Publishers Versus Amazon: An Escalating War

Last week, I shared some opinions about Amazon and other bookstores. But other bookstores aren’t the only ones who hate and fear Amazon. Many publishers do as well, despite the fact that Amazon makes it easier for people to get those publishers’ books. The advantages are balanced – many would say outweighed – by Amazon business practices that try to force publishers to lower e-book prices, and ask for special discounts and other considerations.

(Amazon is also making self-publishing an appealing alternative to traditional publishing for many mid-list authors, and no doubt that will eventually force publishers to improve their contracts in favor of authors. But that’s another issue.)

Digital Book World has had a lot of interesting updates lately on the skirmishes between Amazon and various publishers.

In How EDC Plans to Sell More Books After Dropping Amazon, it discusses the practices of the Educational Development Corp., a children’s book publisher, which published the classic potty training book Everyone Poops. The EDC is pulling all of its titles from Amazon. The EDC is an unusual company, however, and has another option. Amazon sales accounted for only about 13 percent of EDC’s sales in 2011. The company makes “nearly two-thirds of its revenue from its sales force of 7,000, which is mostly made up of independent contractors who sell to their friends and acquaintances, often in their own homes at gatherings – like Tupperware parties, but with children’s books.”

The company has been losing sales reps who get discouraged when potential customers attend gatherings but then order the books off Amazon. Without competition from Amazon, the EDC expects sales to grow – as they did for the company’s Kane/Miller line of children’s book, which had a 33% increase in sales after the company pulled titles from Amazon two years ago. Now there’s some creative marketing!

In another battle, Amazon stopped selling e-books distributed by the Independent Publishers Group, a large book distributor for smaller publishers, after the two organizations couldn’t agree on a contract. (Amazon Yanks 5,000 Titles from Independent Publishers Group, a Chicago Book Distributor) Digital Book World reported on several organizations that were backing IPG. Here’s one: Science Fiction Writers Group to Redirect Book Links Away From Amazon in Solidarity With IPG

And if things weren’t tough enough, the Justice Department is preparing to sue five of the “Big 6” North American publishing houses, along with Apple, for colluding to maintain artificially high prices for digital books. Jordan Weissmann explains the situation—and possible fallout—in a recent article from The Atlantic, How Cheap Should Books Be? Jane at Dear Author offers her take on the situation in this post: What Kind of Competition Has Retail Price Maintenance for Digital Books Fostered?  And The Guardian weighs in with Ebooks: defending the agency model.

It’s a tough new world for publishers, and with a few exceptions like the EDC, most are struggling to stay relevant and reach customers. On PandoDaily, Sarah Lacy, a journalist and author of books on technology, shared a long e-mail from a publishing industry insider who says, “We’re in Amazon’s Sights and They’re Going to Kill Us.”

Many will see that e-mail as further evidence that Amazon is an Evil Giant trying to take over the world, and it should be stopped. But I tend to agree with Sarah’s comment at the end: “Amazon didn’t create publishing’s woes, any more than blogging created the challenges of newspapers. The company is just cleverly exploiting them. And good for them.”

Don’t get me wrong – Amazon has tried some pretty shady practices. They always seem to be pushing the limits, probably to test just where those limits are. But it’s not censorship to decide you’ll only do business with certain people under certain contracts. It’s not “unfair” to push for the best contract you can get. (That’s why authors like agents.)

Amazon has opened up a lot of opportunities for authors, and they’ve shaken up an industry that desperately needed shaking. Like Sarah Lacy, I’d love to see publishing adapt to this new era. She suggests it will take publishing employees quitting their jobs to start new companies. That may be true, as big publishers seem to lack the flexibility to innovate. But come on, guys – there must be ways you can improve.

Next week I’ll share an idea on how publishers can stay relevant. I’d love to hear your thoughts as well. Leave a comment here or drop me an e-mail, and maybe I’ll quote you next week.