Amazon & The Publisher
As of this writing in February 2019, it seems traditional trade publishing is hanging by a thread, and while there are multiple variables at play, Amazon poses the biggest threat to the major publishing houses. Amazon has the majority of the e-book market; it also has considerable share of the entire marketplace (per The Data Guy, not only did Amazon’s print sales beat our other retailers, they already account for roughly 75% many nonfiction genres’ sales). Amazon used multiple tactics that compromise the sustainability of traditional publishers, such as undercutting prices to essentially being nonprofitable to become the go-to for e-book sales.
Things That Didn’t Help Publishers
While publishers tried to push back when Amazon endeavored to force their price points on them, Amazon still came out on top. To recap, in 2010, five of the then Big Six publishers colluded with Apple iBooks to establish the publisher as the seller and therefore the entity to control the pricing. The methods employed to enact this approach resulted in anti-trust action by the U.S. government. The result was that agency pricing (i.e., that the retailer or agent could set the prices) was allowed via new contracts with vendors with the important issuance could discount from the agency price provided “the aggregated discounts to consumers didn’t exceed the retailers’ aggregate margin on those books” (Shatzkin, 2018).
Per Mike Shatzkin in The Shatzkin Files, this may have bitten publishers on their behinds considering that the new issuance meant that discounts came from the publisher’s profits. The other result of this case was that publishers were represented as being underhanded and greedy, something many authors already presumed. The fiscal stinginess of traditional publishers is something oft grumbled about by authors on social media forums. (Many of these authors are unaware of how the publishing industry operates from a financial standpoint and fails to understand that a publisher’s profits and margins are often paper-thin.)
Control of Book Prices on Amazon
Moving on, in 2014, publisher Hachette and Amazon went toe-to-toe not only on establishing e-book prices but also to control how much of the pie Amazon took (Streitfeld, 2014). While the two entities feuded, Hachette authors paid the price. Their titles were unavailable or slow to distribute on Amazon. One author noted that he had several readers contact him on Facebook regarding his works, but because of Amazon withholding his titles, he was powerless to supply them to his readers. Eventually, Hachette came out on top and earned the authority to determine e-book prices as well as how much of the pie Amazon took. Amazon got the last word, though, by pointing out that publishers already profited too much from e-books, which furthered perpetuated a negative perception the publishing industry’s Big Five (the industry went from the Big Six to the Big Five with the merger of Penguin and Random House).
Buy It Now & Related Balking
Then in 2017, Amazon delivered a hard blow to publishers. It changed its “buy-it-now” push button feature so that anyone with a product in stock or for a better price would be the seller, not the publisher. Publishers balked noting that this meant that individuals with illegal copies of books, with ARCs they were inappropriately selling, or with damaged inventory could make sales ahead of publishers. Compounding this, with less and less warehouse space, publishers were more likely to run out of titles meaning third-party sellers were better-able to get sales that previously went to publishers. With the latest, publishers are less likely to be able to profit from a surprise success in which sales exceed inventory or from backlist sales, which as Jane Friedman notes in her report of the traditional publishing industry’s health as of the first half of 2018, is a large part of what is helping them hold their ground (nonfiction titles are the other source of support). The end-goal of this latest upper-cut to traditional publishers is to get them to lean on Amazon’s print-on-demand services (Shephard, 2017) (Grady, 2017).
The Publisher & The Author
In the previous, the publisher / author relationship was previously touched upon with the mention that many authors in 2018 grumble about publishers and how much they take from authors and how little they give to authors. Many authors are open to self-publishing because the reputation of independent publishing has improved tremendously. Not only that, success stories from authors such as Mike Omer or Lea Robinson and Melissa King (who publish under the pen name Alexa Riley) who achieve six-figure success as indie authors (Semuels, 2018) fuel the hopes of emerging authors even though over half of indie authors barely break $1,000 (Winters, 2013).
Barriers to Traditional Publishing
The fact that the traditional publishing industry is such a challenge to break into as Marj Charlier reports in an article titled “Self-Publishing Grows and Grows, Despite the Old Stigma” for The Press Enterprisein November 2018. Charlier points out that of the 2,000 new manuscripts an agent gets each year, they will take two or three new authors. After edits, the agents pitches the manuscript to editors, and it can take years for a manuscript to get picked up by a publisher (if it ever gets picked up). Of the 1,000 manuscripts publishers see, they acquire about three. If authors win this numbers game, unless they are already famous or there are other factors that assure the success of their work, the advances are skimpy if not withheld all together. Charlier also notes that today’s authors are responsible for paying for their own editing and for facilitating their own marketing. At this juncture, many authors wonder why even have a publisher?
