Amazon-New-Detail-PageAmazon is winning the book publishing wars, primarily because they are succeeding on nearly every front — with authors, with customers, with delivery infrastructure, with pricing, and with innovation.

In a recent post, J.A. Konrath, a novelist who toyed with self-publishing before taking the plunge (and thriving), takes on Amazon doubters and haters, in a post unflinchingly titled, “Amazon Will Destroy You.” In a less blunt but perhaps even more convincing post, Mike Shatzkin outlines his rationale for why he believes we are about at the halfway point in the online books (r)evolution.

The lesson fundamental to both posts is put succinctly by Konrath:

Blaming Amazon for your eventual downfall is like blaming a lion for being king of the jungle. If you don’t like apex predators, get the hell out of the food chain. . . . You had your shot. And you blew it.

Konrath’s adventures with Amazon have been turbulent. Initially dismissive of self-published authors while also dabbling in the new possibilities self-publishing afforded, Konrath swung over completely a couple of years ago, and has been going gung-ho ever since. His most recent post was inspired by a visit to Seattle, where he spent time with Amazon’s book people and other successful self-published authors. What was most noteworthy to him was that the Amazon people listened, took notes, and were genuinely interested in what he had to say:

I’ve spent hours talking to Amazon. And Amazon listened. They took notes. And I’ve seen them adopt my suggestions. Many times. And I’m not the only one they’re listening to. An open mind beats a closed mind, every single time. Once you start blaming, you’ve lost. Winners don’t blame. Winners don’t whine. Winners keep at it until they win.

Shatzkin’s post is about online book sales, which includes for him both e-books and online purchasing of print. By his rough estimates (which he’s working to refine), he believes that we’re approaching the point this year at which 50% of the Big 6 publishers’ books will be delivered via screen purchasing — either via e-book or online store. This is compared to five years ago, when the percentage of book sales going through stores was estimated at 80-90%.

The implications of this shift are huge, of course. In his excellent post here, “What We Should Learn from the Collapse of Borders,” Joe Esposito noted that fewer print books going through bookstores means smaller print runs for publishers, perhaps up to 30% smaller, which results in higher production costs for each book and trims margins even more. The phrase “circling the drain” comes to mind.

Other implications come with changes in authors’ behaviors. Shatzkin details four stories — J.A. Konrath (coincidentally), Amanda Hocking, John Locke, and Barry Eisler. Konrath is eschewing all contact with traditional publishers, choosing to take lower prices and higher margins for the sake of building a direct customer base for the future. Hocking already has a huge customer base, but having found the marketing and production work tedious, is now happy to work for a publisher, but with very favorable terms. Locke and Eisler are using publishers in different ways, both revealing the flexibility and power that have returned to authors thanks to the competitive threats of the Internet and Amazon.

Amazon’s impact on publishing is already significant and is only gaining momentum, and for legitimate reasons, which makes it all the more of a certainty. As Konrath puts it:

Why didn’t the Big 6 invent online bookstores and ereaders? Why didn’t the ABA? Amazon INNOVATES. . . . They’re not dominating because they undercut you on price. . . . Anyone can sell for cheap. Not anyone can single-handedly jump-start the digital revolution. Not everyone can create an online store that is not only a pleasure to shop at, but where it is fun to spend time. Amazon is going to eat you all for lunch because they aren’t thinking about how to make money tomorrow. They’re thinking about how to make money in 2018.

Much of the success of new digital businesses comes from the usual drivers of success in any business — great strategy, great execution, and great service. Right now, the big players in book publishing seem to be getting at most one of these right, while Amazon is bringing it all.

Talk about bringing a knife to a gunfight.

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Kent Anderson

Kent Anderson

Kent Anderson is the CEO of RedLink and RedLink Network, a past-President of SSP, and the founder of the Scholarly Kitchen. He has worked as Publisher at AAAS/Science, CEO/Publisher of JBJS, Inc., a publishing executive at the Massachusetts Medical Society, Publishing Director of the New England Journal of Medicine, and Director of Medical Journals at the American Academy of Pediatrics. Opinions on social media or blogs are his own.

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Discussion

19 Thoughts on "More on Why Amazon Is Winning the Book Wars"

“They’re thinking about how to make money in 2018.”

Unfortunately the answer to how they will make money in 2018 is by being a dominating, bullying, monopoly, that listens to no one, cares about nothing but their profits, and innovates only to defend its monopoly.

