and a long list of assumptions to work through when it comes to book retail. If Amazon were merely displacing book-of-the-month clubs and hoovering up the book retail that (in the 1980s) was happening in grocery stores and newsstands (newsstands! remember those?) then their stratospheric growth has a ready explanation that doesn’t involve the death of book stores.

In 1994 the big-box-bookstores were just getting started: Borders & Waldenbooks were still owned by K-Mart (yes) and hadn’t been spun-off yet, that division consisted of 1,102 mall stores and just 75 Big Boxes; B&N had 268 stores alongside 698 (B. Dalton) mall locations.

(Remember mall bookstores? I used to buy books there every weekend. The local mall had two bookstores in it. Good times, good times.)

“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

[blockquote]
“There are successful people who are just lucky in their investments and successful people who would have done well no matter what. How do you distinguish the lucky investors from the Warren Buffetts and the David Shaws? It’s mathematically impossible to tell the two apart. You have to do it by understanding the people and their strategies and blah, blah, blah. But the longer the period of time they are successful, the easier it is to differentiate: The number of people who can be lucky for a year is large; the number of people who can be lucky for five years is smaller, but it’s still pretty big. The number of people who can be lucky for 30 years, like Warren Buffett, is really small.”

How much of a role has luck played in Amazon’s trajectory?

“Huge. Huge. I believe that all startup companies need a huge amount of luck.”
[/blockquote]

Bezos himself, in an interview with Wired editors, “We interrupt this issue to remind you that the Internet is big. Catching up with Jeff Bezos on Amazon.com, Oprah, and why it’s still Day One…” : Wired Magazine, July 2000 [many thanks to Conde Nast and the fine folks at wired.com for having a searchable archive.]

What did the bookstore ecosystem look like by 1998?

Borders, 1998 [source]
“At March 21, 1999, the Company operated 256 superstores under the Borders name, including one in Singapore, one in Australia, and three in the United Kingdom, 885 mall-based and other bookstores primarily under the Waldenbooks name and 26 bookstores under the Books etc. name in the United Kingdom. The Company also operates an Internet commerce site under the name Borders.com. Borders is one of the nation’s largest specialty coffee retailers with cafe operations in nearly all of its superstores. The Company had consolidated net sales of approximately $2.6 billion in 1998 and $2.3 billion in 1997.”

Borders had yet to cede its website operations to Amazon (tragic, that, in hindsight) and was busy expanding internationally. Note that the mall locations are already starting to close (885, down from 1,102 above)

B&N, 1998 [source, pdf]
“Barnes & Noble, Inc. (Barnes & Noble or the Company), the world’s largest bookseller(*), as of January 30, 1999 operated 1,009 bookstores. Of these 1,009 stores, 520 operate under the Barnes & Noble Booksellers, Bookstop and Bookstar trade names, (50 of which were opened in fiscal 1998), and 489 operate under the B. Dalton Booksellers, Doubleday Book Shops and Scribner’s Bookstore trade names. Through its fifty percent interest in barnesandnoble.com llc (barnesandnoble.com), the Company is also the world’s largest bookseller on the World Wide Web (http://www.barnesandnoble.com) and the exclusive bookseller on America Online (keyword: bn). Barnes & Noble publishes books under its own imprint for exclusive sale through its retail stores, mail-order catalogs and barnesandnoble.com. During fiscal 1998, the Company’s share of the consumer book market was approximately 15%. … The Company’s sales increased 7.5% during fiscal 1998 to $3.006 billion from $2.797 billion during fiscal 1997. The Company’s retail business reported an operating profit of $188.6 million, up 16.0% from last year’s operating profit of $162.7 million.”

that asterisk is “* Based upon information reported in trade publications and public filings.” The claim to the title was a “thing” at the time. We can also see a different mix than Borders: More big boxes and a lot more brands (Bookstop, Bookstar, Doubleday, Scribner’s) showing how B&N was growing via acquisitions, not just new store openings.