The Business of Smashing Dreams
Then there are the stories of authors who have been burned by publishers. While this does not happen to every author, the author of this paper knows of one author, Jeannie Holmes, who previously had a contract for a YA fantasy series with Penguin Random House stopped writing all together when her contract was suspended. The publisher cited poor sales, and the agent was unable to get the series picked up elsewhere. The author describes her perception of this experience in a post on her website.
Another author interviewed via e-mail reports being picked up by an indie publisher for her first novel; however, that publisher was not very reputable and had multiple contract violations. This author regained her rights and found a second publisher. This small, indie press was great and had excellent marketing; however, the company went belly-up when one of the founders died in 2015. The next publisher was well-rated, and Joyce was offered a three-book series for her standalone YA paranormal novel, which she accepted.
A month before the series’ first book was set to drop, the publisher contacted the author to say she was getting a divorce and was closing her publishing company to instead focus on marketing and advertising. She advised she was canceling the author’s contract but would give “free advice and coaching” to self-publish. The author insisted the publisher honor the contract, a regrettable choice as the former publisher reportedly put as little effort as possible in fulfilling the contract.
Today, the author is a self-published author on Amazon, and says that “I now make a lot more from my Amazon sales than I made from all the small publishers I had combined.”
Amazon & The Author
Meanwhile, between 2007 and 2018, Amazon positioned itself to be the author’s purported knight-in-shining armor. With the production of the Kindle in 2007 (quickly followed by e-readers from Barnes and Noble (the Nook), Apple, Kobo, etc., e-publishing and indie publishing took off. Certain genres performed better than others (romance, mystery, history, etc.) and Amazon capitalized on that.
Not only did the e-book create a vehicle for e-books, but Amazon created a service and platform for indie authors with CreateSpace (a direct competitor to IngramSpark). These services helped authors with things like cover art, formatting, and more.
Amazon also offered special incentives to authors who published with them. For authors publishing exclusively via Kindle Direct Publishing (KDP), authors had the opportunity to offer their books for free in order to build an audience for their writing (free or low-cost books is especially helpful to authors who write series fiction).
To control pricing, Amazon offers authors a royalty of 70% if their books are priced between $2.99 and $9.99. Authors are all too happy to comply.
KDP, You and Me
In addition to KDP, Amazon has another exclusive program for authors, Kindle Unlimited, which operates like Spotify or Netflix. Alana Semuels explains in a 2018 article for The Atlantic that KU users spend $9.99 a month and can read as many KU books as they like. For each page of an author’s book that is read, the author gets half a cent. This does not seem like much, but it adds up. What is more, Amazon pays out very attractive incentive checks to the most-read authors that can be as high as $25,000 a month. (Amazon claims that it works to prevent authors from packing their pages with superfluous content given this kind of reward system does not benefit authors whose works are carefully edited or who favor brevity.)
Amazon Owns Goodreads
Not only this, but Amazon also owns Goodreads, the most popular social networking site for readers and for book reviews. It also owns Audible, the world’s largest and most popular audiobook subscription site (Ha, 2018). Lastly, Amazon now has over 15 of its own imprints and frequently tops the bestseller charts (according to its data).
In the same article by Semuels, Smashwords founder and CEO Matt Coker is quoted as saying, “It’s (KU) is a cancer. It’s going to undermine the entire publishing industry. … Amazon is putting the thumb on the scale¾although customers will happily pay for books, they give these books out for even cheaper” (Semuels, 2018).
TBH, Amazon Also Owns Indie Authors
And so, as of 2019, most authors are delighted with what Amazon is doing for them and for what it seems to allow them to do, which is to be independent; however, as Coker points out and as this author concurs, Amazon is actually making authors dependent on it. By not allowing authors to publish elsewhere in exchange for the exclusive perks offered by KU or KDP, authors are essentially contracted with Amazon. Sure, they can leave when and if they want, but where will they go? Smashwords is an e-book distributor, but no other entity has the kind of audience and clout as Amazon, and this becomes the problem.
