Amazon Signs Up Authors, Writing Publishers Out of Deal

[IainB]

See this post in Amazon Signs Up Authors, Writing Publishers Out of Deal
I find this extremely interesting - I wondered when it was likely to happen.
In 1996 I carried out a study for EDS (since absorbed into HP around 2008) that looked at the strategic marketing opportunities in the emerging Internet market for B2C (Business to Customer/Consumer).
The principle that potentially could be implemented via the Internet was "Collapsing the Value Chain" by removing links (intermediaries) in the value chain - where such intermediaries added no value to the product.

Amazon and auction sites like eBay were subsequently among the first to effectively implement this in the classic value chain, but did so by improving and automating the chain communication and transaction flow, making them more efficient, and enabling commoditisation of the end product by introducing a relatively more "perfect market", where consumers had relatively good knowledge of the retailers' prices for any given product in the market:
The classic value chain is:
[Manufacturer]-->[Wholesaler]-->[Retailer/Reseller/Distributor]-->[Customer]

Up until now, Amazon's implementation has probably been collaborative and beneficial to all parties (links) in the value chain, with some links in the chain (especially Retailer) being represented "virtually", but no links necessarily being removed/"compressed". The consumer will have benefited from having improved access to products at reduced/minimal product costs.

For books, the value chain would look something like this:
Author-->Publisher-->Retailer-->Customer

However, it looks as though Amazon, having relatively successfully introduced the commoditisation of e-books, is now using its market position and manifesting its latent potential to collapse the value chain. Interestingly, it is not removing Publisher, but assuming that role for itself where e-books are concerned. This could arguably herald the speeding-up of product obsolescence for hardcopy (paper) books, depending on the rate of market acceptance for e-books. Still a bit of risk there.

Reed-Elsevier (now Elsevier) could probably have attempted to do something like this if they had taken early advantage of their position some years back, but they seem to have missed this particular boat by specialising on a niche as a scientific Publisher in the classic model.

[mahesh2k]

Amazon, Barnes and Noble and apple are doing great in e-book industry. I think it was really hard for many writers to land a gig with publishers earlier. Now they can simply write and publish at any of these sites. I don't know if we can get yet another JK Rowling with this route as there is so much noise in e-book world. But no writer will feel sad for not being published anymore.

[Renegade]

I don't know whether this is good or bad or what. It's something else though.

[40hz]

The downside is that despite all the drawbacks publishers brought to the table, they also provided two very valuable services: editorial review and publicity.

Publicity isn't that big a deal any more now that mechanisms and techniques for generating 'buzz' on the web are well established and understood.

But editorial review - having a knowledgeable and literate person sit down and work with an author to make their book the best it can be - that's something that is going to go away. Which brings writing back to what it traditionally used to be: an endeavor for amateurs.

And when it comes to writing, there's a very real chance that the amateurs will drive out the professional writers. Because once "good enough" becomes the norm in books, who needs somebody who's really good? And more to the point:" who's gonna be willing to pay them for it?

Right now, Amazon is playing a very dangerous game. In that they are now setting themselves up as business rivals to existing publishers, Amazon could soon find itself out of the book market if all the big players decided to pull and go exclusively with Nook or Apple.

Which would be a sad state of affairs since that would balkanize the e-book industry, and could well force readers onto a specific device if they want to read something. Imagine a world where you need three different devices in order to read every book you want to read! (Someday soon: "Your daughter wants to read Harry Potter? Sorry, it's only available on Nook. Do you need to buy one? We have them on sale today...")...and here we thought it was bad when VHS and Betamax were competing for movie rights.

Lately, with the release of anything "new & improved," something old & bad often comes along for the ride.
With Amazon's latest move, it looks like incompatible formats and arbitrary restrictions on distribution (in the name of digital rights management) is a very real possibility. That, and the end of professional publishing.

Welcome back amateurs! Come one -come all...

Yoiks! I'm think gonna keep the cork in the champagne bottle for the time being.


----------
Addendum: Renegade said exactly what I'm saying, but much more elegantly, in the post above this one.

[IainB]

Yes, whatever it is, it portends change, and change usually has good and bad aspects, and I too dread the corporate potential for control of the market through DRM or similar. That's one of the things that already stops me using a Kindle.
In any event, I think it's unavoidable, though the existing Publishers will clearly "not go gently into that dark night".

[cranioscopical]

But editorial review - having a knowledgeable and literate person…

Couldn't agree more!

Do you remember when an error in the newspaper caused an outcry?

Off topic a bit (who me?) but one thing that really annoys me is a library book containing errors that someone has corrected, in ink, by crossing out the offending part and writing in the correct form.

