A Once-in-a-Century Opportunity to Re-invent Publishing, and Books

The working title for this article was, “These Days, Monopoly is Just a Board Game.” I started to argue that Amazon wasn’t and isn’t a monopoly, but then I also managed to argue myself out of becoming an Amazon Cheerleader. Since I was looking into anti-trust statues and case law (spoiler: it’s dry) we’re going to wade into that half of the post first. But stick with me; I hope by the end I’ve also convinced you of the promise of that over-ambitious title up there.

I’ve set up a shortcut for those that want to skip Supreme Court Case precedents (no blame attached) and get to the second part: click this link

Also, I’m not a lawyer: just throwing that out there before we get started.


“Proponents of Amazon’s lower pricing strategies argue that Amazon is the underdog in the publishing monopoly, not the other way around. But the fact remains that Amazon is a company that single-handedly controls 30% of the market share of the entire publishing industry. And unlike its competitors, it has a publishing arm, a distribution arm, and a retail arm.”
Amazon strongarms publisher, won’t allow pre-order of new J.K. Rowling book : 24 May 2014, The Daily Dot

“Amazon’s strategy against Hachette is that of a bullying combine the size of WalMart leaning on a much smaller supplier. And the smaller supplier in turn relies on really small suppliers like me. It’s anti-author, and in the long term it will deprive you of the books you want to read.
“Final note: some time in the 1980s the US Department of Justice’s anti-trust lawyers changed their focus from preventing monopolies from forming to preventing companies from colluding to preserve their margins (‘price fixing cartels’). As a result, Amazon very nearly gained a monopoly of ebook sales; they’re still around the 85-90% mark in the UK, and peaked at over 80% in the USA. (The irony of the DoJ-Apple iBook store settlement is that the DoJ went after the market incomer with the higher prices and 10% market share, rather than the near-monopolist who was using predatory pricing to drive their competition out of business.)”
Amazon: malignant monopoly, or just plain evil? : 26 May 2014, Charlie Stoss

“People have a choice on where to buy books. Amazon being the biggest bookseller on the planet doesn’t make them a monopoly or monopsony. If readers demand Hachette books, Amazon has not prevented them from being sold. There are thousands of other retailers who sell Hachette titles.
“I have five books published through Amazon’s Thomas & Mercer imprint, and more than a dozen self-pubbed through Createspace. Guess what? Indie bookstores and B&N don’t stock my paper books. And they are allowed to make that choice. And I don’t publicly whine about it.” …
“And there is a big difference between sales and profits. But no matter how you slice it, Hachette isn’t a helpless neophyte. They have power and capital and lawyers and have been around for almost 200 years. Amazon has the power advantage here, because they have customers Hachette wants access to. If Hachette wants to reach those customers, it will either accept Amazon’s terms or withdraw its catalog. And if Amazon can’t stand the idea of losing Hachette’s sales, it will back down.”
Fisking Charlie Stross: More on Hachette/Amazon : 27 May 2014, Joe Konrath


“The Rule of Reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. The rule, stated and applied in the case of Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911), is that only combinations and contracts unreasonably restraining trade are subject to actions under the anti-trust laws. Possession of monopoly power is not in itself illegal.
“The Rule of Reason can be therefore considered a complement to per se illegality. Under the latter, the action, without consideration for circumstances, is illegal. Under the rule of reason, the circumstances in which the action was committed must be considered.” …
“On the same day, the Supreme Court also announced United States v. American Tobacco Co., 221 U.S. 106 (1911). That decision held that Section 2 of the Sherman Act, which bans monopolization, did not ban the mere possession of a monopoly but banned only the unreasonable acquisition and/or maintenance of monopoly.”
— Wikipedia: Rule of Reason – see also the entries for Standard Oil Company of New Jersey v. United States and United States antitrust law

I also like the finding (in other cases) that ‘geographical market division’ is straight up illegal, and I wonder how that could be applied to, say, cable companies in an argument. Do the cable companies collectively form a price fixing cartel more pernicious than, oh, I don’t know, Apple and 5/6ths of the Big Six publishers?

