More Worrisome for Publisher’s than the DoJ?

Yesterday, I heard some news that I initially found quite interesting, and then began to wonder why it wasn’t being talked up very much in my tweet stream of publishing folks. When the DoJ news came out, Twitter went all explodey on me, with articles and opinions all over the place. It has certainly made for some lively and interesting discussion. Personally, I’m still processing all of the information and what it does and could mean down the road for publishing. Yesterday, however, came the quiet by comparison news that Amazon had purchased the rights to Ian Fleming’s James Bond novels, to sell them in U.S. for the next ten years.

While this doesn’t seem like crazy news on the scale of the DoJ settlement, it instantly had me wondering, “how did this happen?” Was there a bidding war? Was Amazon’s publishing arm talking with the rights holders behind the scenes? Did publishers not believe Amazon could/would do this and just ignored the possibility? I’d be very curious to hear how this whole deal played out. It’s not the first time Amazon has done this nor will it be the last. They recently purchased the rights to crime writer Ed McBain’s work (35 of his novels anyway). So, I expect that Amazon will continue to go after reprint rights for many authors in the years to come.

Why would the bother doing this? The books are already for sale in their store. To me, at least, this seems pretty simple. Here are books with a built-in audience base, and in the case of Fleming’s work, they have been selling for $9.99 on the kindle. By today’s standards, kind of pricey for a reprint title, but Bond is popular, and likely commands a premium price. I don’t know what McBain titles sold for prior to being purchased, but they sell for $5.99 now. You can expect the Bond titles to do the same. That money all goes to Amazon. Smart move.

Amazon is gathering up titles they can undercut the previous publisher’s prices without being discounted at all. While this only encompasses a handful of books, it is a brilliant move with regard to buyer perception. If you see/believe one book is now priced lower than previously available by publishers, there could be others. I think I’ll keep shopping here because I might find more.

There are those who will likely see this as another move by Amazon to usurp publishing away from publishers, to destroy their ability to make money from long-standing titles, cut into profitability, etc. The more I’ve mulled over this whole publishing “war” the more I’m beginning to believe (subject to change of course) that Amazon just doesn’t really think in those terms at all.

Amazon’s bookselling has been and always will be about building a consumer base. Books are a wonderful gateway product to get buyers into the store, where they will buy a book and then other things that Amazon has a better margin on. In order to be the best at this and bring in the most loyal consumers, buyer perception rules the land, and the perception must be that Amazon sells books for the lowest price around, bar none.  As a retailer, being able to minimize/avoid markup in prices is key. So, you build an environment that allows producers to sell directly to consumers. Internal competition between them within the store will keep prices at their lowest. Taking the middleman out of the equation makes business sense. All businesses work this way.

So, buying up the Bond/McBain titles is yet another way to sidestep the middleman in the business cycle and offer the consumer a cheaper product. It’s Amazon’s simple mantra of success, do whatever it takes to offer the lowest possible price or at the very least, instill the perception in buyer’s minds that this is true. They aren’t trying to destroy the publishing industry, not on purpose anyway. They just don’t care how the rest of the industry handles their ability to make smart business decisions. One could certainly fault them for this, and I do, just as much as I fault the publisher’s mishandling the changes that Amazon is bringing about.

There are likely scenarios where things could have been different and pubs/retailers could have worked together to sell cheaper books and maximize profits. It could have been a transition, painful to be sure, but a transition nonetheless. It’s getting close to the point now, I believe, where the industry is going to not just change but basically get burned to the ground and rebuilt. It didn’t have to happen that way, but when one side is intransigent and the other has the power to just kind of shrug and carry on without caring what happens to everyone else, it seems almost inevitable. Amazon has a plan, guided not by books, what they are or mean or what value they have, but by securing the most customers.  It’s a pretty smart plan, even if they do some rather shitty things like locking buyers into the kindle, but I expect that will change in the near future. It’s getting to the point where consumers will be loyal enough to the Amazon experience that they’ll go there simply because they perceive that they can get what they want at the cheapest price. Looking elsewhere won’t be worth the effort.

This Fleming sale may not seem like much, but it should be a pretty clear sign to people that Amazon’s march to securing their kingdom of buyer percpeption is going to keep getting stronger regardless of what the rest of the industry does.

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8 responses to “More Worrisome for Publisher’s than the DoJ?

