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Forbes Column 08: How Amazon Could Change Publishing

Posted on Friday, May 16th 2008

Amazon is the 800-pound gorilla in book retail. What if they also became the publisher, and cut out all the middle-men? Read my new Forbes column, How Amazon Could Change Publishing.

This segment is a part in the series : Forbes Column 08


. Connecting With Your Intimate Bot
. The Gap in Google's Defenses
. A Recession-Proof Corner of the Tech Sector
. eBay's Bounce-Back Opportunity
. How To Dig Out Yahoo's Treasures
. The Microsoft-Yahoo! Battle Plan
. What Microsoft Should Do While Yahoo! Dithers
. The Next VMWare
. The Smartest Unknown Indian Entrepreneur
. The Coming Death of Indian Outsourcing
. India - Cash Rich, Product Poor
. How to Save the World's Back Office
. Latin America's eCommerce Leader
. The Next Indo-China War
. The Real VCs of Silicon Valley
. Fund Envy
. Bootstrap Yourself
. The Coming Convergence
. Lighting The Way In India
. Hydro-Alchemy
. How Amazon Could Change Publishing
. A Technological Fix For Education
. How Technology Can Save Retailers
. Mobile Microfinance
. How To Heat Up Solar
. How Chip Toolmakers Can Survive
. Kill The Business Trip
. Water Firm Enlivens IPO Market
. Web-Savvy Authors Reap Fame, Fortune
. Peeking Inside the iPhone
. Bootstrapping, Montana Style
. Entrepreneurs Flock To Online Travel
. Silicon Lazarus
. Carts Ahead Of Horses
. Weapon Of Mass Reconstruction
. Barack Obama' s Finance Lesson
. Stimulus Package For Entrepreneurs
. Building A Smarter Corporation
. Deconstructing The Cloud
. 'SaaS-ing' Back At The Economy
. Web 3.0
. My Adventure With Amazon
. An S.O.S. To Silicon Valley
. OLPC’s Last Billion
. Capitalism Revisited
. Bargains For Private Equity
. President Obama
. Perilous Protectionism
. Healing Health Care
. Stop The Fear Epidemic
. Obama
. 'Edutainment' Needs Entrepreneurs

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Hi Sramana,

I read your article with great interest. I do believe Amazon.com has this great potential to bring another innovation in the publishing industry.

I just finished writing my own book. And I deeply it will be a bestseller. Can you give me some advice how I can approach Amazon for my book’s publication?

Best regards,

Jay Jaboneta

Jay Jaboneta Saturday, May 17, 2008 at 8:40 AM PT

Jay,

Right now, if you want to self-publish, you’d have to go through BookSurge, which is Amazon’s POD service. Or iUniverse, which has more channels besides Amazon and includes Barnes and Noble.

Making it a best-seller would be upto you. I don’t think you’d get a great deal of help from anyone in doing that, and that is primarily my point about the deficiencies in publishing … that they don’t market books.

At least, as a retailer, Amazon has some semblance of marketing and merchandising going on.

Sramana Mitra Saturday, May 17, 2008 at 9:59 AM PT

Hello Sramana,

Thanks for your article re: amazon.com.

It confirms what I have been telling people for the last four+ years; that they are better off to bypass the traditional publishing model and use what I have dubbed the Online Publishing Model (OPM).

BTW, I have used this OPM to publish more than a dozen how-to books (printed via POD) and they are all still listed and selling via amazon.com. Although, with this BookSurge thing I suppose they could disappear from the amazon.com website at any time.

This actually happened with all of my eBooks in the summer of 2006 when amazon.com pulled the plug on pdf ebooks overnight and forced all ebooks to go through their then recently acquired ebook publisher and distributor, mobipocket.com.

For a detailed list of ALL of the downsides of the traditional publishing model please check out my website that deals with this:
https://instantbookwritingkit.com

All the best,
Shaun Fawcett, M.B.A.

Shaun Saturday, May 17, 2008 at 8:08 PM PT

Hi Sramana –

Thanks for opening a discussion about Amazon’s POD squeeze. Some of this is rather old news — I founded a company (trafford.com) that was the first publishing service in the world to use print-on-demand (aka POD) as its basis. [This was before Amazon opened its website.] This POD approach has growth to the point that about 1/3 of all new titles published use this process!