Amazon, 1998 [source, pdf]
$609 Million in sales in 1998.

$609 Million, Compared to the $2.6 Billion for Borders and $3 Billion scored by B&N. Oh, and that was up from $147 Million in 1997 (and just $15 million in 1996).

“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]

Also in 1998: Apple’s big product was the iMac (the iPod didn’t follow until 2001). Google got started as a company in September of 1998, following the domain name registration of google.com in 1997, and its origins as a research project of a couple of grad students in 1996.

##

Lawsuits and acquisitions aren’t new:

“In what one legal expert characterized as a victory for Amazon.com and Drugstore.com, the online retailers have settled their legal dispute with Wal-Mart without having to abide by any court injunctions. The retail giant had sued the two online ventures, accusing them of recruiting Wal-Mart execs in order to steal trade secrets.”

Amazon.com, Wal-Mart settle lawsuit : Troy Wolverton, 5 April 1999, c|net News

“The move also suggests that Amazon.com has decided against acquiring Baker & Taylor of Charlotte, N.C., the No. 2 book distributor. Interest in Baker & Taylor rose after Amazon’s main competitor in on-line book sales, Barnes & Noble, said in November that it would buy the biggest book distributor, Ingram Book Group of Nashville, for $600 million.”
Amazon.com Is Adding A Warehouse : David Cay Johnston, 8 January 1999, The New York Times

note: the B&N buyout of Ingram in 1999 obviously didn’t go through. This is a reminder, though, of what-might-have-been. more background:

“For the past ten years, Baker & Taylor in relation to Ingram has looked remarkably similar to Borders in relation to Barnes & Noble. Ingram and B&N are family-owned companies (although B&N has the very significant complication of being publicly traded which, with Ron Burkle as a publicly disaffected shareholder, has been well-reported lately) while B&T and Borders are highly leveraged and controlled by private equity. Ingram and B&N with their long-view management styles have made significant infrastructure investments that the always-looking-for-an-exit B&T and Borders ownerships haven’t matched”

Baker & Taylor has the next big thing in ebooks. Really! : Mike Shatzkin on December 8, 2009, The Shatzkin Files [idealog.com]

[blockquote]
“Ingram, the book distributor that Barnes & Noble acquired last week, supplies Amazon.com, a competing online bookseller, with nearly 60 percent of its books, a regulatory filing disclosed today.

“Barnes & Noble and Ingram have said that the merger will not affect Ingram’s relationships with its customers, including Amazon. But in Amazon’s quarterly 10-Q filing with the Securities and Exchange Commission, the company notes that it ‘does not have long-term contracts or arrangements with most of its vendors guaranteeing the availability of merchandise,’ and that ‘there can be no assurance that the company’s current vendors will continue to sell merchandise to the company on current terms, or that the company will be able to establish new or extend current vendor relationships.’”
[/blockquote]
Ingram dominates Amazon supply : Jeff Pelline, 13 November 1998, c|net News

Let’s go through that again: In November of 1998, B&N had their own website, 15% of the book market, was looking to buy Ingram — the company supplying Amazon with more than half of their inventory at that point — and was being run by a driven, ruthless bastard whose modus operandi was buying up companies to either consolidate operations or just get bigger. Can I remind you that at that point (1999) Riggio had also bought Babbages, Software Etc., and GameStop and had built up this sideline into a chain of 500+ stores?

This raised all-kinds of antitrust flags, apparently, so it’s no wonder the B&N/Ingram merger didn’t go through. I think when the deal went sour, Riggio took a step back to reappraise strategy. GameStop was spun-off into its own company. B&N built a massive warehouse of their own, and took up in-house distribution and logistics like a new religion. This quiet and behind-the-scenes stuff isn’t as flashy as mergers or new store openings, but the efficiences B&N built over the 2000s are part of the reason they’re still open today, after 4 years of recession and shrinking consumer demand.