[cyberdiva]

Thanks, 40hz, for your very thoughtful and scary posting.  I was going to quote short passages that I thought were particularly good, but I found that I'd be quoting almost the entire message!    

[wraith808]

Right now, Amazon is playing a very dangerous game. In that they are now setting themselves up as business rivals to existing publishers, Amazon could soon find itself out of the book market if all the big players decided to pull and go exclusively with Nook or Apple.

Not as dangerous as it may seem.  This isn't truly new- only the level of organization put to it is a new factor.  Both Amazon and Barnes and Noble (and other outlets also) have had a self-publishing arm for a while.  The recruitment and support put behind it are new factors, but just an incremental one, not revolutionary, and I don't think there's danger because of that factor.

[JavaJones]

Or, optimistically speaking, the editors will go freelance or have editing companies of their own, the outdated and unnecessary dead tree publishers will die over the next 15 years, and we'll be left with a leaner, meaner system that's just as good at creating quality work but is also higher bandwidth. Mass voting and review output from readers will decide what succeeds. Yes, this means absolute bullshit could well be the most popular and make the most money. That's just down to the nature of modern society, possibly even human nature, but the underlying systems are - in my opinion - still better. Potential for less restriction, less bureaucracy, etc, etc. Then again it could all go to crap.

- Oshyan

[Renegade]

Or, optimistically speaking, the editors will go freelance or have editing companies of their own, the outdated and unnecessary dead tree publishers will die over the next 15 years, and we'll be left with a leaner, meaner system that's just as good at creating quality work but is also higher bandwidth. Mass voting and review output from readers will decide what succeeds. Yes, this means absolute bullshit could well be the most popular and make the most money. That's just down to the nature of modern society, possibly even human nature, but the underlying systems are - in my opinion - still better. Potential for less restriction, less bureaucracy, etc, etc. Then again it could all go to crap.

I need to disagree on one tiny thing...

Yes, this means absolute bullshit could well will be the most popular and make the most money.

I cite as my source of disagreement the brilliant prediction for the future (which is often thought of as entertainment):

[attachimg=#]



It's got electrolytes!

[barney]

And, of course, anyone can read this amalgam of literature - if they can afford the hardware, that is  .  Libraries?  Maybe.  But you might have to bring your own reader  .  Or, perhaps, rent one?  I, for one, hope this remains a niche effort.  I don't think it will, but I can hope  .

[40hz]

the outdated and unnecessary dead tree publishers will die over the next 15 years, and we'll be left with a leaner, meaner system that's just as good at creating quality work but is also higher bandwidth. Mass voting and review output from readers will decide what succeeds.

Leaner and meaner for sure. No argument there.

This is a desirable outcome?

[attachthumb=#]

[cranioscopical]

You know, printed stuff has been around for a while.

Will we be able to say the same for electronically stored material in, say, 50 years (if any of us is still around then)?

My books don't often need to be recharged and I don't have to switch them off when flying.

[40hz]

The other thing that gets lost is the whole tactile dimension of a fine book.

The experience of reading a book is a very different thing than what you get from just reading.

There's the heft, the finish, the binding, the quality and texture of the paper, the typography, the overall 'feel' of the thing. That's something you don't get from a tablet reader.

So for someone to say that an e-book is no different than an ordinary "dead tree" book - or that the experience of reading either is exactly the same - makes me want to smile sadly and pat the poor unfortunate on the head. Because these people, much like Wilde's miser, know the price of everything and the value of nothing.

You can serve a fine wine in a Styrofoam cup or a crystal wineglass. In both cases the content is the same. But I defy anybody to tell me the drinker's experience or enjoyment will be the same no matter which serving container gets used.

I think much the same can be said about the different experience you get reading books as opposed to e-books.

------

“Book collecting is an obsession, an occupation, a disease, an addiction, a fascination, an absurdity, a fate. It is not a hobby. Those who do it must do it. Those who do not do it, think of it as a cousin of stamp collecting, a sister of the trophy cabinet, bastard of a sound bank account and a weak mind.”  ― Jeanette Winterson

*

“Many people, myself among them, feel better at the mere sight of a book.”
― Jane Smiley, Thirteen Ways of Looking at the Novel

[Renegade]

+1 for 40Hz

I regularly murder trees just so that I can read a physical thing. On-screen just gets to be a bit much after working on a computer all day. My eyes love me for it. The environment hates me. But my eyes still love me more, so they win out in the end.