The phrase used is “illegal per se“ — in and of itself illegal, ‘inherently illegal’ —
“The United States Supreme Court has, in the past, determined activities such as price fixing, geographic market division, and group boycott to be illegal per se regardless of the reasonableness of such actions. Traditionally, illegal per se anti-trust acts describe horizontal market arrangements among competitors.The illegal per se category can trace its origins in the 1898 Supreme Court case Addyston Pipe & Steel Co. v. U.S., 175 U.S. 211 (1898).” – wikipedia

Cartels are illegal, a monopoly in-and-of-itself isn’t (in 1911).

Modern day Justice Department lawyers (in my opinion, burned in 1999-2001 when the Microsoft monopoly case amounted to a whole-lotta-nothing) have been skittish, loath to prosecute, and have also taken a very narrow view of antitrust laws: Monopoly power when exercised to deprive consumers of “the benefits of competition” is illegal — and the US Dept. of Justice sees the price charged to end-consumers as the only yardstick to measure that by. (The final price is only one benefit of competition and healthy markets, but whatever.)

It would also seem that players in an industry can collude all they want, too — so long as they do so in the open, in public view, and have excellent lobbyists. This is the reason the cable companies can all charge $90 a month, and raise rates every year, while offering neither better service nor more programming options. The mistake that Apple and the publishers made was attempting the old fashioned back-room deal: They should have hired more lobbyists, set up a think-tank or two, and then debated the ‘issue’ in back-and-forth newspaper editorials and NPR interviews; heck, the CEOs could legitimately spell out the whole deal, in the context of a cable news appearance. After six months of that, they could legitimately claim Agency Pricing was just ‘natural’ and the way ‘everyone’ was doing business.

Or at least, that seems to be the MO of the Cable Cartel — in my opinion.


Coke isn’t a monopoly, because Pepsi.

Visa isn’t a monopoly, because Mastercard.

McDonalds is big and profitable and ugly, but isn’t a monopoly.

Walmart is pernicious and certainly isn’t playing fair in several ways, but they do not have a monopoly.

We, as individual consumers, may not like some very successful firms because we dislike how they do business — or object to the business entirely — and so we don’t eat at McDonalds or shop at Walmart or drink either brand of fizzy diluted corn syrup.

De Beers is a straight-up monopoly — (not that this will ever be an issue, but) if I ever find myself needing a diamond ring, you can bet your ass I’m shopping vintage, or even going to a pawn shop, and if need be having the stone reset, rather than giving them any money.

Even when consumers exercise choice (free market, etc.) there are always times-and-places where some non-Monopoly with plenty of competition still ends up being the only choice. Cable TV and Broadband Internet are two lovely examples — as I can all but guarantee you have only one choice for each, and it’s the same company. For rural US customers, away from the coasts, Walmart may not just be the only discount department store, but the only grocery store for miles.

Walmart is a monopoly to the folks out in Podunk and West Bumble, though those folks are often glad to have them there. The options that existed before were both limited and more expensive. I still don’t think Walmart is ‘doing good’ but they’re serving markets, and if all we consider are outcomes and prices (and not awful practices) then Walmart deserves (some, slight) praise.

Amazon isn’t a monopoly… right?

Amazon has ‘competitors’ in the book market, and the small electronics market (that’s their real retail bread and butter), and online streaming video, and music downloads, and cloud computing services, and small goods (anything that fits in a box). Amazon has barely started in the grocery delivery market — a market which doesn’t even exist yet, honestly* — and in a number of other fields-of-competition, Amazon is in 2nd place, 3rd place, or worse. There is no way** to call Amazon a monopoly

* natural monopolies in markets where no active market previously existed have also been addressed by the courts; we’ll get to that eventually.

