Financial Times: Prescription for Publishers Surviving Amazon

“What happens if your biggest customer is also your worst nightmare?” asks the Financial Times.

While the question is reductive (for many publishers, Amazon has been far from a “worst nightmare,” giving purchase to previously “out of print” books, reviving authors’ careers, creating a digital revenue stream without destroying the print one, driving innovation in the industry…the list goes on), it allows the FT to explore some ways in which publishers, feeling pressure from their biggest trading partner, can maintain or grow their businesses.

Here’s a rundown, with commentary:

1. Prevent the “everything store” from having everything. This is a strategy that has been suggested to publishers in negotiating with Amazon: pull your books. The problem with this strategy is two-fold: It will kill revenue, anger authors and agents and likely do more harm to the publisher than to Amazon; second, Amazon will find other ways to get the books. Amazon can always get the titles from major distributors or even other stores, as it did in its early days, according to Brad Stone’s book on the retailer The Everything Store. Sterling Publishing, the publishing subsidiary owned by Barnes & Noble, does not seem to distribute directly to Amazon and its books are still available on sale there. I asked Barnes & Noble to confirm this and was told that, “Sterling has a number of distribution channels beyond B&N. We would not disclose who they would do business with.” Amazon has not replied to request for comment on this.

2. Get bigger to have a bigger negotiating advantage. While this strategy might work for Penguin Random House or perhaps the other largest publishers, it likely won’t be as successful for any medium-sized or small publisher. And it certainly won’t work for indie authors, who are themselves small publishers. Even if scale does offer some advantages, Amazon has shown little hesitation in tangling with much bigger and more powerful companies than even Penguin Random House. This weekend, it reportedly started using some of the same tactics it has with Hachette on Disney.

3. Sell books and ebooks direct to readers. Publishers are trying this and some have had great success with it. There are several issues with this strategy, though. First, it’s hard to execute. Building a smoothly functioning e-commerce operation is difficult — what Amazon has done, building arguably the best one in the world, is extremely difficult. Second, publishers won’t just be competing with Amazon, they’ll also be competing with Barnes & Noble, small bookstores, Walmart and anyone else who carries their books. That isn’t likely to make those trading partners happy. Third, as was pointed out in the article, unless they carry other publishers’ titles, they won’t have a complete catalog and won’t be able to offer the same level of selection and service that Amazon can. All that said, unlike some of the other strategies proposed, this one is something every publisher can try, many are, and some are finding success with.

4. Create a better discovery engine than Amazon has. Better book discovery solves a problem for book publishers and certain kinds of authors that most readers just don’t have. The article mentions the many book discovery start-ups that have failed but fails to mention the one that succeeded: Goodreads. It’s so much more than a discovery start-up, of course, and now it’s owned by Amazon. Besides, book discovery only really makes a big difference to consumers of subscription content.

5. Catch Amazon doing something illegal. Antitrust authorities are unlikely to target Amazon for now because the company has so far shown no willingness to raise prices on consumers. This is a strategy that the big publishers are likely already employing. Amazon has been very good about pushing the boundaries of legality without actually getting sued by regulators. It has also cut deals with state governments to stay on the right side of the law, as in California, where it cut a deal to defer collecting sales tax.

Of course, this isn’t the first time that observers have suggested to publishers what they can do to survive and thrive in the ebook era. And it won’t be the last.

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3 thoughts on “Financial Times: Prescription for Publishers Surviving Amazon

  1. William Ash

    Amazon cannot distribute epub nor iBook files. They can’t get audiobook files that easily either. So maybe limiting distribution of ebooks and audiobooks is possible. At least when they go through a distribution channel like Ingrams, the publisher can at least set terms and price.

    Reply
  2. Michael W. Perry

    Good ideas all!

    I’d add one more. Whatever your current publishing workflow, move to InDesign-CC. With this year’s update it became a powerful tool for publishing the same document in print and both reflowable and fixed-format epub. No hiring expensive third-parties to create an ebook version.