[IainB]

Well, when it comes to "which technology wins" - in this case paper books v. e-books, the market winner will not necessarily be the "best" technology or the "best" form of the product:

For example:
       Loser                      v.       Winner
GM EV1 (1996)                v.   Big Oil.
8-Track cartridge tape       v.   Philips cassette tape.
Betamax video tape          v.   VHS video tape.
OS/2 WARP v4                  v.   MS Windows OS
HD DVD                             v.   Blue-ray DVD
(Sony was rumoured to have paid $500 million to Warner Bros. to drop their support of HD and adopt Blue-ray.)

It looks as though when they remake the movie of Fahrenheit 451 they will probably have to pick a different temperature for the title.  

[wraith808]

Warp was not necessarily the best option.  And this comes from someone who used it quite a bit.

[cranioscopical]

when they remake the movie of Fahrenheit 451 they will probably have to pick a different temperature for the title

[Carol Haynes]

There are some books that simply do not work in eBook format:

1) Interactive childrens books (such as books with flaps, squeakers, popup and moving parts). Kids love these and whilst you could make a touch screen emulate the effects they wouldn't have the same effect reading a story to a class of 5 years olds!

2) Large format art books - no screen with current technology can begin to match the quality of good art prints - hell most screens can't even colour match without an awful lot of headaches and expense.

3) Books containing other products (such as The War of the Worlds Collectors' Edition which contains 2SACD disks, 1 DVD, 4 CDs plus a 12 inch square book with all the original artwork up to 12 x 24 inches). OK you could argue in my example that I could buy a digital copy with a digital copy of the media but it would not induce me to buy it for the price I was prepared for the physical item.

Back on topic - Amazon may be trying to push out the publisher and have a contract with authors directly but there are number of issues that Amazon will never be able to do effectively - provide an effective editorial system, promote the books through shops and supermarkets (they could but they won't want to). The biggest problem is that this new collection of digital only authors will be about as effective as the existing bunch of digital only musicians - ie. almost unheard of by most people. What Amazon will generate is a huge collection of dross that no one wants. Any sensible and serious author will want their books published properly (with the option of an eBook probably)

AT the moment eBooks are a novelty on iPads and Kindles etc. but I honestly believe the novelty will be short lived - especially if prices don't drop to sensible levels for the devices and the eBooks.

The only circumstances I can see eBooks being genuinely preferable is when a book has a shelf life - such as technical manuals. Currently they are pretty poorly served in the eBook market suffering form large books on tiny screen syndrome and poor reproduction of diagrams. Ironically most of the books I buy are already available in unprotected PDF form from the publisher so why would I buy a more expensive copy from Kindle or iTunes?

Here is one example from Sitepoint:

http://www.sitepoint.com/books/htmlcss1/

Book: $39.95
Electronic book: $29.95 (includes PDF, MOBI and ePub versions)

Amazon.com:

Print edition: £23.97
Kindle only edition: $23.87

OK the Amazon versions are cheaper than buying from the publisher (which is to be expected) but is the Kindle only version really a good deal compared to the publishers own electronic package?

Personally I would pay the 10cents extra and get the book - then I can leave it open on my table, write on it, stick notes and post-its inside, share it with friends and colleagues, jump up and down on it or throw it at the cat out of frustration, read it in the bath and finally recycle it when I no longer need it!

[IainB]

@wraith808:

Warp was not necessarily the best option.  And this comes from someone who used it quite a bit.

Yes, I quite agree. I had to use WARP quite a bit too and have some knowledge of it, but I did not intend for the reader to infer from what I wrote that WARP was a "best" option - that wasn't my point at all. Sorry if I was misleading.

No, my point was that:

...the market winner will not necessarily be the "best" technology or the "best" form of the product

In the table of examples, I highlighted the "winner", but I have no idea what were the "best" options/forms in each case. The criteria for deciding the "winner" seemed to have less to do with whether the winner was intrinsically "best" in any way and rather more to do with extrinsic market factors.

@Carol Haynes: + 1 re what you write - I and my 10-year old daughter had been discussing those same points today.
It will be interesting to see what the upshot of this disruptive technology will be. The limited pricing differential that you describe certainly seems to be all wrong anyway, at present - too greedy. The new technology would probably not intrinsically justify that limited pricing differential. If they keep that pricing, then market preference (demand) could well be divided roughly equally between the two technologies. In that case, for the new technology to "win" and oust the old, some extrinsic market factors might need to be brought to bear on the situation. This is what seemed to happen to a greater or lesser extent in most of the above examples.