There is a lot of consolidation possible when one company in an industry becomes a dominant player, but I think this sounds a little paranoid. Barnes & Noble is doing a good job offering competition on a number of fronts, Apple is making moves, and Google is a dark horse with a bookstore of its own (and device expertise). And there are independents like Smashwords and Inkling on the author front (and dozens of others — Lulu, Dog Ear). Amazon may be the big player in the space by 2018, but it won’t be the only player, and that’s far from a monopoly.

And things can change quickly. Remember a few years ago, everyone was convinced Microsoft was a monopoly. Now, its computer products seem quaint, and Apple out-earned it in one quarter of iOS device sales.

But Microsoft WAS a monopoly – for at least a decade. It hurt he industry, it hurt consumers, and ultimately, it hurt them.

The other players in the industry need to be paranoid. They need to figure out how they will have a place in an industry dominated by Amazon, or a place that prevents the industry being dominated by Amazon. They should not wait until the domination is so strong it is invincible.

Yet, this “invincibility” ultimately led to what? Microsoft hardly seems invincible today, and the DOJ case against it was hardly the cause of Microsoft’s diminishing power in the computer world. What was? Lack of innovation? Yes. Retrograde browser builds (IE 6)? Yes. Failure to be on top of trends? Yes. Even if Microsoft had never been taken to court, it wouldn’t have been able to deal with the iPod, iPhone, or iPad, or with Firefox, Google Books, or iTunes.

All monopolies eventually end. Standard Oil, AT&T, etc. But damage is done along the way, and you’re discounting the promising directions that were crushed while the monopoly was in full effect. Think of things like BeOS, OS/2, NEXT or the progress of Linux that were all hampered or driven out of business because of MS’ monopoly. For a while it seemed like the browser was going to replace the operating system, and the MS monopoly certainly had a hand in quashing that.

So yes, Amazon’s dominance will eventually end. Some black swan competitor will drive them from the top spot. The point that I think Dave is making above is that it may be a while before this happens and that in the meantime, monopolies are generally bad for consumers and bad for content creators.

I think all those “casualties” you list had the same goal as Microsoft — they just weren’t able to achieve world domination, but they wanted to. By the way, not all are casualties. Linux now runs 90% of the world’s fastest mainframe computers and serves as the basis for Android, so the “damage” was shoving Linux out of the desktop world and reorienting it into other areas, likely more productive overall. NEXT ultimately was reborn as an Apple OS. BeOS didn’t cut it, but they tried.

There will always be a dominant player in any industry as long as there are economies of scale and incentives for market dominance. Speculation about damage done seems based on an alternate reality. The point is to accept our reality, and start breeding black swans if you want to change it. After all, direct head-to-head competition didn’t unseat any of those incumbents. Sneaky flank attacks did. What will unseat big oil? Electric cars, not different oil.

What are the Big 6 publishers going to do? Do they have a black swan? I doubt it.

I’m not questioning the motivations of those casualties, nor the notion that some markets coalesce on monopolies. These are things we have to accept. But that doesn’t mean these are good things, or things we should actively support. As another example, think of the stagnation seen in Internet Explorer after Netscape was vanquished. It sat idle for years until Firefox came along to push things forward. Those are wasted years, progress lost. Yes, this is a speculative point and perhaps Konrath would label it “whining”, but it doesn’t make it any less true.

How happy will Konrath be if Amazon becomes the only viable place for him to publish his work and they change the terms to make them a lot less favorable, and they let the development of their platform stagnate? These are the typical sorts of things that one sees in a monopoly situation, as the dominant player is relieved of the competitive pressures that lead to progress.

I agree with you though that the black swan here is going to come from somewhere outside of the big publishing firms. Has there ever been a dominant service like this that was created by a content producer? There’s incredible power in aggregation. No one wants to have to go to 10 different publisher’s websites to buy 10 books. And since Random House and Penguin are competitors, it’s unlikely that you’ll see Penguin supporting a Random House-led effort to create a new type of bookstores. This is the same reason it took someone outside the music industry to create the iTunes store.

“All monopolies eventually end. Standard Oil, … ” .. Standard Oil evolved into ExxonMobil, the most profit company in the world.

Yes my point is that monopolies are bad. Microsoft’s monopoly was bad because it stifled competition. For at least a decade venture capitalists would not invest in any innovation that required beating Microsoft in order to succeed, while Microsoft lived off the innovation of others – bundling me-too products into Windows to protect its monopoly. Microsoft’s monopoly sucked the profits of the industry. While they were making gross profits above 90%, everyone else had single digit margins. While the price/performance of memory, say, improved by orders of magnitude, that of the OS degraded by an order of magnitude..