Amazon is much more than a bookstore these days anyway. No matter how small a percentage of the business, though, Amazon is always going to sell books — because books are the key to everything else:

“[B]ook markdowns are extremely visible. Sellers can tout their low prices compared to what’s on the back of book covers, the price publishers want to sell it for. And that can be a convenient psychological device — especially if you’re a big retailer with lots of other stuff to sell. ‘When the customer sees a book at 40, 50 percent off,’ Teicher says, ‘the presumption is that everything else that that retailer is selling is also equally inexpensive.’ And books bring in some pretty attractive consumers. ‘Book buyers are good customers,’ Teicher adds. ‘They tend to be slightly more affluent, they tend to be consumers who shop and therefore are always in the marketplace for other products.’”
Why books always seem to have a discounted price : 8 May 2014, Marketplace

Amazon can and should price books however they want. They do the same for MP3 players, hard drives, digital cameras, headphones, blenders, kitchen wares, blu-ray players, electric razors, board games, golf clubs, auto parts, and industrial shop equipment.

Amazon is just doing what every retailer does, though: sell at a discount. Nearly every manufacturer or supplier has a MSRP — notably the “sticker price” on the window of a new car; publishers aren’t the only ones who print the price on the ‘cover’ — and nearly every retailer ignores it.

Sometimes the items are discounted right out of the gate — especially on the fourth Friday in November. Those of us who shop for clothes know that the retail ticket price is only there to make the eventual clearance/close-out discount seem that much more attractive. If you’re shopping for a TV set, I’m willing to bet that the MSRP is also the in-store list price on 90% of the new models on display; there will be one “flyer” item on sale, to get you in the store, and of course last year’s models are discounted (to 15% margin instead of 50%).

There was one notable retailer exception: book stores. Book stores charged the price on the book. Books as a commodity are different, though — the exact same book will be available in at least two formats, with a price differential between ‘prestige’ hardcovers and the soft cover. Having two paperback versions (‘trade’ and ‘mass-market’) further clouds the picture, as do remaindered hardcover books. It is technically possible to walk into a bookstore and find a $6.98 hardcover, a $8.99 mass market paperback, a $18.00 trade paperback, and a $28 ‘new’ hardcover all of the same book, same words on the inside and everything, with only a matter of size and paper quality (or the detail of a remainders auction) to differentiate them.

So books were being discounted; the publisher just found a very convoluted way of doing it, and the booksellers were more than willing to play into it. Customers know the score, and they buy — or wait, and wait — depending on the current format and asking price, and their enthusiasm for the book.

Book stores used to be an exception in that they “always” charged the cover price — but only up until the chain booksellers began to routinely and without exception discount their bestsellers, not because of online prices (not at first) but rather to compete with the likes of Costco and Sam’s Club — which were selling the headline, bestselling authors’ books at discounts of 30% or more. That was in the early 90s, before Bezos had turned his bookstore into a behemoth. Amazon didn’t invent the discounted hardcover, they just had lower overhead, and so they could do it even better.

Amazon entered into the book market, where pricing and formats were already a muddled mess, and then further complicated things: by organizing a network of 3rd-party resellers of used books, by lowering their own margins on all books including the backlist, and (the clincher) by choosing to list all editions—new, used, remaindered, 3rd party sellers, paperback, hardcover, and collectible signed first editions—on a single product page. “Oh look, this book is only $2!” exclaimed thousands of customers simultaneously, even if they then went on to buy the book for $5.99 or $18.79 or $65.

Customers’ perception of [physical] book prices had already changed by the time the Kindle launched in Nov. of 2007 — and immediately sold out. Others had tried to sell ebooks online, and ebook readers pre-date the kindle by 10 years but Amazon had an edge: their customer base consisted of early adopters, avid readers, folks comfortable with or at least willing to try new technology if it meant they could save money, and folks affluent enough to drop $300+ on a gadget — no, those last two points aren’t a contradiction: I think the mindset is that books are a commodity good so of course you buy for the cheapest wherever you can find ‘em, but a gadget, especially the best-in-class gadget, is a one-of-a-kind (and potentially, a must-have) so price is no object. (‘Best in class’ and a price insensitive fan base is Apple’s whole business in a nutshell.)