[JavaJones]

Let me clarify that when I said "outdated dead tree publishers" (admittedly with the charged "dead tree" term), I was not so much saying that physical, printed material should or will die, rather than the monolithic industries built around traditional print publishing systems should. On-demand printing is but one example of a potentially good way forward for independent authors. Or simple printing houses, which aren't going away. An author buys, say, 500 copies of their book and hires a local sales rep to hawk them to local book stores, or sells them easily through an online portal. They can choose to deal with shipping themselves or pay a service to deal with it for them. Dismantling the mainstream publishing empires into component pieces that people can deal with as they need (and as they please) makes the industry more flexible, more diverse, potentially more capable, certainly leaner and meaner, lower costs, less overhead.

In short, I am not dreaming of an exclusively digital future. Just one without huge companies having their way with every bit of media and art I want to enjoy.

As someone who has actually helped publish a book through on-demand publishers as well as Amazon, I can tell you it's actually quite easy to straddle the digital/real-world divide and utilize Amazon for what it's good for and book stores for what they're good for. Amazon may not want to deal with book stores, but I believe they do offer (and certainly other on-demand book publishers do) a service that can put your book into the main catalogs that book stores reference and buy from. Actually getting a store to buy it is another matter, that's where a sales agent and/or PR come in. I'm certainly not saying that doing things yourself should be the only way or that it will be easier or more successful than traditional methods. However the average author stands to benefit more from self-publishing *provided they take advantage of additional services like editing and sales agents* than they do in a traditional publishing model. This is because they know the actual cost of materials and services and can price their product however they want and, critically, they reap all profits. It's potentially riskier, but more rewarding (percentage-wise at least) as well if they succeed. The chances of success are also higher, though again "success" generally doesn't mean "millionaire author" (it very seldom does in the current publishing world either, but the chance is there, just like in music, which puts stars in the eyes of some writers).

I also take issue with the idea that digital-only/self-published music is unnoticed and consists mostly of crap. There's tons of crap, of course, just as there is in any artistic/expressive medium. But to say that only record execs or publishing houses or whatever can properly decide what should actually get attention is silly. It's easy to create systems that fairly rank and reward quality, or at least popularity. There are many modern examples of quality winning popularity contests and I would in fact argue that much of the trashy pulp, both in print and in music (and elsewhere) is actually promoted and made successful by the industries I'm pointing the finger at here, by the A&R people, the publishing reps, etc. "Ooo, sparkly teenage vampires? We'll sell millions!". Going independent isn't going to ruin our chances of finding good material and more than it already is, and it stands a good chance of improving it. It's democratization of publishing and promotion, essentially.

- Oshyan

[Carol Haynes]

On-demand printing is but one example of a potentially good way forward for independent authors. Or simple printing houses, which aren't going away. An author buys, say, 500 copies of their book and hires a local sales rep to hawk them to local book stores, or sells them easily through an online portal.

I don't like monoliths either but I think the model model you suggest only has limited appeal.

I can see the publish on demand or self publishing has some viability if you are writing stuff for a local or very specific market where small numbers are required but if you write a novel that you want to share with the world purchasing 500 copies to hawk round shops or paying your own private editor and sales/marketing force is not what most writers want to be doing! Writers want to write.

The idea of setting up millions of loan writer publishing businesses really sounds awful.

I love the idea that it is easy for individuals to sell on the web - it isn't without a huge outlay in terms of promotion.

The biggest problem is that this new collection of digital only authors will be about as effective as the existing bunch of digital only musicians - ie. almost unheard of by most people

I also take issue with the idea that digital-only/self-published music is unnoticed and consists mostly of crap.

I take exception to that characterisation of my comment. I didn't say independent music is crap - what I said is that the vast majority of independents go unnoticed by the vast majority of listeners because they don't have the exposure in the market place.

What I did say is that a company like Amazon wanting authors to self publish with attract a lot of dross - everyone who has ever thought of writing a book will get their book onto Amazon (provided Amazon gets a large enough slice of the price). Doubtless Amazon will promote work - like it did with its app store that has driven many small developers out of business or running away from Amazon in droves as Amazon saw fit to give away copies of other people's products for nothing!

Imagine if Amazon opened its MP3 store in the same way - everyone who has a guitar or a penny whistle would have their work on their in a minute.

If you want an example of what self publishing really achieves look at YouTube! Whilst there is a lot of good stuff on nYouTube you have to wade through all the rubbish (which probably constitutes over 99% of the content).

[IainB]

@JavaJones: Yes, it will be interesting to see what sort of market structure using what sort of "technology" arises from this current disruptive move by Amazon. Of course, there may be similarly disruptive moves by other existing/new market players.
It seems highly likely that the length of the value chain and the roles of the remaining players in the value chain:
Author-->Agent-->Publisher-->Retailer-->Customer
- will undergo change. (I've added "Agent" to that chain.)

