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Hal Licino

To Fight the Jungle King: Winners & Losers of the Amazon Battles

Apr 17 2012, 05:39 PM by

WANTED: Highly skilled, educated, and experienced individual to work part time or even full time. Average compensation is well below minimum wage, usually paid only after a few years of work, and most never receive any pay at all. Apply at totallyinsanejob.com. If a classified ad such as this appeared on Craigslist or in your local paper, most people would just laugh it off as a prank. However, this is precisely the job that hundreds of thousands of wannabe book authors are actually performing right now, and some of them have been doing it for most of their adult lives. Breaking into the book publishing industry has never been harder than right now with the effective disembowelment of the printed book industry and the transition to an e-model where the mighty publishing leviathans of the past are being replaced by an online seller of tchotchkes, baubles... and, oh, yes... books too. Amazon is now king of the publishing jungle and the rest of the industry is lost in the thick underbrush.
The Brobdingnagian Complexity of Book Printing
Anyone familiar with printing can testify to the Brobdingnagian complexity of manufacturing and shipping a paper book. The myriad steps involved are not only time consuming but exceptionally expensive. In comparison, an e-book is as easy to create as clicking Save As PDF, and is universally distributed with another click. However, there are many more factors that regulate the cost of an e-book and they have become bones of contention between the publishers and Amazon.
A Mere 30x Increase in Promo Fees
The country’s six largest publishers Hachette, HarperCollins, Macmillan, Penguin, Random House and Simon & Schuster, have refused to sign onto Amazon’s latest contract primarily due to “co-op promotional fees” that have increase by a mere 30 times. Yes, that’s 30 times not 30 percent. Refusing to pay these fees does not equate to Amazon refusing to stock your books, it only means that they will not be promoted, therefore they will vanish without a trace among the several million other titles all competing for the reader’s dollar. The paper book versions may still be available for sale but since Amazon owns Kindle and has final say on what goes on it, the e-books will completely vanish, and there goes a massive chunk of total sales.
Amazon’s Railway Monopoly vs. the HO-Scale Competition
As was learned by America in the age of the railroad robber barons, monopoly corrupts and absolute monopoly corrupts absolutely. There is the argument that this is not a monopoly situation, as Amazon is completely within their rights to charge whatever they wish due to the fact that the publishers have many other online book selling options. The problem is that all of those options lumped together don’t equal the amount of Amazon sales that fall off the delivery trucks. In the railroad age if you wanted to sell your coal to the Amazon neighborhood of Eugene, Oregon you had one choice. Today, if you want to sell your book to the nice people of Amazon you have countless lines and choices. It’s just that the one operated by Amazon is the only one that can actually move enough product, as the others are Home Office-scale.
The DOJ Action Has Enabled Amazon to Squash Its Competition
Even HO-scale e-booksellers can grow to be giant killers, and there are various e-tailers who are challenging the Jungle King. Barnes & Noble and Google are among the competitors who are starting to make serious inroads into Amazon’s e-monopoly. This anti-trust talk has also attracted the attention of the US Department Of Justice, which has recently launched actions against Apple and various publishing companies for price fixing of e-books. This action has had the unintended effect of allowing Amazon to discount ebooks to any level it desires, creating a mechanism where the giant can now squeeze out all the dwarves. Kindle e-books can’t be read on Nooks and vice-versa, so with prices at fire-sale levels the Amazon tablet can garner overwhelming market share and as soon as the competitors are comfortably resting six feet under, they can jack the prices up to whatever they want. The monopoly is dead! Long live the monopoly!

The most obvious scapegoat who will not fail to be crunched in this money crush will be the author. As publishers see their margins dwindling the advances and total royalties that are currently at a mere pittance for all but the top bestselling authors will be decimated to the level of a decent dinner if the author doesn’t go anywhere expensive. Then the real loser will be the reading public, which will be denied the full spectrum of modern literature.

Posted in Printing, Current Events, Tech Editorial

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