The major selling point of the kindle was $9.99 brand new bestsellers; the initial price on the Kindle was $399. Enough people did the math and figured it was still cheap at that price. It shouldn’t be surprising — Amazon didn’t launch Kindle without knowing their market. When you have a database of the customers who buy at least two New-York-Times-Bestselling books a month, and can send them an email, you’ve already done that math.

[more on ‘$9.99’: NYTWashington PostAmazon itself]

Amazon launched into a market that didn’t really exist, and so quickly became the only major player worth talking about. Barnes and Noble (fatally?) took two years to enter that market, and Apple now famously only entered the market in 2010 as an ‘add-on’ and initial hook for their new iPad — and when they could stack the deck in their favor. So it should be no surprise that Amazon is the major player, with 60-75% of the ebook market (or more, and growing).

** And at what point could we say Amazon is a monopoly?

Of note is the 2nd Circuit Court decision United States v. Alcoa, 1945 —
“Judge Learned Hand held that he could consider only the percentage of the market in ‘virgin aluminum’ for which Alcoa accounted. Alcoa had argued that it was in the position of having to compete with scrap. Even if the scrap was aluminum that Alcoa had manufactured in the first instance, it no longer controlled its marketing. But Hand defined the relevant market narrowly in accord with the prosecution’s theory. Hand applied a rule concerning practices that are illegal per se. It did not matter how Alcoa became a monopoly, since its offense was simply to become one. In Hand’s words,
[blockquote]‘It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.’[/blockquote]
“Hand acknowledged the possibility that a monopoly might just happen, without anyone’s having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result. But that acknowledgement has generally been seen as an empty one in the context of the rest of the opinion, because of course rivals in a market routinely plan to outdo one another, at the least by increasing efficiency and appealing more effectively to actual and potential customers. If one competitor succeeds through such plans to the extent of 90% of the market, that planning can be described given Hand’s reasoning as the successful and illegal monopolization of the market.” – wikipedia

In the end, the 1945 decision was mooted by changing markets —very much like the Microsoft/Internet Explorer decision in 2000 quickly became irrelevant as other browsers ate away at IE’s market share — but Alcoa and Microsoft were both subject to court oversight after being found guilty, and oversight continued until the market caught up. Apple and the courts are still arguing over what “court oversight” might mean in the ebook-pricing case.

[The publishers already submitted to court restrictions when they settled the case before trial. They have to renegotiate their contracts, though the court allowed that these negotiations should be staggered. Hachette is the first of the five on the schedule; say, how is that going?]

Let’s take a second look at “the possibility that a monopoly might just happen, without anyone’s having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result.”

See: the 1st Circuit Court decision, Fraser v. Major League Soccer, 2002 —
“The Court of Appeals upheld the jury’s finding that the plaintiffs did not prove that Major League Soccer illegally monopolized the market for player services, and failed to prove the product market and geographic market, because MLS competed with other soccer leagues in the U.S. for players, and MLS competed with soccer leagues in other countries.
“On the charge of a reduction in competition under the Clayton Act, the Court of Appeals held that ‘the creation of MLS did not reduce competition in an existing market’ because no active market for Division 1 soccer previously existed in the United States” – wikipedia

I don’t know what soccer player salaries have to do with author royalties, but I think we all can agree that MLS—which owns every individual team, not just the league—is a de-facto monopoly on US Soccer and that likely does affect 98% of player salaries, no matter what the court found at trial.

However: “the creation of MLS did not reduce competition in an existing market because no active market for Division 1 soccer previously existed”

The same could be said for ebooks in 2007.

On the other side of the coin, the Alcoa decision — where control of part of a market (ebooks for example; just throwing that out there) can be considered as separate from the overall market (all books) — might just be a precedent if someone chose to apply it. Of course, any and all actions taken by Amazon in pursuit of book market share is just “good business”. For Amazon to act differently would be stupid. Bezos is not stupid.

