Amazon and Rebalancing the Book Publishing Ecosystem

Jeff Bezos

David Ryder/Getty Images News

Amazon effectively invented the online bookselling business. In an IQ2 debate of the topic "Amazon Is the Reader's Friend," Matthew Yglesias, Executive Editor of Vox (and arguing "for") posited that the Internet retail giant's 41% share of book sales and 67% share of digital book sales is a result of its "superior product."

The fact that their strongest "product" is distribution to consumers (awards success of Transparent aside)—and that Scott Turow's so brilliantly used the word ecosystem in the debate (he was arguing "against")—prompted my own thinking on the subject.

Amazon's market domination has proven to be a double-edged sword for many who make their living writing or publishing or selling books. But whether one experiences Amazon as a distribution powerhouse or a monopolistic bully, nobody can deny that the company's actions profoundly affect all parts of the publishing ecosystem.

Towards a Healthier Ecosystem

As I have to remind aspiring authors: the first thing everyone needs to remember everyone in the publishing ecosystem needs to make a profit and a living.

As much as I can truly say that most people in the book publishing industry love books, none of us can afford to rely on idealistic notions of what books do for culture or sense of fair play. As much as anyone else in the ecosystem, writers and authors need to reinforce the value of what we all do and any solutions need to address the hard-core fiscal demands for all parts of the ecosystem.

So what unique factors or tactics might we see to temper the predatory and nudge relationships in the book publishing jungle towards a more healthy symbiosis?

First, a Bit About Amazon

In the early days of the retail giant, it seemed a near miracle that any book in print could be had easily — it was great for backlist authors, great for those of us whose job it was to market books. The only thing I remember about my own first order is that Amazon sent me a mousepad with the quote from Groucho Marx: "Outside of a dog, a book is a man's best friend. Inside of a dog, it's too dark to read." Unadulterated but clever bribery. And it worked. In those nascent, halcyon days of Jeff Bezos' book career, what was not to like?

With a nod to online ordering convenience and ease of book discoverability, it was consumer bribery—in the form of deep discounting to consumers, no taxes and free shipping—that's what's helped sustain Amazon's dominance. Flash forward to a DOJ anti-trust lawsuit against publishers and Apple and a stand-off against Hachette that hurt book sales and authors… to Author's Guild past president and bestselling author Turow's remarks regarding their tactics:

"Amazon is a Trojan Horse, offering low prices today—while Wall Street is willing to float a company that doesn’t make a profit—at the cost of destroying the [traditional] publishing ecosystem that is indispensable to authors… Amazon actually prevents competition by locking its customers in through devices like Prime and DRM, which means Amazon customers can’t read books sold by Apple or Google Play on their Kindles.”

Even as it alienated some facets of the industry, Amazon was successful in being viewed as a benefactor for self-published authors—many have made a killing by distributing through its KDP and took the retailers' side through the Hachette standoff. But the recent terms of Kindle Unlimited subscription model have reportedly damaged many of those indie author's bottom lines, making some rethink the wisdom of putting so much distribution power into one entity.

But Amazon isn't likely to change its spots. The Author's Guild is hoping for legal remedies; Amazon's financial backers might decide they need profits. But there are other forces at work towards the rebalancing of book publishing power.  

Publisher Consolidation, Content Focused

The consolidation of the publishing industry includes the formation of Penguin Random House, Hachette's purchase of Perseus, and HarperCollins' purchase of Harlequin. Whatever the downsides to this, the concentration of bestselling content gives the Big Five a lot of leverage with readers, and creates the potential to drive readers to publishers rather than online retailers. This means higher margins for the publisher.

Many publishers offer direct ebook distribution off their websites but in 2014 HarperCollins very publicly launched a direct sales effort—complete with discounting, free shipping and book sampling. This was a move that would've been shied away from years ago—because while publishers have always sold books to consumers and booksellers have always published, publishers avoided being perceived as competing with their customers, the booksellers.

But the lines in the industry are blurring more now than ever and it makes sense for traditional publishers to more overtly and aggressively compete in the digital distribution arena.

And as authors are necessarily doing more of their promotion, publishers may choose to financially incentivize house authors (ex. with higher royalties) to drive sales to the publishers' direct "sell" buttons in order to effectively compete with Amazon's robust author affiliate program. HarperCollins is doing this now, offering an additional 10% royalty for books sold through their system. 

And anyone who wants to be an author today needs to be educated in the ways of the marketplace...  continued:  broadening publisher services, authors and agents, bricks and mortar, flesh and blood.