Of oil lamps, Print on Demand, and e-book machines: Amazon’s Bezos as a would-be Rockefeller

"Authors and publishers who use Print-On-Demand printers in the U.S. have recently been hearing that Amazon will only continue to carry their works if they switch to Amazon's own POD property, BookSurge. WritersWeekly has the full story." - Booktwo.org. image The TeleRead take: Amazon has its share of good traits, but as shown by its bullying of Toys R Us and the related legal findings, this is no charity---in many respects, not all, just the usual robber barons at work in the Seattle haze. TeleBloggers might want to revisit Matthew Josephson's writings or download a freebie from Manybooks.net, Burton Jesse Hendrick's Age of Big Business. Hendrick vividly tells among other things how John D. Rockefeller dominated the oil business, not just by financing and running huge refineries like the one shown here, but also by playing dirty against competitors. Far from an enemy of big business, Hendrick often glorifies it---thereby making all the more credible his depiction of Rockefeller's sleazy side. Oh, and don't forget the muckraker Ida Tarbell's classic, The History of the Standard Oil Company, with details far beyond Hendrick's or Josephson's. That's her photo below. The Standard (Oil) of E? image image Now let's do the inevitable extrapolation from Amazon's reported POD misdoings, with some 19th century history thrown in. The Amazon Kindle and other e-readers aren't oil lamps, and e-books and their formats aren't oil, and, no, I'm not saying that Amazon can achieve as complete a control of e-books as Rockefeller did of oil, but if you go by WritersWeekly's account of the BookSurge move, Amazon comes across as a bully who can be predatory with both E and P. Consider that someday most p-books may be POD, and that BookSurge is hardly the cheapest choice for writers and publishers. If the WritersWeekly account is accurate, and I see that the Wall Street Journal has apparently confirmed it, I hope Jeff Bezos and crew will reconsider the POD action and also stop trying to inflict his brand of eBabel on the rest of us. Amazon's track record is bad enough. The main Amazon store abandoned Adobe PDF and Microsoft Reader in favor of its own Mobipocket---forcing publishers to switch. NonDRMed MP3s---but shackled e-books Amazon's monopolistic ways should give publishers all the more reason to get serious about the IDPF's nonproprietary .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?

Why I’m not beating up on Google and Microsoft right now: Yes, I as keep disclosing, I have a small retirement investment in Google, but have criticized it, vigorously, for such practices as vandalizing public domain books with its corporate logo on every bleepin’ page. But Google isn’t as much against consumer choice, in the e-book area, as Amazon is. You don’t need a Google machine to read Google-provided books. As for Microsoft, my feelings about its proprietary Microsoft Reader e-book format are already well known. If Microsoft is smart, it will reinvent itself in the e-book area with a far more open approach.

Other recommended reading for students of monopoly: Frank Norris‘s The Octopus. Hmm. Book publishers as California farmers forced to ship via the Southern Pacific Railroad?

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12 Comments on Of oil lamps, Print on Demand, and e-book machines: Amazon’s Bezos as a would-be Rockefeller

  1. As an Amazon:

    1. Customer

    2. Shareholder

    3. Affiliate

    4. Supplier (via Lightning Source)

    I am completely disgusted by this latest news, my shares will be sold today as there is a lot of negative press around this already.

    1, 3 and 4 will be following very quickly if this news is true.

  2. Interestingly I believe the WSJ missed the point when it referred to Amazon as a mere retailer. They are far more powerful and I have the similar thought but related them to the 19th century mill owner. My conclusion: The WSJ should know better. Without being too dramatic, the release of Windows 3.1 heralded a period of intense exclusion at Microsoft: If you didn’t play ball with them you essentially had no marketplace. Perhaps at first blush the publishing industry doesn’t appear to have any correlation to the software world but with the migration to ‘platform’ based publishing (a publishing version of iTunes for example) we are seeing the germination of a world where there are only one or two legitimate channels to the consumer. If their actions in the POD world over these past two months are anything to go by then Amazon definitely has monopolistic tendencies. More: Personanondata.blogspot.com

  3. I am outraged at this news. I just sent Amazon a very blunt email, telling them what I think about this and warning them that I would take my business elsewhere if this coercion isn’t stopped.

  4. While normally this news would shock and disgust me, I think a natural way around it for all concerned is simply for Amazon to buy all the other POD companies. They should also buy all the ebook companies, and they should buy eInk, and with the profits from these monopolies they can go on to buy all display technology patents that are still in force.

    Note to Mr Bezos: best hurry, the administration that gave the green light to the only two satellite radio companies merging, saying that it would not hurt competition, has only a few months left in office! Somebody with an ounce of common sense (or a lick of law-abiding-ness) might get into power come 2009!)