In fact, I’m sure that Bezos knows the distribution centers he’s built in the last decade, combined with the ease of one-click shopping, an engaged and enthusiastic customer base (of readers!), integrated hardware/software that includes dedicated e-readers, andoid-ish tablets, and apps on everything, along with razor-thin margins and customer retention programs like Amazon Prime, all represent very high barriers to entry. The ability to drop a few or a hundred million to buy out a nascent competitor certainly doesn’t hurt. It seems obvious to buy an online bookseller like Abe Books — but more vitally, Amazon is being proactive in acquiring any developing network of readers, including both Shelfari and Goodreads. The business is being won not just in market share but in mind share, and having a lock on enthusiastic readers is apparently worth at least $150 Million (for Goodreads, the purchase price of Shelfari wasn’t disclosed).

“It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel”


Following the precedents, the Apple ebook case makes sense in its own way — price fixing and cartels are definitely illegal. Monopolies in and of themselves are not.

Any theoretical Amazon case would also be a huge mess because you’d have to argue about who Amazon’s customers are: sure, on the surface, Amazon’s only book customer is the end reader — but if Amazon [eventually] controls 90% of the ebook market, wouldn’t an author’s only way to reach those readers be through Amazon? Isn’t the author—attempting to use Amazon’s services to reach Amazon’s reader base—a customer too? Amazon buys books from publishers — but if you’re a [dead tree] genre fiction publisher and Amazon accounts for 50% or more of your overall sales, online or off, who has the power in that relationship? What are your options outside of Amazon?

By placing itself across the whole book industry — and playing different roles in retail, distribution, and publishing but not controlling any of the three — Amazon in a way insulates itself from accusations of monopoly while also becoming a much bigger and more formidable adversary than it might have been otherwise.

In November of 1998, Barnes and Noble (with about 15% of the book retail business) proposed buying Ingram Book Group, which at that point had 11 distribution centers and shipped books, audio books, and magazines to stores nationwide — including to Amazon. While each was the number one competitor in their field, both Barnes & Noble and Ingram still faced strong second-placed competitors, and both parties promised that the merger wouldn’t affect Ingram’s existing distribution deals or customer relationships. The buy-out was dropped in 1999, about six months later, over fears the FTC would axe the deal; the respective companies felt dragging the process out any further would only damage their image, and potentially, their business [and certainly: B&N’s stock price].

[Additional reading on that: AP, NYT, CNet]

Would the union of book retail with book distribution have destroyed competition? — Apparently it didn’t; after 1999 both B&N and Amazon brought distribution in-house (spending hundreds of millions in the process), handling the majority themselves and buying direct from publishers instead of middlemen. But in 1999 the “major” player in book retail (with 15% of the market) was effectively blocked from consolidating its position by anti-trust fears.

And Amazon has 30% of the book market, but isn’t considered an anti-trust candidate by anyone except those suffering from ‘Amazon Derangement Syndrome’.


[Enough droning on about Amazon.]

Could the publishers be making major changes to the way they do business? Aw Hells Yes. Amazon is devouring the business like a pack of cheetahs because the old school, New-York based publishing business was and is very inefficient, a half-broken system that was in no way improved by the consolidation of imprints, and the consumption of New York publishers by Big Media conglomerates.

If I were to launch a publisher today, it would not be in Manhattan — well, Manhattan, Kansas, maybe, but not New York. The ghosts of Max Perkins, Book Row, and the Algonquin Round Table seemingly haunt the business —or perhaps, it is the publishers who cling and won’t let go, not the ghosts who are refusing to leave. We’re constantly lamenting either the demise of literacy, of literature, or just of good taste. (that link is a 1959 article in Harper’s on the decline of book reviewing)

So lets rethink this a bit and reframe our mental image of publishing:

By the 1930s, rotary presses, offset printing, and hot metal typesetting had industrialized the manufacture of books, to the point where a paperback could be sold for just 25¢ (in 1939, inflation adjusted $4.15) — while simultaneously, the market for fiction in magazines (high-brow and low) fostered at least three generations of writers, the end result of which we see in Pulitzer Prizes, Noble Laureates, and (even better) the glorious era of Pulp. The modern day publishers were all born in this era (as previously, there was no way to profitably make the books—copies of books, in the manufacturing sense) and in a way, they are all still stuck in it.

