The Biggest Threats to Publishing

Thanks to TeleRead here for drawing my attention to a series of blogs on e-book retailers.

It all started with sci-fi writer Orson Scott Card kvetching about Amazon here (after a long intro on storing brown sugar in airtight containers):

. . . with the Kindle and other electronic book systems, nobody has to pay for unsold copies because none are ever printed. Nor does Amazon have to pay for rent or utilities for bookstores all over the country. They have exactly one bookstore, which is online . . . And Amazon is keeping 65 percent of the cover price for themselves. The publisher and author have to figure out how to divide the remaining 35 percent between them – but lots of publishers are giving their authors only their standard royalties.

Mike Shatzkin picked up on the subject here. He makes a point that I made during one of my two talks yesterday at the DFW Writers' Conference: that Google is a search engine, interested in remaining the preeminent force in search. It's doubtful that Google has any interest in becoming a publisher.

Mike went on to say:

I think if I were a big publisher, I would make it clear that the era of 40, 50, 55, 60% off retail for digital downloads is one that must come to an end. I’d lean to a phased reduction and, in the short run, all kinds of support (including additional margin) to help “retailers” . . . and every store served by Ingram and Content Reserve) build their offering and their capability. The big publishers will have extraordinary leverage to recreate the paradigm.

Agent Richard Curtis jumped in here, agreeing with Mike that the risks a physical book retailer assumes are far greater than the risks an e-retailer takes on.

Mike suggests that the print publishers take a stance against e-retailers like Amazon.

I agree with Mike. Amazon has already made it plain that they are willing to use their considerable clout to demand EVEN MORE advantageous terms than they are already getting. Last June, I reported in my blog here that, during annual contract negotiations with Hachette Livre (one of the Big Six of publishing), Amazon had taken the audacious step of removing the "sale" buttons for HL titles on Amazon.uk.com in order to increase pressure on the publisher.

Even before then, in March of 2008 here in the U.S., Amazon had used the same tactics of taking down the "sale" buttons for publishers using POD technology in an effort to force them to use Amazon's proprietary press BookSurge if they wanted their books sold directly by Amazon. You can read about that here.

My admiration for the founders of both Amazon and Google knows no bounds. At the same time, I have enormous concern for their aggressive efforts and the potential for damage they represent to the publishing industry.

Google was happy with the proposed settlement created by that idiotic lawsuit brought against them. If that settlement goes unchallenged, they will have destroyed almost any chance a competitor may have of challenging their hegemony in the world of search engines. I was delighted that the Justice Department decided to review the Google settlement.

I would be equally happy if the Justice Department decided to take a good look at the potential threat from Amazon's vertical integration and its willingness to use one part of its empire to advantage another part.