Amazon borrowed a billion dollars (no exaggeration: they were carrying $1.4 Billion in debt by 1999) to build up the infrastructure they needed following this close call — 15 years ago the market changed, more distribution and warehousing was brought in-house and verticals were built. You might also be forgiven if you pointed to 1999 as the year Amazon changed strategic focus: from building a website and sales portal to building a business.

I find it amazing that in 1999, the owner of a physical, brick-and-mortar bookstore chain was precluded from purchasing a book distributor (even when neither was the only player in their individual markets, and on the cusp of market changes already in motion and being trumpeted by both online-sales advocates and voices in the business press) — and the same sort of monopoly-building in 2012 is not just condoned by the state, but is being actively supported so long as some Justice Department lawyer can buy his ebooks for $9.99 instead of $14.

It is said Amazon has 30% of physical book sales and 60-70% of all e-book sales. 15 years ago, Barnes & Noble was blocked on anti-trust grounds when they had only 15% of the book market. I find this fascinating.

##

Ingram hasn’t been standing still:

“Ingram has long been thought of as the book industry’s quintessential middleman, distributing publishers’ books and other products to thousands of accounts. But over the past five to 10 years, the company has invested tens of millions of dollars to become what Skip Prichard, president and CEO of the Ingram Content Group, called the ‘centerspoke’ of an industry in transition. To meet its mission statement of ‘helping content reach its destination,’ Ingram’s strategy is to offer publishers whatever services they need to operate more efficiently.”

Not Your Father’s Ingram: The Ingram Content Group moves beyond traditional wholesaling : Jim Milliot, 27 September 2010, Publishers Weekly

[I still can’t help but daydream a little bit about the B&N-Ingram-hookup, what might have been. Damn.]

Ingram is probably the only major player who really could give Amazon a run for its money in the CreateSpace/Kindle Direct/alternative-and-self-publishing market — but Ingram isn’t pushing its luck or its advantage yet. In fact, it seems that Ingram is willing to work with established market players, quietly becoming everyone’s back end: “print shop to the world”, a corporate-scale Kinko’s.

##

“I wish we could keep bookstores for cultural reasons, but they are businesses after all. Even if Barnes & Noble (NYSE: BKS) stays in business, there is no guarantee that the physical stores will remain.”

Retailers: The Search to Buy, Not Buy From : Nihar Patel, 20 March 2013, Motley Fool

“This value—this unique something, that physical bookstores provide—may not be sufficient in itself to support a viable business model for more than a handful of a bricks-and-mortar business (as many people believe). But it may provide the key to a online retail experience–one that doesn’t compete with Amazon but provides a real alternative.”

The End of the Beginning of the Future of Bookstores : Peter Turner, 25 July 2012, Ampersand

So. Let’s talk about the business.

Soundtrack:

Rage Fuel:

“That’s because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers. The shareholders put up the equity, and instead of owning a claim on a steady stream of fat profits, they get a claim on a mighty engine of consumer surplus. Amazon sells things to people at prices that seem impossible because it actually is impossible to make money that way.”

Amazon Profits Fall 45 Percent, Still the Most Amazing Company in the World : Matthew Yglesias, 29 January 2013, Slate MoneyBox

#bringit

1. Borders.

Dear Motley Fool bloggers, other tech press, pundits, (and the occasional customer in my store),

Please stop throwing Borders in my face as “proof” that physical bookstores are already dead, and are just staggering around a bit (fatally wounded) before the Final Fall.

Do your research:

Borders Group was formed when K-Mart (yes, let me stress that again: K-Mart) bought the family-owned Borders chain and forcibly merged it with Waldenbooks, instituting an instant culture-clash between the two divisions that in many ways persisted right up until the end. The company most of us were familiar with as “Borders” was spun off in an IPO in 1995; the IPO netted $567 Million but K-Mart still booked a loss of $185 Million, “the difference between what it paid for and invested in the Borders chains and what it was getting for them” [NYT, 26 May 1995]. After a wobbly start, BGP went through 6 CEOs in 10 years, over-extended (including internationally) by taking on debt, and basically surfed the big-box wave instead of innovating or making smart decisions: Things were going fine as long as the retail business was growing, but Borders wasn’t in a position to survive the great recession, let alone compete after. Borders’ last-ditch “digital initiative” was an investment in an ongoing (Canadian) operation, Kobo: not an organically developed add-on for their business, and not ready to go head-to-head in an e-reader (let alone tablet) war.