Now, the word processor, digital publishing, and social media have again revolutionized the manufacture of books — In publishing, It’s 1879 All Over Again, and every blogger is a newspaper onto themselves, every online author their own very small magazine or press, and every existing, accepted business model should be assumed to be wrong until proven otherwise.

But instead of seeing the revolution take off (like it has in other areas of tech), enterprising small publishers and aspiring authors still have to contend with the weight of the Book Establishment: the media conglomerates, their gatekeepers, and a self-appointed literary police force that values laurels and prizes over fun and pulp. The Established Book People control every approach to the market: breaking free from the slush pile and into publication to begin with; access to shelves in bookstores, or even better, front-of-store placement; getting your book reviewed by nationally-distributed newspapers and magazines, or even better …Oprah.

How does one crack into this market? Do you have to, anymore, to ‘make’ it as an author? If you go online, is Amazon your only way, or just the only way to reach Amazon’s (numerous and book-hungry) customers? To date, only Pottermore has begun to explore (and exploit) what is possible — though of course we could argue that Rowling is in a unique position to do so. In time (5 years? 10?) others will definitely follow. The next G.R.R.M. will not be a greybeard with an existing publishing contract, but will instead use Facebook, Twitter, Tumblr, and [The Next Great Social Media Thing that Hasn’t Been Invented Yet] to pull readers into a totally independent website, to read appendices and argue minutia on forums and to buy, buy, buy digital copies of the books.

Rowling and G.R.R.M. had a lot of help though: movies and cable TV gave a boost to properties already pretty famous and selling themselves out in the bookstores. 99.999999% of new authors won’t be able to take the same path (or sit on Oprah’s couch, let alone Conan’s) but the idea of doing it all yourself shouldn’t be discarded just because we can’t all win the lottery. Maybe the next G.R.R.M. will get his start writing fan fiction — maybe she has already done so, and just needs a push to go from posting on others’ web sites to building and hosting her own. Sure, reader-outreach and fan interaction might ‘live’ elsewhere (twitter&tumblr, perhaps) but you’ll need more than a few @handles and an Amazon landing page if you want to control your own destiny.

For authors that don’t do it themselves? To go back six paragraphs, “If I were to launch a publisher today” it would be a website, not just an imprint — and the small editorial staff would include writers to maintain the blog, programmers to build the platform, and some social media savvists (yes I just made up that word and invented the job) to find and capture fans — and the staff would be given a mission to curate a small niche of publishing — or a large niche, or a whole genre, but whatever: our target is a target, and we’re aiming for both the authors and the readers. IF I could buy the Analog or Asimov brand names: we’d be off and running, yesterday.

So long as I’m wishing: Give me the modern-day John W. Campbell or Lester Del Rey and let’s do this already. Pitch it as a tech startup to con the VCs acquire some startup capital to pay the bills the first two years and *do it*.

If Vox, Whalerock, Ziff Davis, Conde Nast, or First Look Media want to get in touch with me about starting this new hybrid website-magazine-imprint, I can be on a plane and at your office on Monday. Have the contract ready for me to sign; no takebacks.


Publishing is ripe for disruption. Amazon found a couple of cracks and are working the wedges to split off their chunk of the market. Amazon is very successful at what they do; they are the first of a new kind of book company — currently more retailer than publisher, but doing just fine with their house imprints and also, more than willing to share parts of the infrastructure with others (authors; but authors direct and not their publishers) (at least: so far).

Amazon is monopoly-ish but the Justice Department has given them a pass (and will continue to) so long as Amazon isn’t “abusing” their position to raise consumer prices. Anything else that Amazon does, including making publishers squeal, making B&N obsolete, and stomping (or buying) any upstart that even looks like it might be eyeing Amazon’s business: that’s all fine.


And this is aimed at the Amazon Cheerleader Squad,

Amazon’s dominant market position isn’t a good thing, in my opinion. It’d be great (and I’d certainly be less apprehensive) if there were a strong, and growing, and decently-popular alternative to Kindle Direct Publishing to threaten Amazon and keep them honest. A Pepsi to their Coke, or a Discover Card (or even a Square) to their Visa/Mastercard hegemony.