Possibly the most harmful effect (although the most speculative) is the poor quality of their product with respect to security that effectively created the malware “industry”. If there had been competition then a version of windows that was not rift with buffer-overflow vulnerabilities and so forth, would likely have emerged, and the billions of dollars wasted on virus damage might have been saved. That is speculative, of course, but once a product has been isolated from competition there ceases to be any market validation of what it does or its price. The best evidence for the curse of a monopoly is the customer petition for Microsoft to continue selling Windows XP.

It’s interesting to see the evolution of ineffectiveness of the DOJ against monopolies. Standard Oil and AT&T were broken up, IBM was handicapped, but Microsoft learnt so that anti-trust suits were completely ineffective – in fact the spin-off class actions benefited Microsoft. (BTW the anti-trust suit Findings of Facts are remarkably comprehensive record of the dirty tricks MS used to maintain its monopoly.)

Don’t forget the monopoly Microsoft displaced, IBM. IBM is now one of the world’s most valuable and most profitable companies. These big players may lose their monopolies, but they don’t seem to go away.

It should be noted though, that much of what you’re talking about has nothing to do with Microsoft’s illegal monopoly maintenance, and that it’s really more a natural consequence of a legal monopoly. Monopolies are perfectly legal, and Microsoft came about theirs through legal means. Take away the illegal maintenance and you still have stifled competition and reduced progress.

I’d also argue that the malware issues are more the result of maintaining backward compatibility than anything else. This may also be seen as a result of having a monopoly, or at least an extremely popular product. Microsoft couldn’t move forward in many ways because so many businesses depended on them and weren’t willing to sacrifice their older pieces of custom software that they still needed to run. This dragged things down for everyone else, where Apple, with a much tinier user base and a much smaller business presence had a greater level of freedom as far as leaving old code behind.

If Mr. Konrath’s books are designed or written anything like his blog, I would argue that he’s not really talking about publishing, he’s talking about printing and file sharing. He seems to have some proficiency with templates and single sentence paragraphs, but I don’t think he and I mean the same thing when we talk about publishing.

Konrath was traditionally published and quite successful in that mode before he moved to self-publishing through Amazon and independently. I can’t discern what you mean, actually. Are you saying that real publishers demand longer sentences?

Amazon is a lot more popular with readers than it is with people who write articles from the booksellers’ or publishers’ perspective (having read quite a few “whiny” posts as you refer to them, in recent weeks). All the arguments have been rehashed many times, but as you write it is a pleasure to shop at Amazon, their stock is great, price of fiction cannot be bettered, they have good customer service and returns policy, anyone can sell used books on the site, etc. All great for readers who have not been best served by the lack of innovation in the bookselling industry, and poor service/stock levels.

Incidentally, in your comment about the inevitability of small print runs, that makes sense but I think POD (Espresso machine etc) is getting better all the time and has the potential to make the print run concept moot (or at least, economic) for anything that isn’t in the bestseller lists and that people want to read in print rather than e format.

I agree, the Espresso and its ilk are really interesting, but will probably be niche products. I don’t think they’re competing with print any more. I think they’re competing with e-readers, and the headway being made with e-readers in the past 2-3 years easily outpaces the progress with Espresso. I’m beginning to think Espresso machines will fill a very narrow niche indeed.

Would you say that scholarly pubs have a better than average bid to entry. I.e., what makes us different makes us stronger, ion so far as it helps describe a unique and potentially under-served network space.

When you talk about Amazon dominating “book publishing,” surely you just mean only one sector: trade publishing. I don’t see Amazon (yet) taking over the textbook publishing business or scholarly publishing either, for which “self-publishing” is not going to do the trick, given the requirements for peer review and prestige of imprint that are fundamental to the latter.

I wouldn’t be sure about that. Why would textbooks be any more secure than trade titles? In fact, a few scholarly authors I know are having trouble finding receptive university or academic presses, and are thinking of self-publishing. It may happen more slowly, but I wouldn’t view textbooks or academic titles as impervious to these trends.

I htink you’re missing Amazon’s main lock which is its ebook standard. Even their new Kindle 8 package locks you to their platform, which is why I won’t use it.

In many of your posts about STM publishing in journals you argue for the importance of the editor and publisher to the quality of the final paper and, indeed, to weeding out the pointless or terrible papers that no one is going to read. Unless I misunderstand how self-publishing works, you seem here to be supporting the demise of editors and publishers in the non-STM publishing world. But surely they provide the same vital service: nurturing and improving good stories that we’ll enjoy reading, while dismissing the poor stories that repeat previous work, are too poorly written, or are simply pointless. I’d be interested in the differences you see between the two arenas that make editors important in the one, but optional in the other.

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