Amazon’s infinite stockroom
This may be one of Amazon’s biggest disruptions yet…and it could really benefit small publishers.
According to this
Amazon UK is pushing for new contract conditions with small publishers.
One of them I don’t like, and could run afoul of anti-competition agencies. That’s the so-called “MFN” (Most Favored Nation) requirement.
Essentially, having an MFN means that you can’t sell your product at a lower price anywhere else. In this case, it would mean that publishers would have to give Amazon as good as they give anybody else…including themselves.
MFNs haven’t been inherently found to be illegal, but they were a problem in the legal action taken against the Big 5 publishers for conspiring to raise e-book prices.
It feels to me (and I’m not a lawyer) like restraint of trade, since it controls what you do with another entity. That may be subtle, but I think it’s different from paying somebody for exclusive rights. Again, it’s just my feeling about it, but exclusive rights says, “Sell this just to us.” An MFN says, “We will control the pricing even when we are not part of the sales chain.”
The other rumored condition, though, is far more significant as far as I am concerned.
When I managed a brick-and-mortar bookstore, we would occasionally have someone come in who wanted us to carry a book they had self-published on a contingency basis.
In that situation, we don’t pay them anything for the book unless it sells.
They think that doesn’t cost us anything, which would demonstrate a lack of understanding about retail, as far as I was concerned.
In a brick-and-mortar, one of the biggest things you are battling is rent. Every day a book sits on a shelf, you lose money, because you have to pay the rent on the space under that book.
That’s one reason why books may turn over pretty quickly: if a book sold five copies the first day, three the second day, and one the next day, you might return it to bring in something hotter.
So, contingency was never risk free for the store.
However, what if the book did sell well? Wouldn’t that be worth it?
Books have a short sales cycle in a store. There just aren’t that many people who are going to come into a bookstore every day, and you have a core of regulars. If a bunch of your regulars buy a book as soon as it is released, they don’t buy it again, typically. Book sales are front loaded in most (but not all) cases. You need the book when it is hot…waiting a week can really cut into sales.
So, I would say to the self-publisher: “If I need ten more of these tomorrow, could I get them?”
Their answer would always be, “No.” It might take them weeks to get more printed.
That was why I would tell them I couldn’t carry it. A traditional publisher could drop ship me books that fast…certainly within a couple of days.
If a Random House author went on a local radio talk show (which was a huge driver of book sales), I could ask for a hundred more and get them while people still wanted them.
The little, independent publisher simply couldn’t compete, because they didn’t have the supply infrastructure.
That’s also been true online.
If you want a p-book (paperbook) from a small publisher, it might take weeks for Amazon to get it, even if they can then send it to you in two days.
Amazon has a solution (according to sources).
They are reportedly telling the small publishers that, if the publisher is out of stock, Amazon wants the right to print the book themselves.
Amazon has a huge “print on demand” operation already:
I think most of the writing I’m seeing about this doesn’t adequately recognize what a game changer this would be.
Let’s take an easy example.
An author publishes a horror novel with a small press.
They print 500 copies, which seems likely to be adequate.
Stephen King writes about loving the book.
Suddenly, demand is huge.
Amazon could sell 10,000 copies tomorrow…but the publisher only had 500 for everybody…and it will take them two weeks to print more.
Under the reported proposal, the publisher has given Amazon the file from which to print the book, and Amazon just prints it themselves and gets it to the customers.
The publisher still gets paid.
My guess is that Amazon doesn’t need to charge them much (anything?) for having had to print it. The cost of printing a book is actually a small portion of what creates the consumer price. There are a lot of people costs (editors, cover artists, the author), marketing costs, and other things involved beyond the paper and ink.
The book now shoots up the bestseller list, and becomes an even bigger hit (competing strongly and directly with large publishers’ products).
If Amazon couldn’t print the book, they would likely lose the vast majority of those sales…some people would wait for it, but I think most would not.
Now, in the writing about these contract proposal rumors, the feeling is that publishers are pushing back against this one.
They don’t want Amazon to control the process…they may be concerned (not unreasonably) that the quality of the book might suffer. In the scenario that I’ve proposed in the past that new novels might cost $50, that includes them being printed in a much higher quality way than we usually see now…or that we would expect from print on demand.
What this does, though, is level the playing field between small publishers and the big tradpubs. Amazon becomes the back-up “factory” for the little guys.
In the same way that we’ve seen huge successes in e-book publishing for independents (where no factory is necessary), we would see gains for small publishers in p-books.
I also don’t see this being a problem under anti-competition laws.
This would further weaken the bargaining power of the Big 5 with Amazon, since little pubs could also have blockbusters.
I suspect this will come to the USA as well, if it hasn’t already.
What do you think? Would this be as big a deal as I think it would be? Will publishers push back against it to keep Amazon from having too much control…even if it might benefit them? What can the Big 5 do to maintain their marketshare? Feel free to let me and my readers know what you think by commenting on this post.
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This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.