Tag Archives: Amazon

Amazon Gives In

Every few years, giant we’re-selling-parts-of-the-moon-next conglomerate Amazon decides whether it’s going to keep selling books (a mere 7% of its revenues,) and when it decides, so far, that it’s going to do so, it negotiates sales terms contracts with the Big 5 global conglomerates that dominate U.S. publishing, among other presses. (It doesn’t have to negotiate anything with the self-published authors since they agreed to a contract that states that Amazon can change their terms, including the monetary ones, whenever it wants.)

The sales terms do not include just what prices publishers will sell print books to Amazon for or price e-books with Amazon at, but also how much Amazon gets of each sale as its retailer cut, and how much additional monies Amazon gets of each sale in “developmental marketing” fees. Those are the fees that Amazon charges for search rhythm algorithims, search inside this book features, special screen displays, recommendations, etc., that all help books sell on Amazon and make it easy for people to find them. Amazon has been increasing the number of fees it demands the publishers pay to sell with Amazon in the contracts, squeezing the publishers for more revenue to feed its enormous business acquisitions engine. (Amazon gives most of these services away for free to self-pub authors, but it has been adjusting its cut and charging some fees to them.)

This has been particularly hard on small presses, for whom the balance between the costs of doing business with Amazon and making it up in cheap bulk sales they depend on from Amazon is very precarious. But it’s of concern for the big publishers as well, especially because some of the conglomerates also sell other merchandise to/through Amazon and because other retailers and wholesalers are likely to follow Amazon’s lead in charges. So when French-based global conglomerate Hachette entered into negotiations with Amazon this year, it balked at Amazon wanting a higher cut of revenues for marketing fees for e-books and print, as well as tighter control of the e-book market and better terms on print returns refunds (meaning more expenses and shipping costs for Hachette.)

Amazon promptly tried one of its favorite negotiating tactics with any size of publisher — suspending sales on Hachette’s titles, which it claimed were suddenly out of stock at Amazon or didn’t have a buy button anymore altogether, or messing up prices, so that Hachette would cave quickly. But Hachette isn’t as dependent on Amazon sales as some of the other Big 5, and more to the point, they are facing the same need as Amazon to cut costs and squeeze more revenue, so they dug in. Amazon promptly started a media campaign, claiming the dispute was only about e-book prices, that it was trying to decrease the costs to the consumer by making more e-books at the legendary price point of $9.99. This of course ignores that most e-books, including from the Big 5, are priced well below $9.99 already.

Hachette offered a few terse statements that the negotiations were about way more than e-book price points, but otherwise ignored media knattering in favor of confidentiality over the negotiations. That media coverage, as it was back when Amazon tried this tactic on Macmillan a few years ago, was not exactly positive towards Amazon. It got worse when a bunch of authors, some Hachette authors affected by the ban, some just big bestsellers, took to the presses to complain about Amazon’s author punishment negotiation tactic in a business deal that the authors had no say in. Amazon made pie in the sky promises that they knew contractually they and Hachette couldn’t actually do, even if authors and Hachette had been willing, over e-book prices only. But that didn’t change the general view that Amazon was riding roughshod over the book publishing business, especially in the States, which was still reeling from various retail shrinkage in recent years. That e-book sales have flatlined, having reached perhaps their natural share of the market for now, and that online selling of print books has expanded to more vendors, didn’t help Amazon have more leverage. Continue reading

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More Pretty Things for Lucas

Australian author Lucas Thorn pingbacked my blog yesterday because I’d mentioned his novel, Nysta: Revenge of the Elf re Amir Zand’s very cool bookcover art for it. He got the name of my blog wrong, though. It’s The Open Window, Lucas, not Pretty Things. (Although Pretty Things is a pretty good name for a blog, don’t get me wrong. Also “This is Why We Can’t Have Pretty Things” would be a good blog name and somebody probably has it. There are about 500 blogs plus a famous short story called The Open Window — the more, the merrier.)

Anyway, I realized that I forgot to mention in the last post that I had actually read the opening pages of Thorn’s novel, through the Amazon U.S. “Look Inside” feature that Thorn paid for or wiggled out of Amazon. And those pages were good, in my opinion. Lot of atmosphere, dry humor, an immediately appealing character in the Prologue made all the worse because you knew he was going to buy it pretty soon.  So I was actually recommending the book to the extent that one can do so from just having read an excerpt. (And if it provides further inspiration on doing Book 2, Lucas, I’ve been a book editor in one way or another for a reeaaallly long time.) The book is unfortunately not available on all the Amazons, but may be in other spots on the Net, and in Amazon U.S. (and I would assume Amazon Australia,) you can get it as an e-book or a more expensive trade paperback print edition. So this may be going on the birthday list for me. You all can check it out. It is apparently #18 on Amazon’s list of Hot New Releases of Epic Fantasy, which means it is selling well and other people are burbling about it. And yes, Lucas Thorn is apparently his real name. So there you go.

