Is Amazon the Sauron of Publishing?

Amazon’s announcement of their new Science Fiction and Fantasy imprint, 47North, has got me looking toward the publishing future. There are certainly plenty of folks, most in traditional publishing and book retailing, who would agree that Amazon is Sauron, and that the Kindle is the One Ring, and that their goal is to completely vertically integrate publishing into a monopoly that squeezes everyone but authors and Amazon out of the picture. The fact that they’ve gone from being a retailer to a publisher with seven imprints (including the New York imprint—how’s that for jabbing traditional publishers in the ribs?), would certainly seem to justify fears expressed by traditional publishers and every other retailer in the world.

Choosing to open a science fiction and fantasy imprint is significant, especially when one notes the line in the press release that says, “47North will publish original and previously published works, as well as out-of-print books.” [Emphasis mine.] Speculative fiction has a good reputation as being a genre with a solid long-tail: backlist sales, when the books are available, remain strong. Readers who discover SF and discover an author tend to buy everything by that author that they can get their hands on. Publishers have been running around scooping up backlist rights as fast as they can (offering half of what they offered before 2009, and a quarter of what authors can make if they electronically self-publish those same titles). For harddrive space in a server farm, Amazon will produce a crop of perennial books which will sell steadily. With a little promotion, a series can take off, and sales of that author’s other work will rise accordingly. Because of the “others also bought” feature at Amazon.com, one person’s discovery will lead to others discovering authors who haven’t been actively promoted.

More importantly, the “previously published” aspect of that comment is a key to Amazon’s future. They have access to daily statistics and analysis that tells them which authors are trending or about to trend. Even before the authors themselves can translate daily sales figures into a projected future, Amazon will know which authors are going to be a good investment for 47North. They’ll get to cherry pick talent and promote their “discoveries.” Amazon also has the ability to promote digital sales of books and later on produce a print compilation of digital novels, offering a unique print product. This is actually stated as a plan in their press release.

Amazon will use its demographic data to pick winners out of a vast field of authors. This lack of demographic data has always been a weakness with traditional publishers. Traditional publishers have always been in the position of fighting the last war. The surprise popularity of The Girl With The Dragon Tattoo prompted publishers to search for bestselling crime novels that needed translation—a strategy which has failed to produce another It-Girl success. Amazon’s willingness to promote authors—doubling down on an investment which they realize, by having data and analyzing it, is about to crest, simply makes good business sense. When was the last time traditional publishing ever threw promotional money at a title to lift its sales and boost its trend?

Publishers really can’t ignore that this is a shot across their bows—though I imagine they will. Just the fact that Amazon pays on a monthly basis makes authors look on them favorably. Their willingness to promote is another plus. The fact that they’re willing to let authors publish what they want when they want, regardless of whether or not a committee thinks it will be a blockbuster, is a third factor in their favor. True, in this latter case, publishers make a capital investment in books, so need to be sure that there is a reasonable expectation of a return on that investment, but by lowering overhead and by using electronic publishing as a farm system to develop writers, traditional publishers could successfully lock up talent, gather data for analysis, and guarantee that Amazon will have to deal with them if Amazon wants access to the properties they own.

Retailers are in an even more precarious situation. Barnes & Noble—and to a much lesser extent Apple & Google—has to look at securing its lines of supply. This includes physical books, certainly, but more importantly it means intellectual property. A key to their survival will be whether or not they choose to establish imprints as Amazon has done. Without exclusive content which draws customers to their stores (online and real world), they lose. For consumers, the choice comes down to going to Amazon, where they can get everything B&N offers plus exclusive content, or B&N, where they can’t get the exclusive content. Human psychology dictates that even if the reader has no real desire for that exclusive content, they still feel constrained if they can’t get it. They want the choice, and B&N isn’t giving them that choice.

Brick and mortar retailers also have to look to their lines of supply. While independent bookstores may hate Amazon’s discounting, they know that Amazon’s promotion of titles will drive demand. Do they stick to their principles and refrain from trading with “the enemy” or do they order from Amazon and piggyback on Amazon’s promotion to sell lots of books? It’s a tough choice to make, but one that could spell the difference between going out of business and earning a profit. Since most independent books trade heavily on their sense of community—based around events held in the stores—the latter strategy can work very well for them. Cultivating a “stick it to the man” attitude in which patrons thumb their noses at Amazon by buying Amazon books at their local store definitely could work. (Brain bender, yes, but there’s plenty of folks that would go for it.)

For authors, Amazon (and electronic publishing), looks very good. We earn 70% of a retail price we set, and we get the money in sixty days. Amazon spends a lot of money convincing people to buy empty boxes and allows me to supply the stuff they’ll put in those boxes. While some might fear that Amazon—once it establishes its monopoly—will cut the pay rate or otherwise upset the apple-cart, I believe that worry is premature. Amazon’s plan for complete vertical integration requires the compliance of authors. They need what we supply. When Amazon approaches that monopoly position, we know that there will be enough money involved in the business that investors—perhaps even the entertainment conglomerates who own the traditional publishers—will be willing to fund one or more rivals to Amazon’s sales platform and delivery system. The fact that the new Kindles are based on Android means hackers will root them and be happy to supply links to other retail sites. Moreover, users of said devices will become more sophisticated and comfortable in finding those alternate retail sites. But even if Amazon were foolish enough to contemplate pulling a Walmart and demanding that suppliers take less, my guess is that we’d not face that situation for another three years anyway.

In terms of actually attaining a monopoly position, here things are more doubtful. Not only do they not control the raw material they sell, but there are lawyers and lawsuits lurking out there which pose a threat to that business model. I would imagine that legislation which taxed Internet sales might be threatened to curtail Amazon’s more predatory tendencies; and then there are price-fixing and anti-trust lawsuits which could tie them up. Those cases could drag through the courts for years, if not decades, and with technology changing as swiftly as it does, advancement in delivery systems could render any and all monopolist dreams moot before any decision ever got handed down.

All in all I think the world of publishing today hasn’t been changed by Amazon’s announcement. Sure, the establishment of 47North should be a canary in the coal mine as far as traditional publishing is concerned, but it’s the last in a long line of very dead canaries. I stand by my previous prediction that holidays 2011 will be the last gasp of traditional book retailing as we know it. Major contractions will come on the print side of things while electronics continue to grow an an increasing pace. I also suspect, along about next summer, when Internet sales again slump (as they tend to do while folks are outside, away from computers, spending money on vacations and stuff—what are they thinking?), that pundits will predict a resurgence of paper publishing. They’ll even point to an uptick in sales to prove that point, but it will just be a dead-cat bounce. (From the Wall Street saying when a diving stock rebounds…”A dead-cat that bounces up, is still dead.)

For writers right now, the course to success is rather simple: create inventory. Bring backlist work into inventory. Write new work. Spread your work around to give readers a greater chance of discovering you. Worrying about price points and why you’re not selling like Amanda Hocking is wasted energy. If electronic publishing is a tide which will raise all boats, the point is not to have the biggest boat. The point is to have as many boats as you can on the water. You want to have a fleet or two because that’s how you maximize the benefit of the rising tide.

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