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Industry news: Amazon isn’t predatory. Maybe.

April 13, 2013

The guy in the picture doesn’t look like Darth Vader. In fact, he looks like a friendly guy, with sort of a permasmile on his face. Businesslike, but not a shark. Not the type of guy who would ruin your business because it’s ruin-able. And maybe he’s not. Or maybe he is. Or maybe he’s all of those things.

The guy in the picture is Jeff Bezos of Amazon. And to some, Darth Vader is Mister Congeniality compared to him and his business practices. Some publishers have said that Amazon is trying to kill them. The Author’s Guild isn’t a fan. Amazon has demanded deep cuts in wholesale prices and much more favorable co-op terms.

Amazon is the primary supply chain for book sales. It owns enough of the distribution means that publishers almost have to do business via Amazon in order to survive. In order to do business, publishers have to be on Amazon. As a result, the publisher’s competitor is dictating some of the terms of its existence.

It’s almost enough to make publishers band together–maybe with a well-known hardware company–to try to fight the domination. Not that five of the Big Six (at the time) got together at a New York restaurant to discuss how to do that exactly thing. (That would be collusion.)

Pretty much any publisher that wants to do volume has a functional take-it-or-leave-it offer from Amazon. And so far, Amazon’s been able to stay off the Department of Justice’s anti-trust radar.

Bezos hears the criticism, as referenced in Amazon’s annual report. According to the report, Amazon is looking to please customers, rather the crush competitors. (Former Borders employees might not agree.) And part of Bezos’s approach has to force even its biggest skeptics among authors to give the company some credit.

According to Bezos (as quoted in Publishers Weekly), “The industry standard is twice a year, and that has been the standard for a long time. Yet when we interview authors as customers, infrequent payment is a major dissatisfier. Imagine how you’d like it if you were paid twice a year. There isn’t competitive pressure to pay authors more than once every six months, but we’re proactively doing so.”

In fact, several authors who have been dissatisfied with their former publishers have signed what they perceive to be better deals with Amazon. They include Timothy Ferriss, Seth Godin, Deepak Chopra,  and James Franco. And there’s an argument in favor of going with Amazon. Starting with Amazon’s move to pay royalties within 60 days, many consider Amazon to have better terms. According to my research, you’ll get about 15% from a traditional publisher and 35-70% from Amazon.

Maybe that’s why Jeff Bezos is smiling. Maybe he loves giving the customer, including authors, the best deal. Or maybe he’s imagining what he can do when authors and buyers have no choice but to go through him.

Your mileage may vary.

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4 Comments
  1. April 13, 2013 11:26 am

    As far as the publishing industry goes, I’m pretty small potatoes. I started self publishing when my traditional publisher went out of business during this ongoing recession, depression, economic turn down, etc., etc., etc. I am available on Amazon only because I feel I need to be. The truth is, every time one of my books sells on The Big “A”, I lose money. They keep 55% and I pay the postage. Fortunately I also have self produced CD’s with a much higher profit margin, so what I lose in book sales, I make up in CD sales. Imagine a book being your loss leader. Pathetic.

    • April 14, 2013 10:31 am

      I sympathize with your situation, but are you sure that your losses are specific to working with Amazon as opposed to self-publishing, in general.

      The more frequent pay outs sound very favorable.

  2. Anna permalink
    April 13, 2013 11:28 am

    *predatory

    • Chris Hamilton permalink
      April 13, 2013 11:33 am

      That, too.

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