
Life After Amazon - ColinWright
http://publishersweekly.com/pw/by-topic/columns-and-blogs/soapbox/article/60517-life-after-amazon.html
======
nowarninglabel
It's not without hypocrisy, that a company in the educational book publishing
industry can complain of unfair business practices, while knowing that the
industry is responsible for $200 textbooks. Textbooks that are not only $200,
but where publishers have given kickbacks to professors to ensure they require
a new version every 2 - 4 years, so generations to come will continue to pay
$200.

While this particular publisher, EDC, may only be publishing children's
education books and not textbooks, it has to understand the absurdity of such
a one-sided argument. I for one applaud Amazon, celebrate Amazon, for making
it so I could afford to work myself through college buying cheap used
textbooks rather than being forcefully impoverished by the publishing
industry's duplicitous actions.

~~~
dredmorbius
Without absolving the textbook industry (prices are nuts, have been for ages,
dig up Supreme Court Justice Stephens' essay on the topic from the
1960s/1970s), this is in some ways a problem of the market-capitalist system.
It's similar to the issues of equitable pay, automation, labor displacement,
and business models for the arts, music, newspapers, and publishing in
general. Oh, and this little thing called software.

In order to produce material, a certain amount of resources are necessary. The
mechanism we've adopted for allocating those resources is the market. For much
of present production, the fixed costs of production are high -- writing a
book (particularly a textbook) is a large initial investment. Same goes for
software. The _marginal_ costs of production are low -- hell, you can download
a 400 page text off of Project Gutenberg or stream a movie in a few seconds
with a decent broadband connection. Amortize the costs of your laptop (a few
hundred dollars for a basic model, a grand or two for high end), less for
tablets or eBook readers), and a broadband subscription, and it's still cheap.

Textbooks generally do have to be updated every so often, though annual
revisions are pretty ridiculous, and much of the industry is a fat scam,
especially where the professor teaches from his own text. Rental schemes,
"authorization codes" (required to access other materials), and the like
factor into this as well -- they're akin to various tack-on fees for air
travel. And there's a whole burgeoning movement for producing DIY book
scanners and the like (pretty fascinating, do a quick DDG search or hit up
Fixyt.com for videos). One thing I've come to realize about many commercial
opportunities is that they require a control and toll-taking point. Revision
updates, exercise questions, registrations, rentals, and the like, all create
an arbitrary tollgate. Great for the publisher, for the student, not so much.

And the model requires that for a new or continued revenue stream, new books
have to be published. I'm beginning to strongly suspect this is a market
failure -- of externalities (the educational value of those books benefits
more than just the reader) and perverse incentives.

The question is: what's the better way? Online we've been experimenting with
vastly democratized publishing, and the result is Upworthy, Buzzfeed, HuffPo,
and numerous other viral sites, which with time are finding their way into my
hosts file with '0.0.0.0' entries, and search-engine blocklists. It leads to
what Clay Shirky recognizes as a problem, not of data overload, but of filter
failure.

There's also the problem within the publishing world, including academic
publishing, of so much material being produced that not only is it not
possible to keep up with it, even within a discipline or sub-specialty, but
that _good content is getting buried_. That's the real tragedy of broken
filters -- not the crap spewing everywhere, but the gold nuggets that don't
float up.

~~~
pseut
>Without absolving the textbook industry (prices are nuts, have been for ages,
dig up Supreme Court Justice Stephens' essay on the topic from the
1960s/1970s), this is in some ways a problem of the market-capitalist system.

The textbook industry is different, even from other publishing, since the book
is chosen by the teacher, who gets the book for free. Whether a professor
teaches from his or her text is largely irrelevant.

~~~
texthompson
>> Textbooks generally do have to be updated every so often, though annual
revisions are pretty ridiculous, and much of the industry is a fat scam,
especially where the professor teaches from his own text.

> Whether a professor teaches from his or her text is largely irrelevant.

If a college professor writes and teaches from a book, he's requiring people
to buy it. That often gives him royalties, which is a perverse incentive. I
wouldn't call this a fat scam, but it's probably relevant to the idea that the
textbook industry has some issues.

It might be worth distinguishing between college and public schools, where the
burden of cost is on either the student or the public.

------
nostromo
This publisher was selling books at a high price point to schools and a low
price point to Amazon. Then, when the school discovered this, they bought them
through Amazon. Umm, duh?

Alternative title suggestion: Amazon made it hard for us to fleece schools.