Borders went down. It was a sort of close thing, there at the end, but without a deep-pocketed buyer or a concession from the publishers (who would’ve hardly been able to absorb it) Borders was doomed.

Borders is hardly proof that the bookstore business is doomed, though. Every business segment has businesses that are either run poorly, or (being generous) at least being run sub-optimally. And books are different: you can’t just hire a “retail” guy with experience in grocery stores and expect him to know anything about books. (I think it’s telling that the best qualified CEO Borders ever hired, Philip M. Pfeffer, former CEO of Random House and a former executive at Ingram, resigned after only 5 months. That was back in 1999.)

2. Amazon.

There is a long history of delivering books – specific titles requested and delivered on demand right to the customer. There was The Book of the Month Club [1926], B&N’s mail-order catalog [acquired in 1979 along with Marboro Books], and even Benjamin Franklin’s book catalog in 1744 – nothing new about ordering or delivering books.

And online shopping?
that’s almost quaint.

[hat tip to Laughing Squid for the video]

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 is 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.)

3. Physical Bookstores.

Many point to the expense of maintaining a nation-wide chain of actual bookstores as the albatros hanging around Barnes & Noble’s neck — and to a lesser extent, also a handicap of all bookstores, but B&N as the market leader and biggest target gets most of the flack for this.

My personal experience is only as one physical location — a fair-sized bookstore at the center of a top 30 market — but only the one store: On a random Tuesday, we’ll have at least 20 customers in the store at all times, starting at 10am, averaging about 30 and peaking at 50-60 during the lunch and 5-6pm rushes. On a Tuesday. We’ll take between 20 and 60 phone calls an hour — these interactions are typically short, but there are times when all 4 phone lines are ringing at once. Oh, you might not have realized: we have 4 phone lines, and a daily call volume that averages around 500. Some of those calls are, “So where exactly are you located?” or “How late are you open?” but even those calls support eventual sales, and most phone calls are a customer looking for a particular book. They may even have found the book online – but they take the time to find our phone number and call us anyway. At any given time, we’ll have two to three hundred books on hold, waiting for customer pickup: some of these are special orders but about half are books that we already had on the shelf and pulled the same day.

A big box bookstore can gross between $2 and $20 Million a year, depending on location, size, and the overall economy. Some bookstores will close, but not all. At least one independent analyst points out that retail book sales (as reported by the US Census Bureau) peaked in 2005, three years before the peak in the number of big box bookstores in 2008 — and that the late 1990s and early aughts in fact represented a big-box-book-store-bubble. If there were only 500 B&N stores (as is perhaps projected) that puts us at 1998 levels, back when B&N was doing $3 Billion a year – $3 Billion that at that date did not include the college bookstore division or any of the Nook-stuff launched since.

Sounds good to me.

In fact: If I told you I had a startup that engaged at least 1000 users every day, that provided a free product but had a built in solution for add-on sales, that was easily scalable past my current single-site implementation, and that I was making $1,000,000 a year off of $5,000,000 in gross receipts, that might sound like decent business. If I told you the costs (physical plant, payroll, inventory) were both fixed and known, and out primary struggle was figuring out how to monetize all the traffic using our site for free, you might be forgiven for thinking I was talking about a web site.

20% is a decent margin, and close to retail average (Wal-Mart is at 22%, if I recall correctly). I can’t divulge acutal numbers; I might mention that I know at least one bookstore that does more than $5 Million a year, even in a recession. And I’m dead serious: we need to figure out how to “monetize our traffic” past selling them some coffee.

