By Lucy Ahl
Like Walmart, Amazon is a global superstore. It not only publishes books, it sells books, technology, videos, has its own literary magazine, and its own production studio. Amazon’s founder and chief executive, Jeff Bezos, a graduate of Princeton, also owns a major newspaper, The Washington Post. Amazon is turning or has turned the publishing industry upside down and they are feeling the effects. Bowker reports that over one million (1,052,803) books were published in the U.S. in 2009, which is more than triple the number of books published four years earlier (2005) in the U.S. (April 14, 2010 Bowker Report). More than two thirds of these books are self-published books, reprints of public domain works, and other print-on-demand books, which is where most of the growth in recent years has taken place. Bezos told Charlie Rose on 60 Minutes, “Amazon is not happening to bookselling. The future is happening to bookselling.” (Packer 17).
One traditional publisher, Dennis Johnson, co-owner of Melville House out of Brooklyn and one of the few publishers willing to criticize Amazon publicly, says the mega giant has turned into the bully of the publishing world. When Johnson’s distributor was approached by two Amazon employees, he described the dinner meeting “like dinner with the Godfather.” Refusing to budge on making a payment to Amazon for carrying their books, (in 1999, Amazon received $3,621,250 in co-op fees) Johnson contacted Publishers Weekly, who ran their story about the strong arm of Amazon. The next day, the “buy” button on all their titles had been deleted. Because Amazon accounted for eight percent of their sales, Melville House caved to the pressure and paid the ransom. Though major publishing houses believe Amazon has monopolized the digital works of fiction and non-fiction genres by selling books for just a few dollars, unknown authors and readers who live hundreds of miles from any bookstores, disagree.
History of Amazon
In 1994, Amazon started off as a bookstore, an internet bookstore. Jeff Bezo’s, a Princeton graduate, quit his job at a Manhattan hedge fund and moved to Seattle to cash in on the “exponential growth of the early commercial Internet” (Packer 2). In Chicago in 1995 Bezos manned an Amazon booth “at the annual conclave of the publishing industry”, called BookExpo America with a sign that read “Earth’s Biggest Bookstore”. When approached by Rainy Day Books owner, Doeren, he asked “where is this bookstore?” Bezos replied “cyberspace”. When Bezos told Doeren his business plan, by gathering data on affluent, educated shoppers then selling books close to cost in order to increase sales volume, Doeren went back and told his business partner “I just met the world’s biggest snake-oil salesman. It’s going to be really bad for books.” (Packer 3).
By 2010, Amazon controlled ninety per cent of the market in digital books (Packer 10). One literary agent, Andrew Wylie, was worried Amazon had no competition. E-Book prices were being slashed to a mere dollar ninety-nine or ninety nine cents and publishers feared it would not be long before they had to slash the cover prices of all their titles. Publishers wanted control back and along came Apple. Apple wanted a deal with each of the big six publishing houses, Hachette, HarperCollins, Macmillan, Penguin, Random House, and Simon and Schuster. All but one, Random House, took the Apple deal and though the deal was worse from Apple than Amazon. “Apple’s terms included the provision that it could match the price of any rival” (Packer Cheap Words 12). It gave publishers control over pricing and a way to challenge Amazon’s grip on the market. However, in April of 2012, the U.S. Justice Department filed a complaint against Apple and the big publishers on conspiracy to fix prices after Attorney Steve Berman filed a class action suit. Because Berman was an avid reader of e-Books, he discovered a number of different publishers had increased their book prices from $9.99 to $13.99. After some investigation, Berman decided it was exactly what the publishers were trying to do, fix prices. “The federal complaint was a shock and an embarrassment to the publishing community” (Gessen “The War of the Words” Vanity Fair 7). Apple and the big publishers were trying to squash a monopolist-in-the-wings, Amazon, and the government stepped in and stopped them. It was catastrophic for the publishers who had to pay out millions in damages to rid themselves of the class action suits (Gessen “The War of the Words” Vanity Fair 7).
Despite all this drama, behind the scenes, publishers were making money, just like Bezos said they would. Print book sales may have been down, but e-Book sales were up. With the e-Books there were no manufacturing costs, no warehousing costs, not shipping costs, no returns, and so even at a lower price, their profit margins were higher. For instance, the retail price of a hardcover book of $27.99 would net profit to the publisher at $5.67, a profit margin of 41%. An eBook selling for $14.99 retail will profit the publisher $7.87, a profit margin of 75%, therefore, publishers are making more money on e-Books than hardcover books due to the low cost of publishing.