    Apple’s been working with Adobe to refine InDesign’s epub export abilities. And, since epub is the industry standard outside Amazon, it also means those ebooks will also look fine on Nooks and Kobo readers. Of particular importance is fixed-format epub, which can have all the complexity of a PDF. It’s absolutely necessary for many children’s books and very helpful for textbooks and much non-fiction.

    I know from insiders that Amazon has refused to help Adobe create equivalent export to Mobi-KF8 capabilities for InDesign. When I queried Amazon about creating fixed-layout KF8 books for them. I was told to hire a third party. \Yeah,\ I thought, \spend thousands of dollars for what ID will create for the iBookstore in under five minutes. No way.\

    How does that help publishers survive Amazon? Because with that one major improvement to InDesign, the entire dynamics of ebook publishing flipped.

    * Before, the advantage lay with Amazon. By making it expensive to create anything more than the simplest of ebooks for Kindles, Amazon ensured that many publishers, having created an Amazon ebook, did not have enough money left over for creating Kindle, Nook, and Kobo editions. Amazon got what it likes best, an exclusive without spending a penny.

    * But now, thanks to InDesign, that distinction has been reversed. Once a print interior PDF has been sent out, for a well-planned book, creating both a reflowable epub (for smartphones) and a fixed-format epub (for tablets) is a typically trivial export, the only hitches being that a few esoteric areas like text scaling and kerning don’t make the transition to epub.

    What’s the resulting prescription for publishers? If you don’t already, create your books with InDesign-CC. Release the print and almost-everyone-but-Amazon ebook versions quickly. You can literally upload the ebook files the same day as you send off the print PDFs. Then let that Amazon version wait until there’s enough time and money to create it.

    Does that mean some of your customers will be left out in the cold? Not at all. Apple’s iBooks app only runs on its devices, but Nook and Kobo apps run on almost every platform. Simply steer your customers there. More business for them, less for Amazon. And rest assured, with InDesign being the primary tool for creating ebooks, the developers of ebook readers will make sure their apps are compatible.

    On final note. More complex books, whether children’s story books, cookbooks, or more complex non-fiction, looks dreadful forced into the limitations of reflowable formats. For them, you need fixed format. Since Amazon isn’t offering an inexpensive way to create fixed format, don’t publish one. Either release a reflowable version, taking care to tell potential buyers about its limitations, or publish only fixed-layout on everyone but Amazon. Yes, you’ll lose sales to Amazon-only buyers, but you’re not likely to lose enough to justify the cost of creating an Amazon version. And, as #1 above notes, that means the \everything store\ won’t have everything.

    Keep in mind that Amazon, thinking only of itself, created this problem by not updating the now years-old Kindle plug-in for InDesign nor working with Adobe to make ID create beautiful Kindle ebooks. The latter is particularly grotesque, since Adobe’s InDesign team on Seattle’s Montlake Cut is only about a 10-15 minute drive from Amazon’s headquarters at South Lake Union.

    This illustrates that some of the time Amazon’s ‘behave like a jerk’ policy may have consequences that are bad for Amazon itself.

    Reply
  3. Alan Diede

    Honestly, the only thing that is more tiring than Amazon’s self-serving foot dragging, is the constant whining about Amazon. For those who are true independent pubishers, the advent of the ebook and in part, Amazon has been nothing short of a godesend. It is madness to pretent the Dead Tree book business was some kind of heaven on earth. It was rife with liars, cheats, printers, publishers, and distributors. The last two being the worst kind of scum. Amazon’s 70% pays like clockwork, and the author/publisher friendly non-judgemental business model is outstanding. I guarantee you the self-publishers of the past, you know Twain, Dickens, those guys would cane these whiners as soon as they understood their kvetch.

    None the less, every business deserves robust competition. You want to squelch Amazon? Bring back the book store. Not the dead tree book store. A book store where you can browse, mingle, and commune with book lovers, and then download your choices and go home. Is that so hard? Amazon has no antidote for that. Oh, and the person(s) who figures that out gets to make a few billion dollars too. Why is this so hard?

    Reply

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