Amazon moves into big-time publishing

Robin Sullivan, who is attending BookExpo America (aka "BEA"), reports that the really big buzz so far is that Amazon is moving into publishing, big time.

In contrast to the legacy publishers, Amazon has demonstrated that it knows exactly what it's doing, which is how it has come to dominate, first, online book marketing, then the ereader market, and then the ebook self-publishing market. Now it is diving into print publishing, too -- first with "CreateSpace" for self-publishing authors, and now with a number of genre imprints for select titles.

As I've noted before, Amazon clearly has the goal of achieving complete "vertical integration" in the book business: from attracting authors and their manuscripts, to publishing (Kindle Direct Publishing, CreateSpace, and a host of print imprints), to creating great sales platforms (online and the Kindle).

Amazon has allowed authors to bypass the need to hire agents before getting published; they have allowed authors to avoid getting trapped in the endless "query go 'round" with traditional publishers, hawking their manuscripts for months or years and waiting desperately for acceptance; they have let authors bypass the need to have agents or lawyers parse the fine print of book contracts (by offering a single, simple deal to all); and they've allowed authors to bypass bookstores and still be able to generate big sales.

Amazon also has dramatically accelerated the process of book publishing (from edited manuscript to publication within weeks, instead of a year or more), of paying author royalties (monthly, with just a 60-day lag, instead of semi-annually or even annually), and of generating marketing attention (through online linking, reviewing, and recommendations). In short, they've made the process of book publishing completely painless and author-friendly.

Now, they're taking those same practices into the print business and are planning to seduce bestselling authors away from the legacy presses with better deals. To head up this operation, they've hired the former CEO of Time-Warner Publishing. How good will their contracts be for authors? Well, even Joe Konrath and Blake Crouch, two hugely successful self-publishers, have been offered a contract attractive enough that they've agreed to let Amazon publish a print version of their new collaborative novel, Stirred -- an inaugural title for Thomas & Mercer, Amazon's new mystery and thriller imprint. Amazon also has launched Montlake Romance, its imprint brand for the romance genre, and is about to unveil a sci-fi/fantasy imprint, too. These are added to Amazon's existing imprints: AmazonEncore (the company's flagship general imprint), AmazonCrossing (dedicated to literature in translation), Kindle Direct Publishing (for self-pubbed ebooks), and CreateSpace (for print-book self-publishing).

As a measure of how much Amazon is disrupting the book industry -- from publishers to agents to bookstores -- check out this piece in Publishers Weekly, commenting about the launch of Amazon's Montlake Romance imprint. You don't have to read between the lines to see how worried they are.

UPDATE The NYT reports on BookExpo America, saying, "There is a Wild West quality to the book business these days":

E-books have exploded, surpassing print sales for some new releases. The struggles for many brick-and-mortar bookstores have deepened as their customers began downloading books onto their e-readers from home rather than heading to stores.

Easily eliciting the most chatter was Amazon’s announcement on Sunday that it had hired one of the industry’s best-known veterans, the publisher turned agent Laurence J. Kirshbaum, to head a new imprint for Amazon that will publish general-interest titles. On Wednesday Amazon said it had acquired a book by the thriller writer Barry Eisler, who had announced this year, with much fanfare, that he was abandoning a six-figure contract with his publisher out of dissatisfaction with the traditional book industry.

But offering more probing and prescient observations, this guy calls the BEA shindig "industry dinosaurs on parade":

The New York Times claimed that “e-business is the buzz” at BEA. Not a chance. Read between the lines of the action on the floor, listen to the people in the trenches of publishing and selling books, and you see an industry that still hasn’t begun to comprehend the e-media revolution that is rapidly engulfing it. The industry is a mass of silent film stars telling each other that the talkies are no threat.

I attended BEA on Tuesday and found that, overall, interest in technology is superficial at best. In the eyes of the industry — that is, as one person put it, the old white men in their 60s and 70s who run the big publishers –- e-books and what they represent are a curiosity and maybe potential opportunity. But they aren’t vital to to the industry because its captains think they have all the time in the world to understand and exploit it.

Their focus is still on paper, on cutting deals and cutting costs, on keeping business, as much as possible, as it always has been. And, understandably, you can’t walk easily walk away from the bulk of your business. However, the publishers have fought progress rather than embraced it. Collectively, publishing decided to stick its big toe into the ocean just as a series of 8-foot waves are about to hit the shore. The result will be ugly.