In 2014, a war between Hachette, book publisher for writers such as James Patterson, Malcom Gladwell and Douglas Preston, and Amazon began. The business dispute grew into a high stakes one, authors got involved because it was their bread and butter. They organized a group called Authors United and circulated a petition that gathered more than 900 signature. It called for Amazon to put an end to the sanctioning of books” (Gessen “The War of the Words” Vanity Fair 8). In a nutshell, the Amazon-Hachette dispute mirrored a culture war which had been playing out since the 1960s in America.
Authors United was able to obtain 900 signatures to put an end to Amazon’s sanctioning of books. However, writers who had self-published with Amazon, some who had made a good living out of doing so, came to the defense of Amazon. They were tired of New York publishing making the decisions of what stories people were allowed to read. They were tired of the high prices of books, and they were tired of the little profits made on each book, with the majority of profits going to the publishers. So they fought back. They made it known that Amazon wasn’t the evil enterprise these authors purported Amazon to be. They explained it was the natural and inevitable transition to online book sales. They said the same transition happened to other forms of entertainment, they blamed the publishers for “resisting technology” (Gessen “The War of the Words” Vanity Fair 8). These same publishers could have done the same thing that Amazon did, but they didn’t, they choose to fear the future and fight to protect the status quo (Gessen “The War of the Words” Vanity Fair 8). Their petition on Change.org obtained more than 8,000 signatures.
The dispute with Amazon and Hachette ended in November of 2014 with both parties seemingly happy with the results. The dispute was mainly over pricing and how much royalties an author could expect on sales of e-Books. Hachette sent a letter out to its authors informing them their royalty payments would not decrease and they were given the right to decided how much to charge for their eBooks on Kindle. Amazon in turn would provide incentives for Hachette to have lower e-Book prices, however the details of their deal remains unclear. According to Sarah Kahn, an industry analyst at the market researcher IBISWorld, said the agreement shows that “large publishers have some kind of impact to negotiate with Amazon” (Stenovec 1).
Amazon’s self-contained publishing world has its advantages and disadvantages to the author who decides to publish with them. First off, the majority of book sales, 20%, are through its e-Books, on the Kindle platform or on Kindle Direct. The books are never seen in a book store, most won’t carry Amazon titles because they believe they are being undercut by Amazon and that they are out to destroy them (Shapiro 2). Authors are also sacrificing the traditional New York based literary world as well as some amount of recognition in the world at large (Shapiro 2). Amazon promotes the titles on its website and the Kindle, and uses one vendor, Amazon. This is definitely not a path to riches for the author. In fact, some find themselves working for almost nothing. Aaron Shepard, an author of three “how to” books on Kindle publishing says he has told his readers to deliver the message, “The party’s over”.
One of the advantages of self-publishing with Amazon would be the low production costs, through their CreateSpace program. With Kindle Direct, authors don’t pay any upfront cost to Amazon, they take a cut of 30 percent once the book starts making money. This leaves a 70 percent royalty payment to the author much higher than the 10-15 percent from traditional publishers. One self-publishing author has made upward of $450,000 a year. According to an article in Forbes, a UK-based author, Mark Dawson, who writes thrillers and crime novels, has sold 300,000 copies of his thriller series about a British assassin named John Milton netting him a six figure total.
Around eighty percent of newly released books originate from self-publishing or small presses and this figure has been increasing yearly (Carolan & Evain 285). In order to establish the positioning of self-publishing’s future development, one must look at current industry practices. By profiling self-published authors, Carolan and Evain, who wrote a journal article “Self-Publishing: Opportunities and Threats in a New Age of Mass Culture” (2013), broke these profiles down into three categories: the big fish in the big pond, the big fish in the small pond, and the small fish in the big pond. The author’s example they used for “the big fish in the big pond” was John Grisham. Prior to becoming a bestselling author of legal thrillers, Grisham’s first novel, A Time to Kill, was rejected by dozens of publishers and agents until a small New York publishing house, The Wynwood Press, decided to release an initial run of five thousand copies. Because Grisham had been studying the market, he knew his book would not obtain the success he was looking due to the limited marketing potential of the small independent press. He sold his law firm, purchased one thousand copies of his book and went on a three month book tour cross state. He ultimately sold every copy. He then set out to produce his second novel, The Firm, which attracted Hollywood into making a major film, and in turn was then adopted by a major publishing house. Though Grisham is often mistaken as a self-published author, he remains heavily involved in the promotion of his work and yet is also engaged with traditional publishers.
