Salon, rarely the most Amazon-friendly of venues, has just run another story on the state of the indie bookstore sector in the U.S., and found surprisingly positive trends. And naturally, being Salon, it saw fit to headline the report with a hit at Amazon like: “The independent bookstore lives! Why Amazon’s conquest will never be complete.”
In the article, Andrew Leonard picks up on the same kind of data that I instanced previously on the relative fortunes of indie bookstores and major book chains (Borders in particular, of course) in the era of digital disruption. “Brick-and-mortar bookstores aren’t dead, yet,” he says. “On the contrary, independently owned bookstores are growing in number. According to the American Booksellers Association, since hitting a nadir in 2009, the number of indie bookstores in the U.S. has grown 19.3 percent, from 1,651 to 1,971.”
I’ll leave you all to head over to his article for the various arguments and data points he marshals in favor of his thesis. There’s plenty of good stuff there. But back to that headline. Did Amazon ever really want to trample the indie bookstores under its feet? Is a solitary main street one-man-band bookstore really ever going to make Jeff Bezos lose sleep? And above all, since both are totally different kinds of businesses, was Amazon ever likely to be a serious threat to the indie sector?
It makes sense if you think about it. Amazon’s fundamental value proposition is distribution and fulfillment. Distribution is obviously something that a standalone store does not do. Amazon is using exactly the same algorithms and infrastructure to sell a vast range of general merchandise that contributes the lion’s share of its revenues and has nothing to do with books. And, as Leonard points out, the bookstores themselves are learning how to use technology in their own ways and for their own purposes – which are not necessarily Amazon’s: “Bookstore owners have become adept at taking advantage of new technology to connect to customers.”
Leonard also instances another factor in the resurgence of indie bookstores in the U.S., though – the demise of Borders. “Indie-bookseller survival does not mean, however, that the larger trends unleashed by Amazon on the publishing industry are negated,” he points out. And that leads back to one important area where Amazon and the indie bookstores do resemble each other: They both excel in giving people what they want. That’s what Amazon’s distribution and fulfillment focus is about. It’s what indie bookstores live from too – even when they’re selling a location and an ambience as much as books. But it’s what big book chains – and big publishers – have historically been lousy at. Time they listened to the streets.
And time that Amazon got more credit for that democratization of demand. Those journalists who spend their time preaching the virtues of sucking up what the supplier chooses to pump your way do make you wonder sometimes.
As a writer of less-than-bestsellers, I may have a sentimental attachment to independent bookstores, but my printed books rarely end up their shelves prior to a sale. I make about the same wherever they’re sold: Amazon or Little Jane’s Tiny Bookstore.
Ebooks are another matter. Amazon’s royalties are based rather bizarrely on price and, at certain prices authors are charged a download fee that’s roughly the equivalent of paying $400 for an ordinary hamburger.
Like that deceptively named ‘download fee,’ Amazon’s entire royalty scheme tricks authors, who wrongly think because that check from bigger-market-share Amazon is large, Amazon is paying them more. That isn’t so. Amazon claims to pay 70% royalties like many others in the industry, including their chief competitor, Apple. But that’s never true. In fact, I’ve not been able to come up with a circumstance where Amazon pays authors as much per sale as Apple pays. Do the numbers.
* Inside the narrow, $2.99 to $9.99 range, Amazon claims to pay 70% but the addition of that $400 burger download reduces the real royalties to around 55%.
* Outside that range, Amazon only pays 35% of retail, keep the other 65% for itself. That’s in the range of what some publishers pay authors for ebook royalties, but those publishers edit the book, format it, prepare it for publication, and provide it with publicity. Amazon dose none of that. It just sucks that outrageous sum into its bank account.
* The rip-off is particularly acute for new authors who’re selling their introductory novels for $0.99 to attract an audience. If they sell 1,000 copies per month, Apple pays them $700, while Amazon will only pay them $350. That $350 underpayment adds up quickly. In a year, it’s $4,200. That can make a big difference.
I run through the actual figures elsewhere, but I’ll touch on the issue here. At the same time Amazon’s royalties are ripping off authors, they’re also cheating the public. Here’s the essence. Quite a few books, particularly student textbooks on specialized topics, can’t cover their cost of production if they’re sold for $9.99 and earn but $6.00 from Amazon.
Many could be sold for only a little more if Amazon paid the same royalty rate as Apple. Sold on the iBookstore for $20, a textbook would earn $14. Sold on Amazon’s Kindle store, that same textbook only earns the identical $7 it earns at $9.99. In fact to earn the same $14 it earns on Apple when sold for $20, the Amazon price has to be $40, or twice as much. That’s why Amazon’s lawyers get nasty if authors sell their ebooks cheaper elsewhere, even though those authors are only pricing it to get the same income per sale.
Amazon’s rip-off-authors policies, which are factual and undeniable, are why reporters should not only continue to demonize Amazon, but need to focus their attention on where Amazon’s real misbehavior is. It lies in underpaying authors and using royalties to drive up ebook prices.
What needs to be done is obvious. Amazon executives need to perform an exorcism on their demons and match Apple’s simple-as-pie royalty scheme: no download fees and royalties that are 70% of retail at every price from $0.99 to $199.99.
One final comment. I’m not even sure what “democratization of demand” in the above article means. Traditional bookstores certainly didn’t sneer at customers and say, “I’m sorry, but we do not sell books to the likes of you.” And what Amazon is practicing certainly could be called the “monopolization of royalties.” Amazon uses its 70% marketshare to force authors to accept royalty payments that are in many cases half what other retailers pay.
For a literary parallel, think of a Charles Dickens’ novel where an emaciated little boy approaches a porked-out Amazon and says, “Please sir, could I have more gruel.” That’s the situation authors find themselves when they approach Amazon. It’s not a pretty picture.
Wow! $400 hamburgers! Schemes, deceptive naming, bizarre royalties, outrageous sucking, nasty lawyers, rip-offs, underpaying authors, driving up ebook prices, AND corporate demons. Perry certainly paints a colorful picture. Of course, most grown-ups are able to read a Terms of Service agreement without freaking out and spewing misleading bile all over the internet.
There is one simple test that will help us tell whether or not we should pay any attention to his comment. Does Mr. Perry sell his books on Amazon? Why, yes, he does. So, like most Amazon haters, he is nothing but a whiny hypocrite.
I continue to be puzzled by the antipathy shown toward people/companies that do something extremely well to the point of becoming very successful. Mr. Perry has a bizarre view of the services Amazon offers. Yes, it might not design your book, edit it, etc., but it remains an incredibly effective distribution company. As such it provides servers, a search engine, and a delivery system that is far better than anyone else’s. Amazon has provided authors with the ability to have their books available to everyone in the United States as opposed to the parochial little independent bookstore of myth that never has the room nor the desire to stock much more than best sellers and those physical volumes available through Ingram or Baker & Taylor.
Bezos started Amazon in his garage. Anyone is free to start a competitor if they think they can do it better.
I challenge Mr. Perry to pull his books from Amazon and sell them only through Apple and that little independent bookstore. See where that gets you.