I have to employ multiple booksellers to work a collective 20 hours every night just to reshelve books, clean up after our beloved, much-valued patrons and reset the whole store to ‘normal’ — or at least normal enough to do business. That doesn’t include the amount I pay for janitorial services (horror stories about publicly accessable bathrooms is its own post) or the payroll we use to sort and shelve new product: it takes an-average-of-five booksellers working 4-hours-apiece every night just to *recover* the store.

Call this the “social cost” of running a bookstore. The social cost would also include – damaged product (the victims of both spilled coffee and free-range toddlers) – shop wear (books are physical objects subject to the Second Law of Thermodynamics) – outright theft (the bane of all physical retailers), and – being vulnerable to actual social interactions with customers, and having to become the de facto referee or cop for all the unanticipated interactions between customers

Payroll costs aside (I’d estimate this social cost at $90,000 per year, per store) there is also the question of customer experience: If you left early because a smelly homeless person was camped out in the sci-fi corner of your favorite bookstore, how will that affect your decision to return? Do you return?

All bookselling is local: in fact, it can be hyper-local. In the internet age, do you brave in-city traffic and spend a whole 20 minutes in your car to go to the bookstore, or do you just order online? I’ve been told over the phone that a customer “would never” drive to my store, even though the distance (in this case) was a quarter mile. If someone can solve the calculus—where your local bookstore need be no farther than your local Starbucks, and yet still stock everything—that person will make lots and lots of money.

##

4. Ebooks

First assertion – If digital-is-all, and cheaper besides, and kills all physical formats: why do people still go to concerts? Why do they buy vinyl?

Ah.

so does the ‘physical’ version offer something not found in digital transcriptions? Please at least acknowledge the persistance of both concerts and vinyl in what is, in 2013, a completely digital music market in any argument you’re about to throw at me about e- vs. physical books.

Second assertion: ebooks are merely, merely, the New Pulp.

…and that’s fantastic — I’ll explain — but ebooks are not the death-knell of physical books nor the publishers who print them, nor of the bookstores who sell them.

“Paperbacks were and weren’t radical:

“Yes, they were cheaper. While initially introduced as value editions of the classics and bestsellers, soon the lower costs of manufacture induced some publishers to create new works (and whole genres) to take advantage of the format. Stories which might never have seen print due to either ‘lurid’ content or lack of a ‘literary’ appeal suddenly found a new home, and mountains of books were printed to feed the pulp market. Some of these were reprints of material previously available in fiction anthology magazines — a format that is, sadly, mostly extinct — the magazines fed a fan base that later bought the books, and the magazines were a crucible that forged not just the fans of the works but also their creators. Mystery, Romance, and Sci-fi all exist today as genres — popular genres that support their own hardcover releases — because of the decades of pulps… but that would be another essay.

“A paperback book has a floppy cover, but was still recognizable as a book. If one weren’t hung up on the literary ‘value’ and ‘merit’ of a Book-as-object, then the opportunity to buy one at a cheaper price because you want to, you know, enjoy it is a no-brainer. Here was the first movement toward books as popular entertainment, and also provided a way ‘in’, to merge centuries of Pop Culture Trash back into the literary tradition.

“And that was a good thing.

“Shakespeare was once pop entertainment for the masses — not a printed story but one meant to be performed before a crowd, with ribald (read: sexy & suggestive) jokes and bloodshed and body counts and important commentaries on class, authority, race, religion, and — if one can adjust slightly to the Elizabethan world view — also insightful looks into gender equity and relations.

“Nowadays it’s literature; back then it was equivalent to sweeps-week TV sensationalism.

“Later generations will cherry-pick the best of romance, mystery, and sci-fi and hold them up as Fine Literature — while either ignoring their base roots as pulp genres printed by the bushel to feed a near-insatiable market, or romanticizing their ‘common’ roots and attempting to make hay out of the fact that previous critics ignored or dismissed them.”

source: “Form, Content, Copies, Rights, and Plato” : Matt Blind, 17 November 2009, RocketBomber [heh.]