Amazon Crushes the Comp (Bye, Barnes & Nobles)
As Semuels points out, many book retailers and publishers are at a point that even fractional losses could cause the company to shutter. Barnes & Noble, for example, reported a five percent decline in sales in 2017, which caused its shares to drop. Within the past year, Barnes & Noble has started to restructure from the top down, which is often a sign of the end of days for a struggling retail organization in today’s commercial climate (look at Borders, Sears, and others).
Ethical Issues & Practical Importance
Ideally, Amazon will be mindful that with great power comes great responsibility. They have made enemies as they have clawed their way to the top. Their lack of ethics with regard to how they treat employees (Bezos reportedly makes $230,000 a minute while Amazon employees on average do not even make a living wage (Giridharadas, 2018) (Marx, 2018).) as well as how they are affecting the publishing industry has many writers shunning the giant. Recent news from The Guardian reports that the Canadian literary prize, the Prix litteraire des collegiens has been suspended due to the finalists’ commentary upon finding out that Amazon was a sponsor. The finalists wrote that, “Our great unease comes from the dangerous competition this giant has with Quebec bookstores. Need we remind you of the precariousness of the book trade and literary publishing? Need we mention the inhumane methods this online giant, which constitute a danger for small traders and culture at large?” (Flood, 2018).
Critics of Amazon’s corporate ethics also point to the company’s recent quest for an HQ2, which was a years-long process involving 200 major U.S. cities in a “gameshow-like” competition for Amazon’s favors. Norther Virginia and New York are homes of the new hubs, which are actually more like a basic expansion, which is not what was advertised. Meanwhile, Amazon walked away with data on those 200+ cities that competed to be HQ2’s new home (Kim & Teachout, 2018). Many felt cheated, and many in New York are concerned for what this expansion will do to the impoverished and underserved groups in the boroughs of Queens, the Bronx, etc. It remains to be seen how this move will play out; however, the underlying point is that Amazon gathered a lot of data, and if one looks at Amazon’s other activities, data gathering seems to be the name of the proverbial game. In fact, it has been suggested that Amazon’s goal in increasing its dominance in publishing is to have data that will inform it / authors for its imprint to “write the perfect book”, a notion that seems preposterous but perhaps suggests how out of touch Amazon has become (Ha, 2018). Certainly, this point illustrates that Amazon’s intent has nothing to do with the integrity or artistry of the written word.
So…What Should Authors Do?
Does this mean that authors should stop publishing on Amazon? No, of course not. Many authors have made great livings via Amazon. Further, authors who were traditionally represented have gone on to be more successful with self-managed indie careers (after all, even traditionally published authors have to do most of their own marketing hustle these days). Authors, should, though, be mindful of the situation. They should be mindful that if Amazon makes major changes to its publishing program or to how authors get paid, their income flow might be affected substantially. In other words, indie authors who publish and make a living via Amazon do kinda work for Amazon.
My recommendation is for authors who want to be traditionally published, go for it. For authors who want to be indie, they should also work on platform building. Don’t just build your presence on social media (because social media platforms collapse and change all of the time). Have a website and build a solid client list via e-mail. Stay in touch with clients and treat them like the special, wonderful people they are. Your bond with your readers is important because what if one day, Amazon shutters its book biz or something replaces e-books.
At the end of the day, no matter what happens, no matter if you think Amazon is a sinner or a saint, whether Simon & Schuster and Hachette and Tor and the others shatter like glass, or if Amazon goes to pieces, you can be relatively unaffected by having a solid relationship with your readers and (more importantly) a way to contact them and to make sales to them.
Building relationships is an important part of the business end of being an author. You need to have a relationship with your reader. You also need to have a relationship with an editor who will stick with you through your career and who will ensure consistency in your works (especially for series authors). You also want an editor who is knowledgeable about the industry and who can help provide resources and who can make recommendations about how to proceed in the (still changing) publishing industry. If you’re in the market for an editor, contact me, Vonnie York by clicking here or by sending an e-mail to Vonnie@creativeeditingservices.com. I specialize in memoir, mystery, and romance. I’m also interested in YA, adventure, and contemporary fiction.
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