It’s been a couple of days, and although it seems like the furor has died down a bit, a lot has been going on behind the scenes. I’ve got links to several press releases below, and there’s an announcement from Amazon UK that’s got some people upset.
But first, an update on the Amazon/BookSurge story.
The Authors Guild sent this e-mail to its members today. It says, in part,
Ingram Industries’ Lightning Source is currently the dominant printer for on-demand titles, and appears to be quite efficient at its task. They ship on-demand titles shortly after they are ordered through Amazon directly to the customer. It’s a nice business for Ingram, since they get a percentage of the sales and a printing fee for every on-demand book they ship. Amazon would be foolish not to covet that business.
What’s the rub? Once Amazon owns the supply chain, it has effective control of much of the “long tail” of publishing — the enormous number of titles that sell in low volumes but which, in aggregate, make a lot of money for the aggregator. Since Amazon has a firm grip on the retailing of these books (it’s uneconomic for physical book stores to stock many of these titles), owning the supply chain would allow it to easily increase its profit margins on these books: it need only insist on buying at a deeper discount — or it can choose to charge more for its printing of the books — to increase its profits. Most publishers could do little but grumble and comply.
We suspect this maneuver by Amazon is far more about profit margin than it is about customer service or fossil fuels. The potential big losers (other than Ingram) if Amazon does impose greater discounts on the industry, are authors — since many are paid for on-demand sales based on the publisher’s gross revenues — and publishers.
Also, the Independent Book Publishers Association has spoken out on the issue. Shelf Awareness says:
PMA, The Independent Book Publishers Association, which represents more than 4,000 independent publishers, has joined the protest against Amazon’s new policy that POD titles must be printed by Amazon’s BookSurge subsidiary to be sold without extra charges on the online retailer.
In a statement, executive director Terry Nathan said: “This policy imposes a significant financial burden on tens of thousands of small and independent publishers who can least afford it. Without the opportunity to benefit from competitive pricing, small publishers risk at best an expensive and needless overhaul of their manufacturing process, and at worst, the loss of their livelihood.
“On behalf of all the small and independent publishers whose businesses are in jeopardy, we urge Amazon to reconsider its position. Over the years, Jeff Bezos and his company have given small and independent publishers a level playing field to compete with the largest of companies. Suddenly, this magnificent playing field has been converted into a ‘members only’ club, to the detriment of those very publishers who have contributed to Amazon’s success. We will continue to monitor developments in the weeks ahead.”
And in other news, Amazon UK has raised a lot of hackles. According to this article, Amazon UK has threatened that for publishers who sell their books directly to consumers at a discounted rate, Amazon UK will pay those publishers based on the that discounted price rather than the cover price OR the listed Amazon price.
In other words, if Amazon receives a 50% discount from Penguin, for example, but Penguin is selling a £20 book for £15 on its website, Amazon will only give Penguin £7.50, rather than £10.
One publisher told PN: “Essentially, they’re not happy when the manufacturer, as they call us, sets the price of a book. The threat is that they will apply the agreed terms of trading to our web price. But they are on very shaky legal ground. After all, they’ve been invoiced at an RRP less their discount, so if they refused to pay that amount, they would be in breach of contract.”
Another publisher was more forthright. “Nobody can tell somebody else what price to sell a book at. Publishers will resist this.”
“Amazon UK has raised a lot of hackles. According to this article, Amazon UK has threatened that for publishers who sell their books directly to consumers at a discounted rate, Amazon UK will pay those publishers based on the that discounted price rather than the cover price OR the listed Amazon price.”
Good grief! Good luck with that. Fancy telling another publisher or – to stretch the analogy – bookshop even, at what price they can sell their books.
Evecho