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Publishers: What are you doing while Amazon eats your lunch?

Amazon (s amzn) started out as a book retailer, a company that was arguably a friend to book publishers, since it expanded the market for many of their books. But increasingly, the web giant is becoming a competitor to those traditional publishers, as the New York Times details in a recent article and as we have noted a number of times. Just as it did with book retailing, Amazon has its sights set on lowering the barriers between authors and readers, both via the Kindle and through its own publishing deals — and in many cases, the biggest barrier between authors and readers is a traditional publisher. Until that changes, Amazon will continue to win.

Although some are just beginning to see the company as a publishing competitor, Amazon has been marshalling its forces for some time now. As GigaOM Pro analyst Mike Wolf has described in a number of posts, the company has been putting together the pieces of a “book industry in a box” for the better part of a year — launching new imprints of its own for various different genres, including one devoted to popular thrillers. Then in May, it hired publishing-industry veteran Larry Kirshbaum, former CEO of the Time Warner Book Group, and opened a New York office.

In the months since then, Amazon has signed deals with a number of prominent authors, including one with popular writer Tim Ferriss, whose books — such as The 4-Hour Workweek and The 4-Hour Body — have sold millions of copies. The terms of the deal with Ferriss weren’t released, but the author said “The opportunity to partner with a technology company that is embracing publishing is very different than partnering with a publisher embracing technology.” Amazon also signed thriller writer Barry Eisler, who gained attention earlier this year when he turned down a $500,000 two-book deal with a traditional publishing house and said he planned to self-publish instead.

It’s not just about the money

Why are authors signing these kinds of deals? In some cases it could be about the money (a deal with former TV star Penny Marshall was reportedly for $800,000 according to the New York Times), but in many cases it seems to be mostly about getting past some of the legacy processes that are typical with traditional publishers, and expanding the potential market for a book. The core of the problem confronting the industry is summed up in a comment by Amazon executive Russell Grandinetii in the NYT piece, in which he says:

The only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.

If you look at the comments made by Barry Eisler about why he decided to take a deal with Amazon instead of self-publishing, he says virtually nothing about the money, or about other factors that traditional publishers are used to focusing on. It’s the other terms of the deal that he was swayed by: for example, the fact that Amazon was going to come out with an e-book version within a matter of days after the book was finished, and then follow that quickly with a paperback — and that both were going to be sold at a cheaper price, instead of the traditional industry’s approach of trying to charge print prices for electronic books.

What I care about is readers, because without readers I can’t make a living [and] I want people to read a lot. To that end, if I can find a way to get readers books that cost less and are delivered better and faster, I want that.

Just part of a wave of disruption

And as we’ve described before, Amazon signing deals to publish authors is just part of the bigger wave of disruption that is sweeping through the industry: self-publishing via the Kindle is becoming a larger and larger phenomenon, thanks in part to advocates such as JA Konrath and the kind of success that writers like Amanda Hocking have had by publishing their own books. Authors such as John Locke have shown that selling a million copies of a self-published book is not only possible but entirely feasible — and the fact that he and other writers who do so get to keep 70 percent of the proceeds is yet another wakeup call for the traditional industry.

And what kind of response have mainstream publishers had to all of this? Most have just continued to offer the old deals they are used to — deals that serve the publisher’s needs, but not necessarily those of the author. And in some cases, they have tried to punish authors who try to meet those needs themselves: the NYT piece describes how Hawaiian writer Kiana Davenport, who signed a book deal with Penguin last year, was threatened by the publisher after she packaged some of her short stories into a Kindle e-book. Penguin wanted all copies of the book removed from the internet; when the author refused, the publisher cancelled the deal and is now suing her for breach of contract.

Here’s a hint for book publishers: take a lesson from the music industry, and don’t spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that. Amazon is giving authors what they want, and as long as it continues to do so, you will be at a disadvantage. Wake up and smell the disruption.

Post and thumbnail photos courtesy of Flickr users Umberto Salvagnin and Marcus Hansson

19 Responses to “Publishers: What are you doing while Amazon eats your lunch?”

  1. I disagree; Amazon will become another dreary tabloid book publisher ASAP, but quicker and selling worse books than the traditional publishers. I like the idea that someone, other than an industry retread–likely the first of a series, is selecting and editing and promoting indepedently of the retailer. I respect publishers, not accountants, and look forward to their choices for me. They have standards and they stick to them. They are “book people”. Think of what happened to TV. Three channels fought all the time and the result was pure gold; shows like Twilight Zone, The Untouchables, etc., that play 10X better than anything today. 100 channels or so
    has given us ca-ca, or else recycled versions of…Twilight Zone and Eliot Ness, for example. The bland copies…So, I don’t want that to happen to the internet of internets: literature. We’ll end up deaf, dumb and blind.

  2. Insightful post Mathew. I have to agree with Russell Grandinetii and his ‘Everyone who stands between those two has both risk and opportunity.’ comment. Seems he understands the world today, and those that adapt, and rise to the occassion are the winners.