    😉

  5. WSJ…is WalMart a “mere retailer”? If you are big enough, you can dictate trends and terms.

    As for Amazon…it’s stuff like this that gets me worried about Mobipocket as a format. What if they decide that if it ain’t a Kindle eBook you can’t use Mobipocket?

  6. “Note to Mr Bezos: best hurry, the administration that gave the green light to the only two satellite radio companies merging, saying that it would not hurt competition, has only a few months left in office!”

    Any subsequent administration might not be all sunshine and puppies. Take a look at when things like the DMCA and NAFTA were signed into law!

    :(

  7. Septimus Severus // March 28, 2008 at 5:08 pm //

    David Rothman raises an alarm about Amazon using its market power to push booksellers toward its Print-on-Demand (POD) company called Booksurge. I can understand this objection. Yet the article in WritersWeekly suggests that there is another dominant company that may have even greater market power in its niche in the bookselling business called Ingram. Consider this excerpt:

    Since Amazon/BookSurge does not offer Ingram distribution (Ingram distribution is considered imperative in the industry for bookstore sales), any company that accepts the Amazon/BookSurge deal, who desires to keep offering Ingram distribution, may need to maintain two copies of the book files.

    Maybe some blog reader and book seller can comment on the phrase “Ingram distribution is considered imperative”. Ingram has its own POD Company called Lightning Source. Is Ingram using its market power to push booksellers toward Lightning Source? I am not a book seller and I do not know. Perhaps someone knowledgeable can comment. WritersWeekly says some authors will feel it necessary to use two POD companies:

    Likewise, self-published authors who believe they must have Ingram Distribution AND an active “buy” button on Amazon to be successful may need to pay double the setup fees (to a POD publisher AND Amazon/BookSurge), and also may need to create two separate sets of formatted files.

  8. Good point, Sept, but Amazon (2007 revenue of $14.84B) dwarfs Ingram Industries (sales of around $1.8B in ’06). Ingram Industries owns the Book Group but is into many other activities, so the book-related sales would be still smaller. In fact, elsewhere, I see the Book Group’s sales are around $290M. Am I missing something? Are the Book Group figs picking up Lightning Source? Apparently not, since it’s a sister company” to the Book Group. Based on the figures for the parent company, however, it would be safe to say that Amazon is the one to watch out for, even if books are just one of its offerings—especially since Bezos apparently likes to push the law to the limit. Again, I’m not saying that Ingram is unimportant. But Amazon is far scarier to me. Further info from others welcome! – David

  9. We at Hard Shell Word Factory won’t agree to this ill-conceived policy. At one point several years ago we were getting POD printing from Lightning Source, BookSurge and Bookmobile–3 setup charges per title. We felt it was necessary at the time to ensure sales to booksellers as well as getting books to author events on time. However, BookSurge’s price and quality were so poor we turned more to LSI, with Bookmobile as a backup. Bookmobile was more reliable for timely shipping and quality than either LSI or Booksurge, but did not have the distribution channels. Since then, most large chain booksellers began refusing to order POD printed books unless they got full discount and returnability, so unless a publisher was willing to knuckle under this archaic practice which POD should have eliminated, Ingram “distribution” no longer applied.

    When we heard Amazon had acquired BookSurge, we decided to wait a bit and see if things improved. However, more than six months after the acquisition, they not only showed no improvement in price or quality, but delivery time had become terrible. We did not renew our contract with BookSurge/Amazon for printing our PODs. They may not care–we’re not a big company–but I can’t imagine any publisher agreeing to this new policy, since they never get to QC the final books produced in this Amazon to BookSurge to Customer sales model.

  10. 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.

  11. 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

  12. Forget supplying Amazon with five copies of books and paying an annual fee for the dubious privilege of adding to their profits. That’s not a viable option. Anyone who does so is likely to find the ante soon upped.

    They have some ten shipping centers, all of which will need to be stocked if their ill-conceived Prime shipping scheme is to work. Do you want the hassle of keeping an inventory of five books for each title you have in each of their ten centers?

    If you have fifty titles, that’s an inventory of 2500 books that have been printed and paid for without you getting a penny in income, as well as 2500 physical books you have to track week by week, lest Amazon ship them but not pay you. You’ll have to have a computer tracking system as complex as that at Ingram. Do you have the budget for a full-time financial database and inventory tracking programmer? You’ll need one that can individually track all the books you publish at four points in the business cycle Amazon would be forcing on you: !. Printed and held for sending to Amazon, 2. Sent to Amazon but not sold, 3. Sold by Amazon and waiting for payment, 4. Paid by Amazon. That’s 10,000 transactions to be hand-managed every time you sell ten copies of each of your titles.

