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An article over at SNL Interactive explores the delicate business of dealing with Amazon. Sarah Barry interviews Michael Cairns of PersonaNonData and Mike Shatzkin of The Idea Logical Company about the ways publishers have responded to the growing market power of Amazon, and the online retailer’s willingness to use it.
Despite the strained relationship between Amazon and the publishing community, neither Cairns nor Shatzkin believe publishers will decide to stop dealing with Amazon altogether.
“I wouldn’t say it’s a love-hate relationship; it’s more of need and fear relationship,” Shatzkin said. “They need Amazon because it’s probably every publisher’s first or second largest client. But they fear Amazon because it’s every publisher’s first or second biggest client.”
Link [Thanks Jose, via Read 2.0!]
Sorry for my absence for the blogosphere lately, chickadees, I experienced a few health hiccups but am now back at the keyboard.
And while I was away those sneaky folk over at Amazon did a 180 on me. Here I was thinking how helpful and forward-thinking their services were for small presses and self-publishers. It turns out monopolistic and aggressive might have been better descriptors.
As first reported over at Writers Weekly Amazon are now insisting that Print on Demand (POD) books be printed by Booksurge (an Amazon-owned company) or they will not be offered for sale on Amazon’s website. POD publishers and small presses who are printing with other companies, Lightning Source for example, will have to shift their lists to Booksurge or have the “Buy” button taken off their amazon listings. According to Writers Weekly, Amazon representatives have admitted that eventually their desire is to carry only Booksurge printed POD titles.
Though egregious, I agree with Booksquare that this is hardly surprising. Vertical integration is a tried-and-tested method of increasing efficiency and hence profitability within industries, and for a mature company like Amazon this is a strategy that makes sense.
What I’m interested to see next is how publishers respond and whether they’ll be able to leverage any collective power to win changes. While this appears like agressive even bullying market behaviour on Amazon’s part, it seems unlikely that it is in breach of antitrust laws or competition legislation.
One of the biggest problems for small presses and self-publishers is distribution. Most small publishers in Australia cannot attract a distributor because their print runs are too small. Yet the economics of a higher print run in Australia don’t really work, the market size doesn’t warrant, for example, a print run of 1500 copies for a poetry collection or short story anthology. So small publishers do the hard slog of selling the book themselves, usually direct to market through their website, personal networks, literary events or through relationships with independent booksellers wherever they can.
This means two things: firstly, small publishers (or in this post I really mean micro publishers) must handle the physical process of distribution themselves, keeping boxes of books in their garage, handling invoicing, returns, etc. Secondly, they are usually restricted to a local market geographically (sometimes even within one state let alone one country) because they don’t have the resources to develop distributor relationships with retailers further afield and because customers start to pay prohibitive amounts for shipping.
What if these two things could be magically solved by a fulfillment service? Enter Amazon Fulfillment Web Service (Amazon FWS).
As ReadWriteWeb reports:
FWS offers two APIs (application programming interfaces) – one inbound and one outbound. That means developers can now progromatically send physical goods to an Amazon warehouse (fulfillment center) and then have Amazon do the shipping of those goods out to customers when items are purchased through 3rd party sites. Amazon has offered other businesses access to its fulfillment infrastructure for some time through the Fulfillment by Amazon service, but today’s announcement means that the whole process will be automated. It’s a webservices world!
This could be an amazing opportunity for some publishers to expand their geographic markets and streamline their businesses. For example, a small Australian publisher could more cost-effectively offer books for sale to US and UK customers without those customers having to pay international shipping, and without the publisher having to handle the physical goods.
It’s not without its challenges. Firstly, a publisher may need to make a substantial investment to get a programmer to set up the web interface between their site and Amazon’s Fulfillment Service. And while the web APIs might be free, Amazon do charge for the physical storage of goods and shipping costs. But I would think this need not be any more expensive than a publisher would pay in percentage margin to a book distributor to perform exactly the same functions, and could well be a lot less.
Since small presses and self-publishers are usually working unpaid, they are limited in the time and energy they can devote to all the functions of publishing books. If they could alleviate even a portion of that workload through something like Amazon FWS they’d have more time and energy for marketing and promotion, lifting their overall productivity and, ultimately, book sales.