  3. EvanJGregory

    It shouldn’t just be the publishers complaining about Amazon. Authors should think twice about joining them in a race to the bottom vis-a-vis pricing. Dead-tree Publishers may be gigantic, old, and unwieldy, but thier primary interest is to sell books for a profit. The redounding benefits to the author are that if your book sells you catch a piece of that action. Amazon’s interests are not about books primarily, but as a one-stop-shopping destination generally. They use books as a loss leader to sell electronics, bicycles, groceries and hundreds of other products. That’s not to say that Amazon is an unmitigated evil in the book business, they serve a purpose, but let’s not get all starry-eyed about them. They aren’t benevolent futurists out to save publishing from itself.

    Also there’s nothing wrong with the snails pace of legacy publishing, so long as their taking thier time to do it right (i.e. carefully editing, designing a marketing scheme that works, working with retailers to sell copies) and creating better products.

    As for Penguin, the author is at fault in that scenario, it has nothing to do with Amazon. When one signs a contract to grant exclusive rights to a publisher there are non-compete provisions included (even Amazon publishing has them, I assure you) and they exist for completely legitimate reasons. If you paid umpteen million dollars for exclusive rights to a Steve. King novel and six months before release he put out a collection of short stories, that might cut your readership (and your sales) in half. That’s just what Kiana Davenport did. She should have consulted with her publisher first before self-pubbing. She’s not a victim here nor is her case exceptional in the annals of publishing, nor is it message Penguin is trying to send to others who might wish to self-pub.

  4. Nicholas

    I think what you have to think of past the popular conception of publishing — the authored title — is just how much more growth amazon could conceivable acquire.

    My previous business was developing educational materials. In 1999, those publishers thought I wanted to get rid of them, when I stated that new methods of web publishing were on the horizon, and change was imminent. 5 years ago, I left my business because after completing Pearson’s reading program, a near $100M project, because I saw the collapse coming. They are only at the beginning.

    There are huge verticals for Amazon to attack, which are frankly easily accomplished for such a company. These are $7B publishers. Most of the large publishers have already begun to offshore such development.

    This has only just begun!

  5. What Amazon doesn’t realize is that they cannot be seen as a competitor to their suppliers. It’s like how some home improvement stores capitalize on contractor sales and take steps to become their exclusive suppliers, and they do not ever provide the same services as their clients, otherwise they would lose their trust. You don’t shop at your competitor. Just like you don’t do business that will benefit your competitor. Unless Amazon thinks they can completely take the publishing market, they are shooting themselves in the foot.

    • I agree that it puts them in a head-to-head battle with their suppliers, Brian — I’m just not sure that the traditional publishers have much of an option other than dealing with Amazon. It’s not like chain stores are doing all that well. Thanks for the comment.

  6. A few thoughts…

    Eisler had a pretty big following already and was promoted on the front page of Amazon. Not your typical author. However, I like his stance of being concerned with what’s good for readers vs the publishing business. What concerns me is whether a direct to reader model is, in fact, the best thing for readers. One thing publishers do now is sort through an incredible amount of dross and publish a small percentage of the submissions they see. In other words, they act as filters and curators. This isn’t wholly positive of course… they miss things, etc… but if that function disappears then what replaces it? Does Amazon become filled with substandard slushpile novels that in the past would never have made it past the first reader at a publisher? IF so, then we need to sort through that and no, the 5 star system isn’t going to be of much help.

    One thing I very much liked about Eisler’s book release though… they didn’t hold the ebook release for the print run. The result was that I bought and read the book right away since I wanted the ebook version anyway. The downside to me of Amazon as a publisher is that I want the ebooks to be available in an open format that can be read on multiple readers rather than tied to a closed, vendor controlled format.

    New-style publishers will also need to provide the services publishers traditionally have… editing, copy editing, proofreading, cover design and all of that. People discount these activities now because virtually everything we read has them… we’re used to it and to the reader these services are invisible. What I’d like to see go away though are all of the silly “released now in the US, next year in the UK (or vice versa)” practices along with the idea of scheduling books to be released months after they’re all done.

    • Great points, Rick — there is no question that good publishers provide a number of services for authors, including editing (which Amanda Hocking said was one of the reasons she signed a traditional publishing deal, interestingly enough). But they are going to have to get used to the idea that they are no longer the only game in town. As for the low-quality content problem, that is something we will just have to deal with, I guess. Thanks for the comment.

  7. The publishing industry really has no idea how to reply to the changing world around them. Whenever I’m in an airport or any place else where people read, I more people these days reading on tablets than reading actual printed books. I say let the publishers die out. They’re the gatekeepers who keep pumping out crap celebrity tell–all books anyway.

  8. A story like that about Penguin will keep other authors from looking at their deals. Since the music and film industries are still using lawfare to punish creators and customers; I see no chance of publishing doing anything different.

    May they rest in peace. Soon.

  9. Jay Hartigan

    im glad you brought up the music industry comparison. old business models must adapt to the new digital reality of the world and stop living in the past. sure it was your golden age, but its over now. content doesnt need you to distribute it anymore.