  1. Oh, and I have a hard time feeling too sorry for Barnes & Noble and Borders either, who themselves were responsible for driving small, local bookstores into the ground. They want to dish it out, but don’t like it when they’re on the receiving end.

  2. This is a really interesting situation. My Twitter feed was full of discussion about it yesterday. My understanding is that Penguin’s contract for the James Bond books expired last month and the representatives for Ian Fleming decided to republish the books through Amazon’s Thomas & Mercer imprint. Laurence Kirshbaum who used to be with Warner Books Group is now running Amazon’s publishing house. He sounds very

    • Ooops, my cell phone published my comment mid-sentence. 🙂 Anyway, Kirshbaum sounds very humble and he describes Amazon’s publishing house as small with a lot to learn right now. People who have been to the publishing house describe it as a very comfortable place. I think Amazon values books, and is in the process of figuring out how to merge modern tech with publishing and selling books

      • Honestly, I don’t know a heck of a lot about Amazon’s publishing arm. Given that it’s being run by former NYC publishing folks, you have to give it some credence. I imagine they will publish some damn good books. It does fit rather nicely though with Amazon’s platform. Those books can be offered cheaper than anywhere else, and they will actually make money off of them instead of eating profit through discount. I have and probably always will take Bezos’ rhetoric about transforming publishing with a grain of salt though. They rightly and smartly figured out how to capitalize on a large consumer base in such a way as to keep them company loyal. Amazon will never be “about” books as far as that goes. I can cede the fact that those who actually work within Amazon’s publishing house will feel this way, as do those who work in the traditional publishing industry. I could be proven wrong down the road of course and will be happy to change my mind when that time comes, but I have a hard time believing Amazon will ever care about books in and of themselves. They just don’t need to in order to be successful.

        • I guess only time will tell. One big publishsr, Houghton Mifflin Harcourt, will be working with Amazon in a unique way. They’ve agreed to publish paper copies of Amazon publishing’s adult books and distribute them in bookstores.

          I think we’re about to see huge changes in many businesses in ways we never before imagined. Jeff Bezos has started a space exploration company, as has the owner of PayPal and the owner of Virgin Atlantic. Yesterday, NASA retired the space shuttle and announced planned missions with private companies. NASA announced a rocket launch with private company SpaceX on April 30! And Jeff Bezos’s company found Apollo 11’s rockets on the ocean floor and hopes to bring them up. I think Bezos is one of the high-tech people imagining the future. Only time will tell if Amazon will help or hurt the world of literature.

          • Oh, agreed! All kinds of intriguing stuff happening. I forgot about that Harcourt thing. I believe I heard about that not too long ago. I do hope publishers can figure it out. As much as I’d like to smack them upside the head and give Amazon the finger for using books as a consumer bargaining chip, things would be much better if they could figure out ways to work with each other instead of against. Book culture needs diversity, and Amazon dominance of the market isn’t exactly the best road to that goal.

  3. You’re right, I think. It’s really not any different than any business attempting to deal with competition. Publishers may have been rather screwed from the get go, looking at this in hindsight though. I honestly don’t know if there is anything they could have done to stem Amazon’s growth in the market. It’s much like the Walmarts of the world driving out the smaller, individual businesses through pricing and convenience. They just aren’t in a position, no matter what they do, to compete, and there’s really not a damn thing they can do about it. They just don’t have the resources.

    Small businesses that thrived under these conditions basically reinvented themselves, specialized, turned to methods and products that big corporations couldn’t compete against in a cost-effective manner. I’m guessing publishing is just about to that point too. They’re going to have to reinvent themselves. No clue how this is going to work mind you, as publishing is a very odd industry relative to other product industries, but it’s not hard to imagine that “change” is going to basically mean tearing the whole thing down and starting over.

  4. Frankly, Jim, this is what I thought was happening all along. I mean, is it any different from Walmart trying to undercut the competition? Anyone who wants to compete has to start buying cheap stuff made in China. You don’t have to LIKE it. It just IS.

    As far as the traditional publishers are concerned, I don’t feel a bit sorry for them. When they started charging the same price for an electronic book–which can’t be loaned out at all–as for a printed book, they lost my support. If they had allowed a dollar or even 50 cent discount, I could have accepted it. As it is, they’ve been their bed. Now they have to lie in it, as far as I’m concerned.