Business, Media

Analysis: If Amazon ruled book publishing, too…

By Kevin Bloom 19 October 2011

The world’s largest book retailer offers royalties to authors of self-published digital editions that traditional publishers can’t hope to match. But this is not the real reason that Amazon may be about to upend the publishing game as we know it. With 122 titles set for release this season, Amazon’s own imprints have the major New York houses in a panic. Who will the upheaval benefit? By KEVIN BLOOM.  

In August this year, an award-winning Hawaiian author of three internationally bestselling novels posted an item to her blog that shook the upper echelons of New York publishing to its core. It had been four weeks since her last posting, wrote Kiana Davenport, and in that time she had learned first-hand how deeply the digital revolution could affect her life. By way of explanation, she referred to a decision she’d made eight months previously, a course of action taken “in innocence and exuberance, and [out of] a need for income,” the consequences of which had ruined her credibility among book publishers. What had Davenport done? The unthinkable. She had self-published an e-book through Amazon.com.

Like most writers – including the successful ones – Davenport was debt-ridden and in January 2010 needed the cash that an advance from a “Big Six” house such as Penguin could provide. So she signed a contract with the group for a forthcoming novel, understanding full well that she was being “coerced” into giving away 75% of all future royalties on the electronic edition of that book (standard practice in author/publisher agreements nowadays). After the contract was concluded, Davenport packaged a collection of her short stories for Amazon, believing in her ignorance that since this collection had been rejected by Penguin and all the other major New York houses some years before, she was doing nothing wrong.

“To coin the Fanboys, they went ballistic,” she explained. “The editor shouted at me repeatedly on the phone. I was accused of breaching my contract (which I did not) but worse, of ‘blatantly betraying them with Amazon’, their biggest and most intimidating competitor. I was not trustworthy. I was sleeping with the enemy.”

And here, as a result of their rage, is what Penguin demanded of Davenport: “That I immediately and totally delete Cannibal Nights [the aforesaid collection] from Amazon, iNook, iPad, and all other e-platforms. Plus, that I delete all Google hits mentioning me and Cannibal Nights. Currently, that’s about 600,000 hits. (How does one even do that?) Plus that I guarantee in writing I would not self-publish another e-book of any of my backlog of works until my novel with them was published in hardback and paperback. In other words they were demanding that I agree to be muzzled for the next two years, to sit silent and impotent as a writer, in a state of acquiescence and, consequently, utter self-loathing.” 

Way to go, Penguin. Especially since a précised version of Davenport’s blog entry appeared prominently in the 16 October edition of the New York Times. The bosses at Penguin’s plush offices in Manhattan would no doubt have noticed that while Davenport did not refer to them by name – her blog entry spoke only of a certain “Big Six publisher” – the reporter at the Times, David Streitfeld, wasn’t quite so respectful. He found out who the publisher was, and splashed it all over his piece. He also spoke to top executives at Amazon, one of whom said: “The only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.”  

The risk, of course, is disintermediation. As far as publishers and literary agents are concerned, Amazon’s threat is a threat to their very existence. If a writer already has a name and knows how to self-promote, why pay 20% to an agent and take only 10% to 15% of the remaining 80% from the publisher (for royalties on print edition sales; digital edition royalties, as mentioned, are usually 25%)? By contrast, self-publishing with Amazon offers two agent-less royalty options: one for 35%, which applies to sales of the digital book in any territory, and one for 70%, which applies to sales of the digital book in eleven territories, inclusive of the US, the UK, Canada, France and Germany. Both of these options apply irrespective of delivery costs – that is, Amazon does not deduct the cost of delivery, determined by megabytye size, when calculating royalties.

On the surface, it appears to be a no-brainer. And for writers like Davenport, who thought she had nothing to lose given that her collection was already “rejected material”, it obviously was. But there are a number of caveats to the Amazon model, which is where publishers and agents can identify and act on the so-called opportunities. First, Amazon has millions of e-books for sale, and the role of the publisher in getting a book reviewed and marketed can’t be underestimated. Second, it’s still too early in the evolution of the new model to expect to make a big return on an e-book that doesn’t have a print companion (Oliver Potsch’s hit The Hangman’s Daughter is only notable as an exception). Finally, just about everybody who’s ever been complimented on a well-written email thinks they have a book in them, and the digital space is getting more and more lousy with manuscripts that really do belong in the slush pile (it’s because of this bottomless slush pile that most publishers accept only solicited manuscripts from agents).