I wrote that in 2009, two years before 50 Shades of Grey — can I call them, or what? Also from 2009:

“The new digital methods and methodologies mean that anyone with a computer, printer, and appropriate software (the cost of core equipment and a nominal set-up fee) is now a ‘printer’ and publisher; in fact, one can publish direct to the web without dirtying a single thin slab of pressed wood pulp. The equivalent of the whole of Gutenberg’s shop will fit on my desk, and I can print copies of the bible faster.

“Where will the new ‘press’ take us?

“Ask me in 400 years.”

Let me describe one of the favorite volumes on my bookshelves: it’s a leather-bound, gilt-edge printing of all 5 Douglas Adams Hitchhiker’s Guide novels in a slightly oversize, all-in-one edition. It’s gorgeous and superfluous, and didn’t even exist until 1997. (a similar edition with only 4 novels was published in 1986.) Is this how I first encountered Douglas Adams? Hell, no: I read the first couple of books from the library, and eventually bought the set in paperback. After reading Hitchhiker’s Guide, I happened upon the Radio Scripts (in a bookstore, isbn 9780330419574) and bought and gobbled those up too. Only later did I find out about the TV show, and eventual movie, and after many years I was also able to listen to the original BBC broadcasts. Amazing, all of it. Do I need to own (or even read) the all-in-one edition, considering my exposure and familiarity with the original? Of course not.

In fact, the very existance of a leather-bound gilt-edged Hitchhiker’s ‘bible’ is part of the joke, and still makes me smile.

Fritz Leiber, Doc Smith, Philip José Farmer, Le Guin, Butler, Campbell, Wolfe, Delany, Asimov — for every author that gets a paperback reprint there are three hundred or more that were almost as good and their books will disappear sooner rather than later.

As an author you’ll get maybe two years after you publish (hardcover or paperback, doesn’t matter) and then you’re consigned to back shelves, dusty corners, and used book stores. If you aren’t putting out a new book every 9 months, you just go there faster — if you can’t keep up (or if you died for some inexcusable reason) then baring a lottery-winning-type “discovery” of your books: your whole back catalogue has probably already been pulped.

The time frame has contracted slightly over the past two decades — most authors were OK if they could manage a book every other year. That said:

The whole book business is and always has been ephemeral. Your eventual fate has always been Out-Of-Print and only your hard work (while you’re still alive) keeps you and your books from sliding into the dark depths of forgotten memory.

E-books are great — and have some built-in cost savings and are ready-built to take advantage of internet multipliers — but are still books, and will eventually suffer the same fate. Forgotten. Unsought for. The files exist, but the links and even the primary sources will succumb to bit rot and you will be just as bloody out-of-print at that point as everyone else: papyrus, parchment, vellum, rag paper, pulp paper, bits — hell, to date the most durable system is cuneifrom; write it out on clay tablets, kiln-fire them, and bury them in the desert.

The other most-durable method has been to gain fame and get everyone to repeat your words. Oddly, this is now frowned upon (“piracy”) so I, for one, am moving out west and buying a kiln.

What do millenia-old clay tablets have to do with e-books and bookstores? Everything.

There have always been three impulses of the author:

first, to be heard (publish!, find and engage the reader)
second, to be remembered (word of mouth, engage more readers, build a readership)
third, get paid (historically: very difficult)

A bard might recite in a tavern for tips or free drinks; a renaissance poet might seek out a patron; a victorian novelist might serialize a novel in installments to subscribers; a 1940s pulp writer might churn out 180-page novels as fast as the typewritter allows.

E- makes all of this “easier” in a way – but you still have to work it. It’s not enough to merely upload a file and wait — and since you’ve killed off traditional publishing [thanks, guys] and traditional bookstores [thanks, Amazon] you no longer have the option of seeking out a publisher and having them do all this hard work for you.