As for Amir Zand’s lovely artwork for the book, that will be going up on the Positivity Cover Art thread at SFFWorld.com in the Fantasy Forum, with mention of what book it is to, once I get a minute to do it and some other bookcovers I like, which I’ll also reproduce here. There are lots of people over there and we have lots of Australian members  too, so swing by.

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The Next Emerging — DRM goes bye bye

One of the issues in trying to have discussions about the emerging retail e-book market is that many people have difficulty understanding what the word emerging actually means. We are so used to viewing technology as rapid that when versions of tech and products impinge on our consciousness, many people expect everything to be fully in place, fully available, fully operational, etc., as if all it took is the wave of a magic wand as soon as we realize we want something. In reality, technology percolates for years, being refined in research labs, academia and through governments into a more and more workable product for the general public while infrastructure and personnel begin to be built slowly and sporadically. Start-ups explore possible options of a market for the tech. Tech people and wealthy, tech savvy early adopters buy crude and expensive versions of proposed products. Then a major retailer undertakes to break the market out in a large way in general retail and enlists major suppliers to help.  If it’s successful, then the rest scramble to catch up, with infrastructure being thrown up like a hastily erected fort, new companies coming into being, frantic contract and international trade negotiations, and new applications hastily devised.

E-books went through this exact same process. E-books (electronic text,) and various concepts of portable devices for reading them have been around for thirty years, used widely by academia and the education market, the subject of countless experiments and small operations.  Then Amazon, the major retailer, decided that it would open up the market and try to dominate it for as long as possible by creating the Kindle, a workable e-reader that would have Amazon’s full infrastructure and tech support behind it. Book publishers, having been burned for millions in the first go-round of e-books back in the late 1980’s and early 1990’s, were faced with a problem — they didn’t have the tech personnel, infrastructure, ability to digitize and knowledge of the consumer electronics market to throw themselves into the market willy nilly. So they went with what Amazon wanted, which was a DRM which locked customers into the Kindle platform, and which would be different for each major vendor, out of fears of piracy, lack of technical control with vendors and many other factors.

All the way back to 2008, I was pointing out that DRM was temporary, an unwieldy stop gap measure done out of caution and immediate demand that would be removed once the emerging market was on its feet and had enough vendors come out to play.  It soon became clear that ePub, the open source electronic format that was heir to past platforms, was going to be the likely most workable general and transferable format selected and become the standard, which would certainly be easier for publishers as they dealt with a growing pool of customers with different sorts of devices and a much needed increase in the number of retail vendors.  Once Apple, Barnes & Noble and Indigo came in enough to puncture Amazon’s monopoly, and it became clear that the main market for e-books would soon become not e-readers but all sorts of computers, including smartphones, publishers would have enough leverage and enough of a retail market to go forward without DRM.  This didn’t set well with many people, however, who screamed that if DRM wasn’t removed right this minute from every e-book format, the publishers would find that they had no customers. Point out that the e-book market was growing at 200% with DRM, so that was sort of a worthless threat, and you’d get a fusilage of unrealistic views on e-book production, contract negotiations, and how e-book piracy meant nothing and would kill us all at the same time.

Back in 2009-2010, I said give it five years and the e-book market will be fully established and by that time I expected DRM to be largely gone. And so it seems to be coming to pass — Macmillan, who has been in the forefront of the large publishers dealing with the emerging market, is now putting out large chunks of their list without DRM, including the Tor/Forge list, and the other publishers are quickly following suit or likely to be. What’s also remarkable is that they’ve gotten Amazon willing to go along with this idea, but this is presumably because Amazon has seen the writing on the wall and knows that being able to sell e-books and print content to people with other devices than a Kindle and multi-device needs has become the far bigger market than the Kindle that launched it all. Now that e-books is a big emerging global market, the training wheels are coming off, though I’m sure retailers like Amazon will still find uses for DRM in some areas.

Does this mean that you can have a sane conversation about the e-book market now? Probably not for a few more years yet. But it does mean that the emerging market is transitioning towards established market pretty much right on schedule. SF author Charles Stross has done several blog posts on this and related topics recently that are cogent and informative, including the issues of Internet revenue, Amazon’s spiderweb strategy with e-books, and feedback that he gave when requested to Macmillan about their DRM removal plans. Worth checking out, especially this one. (Yes, I’ve fixed my linking problem.) You can find Macmillan/Tor’s announcement here at Tor.com.