I think it’s fine to use Amazon, but one shouldn’t be enamored by it. In the current publishing landscape, Amazon has every potential to become a de-facto book monopoly — a utility like AT&T, maybe, something you don’t notice and with flat rates that everyone gets accustomed to using — but being a comfortable and familiar monopoly doesn’t make it less of one. If you think of Kindle Direct Publishing as a book utility service (which is more of a poetic analogy than a direct one, but I find it fits) and recall the abuses of pre-breakup AT&T, or perhaps that other de-facto monopoly, your local cable company — maybe you’ll pause for just a moment before encouraging everyone to jump on board.

Additionally, there is nothing Amazon does for you that you, as an author, can’t do for yourself. Sure, one can buy into Amazon’s Kindle Ecosystem and that’s great — it’s easy and seductive.

But if you argue that Publishers don’t deserve 95%, or 85%, or 75% for formatting, editing, production, and distribution when one can easily contract that out (for an upfront, one-time fee – not ongoing chunks of the revenue) and the parts that can’t be contracted out have been made obsolete by ebooks…

…then maybe you can also see my argument that Amazon doesn’t deserve even 30% if you’re the one marketing the book, finding fans on facebook, slowly building up your backlist and ‘brand’ — and you only direct them to Amazon because you haven’t set up your own website yet. (for an author, yes, 70% is way better than 5-17% — even the 35% Amazon offers for books outside the KDP Select program is better — but 100% and 100% control should be the goal, right? …right? )

Genre authors who are at the forefront of the Kindle Revolution might want to start reading web comics, and learning about how comickers are monetizing. Some of them even print and sell hardcover books, direct, at a profit, …without Amazon — and that’s after they give away the comics for free. There is a lot to think about here.


Like I said, it’s 1879 all over again and we’ve been given a once-in-a-century opportunity to re-invent publishing and books. A whole world of options is out there and a possibly brilliant future awaits.

But we can also learn from the past: let me tell you, no one in 1914 was arguing that Sears & Roebuck was the future of publishing just because they had revolutionized retail with direct-to-customer shipping, were leveraging the possibilities of the network (rail network) to ship faster and cheaper all the time, used massive volume to keep margins and prices low, and their ability to reach and inform millions of customers (through their catalog) was unprecedented, nation-wide, and ubiquitous.

Have it shipped direct and save 70 percent off new fiction!

Publishing was re-invented by the packagers and the pulps, not the establishment players. The revolution was led by the people serializing fiction to sell magazines, and the 25¢ paperbacks sold outside of bookstores — dozens, and then hundreds, and then thousands of independent players, of which only a handful were successful (those became today’s imprints, handed around like poker chips by media conglomerates) but all of which were making and selling books. The first editors and publishers learned on the job, and often were the authors themselves; we are being given the same opportunity.

reposted under a CC license from RocketBomber

4 Comments on A Once-in-a-Century Opportunity to Re-invent Publishing, and Books

  1. This is great, thoughtful stuff, Matt. I’m glad I hung in past the legal stuff (which, while important, somewhat buries your lede). And honestly, I think that if you take a reasonable, thoughtful person utterly divorced from the corporate publishing distribution/business model, and you told them your goal was, simply, to connect great books with readers who wanted them while adding as little friction as possible, you’d come to the very conclusion you did.

    I know I did. I was finishing an MFA in fiction/screenwriting, looking at the market for short stories and essays and thinking it sucked, and then looking at that for novels and realizing it wasn’t a whole hell of a lot better. This was back in 2007. Querying. Acquisitions. Etc. The more I studied and the more I learned about formats and offsets (and worst of all, returns), the more I was just like, there’s got to be a better way. I didn’t know what it was, but Kindle had just been introduced, and I realized that as things moved more and more toward digital, manufacturing and printing and distribution mattered way less to publishing than marketing did. So I went and got an MBA.