That's how I see it, too.

UPDATE #2 -- Author Michael A. Stackpole explains why traditional publishers are going the way of the Dodo bird, and author & publisher Dean Wesley Smith adds his thoughts in a blog post and some appended comments.

Meanwhile, Publishers Lunch -- a quasi-official daily e-letter covering the industry from the vantage point of legacy publishers -- reports in its 5/26/11 issue the following:

Eisler's Next John Rain Novel to Amazon's Thomas & Mercer

At our Publishers Launch Conference Wednesday afternoon [at BookExpo America], [best-selling thriller author] Barry Eisler announced that, rather than self-publishing, his next John Rain novel THE DETACHMENT will be published by Amazon's new mystery/thriller imprint Thomas & Mercer in both digital and print formats. "What Amazon has offered is everything that was so great to me about self publishing on the one hand, but everything you want from traditional publishing," including marketing and distribution. "I get the best of both worlds," he added.

Amazon is also paying Eisler an advance, one "that was comparable to what St, Martin's was offering in the deal I ultimately decided didn't make sense." They [have] also given him "control over the packaging and consultation over the pricing of the book," with a royalty he called "much more favorable" than a traditional deal. (It's for world rights, and includes audio as well.)

The royalties offered for the print edition are also "comparable" to the St. Martin's deal, and Eisler suggested that "paper has become a subsidiary right" with "independent advertising value"....

When an audience member asked about the nature of Amazon's contract, Eisler (who is trained as an attorney) said "I've never seen a better publishing agreement than what Amazon presented me. It's readable, it's understandable, and it's transparent."

Eisler went on to explain that the ebook deal from Amazon was so sweet that he was willing to take more modest royalties on his print edition, so that the book would do well in bookstores and generate lots of attention for the ebook. This pricing strategy infuriated traditional booksellers at BEA:

In the following panel, however, ABA [American Booksellers Association] COO Len Vlahos took issue strongly with Eisler's contention that booksellers should be happy to sell low-priced print versions of books which Amazon publishes digitally. "Organizationally we could not disagree with Barry Eisler more." Vlahos objected to having "one entity [Amazon] basically use [print] books as a loss leader and devalue books.... I applaud his innovation, but I think it's grossly misguided. If you do the math on what he is talking about, Amazon is going to lose a lot of money on their contract with him, and you have to wonder about that."

To which I say: Ha! Amazon has demonstrated that it's anything but stupid. What really frosts the legacy press is the fact that Amazon is starting to woo away their bestselling authors with far better deals; that it will no doubt cut the cover prices of print books; and that it will still make money -- which they can't.

Major publishing executives confirm their utter incompetence

Executives representing traditional publishing companies, on an industry panel this week at BookExpo America, demonstrate their utter cluelessness about how to address the ebook revolution. Here's a sample, to give you a clear grasp of their self-admitted incompetence:

Though none of the panelists, publishers all, were ready to say they don’t care about consumers—Random House Digital President Amanda Close immediately responded that “we have always cared deeply about our consumers”—they admitted that they’re facing stiff challenges in getting readers to discover new e-books. “Publishers do not know how to market e-books yet,” said Evan Schnittman, Managing Director of Group Sales and Marketing at Bloomsbury. Or, rather, they know how to market the new titles that they’re simultaneously marketing in stores, but the older titles that publishers are converting into e-books present more of a challenge. “Let’s be honest with ourselves, we’ve never marketed backlist before,” Schnittman said.

"Backlist" refers to older titles, the ones that the publishers no longer push. The way the industry has worked to date, they throw out a book for a few weeks, wait for the sales (and unsold returns) from bookstores, then forget about it (and its author) and move on to the next book, hoping for a bestseller. For authors, this means that their books have little chance of being discovered by readers before their publishers abandon efforts to sell them, and they become "backlist titles" -- which one exec admits "we've never marketed."

The ebook revolution has allowed authors to (sometimes) reclaim from publishers the rights to these older titles, then self-publish them. Books that are years old are now discovering new readers as ebooks, and some are selling hugely. But traditional publishers are sitting on vast archives of these works, and haven't a clue what to do with them.