 

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Interesting Writings for a Finally Warm Saturday

This is actually a short one:

1) The Borders Blog fake duels of words between authors is fast becoming one of my favorite things. (More on that in a later post.) Here’s one between fantasy authors Sam Sykes and Ari Marmell:

http://bordersblog.com/scifi/category/sam-sykes-ari-marmell/

2) McSweeney’s writer James Warner takes us into the future of book publishing:

http://www.mcsweeneys.net/2011/3/24warner.html – James Warner

3) An issue that authors, publishers, fans and bloggers need to keep in mind:

http://www.publishersweekly.com/pw/print/20110404/46703-the-misinformation-age-what-happens-when-a-headline-goes-viral.html

4) A rather depressing article about the difficulties small presses face in the online market and in general:

http://www.guardian.co.uk/books/booksblog/2011/apr/07/amazon-profits-small-publisher-losses

 

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Why It Is Very Hard to have a Rational Conversation About E-Books

Thanks to Nick Mamatas’ blog: http://nihilistic-kid.livejournal.com/ for alerting all to this whacky article in the Wall Street Journal about literary fiction and e-books.

http://online.wsj.com/article/SB10001424052748703369704575461542987870022.html

Among the howlers in the piece:

1) The article only talks about hardcover prices and e-book prices, ignoring that around 70% of the print publishing market is in paperback.  It also gets it wrong about e-book prices being universally low.

2) The article posits the total whopper that literary fiction debuts used to draw $50,000-$100,000 advances on average from the big publishers. The reality is that contemporary and historical fiction debuts, whether it was being sold as literary or not, averaged advances of $5,000-$15,000 from big publishers. Suspense, SFF, romance, and children’s debuts paid advances on average of considerably less than that, and those figures have largely gone unchanged for the last twenty years.

3) That publishers are buying fewer debuts and at lower advances because of the e-book market. This ignores basic realities such as that A) e-books are still only around 4% of book sales; and B) the actual reason that publishers are buying fewer debuts at lower advances is the same reason that they always have — we just had a giant recession. Every time we have a recession, especially a violent, bubble-inflated one, publishers do the same things: buy fewer new authors for less advance fees, cut mid-list authors from their lists, concentrate on big name authors and demand that those authors perform better, and fire publishing house staff, often starting with editorial. Book chains close stores and some of them usually go out of business. It happened in the early 1990’s recession, complicated by the Gulf War and the shrinkage of the wholesale market, and it happened in the late 1990’s, early oughts in the Tech Bubble recession.

But this recession was the Great Recession — the one that was only a hair’s breadth away from being a depression. With the shrinkage of the wholesale market over the last twenty years, and with real estate values tumbling, this recession rocked even the big chains — who haven’t been as well managed as they might be — caused mass firings and consolidations in the publishing firms and got some terrific authors punted from their contracts even as they were building a following. It was a mess and is still a mess. And in those circumstances, publishers are exceedingly cautious about buying new authors, while at the same time realizing that new may sell better than old.

The Wall Street Journal seems to want to pretend that the Great Recession never occurred or is no longer a factor. It revives the commercial vs. literary myth, creates an imaginary past where “literary” fiction was supposedly once more valued and declares that the barbarian e-books will cause publishers to throw out literary fiction for commercial e-commerce. This ignores that quite a few literary titles do exceedingly well in the e-book market. So much so that agent Andrew Wylie made a massive e-rights deal with Amazon for his highly eminent clients’ backlists of classics. (Wylie, known affectionately as “the Jackal,” has made his fortune getting mega international deals for some of the most revered authors of the 20th century. Perhaps that’s where the Wall Street Journal got confused about book advances.)

It’s all ridiculous hype, which Christopher Mims expertly dissects for Technology Review in this piece, “The Death of the Book Has Been Greatly Exaggerated.” (Yes, the Mark Twain quote will always be used.) Mims opens with the question:  “Why are tech pundits so eager to announce that the Ebook is taking over?” And the answer is because they are trying to sell gadgets. Mims lays it all out for you with graphs and everything:

http://technologyreview.com/blog/mimssbits/25783/

The Wall Street Journal is interested enough in e-books (or rather iPads,) that it is planning to review books and cover the publishing industry a bit more. So expect more fantasy analysis soon.

Also, interesting news:

http://www.dailyfinance.com/story/company-news/amazon-pay-search-inside-book-customers/19647266/

This is of course a really bad idea that Amazon is working up for a feature that helped negate their one disadvantage over brick and mortar bookstores — the ability to pick up the book, read the back cover and skim a few pages to see if you like it. It would also reduce Amazon’s effectiveness as a search site destination. Even if Amazon doesn’t ultimately charge for peeking — which they are blaming on publishers, the same publishers they charge to have the search inside feature for their books — it is a symbol of what’s probably going to come — more charges for access to various parts of websites. It seems like a really good way for Amazon to lose sales, though, on the whole.

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