While all of the above would appear to boil down to one concept – marketing – the reality is that these points reference different and necessary functions of an intricate system. Word-of-mouth may be way more effective at selling a book than reviews and advertisements, but hype hardly ever happens in a vacuum. To get noticed, the vast majority of authors have to sweat the craft, which involves thousands of hours of writing and rewriting (it takes a million embarrassing words, to paraphrase Henry Miller, to get to the first tolerable one), and so the best publishers are masters at spotting a charlatan. After signing an author, the best publishers then assign him or her an editor, a person who’s equally devoted to the gospel of the good sentence, which ensures that the reading public is even further protected. Once the publicity machine fires up and word-of-mouth has been kick-started via interviews and appearances, there’s therefore every chance that the customer will find a robust product at the centre of it all.   

Amazon understands this theory as well as anyone. The real threat they pose to traditional publishers is consequently not in the unbeatable royalty structures they offer to writers who want to self-publish, but in their own Amazon Publishing initiative. One of the brands under this umbrella division, AmazonEncore, launched in 2009, uses customer reviews on Amazon websites to identify “exceptional, overlooked books and authors that show potential for greater sales.” Amazon approaches these authors directly, in the hope of partnering with them to “re-introduce” their books through marketing support and distribution into the Amazon Books Store, Amazon Kindle Store, Audible.com, and national and independent bookstores.

An Amazon employee receives merchandise at the Phoenix Fulfilment Center in Goodyear, Arizona. Reuters.

They haven’t had an easy ride of it so far, as pushback from players in the traditional value chain has been understandably significant. According to a recent Publishers Weekly article, a number of independent booksellers in the US are refusing to stock Amazon books under any circumstances. “We’re not doing that,” the owner of a store in New Jersey said. “I’d love to stock their books and give them more money to put me out of business.” Barnes & Noble, the US’s only dominant bookstore chain since Borders went out of business in July, does stock Amazon Publishing titles, but with a proviso: that it gets to sell the print title as well as the e-book. “We will not stock physical books in our stores if we are not offered the available digital format,” the chain’s CEO William Lynch said. “Given Amazon’s recent push for exclusivity with agents and the authors they represent, we feel it’s important to be very clear about our position on content going forward.”

What is also not helping Amazon Publishing’s cause with booksellers is its insistence on remaining secretive. Although the industry knows that publishing veteran Laurence Kirshbaum, retired CEO of Time Warner Books Group and former heavyweight literary agent, has been hired to run the company’s flagship fiction and non-fiction imprint, it doesn’t know how many editors are employed nor how many books it has under contract. Streitfeld of the New York Times revealed this week that Amazon will publish 122 books in the next few months, “in a striking acceleration of the retailer’s fledging publishing program that will place [it] squarely in competition with the New York houses that are also its most prominent suppliers,” but not even he could get answers about the true size of the operation.

Amazon is obviously playing it close to the chest for its own reasons – one of which may be that, according to the Times, it is “aggressively wooing” top authors at rival publishers. Still, since neither Kirshbaum nor big boss Jeff Bezos can do much to offset negative sentiment in the short term, they’re in all likelihood consoling themselves with what everyone assumes to be the larger goal. Publishers Weekly puts it plainly: “For many agents, along with some booksellers, the real concern about Amazon Publishing has to do with what it could signal for traditional publishers. If Amazon lands enough bestselling authors, it could dominate traditional publishing the way it has come to monopolise online bookselling.”

In light of this, it seems the best thing the established publishing houses can do right now is not panic. The case of Penguin and Kiana Davenport is an object lesson in how to get it wrong. After detailing the aforementioned list of impossible demands from the publisher, Davenport wrote in her blog about a telephone conversation between her agent and Penguin’s vice president. The executive offered “extra little sweet meats” if she would just “adopt the right attitude going forward” – but the strategy backfired. “This somewhat sinister and semi-benevolent attempt at mind-control fascinated me,” continued Davenport. “It became crystal-clear to me that the issue wasn’t a supposed ‘breach of contract’ on my part, but the publisher’s fear and loathing of the profoundly threatening Goliath, Amazon. Since Cannibal Nights in no way ‘resembles’ or would ‘injure’ sales of the book I had sold them (an entirely different subject matter) I was not in breach of my contract. I stood firm, and refused to capitulate.”  

The contract was cancelled and Davenport was forced to pay back the $20,000 advance. She took it philosophically, stating that Cannibal Nights was some of her best writing, and that she had Amazon to thank for finally presenting it to the world. “Sleeping with the enemy?” she wondered. “Perhaps. But now I know who the enemy is.” It was a line read by thousands, as evidenced by the 159 comments under the blog, many from writers railing against the well-known bully tactics of the Big Six.

Which is where the upside to the current turmoil can possibly be found. If Amazon can act as a ballast to the dominant publishers without putting them out of business, if it can break the oligopoly and force better terms for writers as an industry standard, the good guys win.

If, on the other hand, Amazon guts traditional publishing until it’s the last player standing, only Jeff Bezos wins. DM



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Photo: Amazon chief executive Jeff Bezos. Reuters

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