“The big fish in a small pond” category corresponds to self-published authors who have managed to “establish their authority as author-entrepreneurs in niche markets” (Carolan & Evain 288). This is the perfect example of author James Redfield and The Celestine Prophecy. Redfield sold almost one hundred thousand copies of his philosophical dissertation on new age spirituality before Warner Books picked him up. Niche markets are successful as self-published books because “these specialty books do not appeal to large-scale publishers and it is far easier to market a book to a specific audience” (Yakawicz 2010). He has since sold over a million copies and the book is translated in thirty-four different languages. Another reason for his huge success was the timing of his book. The author had a great deal of knowledge in both his subject and his readership and the small interconnected communities used word of mouth to help develop his product (Carolan & Evain 288).
“The small fish in the big pond” concept deals with the self-published books that are released through Print-On-Demand which sells about an average of seventy five copies of any given book (Carolan & Evain 288). The competition in this market is fierce. Most self-published authors keep a low profile so it is important for them to engage with their readers either electronically or physically. It’s important in this day and age for the authors to let readers know why they should invest their time in getting to know them. Blogging and social media networking websites are ways for authors to build their online communities and interact with their readers.
Diversification of Publishing
With the e-Book renewing the love of reading for many people, it has also helped the book industry all the way around. People are checking out books at the library and they are still buying hard copies via the internet. With the diversity offered to the public, it seems the modern publishing environment has been able to co-exist and complement each other’s activities. Gabriel Zaid explains it beautifully:
The technologies that lower the threshold for investment and the cost of the product respond to the need of a better educated population to read and express itself in an ongoing conversation in which diverse subjects and interests multiply. By rooting themselves in this economic reality, some forms of conversation that actually favor diversity may thrive. But those that impoverish conversation instead of enriching it will encounter difficulties inherent in the very nature of books.
More than two thirds of the over one million books published each year are self-published books, reprints of public domain works, or other print-on-demand books. All of this growth has come in the name of Amazon, the global superstore. And even though in the beginning, traditional publishers felt Amazon was monopolizing the digital works of fiction and non-fiction genres, the publisher’s profit margins increased from 41% to 75%. With 80% of newly released books originating from self-publishing or small presses, it’s no wonder this is the way of the future. It has opened up diversity in the market place and has allowed both the traditional publishers and the e-Book publishers to find a way to co-exist in the market. After all, enriching people’s lives will help a society thrive in an ever changing market place. Amazon opened the doors to the future, and the future is here to stay.
Bowker Report. “Self-Publishing Movement Continues Strong Growth in U.S.” Tools and Resources. Thorpe-Bowker. A ProQuest Affiliate. 2010. Web.
Carolan, Simon. Evain, Christine. “Self-Publishing: Opportunities and Threats in a New Age of Mass Culture”. Springer Science+Business Media, New York. 12 Oct. 2013. ProQuest.
Gessen, Keith. “The War of the Words. How did Amazon End Up as Literary Enemy No. 1?” Vanity Fair. Dec. 2014. Web.
Packer, George. “Cheap Words. Amazon is good for customers. But is it good for books?” The New Yorker. 24 Feb. 2014. Web
Ronning, Helge. Slaatta, Tore. “Marketers, publishers, editors: Trends in International Publishing. Media, Culture & Society. Sage Publishing. Journal. 2011. ProQuest.
Shapiro, Nancy. “The Perks, Pitfalls, and Paradoxes of Amazon Publishing.” Seattle Weekly News. 4 Nov. 2014. Web
Stenovec, Timothy. “Amazon Probably Didn’t Get What It Wanted In the Hachette Deal” The Huffington Post. 14 Nov. 2014. Web.
Yakowicz, Susie. “Find Self-Publishing success with a Niche Market”. 2010. Web.
Zaid, Gabriel. “So Many Books: Reading and Publishing in an Age of Abundance. Sort of Books. 2010. Print.