Amazon Changes POD Tactics, Removes Velvet Gloves

March 28th, 2008 · 23 Comments
by Kassia Krozser

It is not surprising that Amazon has told publishers that it’s their POD (print-on-demand) service or no sales through Amazon. It is surprising that, well, anyone is surprised. Did y’all think Amazon was buying Booksurge for the fun of it? What other outcome did you expect?

Readers don’t care if a book ships from a massive warehouse or is, quite literally, hot off the press.

I am not joking. While the publishing industry worries about Google (and I am still convinced that working with search engines to optimize access to your content is in the best interest of everyone) and watches while Barnes & Noble moves further into traditional publisher territory, Amazon is amassing what is essentially a secret army. Amazon is a business, and like real businesses, engages in actions that further Amazon’s goals. Not yours…unless your goals dovetail with Amazon’s.

Businesses are not nice, fuzzy creatures that cuddle with you in the dark of the night and believe in fairy tales.

Your content is being locked to their device. Your content is being locked to their service. They get to set the terms — if the music industry hadn’t been so busy fighting consumers, they would have stroked their bearded chins and considered the fact that they lost the ability to dictate terms to a vendor. Apple owns the market; until that changes, well, the labels are victims of their own hubris. They fiddled, Rome burned, and a new empire emerged.

Your fear of piracy mirrors the actions of the music biz. You’re locked into format and device. While the Kindle isn’t near as popular as the iPod, it’s building a fan base. Sony eReaders consumers are locked out of the Amazon store. Other readers are locked out. You have allowed customers to become disenfranchised, and, unless my crystal ball is playing tricks on me, there will come a time when Amazon “encourages” you to explore new pricing structures.

POD is a lovely niche market right now, but the potential is incredible. The cost of creating a one-off book is within the range of most consumer pocketbooks. The process creates a shipping delay that is nearly transparent to consumers — if they’re ordered from Amazon, they know it takes a few days to get the book. Readers don’t care if a book ships from a massive warehouse or is, quite literally, hot off the press. They just want the book they want, when they want it, you know the rest.

I like what booktwo.org has to say:

It’s an incredibly retrograde step. All our recent talk about mass customisation entirely depends on open, independent manufacturing and distribution platforms – the opposite of what Amazon is trying to force on its suppliers. I have to say that we did see this coming, but it doesn’t excuse a clearly monopolistic and unethical action on Amazon’s part. We’ve yet to hear anything in the UK, but we’re going to be watching developments in the US with a keen interest.

TeleRead also highlights some of my points:

Amazon’s monopolistic ways should give publishers all the more reason to get serious about the .epub format at the consumer level and experiment with alternatives to DRM, which is better at protecting monopolies and near-monopolies than at safeguarding books. When, oh when, will the book business catch up with the music business and back off from DRM and proprietary formats? Amusingly, Amazon is now the second-biggest seller of online music or close to it, partly because—guess what?—it is selling nonDRMed MP3s. Time to apply the same commonsense to e-books? Amazon’s share of the pie might not be as big as with DRM, but it’ll be a bigger pie, given all the hassles DRM creates for consumers. Jeeze. Ingenious rascal that Jeff can be at times, who’s to say that a 19th-century Bezos wouldn’t have sold oil lamps designed burn only his oil and able to illuminate only Amazon-blessed books?

Writers Weekly apparently broke this story wide open. As a niche publisher working almost exclusively in the print-on-demand, the Booklocker team (Booklocker is owned by the same people who run Writers Weekly) are faced with a choice: work with BookSurge — a company that didn’t do right by Booklocker in the past — or lose the Amazon sales. And, of course, like most other savvy publishing businesses, Booklocker must still work with Ingram’s Lightning Source.

And it is unclear how this will play out with Lightning Source. Amazon, surely, doesn’t want to mess with its Ingram relationship, and Ingram has built a pretty solid base of Lightning Source titles. Right now, it seems like only the straight POD houses are losing their “buy” buttons. Here’s guessing this is an opening salvo, not the final word.

Yes, I think that working with multiple vendors is a good thing, and, yeah, it’s going to cost companies more to convert books to multiple formats, but it sure beats being locked into a single provider. Right now, if you’re buying and selling in the online book market, you’re buying and selling with Amazon. This means you’re using their service, paying the fees they set, and smiling through the pain.

On the positive side, well, you can officially say that POD has come into its own.

Technorati Tags: , , , , , , , ,

File Under: Non-Traditional Publishing

23 responses so far ↓

  • Eugene G. Schwartz // Mar 28, 2008 at 12:42 pm

    Not to panic. This is in a way an exciting challenge to sompetition. There is no reason for either/or. Publishers can still also do POD with Lightning Source for orders being filled through Inram whoelsale, their own web sites and other on-line retailers.