If there is a steady demand shift towards e-books and away from hardcopy books, then it will be interesting to see whether the level of mediocre output will change. There will presumably always be a cost to publishing, and therefore a business risk, but you could argue that the marginal cost of producing an e-book, compared to the marginal cost of producing a hardcopy book, will have been reduced to such an extent that it really wouldn't matter if the output was mediocre, and therefore there would be little disincentive (potential risk of loss) for allowing rubbish to get through the gate. "Penny dreadfulls" were probably an early example of this in hardcopy form. However, if that were to happen, then the market may well make internal adjustments - e.g., the buying and discerning public voting with their feet and avoiding those publishers with a reputation for producing rubbish. Who knows?
However, I would have my doubts about that discernment, given the examples of apparent success of some books - e.g., including Chariots of the Gods, The 1-Minute Manager).

Whatever the outcome, I just hope that the outcome for consumers like me will be a vastly improved experience. The technology is going to have to change a whole lot more yet before the process of carrying out research and cross-references using e-books becomes as easy as, or outstrips, the same process as when using hardcopy.
On this point there is some hope for e-books. For example, one of the best experiments I have come across so far in "Reference Management" systems for e-books is Qiqqa, and there are several similar applications in this field.

But what about all those old hardcopy books/documents/scrolls that are not yet digitised? That's probably the bulk of the sum of human knowledge we are talking about, right there.

There were two major objectives I learned whilst on a World Bank project in Thailand for the Thai Government Dept. of Lands. The project was to transfer all the cadastre - including 20 million hardcopy (paper and papyrus) deeds - into digital/image form.
The two major objectives:
(a) Data quality: the transfer of ALL of the hardcopy population (including the antique/ancient documents and scripts) correctly and uncorrupted into digital/image form, so that they could serve as the authentic originals for the future.
(b) Access to information: the enablement of free and unencumbered access to those digitised/imaged documents for the purposes intended.

I'm not sure that similar objectives could necessarily be met for books in a market which follows the current commercially-driven and copyright-bound value-chain model. This is a market where books can be regarded as "media" and you have to pay to get access to knowledge in scientific papers, and you have to pay exorbitant prices for mandated educational textbooks. Even access to books through libraries is constrained.
The model of the Gutenberg project might be worth considering, and I still haven't figured out where/whether Google books comes into all of this.

[JavaJones]

Yes, YouTube is a great example! I find tons of stuff I like on YouTube every day with minimal effort. Why? Because the system has rating, tagging, categories, etc. all of which help me find good stuff easily. It simply doesn't matter that how much crap there is (and I agree there will be more crap published if you lower the bar). It's possible to create systems that reward quality, or at least mass appeal, and they don't require a publisher, an A&R guy, etc.

The issues that occurred with Amazon's app store seem to me to be more "sour grapes" than anything. Amazon made perfectly clear what would happen with the featured (free for the day) apps, as far as I've read. People chose to participate because they thought it would help their app earn money through increased popularity, when all it tended to do was load down their servers with free requests. Bummer, but the terms were clear, none of them should have been under any illusion that they would make tons of money off of it unless they had a really good plan for upgrading free users to pay (in-app purchases, etc.). This is a lot like small companies who do Groupons and the like and then get overwhelmed by demand and can't fulfill it all. Too bad, take the time to think through the promotion you're agreeing to participate in before going through with it.

As for the business side and "writers want to write", of course they do. I'm not suggesting every writer buy 500 copies of their book and hawk them on the streets. What I'm saying is you have a range of options, all the way from that base level, up through contracting with individual experts to handle particular aspects of your publishing project (i.e. you hire an editor and a sales rep directly), up to contracting with a full-service publishing house. It's more options, not less.

- Oshyan

[Carol Haynes]

It's more options, not less.

More options are more often than not a double edged sword. I am not an advocate for the publishing industry BUT the model of a publishing house works really well for many authors and has, to a large extent, for the reader too. They have economies of scale because they represent large numbers of authors and produce large numbers of books.

Models with 'more options' may seem alluring but the upshot will be that most authors (particularly of fiction) will want and need that representation to get any sort of market penetration. If they have to buy in those services as individuals all that will happen is the number of people offering those services will proliferate and they will probably end up more expensive than the publishing house model precisely because the economies of scale won't exist. These service providers will also be very choosy about who they accept as clients because they won't want to be seen to fail with clients.