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    « Amazon: A Third Wave Rocks Publishers' Leaky Boat, Pt 2 | Main | Bring Facts to Life in Family History »
    Friday
    Dec032010

    Amazon: A Third Wave Rocks Publishers’ Leaky Boat Pt. 1

    It’s no secret that book publishers have had a tough time keeping their ships afloat over the past three decades. A good way to look at why is the lens provided by a question in Onnesha Roychoudhuri’s recent article in The Boston Review. He asks, “What happens when an industry concerned with the production of culture is beholden to a company with the sole goal of underselling competitors?”

    Historically - or at least in the early 1970s – publishers looked for the best writers they could find, published their work, and left it to independent publishers to sell their books. The local bookstores knew their clientele and chose books for their local markets. Staff recommendations at bookstores often helped books find an audience.

    The first wave of economic change to transform the industry hit in the 1970s-80s when traditional publishing houses were largely gobbled up by multinational conglomerates whose number one criteria for evaluating the publishers performance was their return on investment. Focus shifted to blockbuster books promoted to the hilt. New or mid-list books found it tougher to find a way into print.

    The second wave – mega chain book retailers Barnes & Noble and Borders – washed over the industry in the late 80s. The result was the disappearance of independent bookstores. In the early 90s there were over 6,000. Today there are 2,200.

    The big box bookstores grew by demanding and getting preferential pricing from publishers. Independent booksellers customarily bought at a 40% discount off the publisher’s price. Chains got a 48% “volume” discount. The independent bookseller’s trade group the American Bookseller’s Association filed two lawsuits against the discriminatory discounts. Both were settled out of court.

    The big box retailers then went after the publishers with demands for co-operative advertising fees, usually referred to as co-op. These fees bought preferential store placement, provided special in-store discounts on selected titles, and amounted to 4% of publishers’ net revenues.

    The retailers began to dictate content. Roychoudhuri reported that, “One editor at a major publishing house, who agreed to speak on condition of anonymity for fear of employer sanctions, told me that agents of Barnes & Noble, Borders, and Target are frequent participants in meetings about potential books. Without their buy-in, the publisher is unlikely to go forward with a book.”

    When the third wave became visible, in the form of Amazon.com in 1994, there seemed some cause for optimism. Amazon founder Jeff Bezos said, "We want to make every book available—the good, the bad and the ugly."

    However, Amazon has merely accelerated some trends that were initiated by the big boxes. It has pushed the discounts at which it purchases from publishers to 52-55%, while even the chains get only a 50% discount.

    Publishers Weekly in 2004 reported that Amazon demanded that publishers pay higher co-op rates. If they didn’t they faced “…Amazon not selling their books at a discount and not having their titles ‘surface’ in various merchandizing and advertising programs.” When publishers resisted they found books “de-listed” meaning they could no longer be found on Amazon. Others found the “buy” button removed from their books’ listings. Charlie Winton, CEO of Counterpoint Press called it “a discount grab in the guise of getting co-op.”

    Roychoudhuri reported that most publishers refused to speak on the record about Amazon’s strong arm tactics.

    Jeffrey Lependorf, Executive Director of the Council of Literary Magazines and Presses and of Small Press Distribution said: “I think even people at Amazon would say that it’s essentially a widget seller that happens to have begun by focusing on books. Many people, like me, will say you can’t sell a book the same way you sell a can of soup.”

    In upcoming blog posts we’ll look at what the e-book, particularly Amazon’s Kindle, will do to the trends already in motion and what those trends may mean for readers like you and me.

    Click here to read Onnesha Roychoudhuri’s article “Books After Amazon” in the November / December 2010 Boston Review.

    Click here to read Colin Robinson’s article The Trouble with Amazon” in The Nation, August 2, 2010

    

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