    Gene Schwartz
    Editor at Large, ForeWord Magazine

  • Eugene G. Schwartz // Mar 28, 2008 at 12:57 pm

    Egg on my face.

    I should have read the writer’s weekly posting first.

    It appears on the surface that Amazon is trying to have it both ways, bundling printing in with their retailing or else creating a discriminatory financial barrier for the use of external POD suppliers. There may be a restraint of trade issue here. A retailer cannot apply discriminatory terms, altho they can decide whose work to carry.

    Obviously more here than meets the eye and a lot of sorting out will be needed — but not something for publishers to take lying down.

    Gene Schwartz
    Editor at Large
    ForeWord Magazine

  • Eric Marin // Mar 28, 2008 at 1:16 pm

    Gene, this isn’t my area of the law, but one entity acting alone in an anticompetitive manner is not a “restraint of trade” under the Sherman Act. The Sherman Act’s bar on “monopoliz[ing] . . . any part of the trade or commerce among the several States, or with foreign nations” would be the potentially applicable portion of the act in this type of instance. Whether BookSurge’s alleged move would be considered anticompetitive under the act or other anticompetition statutes in the U.S., I don’t know. Again, this isn’t my practice area, but it’s certainly interesting to think about.

    Here’s an informative page on the various federal anticompetition statutes in the U.S.: http://www.usdoj.gov/atr/foia/divisionmanual/ch2.htm#a

  • matt bucher // Mar 28, 2008 at 8:07 pm

    I wonder how Amazon will distinguish between POD and short run digital printing? I am sure some small publishers will figure out a way around this restriction as it is proposed.

  • Kassia Krozser // Mar 28, 2008 at 9:27 pm

    Eugene — I’d like to respond to your pre-egg comment, if I may (and, what, you’re gonna stop me?). I think competition is very good, and I think we’re going to find that Amazon, particularly, will hold its competition close (or, if you will, will not cut ties with Lightning Source right away). Ingram, seeing this move, can play hardball in its own way.

    If it benefits the reader, I’m all for it. I also think that publishers should not tie themselves to a single distributor (be it POD or other). My biggest issue with this move by Amazon, as indicated, is that publishers are ceding too much to one company — and I’m not sure they realize that they’re doing so. It’s a bit astonishing to watch the mistakes of the music industry replicated so faithfully.

    I’m not a lawyer (whew!) but I don’t think we have a restraint of trade issue here. And I don’t know if there’s a hard and fast distinction between true POD and short-run digital printing — where is the line? One book versus five? Matt’s right, though, with every rule comes a loophole.

  • ats // Mar 29, 2008 at 7:53 pm

    Publishers – This story is being closely followed at amazon troop surge

    http://www.amazontroopsurge.com

  • Artículo de Kassia Kozer, en Booksquare … « El cuartillero // Mar 30, 2008 at 1:44 am

    […] http://www.booksquare.com/amazon-changes-pod-tactics-removes-velvet-gloves/   […]

  • Amazon Flexes Its Market Muscle | Dear Author: Romance Book Reviews, Author Interviews, and Commentary // Mar 30, 2008 at 2:00 am

    […] should be expected, as Kassia Krozser of Booksquare, states. Amazon is trying to create a publishing empire. Not just […]

  • Amazon’s Blatant Disrespect of Their Best Customers // Mar 30, 2008 at 4:54 am

    […] Amazon Changes POD Tactics, Removes Velvet Gloves by Kassia Krozser, Booksquare […]

  • The Essential Marketing Secrets that Amazon Forgot // Mar 30, 2008 at 5:54 am

    […] Amazon Changes POD Tactics, Removes Velvet Gloves by Kassia Krozser, Booksquare […]

  • Dear Amazon, What are You Thinking? // Mar 30, 2008 at 8:54 am

    […] Amazon Changes POD Tactics, Removes Velvet Gloves by Kassia Krozser, Booksquare […]

  • Victor Curran // Mar 30, 2008 at 10:46 am

    There’s a strange deja vu in Amazon.com’s announcement that they won’t sell print-on-demand titles unless they are printed at BookSurge. Book publishers got out of the printing business decades ago, because book publishing is a seasonal business. Publishers couldn’t afford to tie up their capital in factories that for half the year were idle.
    The value proposition of Amazon isn’t the merchandise. They sell convenience, the ease of shopping for books, music, movies, cameras, and golf clubs all in one place, and getting them delivered to your door quickly. They’re successful because they put their resources into the buyer experience. They let other people invest in factories, warehouses, and inventory.
    Amazon might have saved itself a lot of trouble by reading Charlie Rheault’s fine little book, “In Retrospect: The Riverside Press 1852-1971″ (you can even buy it on Amazon). They might have learned to let go of assets that are so expensive you have to bully your customers and business partners into paying for them.