Paperback books—especially mass-market pulp paperbacks—expanded the availability of books, lowered prices, radically changed what was considered ‘economical’, and pushed books into new markets, new genres, new business models, and out to new readers. E-books are already doing the same. Excuse me if I’m not surprised. “It’s a whole new ball game” but from my seat: the game in 2015 is the same as it was a century past.

E-books are books. Your ability as an author (or marketer – are there e-book marketers yet? no? …give it time) is to engage readers with the hope that each engagement leads to sales. Reader engagement can take many forms: direct contact (via author signings, email, facebook, twitter), reviews (great if you have them), online reviews (not so good: most are only seen after a customer has already sought out your book, found it themselves – at best nothing happens, at worst an online review dissuades a purchase), or direct advertising: you could always pay a site (amazon or otherwise) to promote your book for you.

Man, this is hard.

If only we could set up some kind of independent marketplace, where titles could be discovered independently and judged on factors that the author and publisher has control over—-like the actual book cover and dust-jacket copy—and where similar titles are lumped together on a virtual ‘bookshelf’.

Ah.

5. Aside from their size, Amazon has no “special sauce” or secret formula to online retail.

How to beat Amazon? Customer engagement, including serving niche markets — product knowledge, especially for the niche — and after-sale engagement.

Everyone buys geek/joke/novelty t-shirts off of the internet — honestly, these things are everywhere. Everyone has at least one, I have two favorites. But I’d be willing to bet there are more Comics/PopCulture/Crapware (and copy-cat) t-shirts sold off the rack at Target than are sold on Amazon.com. So here’s a question for the Amazon-loyalists: why doesn’t Amazon sell more t-shirts? Why isn’t Amazon known for t-shirt sales and noted in the business press on how effectively they’re outselling and closing down online t-shirt sites?

[to spell it out for you: in the same way Amazon is always mentioned re: bookstores]

I suppose t-shirts are a dynamic market that requires creative inputs, is subject to unpredictable whims of the market, also requires active curation, a buck a shirt isn’t a margin worth bothering with, and there is no single “standardized” geek t-shirt: there are thousands — far from the dry, boring job of listing things for sale elsewhere and undercutting the price by 15¢.

So why doesn’t Amazon stock the cool stuff first? They have the money and resources – do they just not care?

I’m not complaining: I love ThinkGeek, Rightstuf, J-list, Threadless and the many others that make up the geeky side of internet retail. I’m just pointing out that if Amazon can kill off a bookstore: a small online retailer is not just toast, they’re an appetizing slice of toast already topped and set up on Amazon’s tapas and crudité platter for snacking.

In a way, we are lucky because Amazon is lazy, and set up for the lazy.

Amazon is easy, so easy at this point, that most don’t realize that 1. there are cheaper sources or hell, 2. there are in fact other sources. This is exactly where Amazon wanted to be, in fact: Amazon works damn hard at it. BUT: that doesn’t absolve you of being lazy. Amazon knows you’re lazy. They bank on it.

Amazon is not inevitable — “Online” isn’t inevitable either.

Let’s go back to t-shirts. Amazon sells books.

…This isn’t the non-sequitur you think it is.

Amazon sells books, and not only are books set up with unique identifiers: every book publisher buys into that database and there is an independent broker that not only maintains the database, they’re committed to ISO standards and openness so everyone, Amazon included, gets to use the ISBN database. There is a parallel standard of UPC codes and, where applicable, Amazon also uses those for their product descriptions.

Amazon fails in two particulars, however: There are a number of books (CreateSpace & Kindle titles) that have no ISBN (just an Amazon ID or ASIN), and so not only can’t be ordered from other stores, they also aren’t catalogued anywhere but Amazon. For a majority of sources (not just Bowker, but libraries up to and including The Library of Congress) the book might as well not exist. The second major Amazon fail: if there isn’t a handy ISBN or UPC for an item (etsy crafts, say, or geek-oriented t-shirts) they won’t list it.

While simultaneously making it harder for other sites to list their closed-ecosystem books, Amazon refuses to list items unless they they have a barcode and conform to industry standards.