Here's another report about the same panel. Skim it, then try to answer two questions: (1) What the hell are these self-important idiots saying? and (2) What author in his right mind would entrust his work and career to this collection of lame-brains?

How independent bookstores might survive

A couple of posts down, I took note of the spiteful boycott by independent booksellers against "indie" authors Joe Konrath and Blake Crouch, because of their decision to publish a book with Amazon. Many independent bookstores regard Amazon as the Great Satan of the book business, the "enemy" who is putting them out of business.

This is stupid. It isn't Amazon that's putting them out of business; it's their customers. Customers want maximum choices and convenience, minimum prices and wasted time. Right now, Amazon does a much better job of giving them those things than do bookstores, including "indie" bookstores.

So, is there anything that independent bookstores can do to save themselves, in an era when so many of their customers are taking their physical book purchases online to sources such as Amazon, or to ereaders such as the Kindle, Nook, and iPad?

Maybe. But to survive, they'll have to get out of the way of the customer-driven bandwagon, and instead leap on board. If indie bookstores want to survive, then -- in addition to those suggestions offered by Konrath and Crouch at the linked blog post -- here are a few more things I would do if I owned an independent bookstore:

1. Turn your physical location into an advantage, rather than a liability. Change from being just another warehouse for books, into becoming a constant meeting place for authors and their fans.

This expands on a point made by Konrath and Crouch. There is a BIG niche market of fans who want to meet their favorite authors -- including local authors. I know fans (self included) who would drive many miles to spend time with their favorite writers.

So, transform your store into a literary meeting place -- not just in the evenings, but all day -- where authors meet with their fans. It benefits authors by cementing their bond with readers and peddling their wares. It obviously benefits readers. And, if the stores charged a small cover fee ($5?) for the event, as well as sell the author's books (including POD books on consignment), that would keep the lights on and pay the hired help.

Authors can also be invited to hold workshops about writing, self-publishing, etc. The authors could charge a fee, and the bookstore could take a cut.

2. Embrace indie/self-published titles, rather than banishing them. Many readers love novelty in novels (and nonfiction). They can buy Big6 bestsellers everywhere. But where can they get edgy, unusual, provocative, or unsung titles? Not in Barnes & Noble. And who there would know much about them?

So, become known as THE place that stocks and advises readers about indie titles.

3. Embrace ebooks. Hold classes for potential buyers to explain and demonstrate the various differences among various ereader gadgets, and how to use each device most effectively. Run hand-holding sessions for the technologically timid to introduce them to the Brave New World of ebooks and ereaders. Then stock and sell ereaders to your customers. Or rent them, by the day.

4. Partner. If all indie stores in a region worked together, they could coordinate their calendars of events so that they could run "tours" of authors among the various member stores in nearby towns. "Meet Author X at 10 a.m. in Store A." "Meet Author X at 1 p.m. in Store B." "Meet Author X at 7 p.m. in Store C." Advantage for the author: He can sell lots of books and meet lots of fans in a given region during a short period of time. Advantage for stores: a constant flow of interesting authors.


Will ideas like this save indie stores? I don't know. But it's clear their current business model won't work much longer. Either they transform themselves to embrace the current customer-driven changes, or they won't survive. That's the message they need to confront. Throwing temper tantrums against indie authors such as Joe Konrath is just trying to kill the messenger.

UPDATE -- Dean Wesley Smith really knows how to think outside the cliche -- and he has an absolutely fabulous idea. So good, in fact, that I think you'll soon see this one at stores everywhere: books in the form of GIFT CARDS.

UPDATE #2 -- News for chain bookstores on May 25 isn't great.

From Books-a-Million: Sales for Books-A-Million's first quarter dropped 11 percent to $104 million, with store comps falling 13.2 percent from last year (when the company reported a 3.6 percent drop from 2009.) The bookseller lost $3.5 million, compared to $2 million in profits at this time last year. Clyde Anderson, CEO, blamed "the growing effect of e-book penetration" and "the effects of the devastating tornado outbreak" that hit the Midwest and Southeast region in the early part of 2011. Yeah -- blame the weather.

Meanwhile, from Barnes & Noble comes news of an unspecified number of layoffs, including executives, at a New Jersey distribution center.