Sunday, February 21, 2016

The 800 Pound Gorilla

No I'm not here to talk about Beast from the X-Men or King Kong. This week I wanted to discuss the largest publisher of ebooks in the world, Amazon. To many self published indie writers Amazon has been a godsend. Some of them would not have a career without the distribution giant. On the other side purists and large traditional publishers tend to look at Amazon as being the evil empire looking to swallow everything whole. So what is the truth? Is Amazon the evil mastermind behind the destruction of publishers? Is it the hero allowing authors to circumvent the oppressive system of old white men who only want to push the red button? Is it OK to lick Nutella off your friend's face?

Closing The Loop

As I had written previously about many websites who want to take advantage of writers, Amazon is trying very hard to close the loop. They have been very successful at this so far. More products, product previews, reviews, suggested next purchases, also bought, and so on. It is all designed to get the customer to stay there and spend more at Amazon. This has helped make Amazon the largest seller of ebooks in the world. Other companies are scrambling to catch up while the gorilla gets bigger.

This has forced traditional publishers to negotiate from a position of weakness with Amazon. I suggest using a Shake Weight before going into negotiations. Amazon will go on with or without these publishers. The large publishers make up a small percentage of the new products that are made available on Amazon within the ebook market and a much smaller percentage overall. People who shop for ebooks at Amazon will find them elsewhere if needed. With this power Amazon is trying to negotiate a better deal for their benefit. They are a business first and foremost.

What Amazon's data tells them will benefit them the most doesn't exactly line up with what large publishers see as being the most beneficial. Amazon sees traditional publisher's ebooks selling at higher numbers at lower prices and profits overall being higher as a result for the ebook. Traditional publishers see ebook margins as being much higher than paperback novels, so they want to milk it for all it is worth by pricing it like a premium product. Which makes sense for their self-perceived image of being the curators of quality books. Obviously quality is their main concern when they give a large advance to someone like Paris Hilton for her memoirs.

Many publishers are pricing their ebooks higher than the paperback version of the same book. I see this happening in bookstores as well with traditional publishers releasing what I would call the "premium paperback". They are basically paperback novels, but printed in a larger format. The pages are bigger, the cover is bigger, the cost to produce them is I'm guessing only slightly more or the same as your standard paperback. The difference is that they are priced 2 to 3 times as much as the standard paperback. Now they have a paperback with vastly improved margins. The traditional publishers are behind the curve on technology and aren't looking at optimizing and streamlining, while Amazon is, and that is where they clash. They both want to make more money, but they are at odds with each other over the method. This sounds like every political debate ever.

Propaganda

Ebooks being sold on Amazon represent a nice chunk of change to the traditional publishers. So why are there so many articles on blogs, newspapers, magazines, etc. that are all bashing Amazon and their ebook empire? Also nearly every article bashing Amazon is written by an author that is under contract with a traditional publisher. Why bite the hand that helps feed them? Are they afraid Amazon is going to morph into a mechanized velociraptor and bite their face off?

This is a ploy by publishers to maintain their status and gain negotiating power. Amazon wants more products on the shelves. That is one of the reasons they have done so well. They can't sell a product if it isn't on the shelf which might cause people to go elsewhere to shop for it. Gotta maintain that closed loop. Amazon treats customers like Pokemon, gotta catch em' all!

Traditional publishers try devaluing the competition's product (author/publishers or self published authors) by exclaiming their lack of quality. Whether this is true or not doesn't really matter to them. They have a propaganda machine in place of loyal readers and authors who are ready to push this narrative. All of this is just so they can negotiate better terms and subject us all to their agency pricing model. The model they believe will maximize their margins. Of course there is a lot of push back from Amazon, author/publishers, and loyal customers who point out the antiquated methods of traditional publishers. All of the war machines are brought out. Pew pew pew.

Conclusion

Amazon is not good nor is it evil. It is a business just like traditional publishers are businesses. Amazon sees itself as a business that relies on customers, so they do their best to make it all about the customer. Amazon is great at making things easier for the customer in almost every way. They want to see the manufacturers of the products succeed or at least sell more product at Amazon. This is why so many author/publishers love Amazon. Amazon treats them like customers. We need to be wary of programs like KDP Select though. This is Amazon trying to close the loop by giving away benefits in exchange for exclusivity. For some it will make sense to do so, and for others it will do more harm than good. Don't hit yourself, it's not healthy. Also putting all your eggs in the Amazon basket is risky. Especially if Amazon changes their philosophy on how they treat authors which they constantly experiment with and tweak. If it ain't broke, they're still trying to fix it.

My main point is that as an author whether you are traditionally published or an author/publisher you have to look out for yourself. Your publisher is not your friend. Amazon is not your friend. You can be sure they are looking out for their best interests. It's up to you to look out for yourself. It's a big scary world, and Godzilla is out there.

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