All that cool stuff on Etsy? Amazon can’t compete because they won’t list it. Kickstarter? Amazon can’t compete because they won’t list it (though Amazon does take a chunk because Kickstarter uses Amazon Payments. Bastards.) And of course there are multiple discussion threads about how to get Non-Amazon ebooks on a Kindle

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Other reading and references:

“Over the past few decades there has been a lot of speculation about the demise of the American bookstore and some of it may not be entirely unfounded. As big names like Borders fall under the weight of online retailers, e-books, and electronic forms of entertainment, how can small independent bookstores hope to survive? While things aren’t great for bookstores in America today, they also aren’t quite as bad as they seem.”

12 Stats on the State of Bookstores in America Today : 29 October 2012, Open Education Database

“The book industry is going through changes, influenced by trends like the transition from print to digital. And it looks like no part of this industry is being influenced like bookstores. From independent bookstores to the big chains like B&N and Borders – no one seems to be immune to these changes.”

The Future of Bookstores : 12 October 2012, ecolibris.net

“Zipp credits the fall of Borders and the rise of the ‘buy local’ movement as the two major reasons business has improved for indies. Other advantages independent bookstores hold over their competitors include summer camps, improved websites, and physical expansions.”

Independent bookstores doing better than ever in 2012 : Kirsten Reach, 19 March 2013, Melville House

“We can spare a little thought for Borders. It has a particular relevance for American small towns and suburbs that isn’t apparent in urban centres. In the latter, the chain bookstores are the impersonal monoliths that destroyed small independents by undercutting them on prices. But elsewhere, the arrival of a Borders would mean that a town was finally getting a bookstore, rather than a rack of paperbacks and Sudoku books at the supermarket. (Similarly, while Starbucks might have hurt local coffeeshops in, for example, New York, in rural America it has achieved its stated goal of creating a ‘third space’.)”

Beyond Borders : “E.G.”, 21 March 2011, The Economist

[blockquote]
“That community support is by no means unique to Bank Square Books, and it may be the secret ingredient behind a quiet resurgence of independent bookstores, which were supposed to go the way of the stone tablet – done in first by the national chains, then Amazon, and then e-books.

“A funny thing happened on the way to the funeral.

“While beloved bookstores still close down every year, sales at independent bookstores overall are rising, established independents are expanding, and new ones are popping up from Brooklyn to Big Stone Gap, Va. Bookstore owners credit the modest increases to everything from the shuttering of Borders to the rise of the ‘buy local’ movement to a get-‘er-done outlook among the indies that would shame Larry the Cable Guy. If they have to sell cheesecake or run a summer camp to survive, add it to the to-do list.” [/blockquote]

The novel resurgence of independent bookstores : Yvonne Zipp, 17 March 2013, Christian Science Monitor

“EBay Inc. is aiming to nearly double the active-user count on its eBay.com marketplace over the next three years, as well as the volume of payments processed by its PayPal unit. … EBay expects to report between $21.5 billion and $23.5 billion in revenue for 2015, compared with $14 billion last year.”

eBay Says It Is “Now Playing Offense” : Greg Bensinger, 28 March 2013, Wall Street Journal article teased at All Things D [owned by the same company, and of course the WSJ is behind a paywall]

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I’ve made some accusations about Amazon’s mercenary sales efforts to date; I’ve linked to original sources where possible, but I might be wrong…

I’ll gladly post a retraction&correction if Amazon would care to comment: as to whether CreateSpace and/or KDP titles are in fact submitted to the Library of Congress, when they plan to acquire a block of ISBNs to accomodate KDP digital-first authors who wish to sell their wares on other platforms (or even into bookstores), when Amazon will fully participate in industry-standard systems for all their associates (after drawing so much value from these open, industry-standard systems), and whether their commitment to sales over digital publishing platforms is matched by an equal commitment to open digital formats, the public domain, and non-profit archiving efforts similar to but not limited to archive.org.