    And then I went about trying to break publishing. I started with my own books, and then in 2011, formed an LLC and a subsidiary press (Exciting Press), and signed an internationally bestselling author to a 20-book deal straight away. The following year I signed several more. I built up a website, but in getting started we were more interested in leveraging Amazon’s platform. It’s bigger, and it’s there. Now we’re moving (slowly) to Apple’s iBooks (the Pepsi to Amazon’s Coke), as well as Kobo, and ultimately to commerce on the site (where, yes, we’ll get the 100%). But I think at first you have to go where the readers go. You can’t just shout at them to come your way; you have to figure out who your customers are and go where they play, not try to bring their game over to your field. That second bit has to happen organically.

    I don’t think the website/imprint/magazine area is quite the direction to explore. There are too many online literary magazines as it is. But more so, I don’t think that platform is the only way one must disrupt things.

    To wit: I broke everything. Rights? I license digital distribution (for seven years), and I’m an author first, so I want high royalties, and I want my authors to have them, too (70%).

    It’s a long game, though. It’s not something you can build yesterday. Even Kindle took three years to really take off (the first two generations did okay, but the third? The third was where it really took off).

    I’m sure there are people who would say I’m an Amazon cheerleader. But really I’m just an author who studied business and sees the value in using what’s available. I don’t see Amazon as malevolent, and I think if they’re a monopoly it’s because they’ve earned it so far, but I also remain cognizant that one must always have a back-up plan. I think what’s most necessary is to use all the tools available.

  2. At bottom the whole dispute is about bundling. The days when publishers integrated all of the elements of publishing (other than writing and retail sales) under one roof are very long gone; nowadays they contract out virtually everything. But they sell their services as a bundle, much as cable providers do. Amazon believes this is economically inefficient, and many economists suspect that they’re right. The publishers contend it is not only economically efficient but morally imperative.

    It’s really an echo of something we’ve seen in many other markets over the past few decades. Unbundling has not always proven superior; economies of scale can sometimes trump its benefits.

    Publishers claim that bundling is essential in order to provide them with the capital necessary to pick and subsidize winners, both economic winners and social winners. But their record in picking economic winners are very spotty and their claims to unique insight into what will best serve the needs of our society are surely suspect.

    It seems practically certain that experiments in unbundling will proceed, and that Amazon will be continue to a major force in driving them. The nobility or otherwise of the motives of the publishers, Amazon and its competitors, the authors, and others involved I take to be a fundamentally indeterminate and uninteresting question.

  3. Amazon can and should price books however they want. They do the same for MP3 players, hard drives, digital cameras, headphones, blenders, kitchen wares, blu-ray players, electric razors, board games, golf clubs, auto parts, and industrial shop equipment.

    I don’t agree with this.
    You want to buy the last Harry Potter book, nothing else will do. Buying from another supplier the Wheel of Time instead, won’t work. With MP3 players, cameras, etc, if you don’t find the brand or features you want, you can always find other providers, direct or third party.

    Is there a particular reason why publishers can’t do the same? Sell the same book to other websites? I mean, there are quite a few alternatives …

  4. It’s very, very difficult to get someone to visit an unknown website and give over their credit card info to buy something. There’s a good twenty years of experience now in how hard that is (other than for porn, and even that’s hard). It will be very hard for a new author to create a unique site interesting enough to get traffic on a regular basis, let alone monetize it. Even if they give good Facebook and work the social media scene. Yes, there a few people who have managed to give away comics and such for free and then charge for a hard copy, but it’s not really a booming business. And there are more who have failed at that very business model.

    Amazon is well worth the 30% they take off the top for being trusted by customers, for handling the credit card transactions, and for helping generate traffic. iBooks is the same.

    The most important thing is to have a great story, that appeals to a specific audience (large or small). The great thing about copyright is it lasts for the life of the author, and beyond, so if your story takes off at Amazon/iBooks, there’s nothing stopping you from later going the direct to customer path through your own website. (Even then, it’s unlikely you’ll make as much as from working with the big players.)

    It seems very risky in terms of time/money to start with a website and do everything on your own. I think that’s really a Part 2 for people who have it it big, like Rowling and G.R.R.M. . Time building a storefront website would probably be better spend promoting your book, or working on your next.

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