The key to POD in this era of globalization and depleting resources is that the books be printed LOCALLY. For someone in India, for example, to buy a book from Amazon.com is poor economics and bad environmental practice, as Amazon has itself currently set up. I’ll explain: Amazon only has one print plant, in the eastern USA. The book is printed in Charlotte NC and then air freighted half-way around the globe. Why doesn’t Amazon use a network of POD plants around the globe? Because it refuses to cooperate with the other major POD printers (Lightning Source Inc has 2 plants in the USA and one in the UK; Anthony Rowe has one plant in the UK; Trafford has the only large POD plant in Canada; Libri’s Books on Demand GmbH is in Germany) and SHARE print work. To have a viable POD plant requires a print volume in excess of 100,000 books per month — more if you offer hardbound bindings. Amazon doesn’t have enough volume to expand on its own. Amazon’s recent edict to bully/threaten publishers to only use its own printer (BookSurge) is mostly a pissing match against Lightning Source, and has nothing to do with helping authors. Authors earn LESS using BookSurge than using Lightning.

If Jeff Bezos had learned in kindergarten to SHARE and COLLABORATE, we’d see a real and immediate jump in profitability for all players and in environmental improvement. He’s missing a great opportunity to help over the next decade or so.

Ten or fifteen years from now, this will not matter so much, since genre by genre we’re seeing “books” existing as online editions only. Think about the encyclopedia — 15 years ago this was a massive publishing sector; now no one prints these volumes anymore because consumers are all using wikipedia. Think about dictionaries — the OED recently announced it would never print a paper version again. Pulp fiction in Japan and Korean is HUGELY popular now as read on cell phones.

As cell phones grow and laptops shrink, they will meet in the middle — that will be the ultimate book-content viewer, and other genres will not be issued in printed editions.

More about the evolution of publishing on my blog at bookmarketing (dot) agiopublishing (dot) com.

thanks, cheers,
Bruce Batchelor

Bruce Batchelor Monday, May 19, 2008 at 12:46 PM PT

Bruce,

You bring up some interesting points. The most interesting one for me is the issue of international distribution, which Amazon so far has not done a good job in.

India, especially, is one of the biggest “reading” markets of English language books. Amazon doesn’t serve India well.

I completely agree with you that they should have a network of POD operations all over the world. But I suspect, they would own their own, rather than “share and collaborate” as you suggest. The logistics of multi-warehouse POD+shipment is quite complex, so I would give them some time to work out the kinks.

But you hit the problem absolutely on its head.

Sramana Mitra Monday, May 19, 2008 at 1:23 PM PT

Hi Sramana,

Thanks so much for the advice. I’ll send you a copy once its published.

God bless!

Jay Jaboneta Saturday, July 12, 2008 at 4:58 AM PT

[…] major pod printers (Lightning Source Inc has 2 plants in the USA and one in the UK; anthony rowe …https://sramanamitra.com/2008/05/16/forbes-column-how-amazon-could-change-publishing/Antony Rowe LTDCost-effective production of on-demand (links to POD), short-run and medium length […]

anthony rowe pod Monday, July 21, 2008 at 2:02 AM PT

Sramana,

The math of publishing is vexing! I am working with an author now under contract to a large publishing house. She gets 5% of what her publisher nets. That’s what big publishers are offering to new authors. A publisher typically nets on average 50% of list price. For a $20 book, my client will only get 50 cents per copy sold. If the publisher sells 10,000 copies, the author will earn $5000 and the publisher $95,000.

Amazon already gets 65% off from many publishers without incurring any production or shipping costs. If they were to become the publisher, a more realistic split would be 75% for Amazon and 25% for the author. The question is who pays the production, shipping, storage and marketing costs?

Considering that Amazon now represents about one-third of the first year sales for new books, you will lose two-thirds of your sales by not being readily available in bookstores. Can one-third of the sales cover 100% of the production and marketing costs?

You have to print 10,000 books to sell 10,000 books. Those assets have to be in the right place (by the checkout stand) when the marketing message hits.

I think a fair comparison is:

Conventional Publishing = $45,000 to author
30,000 copies sold, $20 list, 50% net
Author gets 7.5% of list (15% of net)

POD Publishing = $50,000 to author
10,000 copies sold, $20 list, 50% net
Author gets 50% of list = $100,000
Production & Marketing Costs = $5/copy = $50,000

Just because the publisher nets 50% doesn’t mean Amazon nets the other 50%. Amazon discounts most books. Consumers often get 20% or more discounts.

I think the most compelling reasons to self publish are related to control and branding rather than revenue from book sales. But that might change as Amazon continues to grow toward becoming half of all book sales.

Thanks for The Discussion,
STEVE O’KEEFE

Steve O'Keefe Friday, August 8, 2008 at 11:51 AM PT

[…] wrote a controversial Forbes column, How Amazon Could Change Publishing, in the spring. In this column, I submitted that Amazon could disintermediate traditional […]

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