  • Deborah Woehr » Backlash Over Amazon Monopoly Tactics // Mar 30, 2008 at 10:52 am

    […] Amazon Changes POD Tactics, Removes Velvet Gloves by Kassia Krozser, Booksquare […]

  • Author // Mar 30, 2008 at 10:01 pm

    A good case can be made that what Amazon is attempting to do violates anti-trust laws. Waiting for federal anti-trust action would take many years–years to get the Justice Department to act, years of trials, years of fussing over what the court decision means. Notice how long it took to deal with Microsoft’s tactics, despite the fact that the corporations they were bullying were large and powerful. None of us can afford that long a wait.

    Action at the state level, however, could move much faster, particularly if it involves off-the-record contact and a somber warning from those who can make trouble for Amazon. Amazon is headquartered in Seattle about a ten minute drive from the office of the Antitrust division of the Washington state attorney general. Here’s the contact information:

    Office of the Attorney General

    Antitrust Division

    800 Fifth Avenue, Suite 2000

    Seattle, WA 98104-3188

    http://www.atg.wa.gov/Antitrust/default.aspx

    Telephone: 206-587-5510

    Fax: 206-464-6338

    Note the remark on that web page that “The Antitrust Division only processes complaints that involve either Washington State residents or businesses located in Washington State.” Amazon is in Washington state, so it matters not where you are. You might also want to raise the issue with your state attorney general’s antitrust office, asking them to get in touch with their colleagues in Seattle. If you’re a publisher, encourage your authors to write. If you’re an author, encourage other writers to contact them.

  • Aaron Shepard // Mar 31, 2008 at 10:35 am

    You might be interested in the post on this issue on my Publishing Blog, “Amazon Declares War on Lightning Source.”

    http://www.aaronshep.com/publishing/blog.html

    Aaron Shepard
    Author, Aiming at Amazon
    Webmaster, Sales Rank Express

  • Rebecca // Mar 31, 2008 at 7:58 pm

    Ummm…so you all don’t take this part of the statement at face value? I know nothing about this kind of business model. So I ask:

    What is not being explained that should be if you don’t trust this assurance: (Thanks!)

    Source: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-printondemand

    Quote:
    “Another question we’ve seen: Do I need to switch completely to having my POD titles printed at Amazon?

    “No, there is no request for exclusivity. **Any publisher can use Amazon’s POD service just for those units that ship from Amazon and continue to use a different POD service provider for distribution through other channels.**

    “Alternatively, **you can use a different POD service provider for all your units. In that case, we ask that you pre-produce a small number of copies of each title (typically five copies), and send those to us in advance (Amazon Advantage Program-successfully used by thousands of big and small publishers).**

    “We will inventory those copies. That small cache of inventory allows us to provide the same rapid fulfillment capability to our customers that we would have if we were printing the titles ourselves on POD printing machines located inside our fulfillment centers. Unlike POD, this alternative is not completely “inventoryless.” However, as a practical matter, five copies is a small enough quantity that it is economically close to an inventoryless model.”

  • Lewis // Mar 31, 2008 at 8:22 pm

    To those asking legal questions, here’s an entry from someone who previously held a post at the FTC: http://managementrandd.blogspot.com/

  • Fiction Scribe » Blog Archive » Give Amazon.com the Bird // Apr 1, 2008 at 12:00 am

    […] Amazon Changes POD Tactics, Removes Velvet Gloves by Kassia Krozser, Booksquare […]

  • Times Emit: Apt’s links for April 16th through April 18th // Apr 18, 2008 at 5:31 pm

    […] Amazon Changes POD Tactics, Removes Velvet Gloves | Booksquare – […]

  • Amazon dashes the dreams of small publishers « Electric Alphabet // May 3, 2008 at 8:05 pm

    […] egregious, I agree with Booksquare that this is hardly surprising. Vertical integration is a tried-and-tested method of increasing […]

  • The Sheriff of Nottingham Works for iUniverse and Amazon These Days | Shireen Jeejeebhoy, Author // Nov 17, 2008 at 3:31 pm

    […] is thinking about self-publishing. I am extremely disappointed in both iUniverse and Amazon. But as Kassia Krozser on Booksquare wrote, “Businesses are not nice, fuzzy creatures that cuddle with you in the dark of the […]

  • How to Start Your Own Publishing Company — Eternal Revolution // Jul 8, 2009 at 8:16 am

    […] books appears higher and profits smaller, and it is exclusive to Amazon.com. In using CreateSpace, Amazon is trying to strongarm other POD companies out of their business. Not very “distributist” of […]

  • How to Start Your Own Publishing Company // Apr 9, 2010 at 3:28 pm

    […] books appears higher and profits smaller, and it is exclusive to Amazon.com. In using CreateSpace, Amazon is trying to strongarm other POD companies out of their business. Not very “distributist” of […]