    That sort of hassle and expense is not what we got into POD for. Besides, from what I hear, Amazon will nickel and dime you to death on this, sending a request for one book on Monday, a request for two different titles on Wednesday etc. You’ll live in your car driving to the post office burning pricey gas. (So much for Amazon’s “save the planet’ claims.) Remember, you’re soaking the cost of all this. They have no reason to play nice with you.

    Also keep in mind that legally books are not like most other products, thanks to a 1930s law and court case a few years back. It’s quite likely that offering that service to Amazon, but no other bookstore, online or otherwise, is illegal. Do you want to also be forced to supply B&N or Powells or any bookstore that decides to keep a few of your books in inventory? You will, if you sign with Amazon and one of them takes you to court, that is, after you pay all their legal costs, which are likely to run into six figures. Amazon will hire high-powered lawyers who will get them off scott-free while you become the criminal. After all, it was your fault for accepting an offer from them that you didn’t immediately offer to others.

    And do you want to have to supply book files in some quirky format to every fly-by-night combo pod/online store that comes along? By law, what you do for one bookseller, you have to do for all.

    No, we must take charge of this dispute. Do nothing and we loose. POD publishers need to develop a list of reasonable contractual requirements that Amazon/BookSurge must meet before we sign with them. Here’s a short list off the top of my head:

    !. Since Amazon is doing the printing, selling and shipping, Amazon must take care of all damaged returns and clearly state that on the Amazon detail page for the book. That means that for BookSurge books, publishers can clearly state inside the book that Amazon must be contacted for all returns, that the publisher has no responsibility and no liability. I suspect this reasonable demand is something Amazon’s upper execs haven’t considered.

    2. Amazon must offer high-quality return services, as high quality as we might like to offer. Having a 800 number manned by humans, paying shipping both ways, and promising to get a new copy to the customer within two weeks. Given the reputed dismal quality of BookSurge, that could get costly for Amazon.

    3. Remember, we’re happy with the current arrangement and can find no benefit for ourselves in these changes. Amazon must use carrots rather than sticks to motivate us. BookSurge must take book cover and interior files in the same format as Lightning Source and match or better their prices. That’ll eliminate the considerable conversion costs. Personally, I’d add another stipulation. If Amazon has 5% of the book sales in this country, their prices to put our books on their system must be 5% of LSI’s. We should not have to pay as much to reach 5% of the market as we pay to reach 95%. Reporters are likely to find that fairness argument compelling.

    4. Since BookSurge can’t print in the same sizes and formats as Lightning, Amazon must continue to sell all books in those sizes and formats, getting them from Lightning, until BookSurge offers that size and format. It must also sell titles from Lightning in any country BookSurge doesn’t print (apparently in the UK).

    5. This is the most important. With Amazon in complete control of a book’s publication chain, they must open up ALL their internal books and sales tracking to any pod publisher who asks, immediately, completely, and without charge. Remember, with the current scheme involving Lightning, Ingram, and an independent bookstore, we have multiple checks on what’s printed and sold. With Amazon doing it all, they could very easily print 1000 copies, but pay us for only 800, turning a tidy profit at our expense. How would we know? We wouldn’t. Can we trust Amazon? Of course not! We know they’re scum. Their behavior already proves that. If they protest, we can reply, “What do you have to hide?”

    6. So we know when to invoke #5, they must report to us all sales of our titles weekly, detailing how many books were sold, when they were sold (to the minute), and where they were shipped down to the zip code. That would let a POD publisher make test sales and get friends to forward Amazon receipts for purchases they make. If a sale doesn’t show up on the weekly report, the contract would allow us go into their accounting and tracking system to find out why. Any missed sale would incur a substantial penalty, perhaps 100 times our loss plus all our costs, including travel and hotel expenses and billing for our time.

    7. Remember that the digital book file you supply Amazon IS you book. With it someone can publish your book at almost no cost. The contract must permit pod publishers to leave at any time and for any reason after giving Amazon 30 days notice. And Amazon must guarantee in writing that they’ve destroyed all the book files and will be liable for any failure to do so.

    Will Amazon agree to those stipulations? Almost certainly not. But by refusing, Amazon will demonstrate that this isn’t about customer service nor is it about business integrity. We take the moral high ground and leave them fuming and sputtering.

    I emphasize again, if we don’t take charge of this dispute by dictating the terms of any agreement, Amazon will stay in charge and slowly wear us down, a little this year, a bit more the next. We need to act, we need to act now, and we need to act together. When BookSurge reps call, we need to be able to say, “Have you agreed to the POD industry’s standard contract yet?” If they say no, then the conversation is over.

    We must seize and keep the initiative, putting the onus on them to meet our demands. If we don’t do that, then what is happening now is only the beginning our our troubles with Amazon. They will continue to squeeze not just us but authors and everyone in the publishing industry.

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