~~~
pingswept
I don't think that the pricing structure you describe is mentioned in the
article. Maybe the books were the same retail price in both cases and the
school chose Amazon because (for example) it made the accounting easier. Kind
of weakens your argument, I think.

~~~
baddox
Not really. It's perfectly reasonable for the school to choose the better
seller, whether the advantage is price, shipping speed, ease of accounting,
etc.

------
sam-mueller
FTA: "But, for all intents and purposes, Amazon does not make money"

This is a very myopic view on Amazon's current business model. They are
_choosing_ to break even/lose money in exchange for growth. They use profits
to expand their business and break into new markets, which is evidenced by
initiatives like Kindle Fire and Amazon Instant Video.

At any time, Amazon could change this growth strategy, and profits would flow
like the Niagra. Investors understand, and that is why their valuation is sky
high at over 150x future price to earnings.

------
cgrubb
An interesting claim in the article is that Amazon isn't doing its fair share
of helping people discover books. The primary source of the research doesn't
appear to be public. An excerpt from a July 2013 Salon article:

    
    
        According to survey research by the Codex Group, roughly
        60 percent of book sales — print and digital — now occur
        online. But buyers first discover their books online only
        about 17 percent of the time. Internet booksellers
        specifically, including Amazon, account for just 6
        percent of discoveries. Where do readers learn about the 
        titles they end up adding to the cart on Amazon? In many 
        cases, at bookstores.
    

Why couldn't we be told what percentage of books are discovered in physical
bookstores? The idea that 83% of books are not discovered online seems wild.
Who did the Codex Group survey?

[http://www.salon.com/2013/07/19/amazon_could_be_a_victim_of_...](http://www.salon.com/2013/07/19/amazon_could_be_a_victim_of_its_own_success/)

~~~
crucifiction
Probably because that number is actually less or equivalent, otherwise I am
guessing they would have published the number. I would posit that most people
find books not through stores, online or physical, but through friends/family
reccomendations or television (e.g. Oprah driving book sales).

~~~
WalterBright
I've discovered many interesting books by simply buying a large box of random
used scifi books from ebay.

------
ChuckMcM
It has always been an interesting discussion as to which was better, wide
reach or focused sales. If you get an MBA you'll spend a few weeks talking
about the pros and cons.

In the case of an established vendor, with an accessible set of target buyers,
controlling the channel is generally considered the right choice, and when you
can't easily talk to all of your potential customers, generally a wider sales
channel is merited.

"baby books" (which is the market here) are actually mostly sold to pre-
schools and other child care facilities so its pretty straight forward to sell
them one on one. Contrast that with programming books where your choices are a
programming class, or Amazon.

The other shoe is of course going to be tablet books. Which we'll have to see
where those land. I've not seen them yet but I expect at some point one of
these $39 tablet vendors is going to try a largely indestructible tablet which
can be used to entertain/educate toddlers. Something with that plastic e-ink
display technology which was show with a person slamming a shoe on it while it
worked. Something like that is going to hurt Edubooks if they can survive
longer than the paper/cardboard form for a lower net cost.

~~~
AJ007
A market I have found very interesting is pen & paper role playing games.
There has been an explosion of self-published content in the past three to
five years. A good portion of it quite high quality, often coming from authors
who previously had written titles for "big" publishers (Even in its glory days
TSR was hardly a titan.)

The channels users are both finding out about these self published RPGs and
purchasing them is not Amazon. Instead it starts with blogs, forums,
Kickstarter, and Indiegogo, and is sold directly on the author's website,
through Lulu, and Drivethrustuff (RPGNow etc.)

I was pleasantly surprised to see Wizards offering old Dungeons and Dragons
books on RPGNow. Other "big" publishers have been doing the same.

As an unknown underdog, you want scale and recognition over paltry margins.
Amazon does this for unknown authors by providing mass market distribution.
The author still needs to get some initial traction, but the author never
loses sales because the consumer couldn't find the book, or didn't have time
to travel to the store while he or she was ready to turn over money in
exchange for an unknown book.

Bookstores and publishers are the losers here. They are middlemen who do
distribution and scaling using methods from the pre-Internet era.

As more content becomes digital only it is hard to see retail stores faring
well. That may be an understatement, considering that this trend has been well
underway for a decade. For now I'm positive on the prospects for retail
clothing stores.

------
rahimnathwani
"Our direct-selling division has recorded seven consecutive months of year-
over-year growth, and new sales force hires are up 25% over last year as well.
And, thanks to our loyal retail customers, we recorded the largest ever sales
month in the history of that division in October—and we did it without
Amazon!"

Huh? The direct sales division and retail division each increased sales after
they stopped selling via Amazon. That's what you'd expect, as long as _some_
of your would-be Amazon sales turn into direct/retail sales.

It would be more interesting to know if their _overall_ sales have gone up.

------
kawsper
> ... because it had effectively become a “showroom” for Internet
> retailers—people would see books in the store and then buy them online.

Which is what all the real-life stores are facing right now. I don't claim to
have the solution, but I tend to buy in stores because I enjoy to have my
product today, with better service in terms of refund policies, and that I can
talk with a human being face-to-face if the thing is faulty.

I live in Denmark where we have pretty good consumer protection, I suspect the
difference between Amazon and a store in the US might be a lot different.

~~~
kybernetikos
> because it had effectively become a “showroom” for Internet retailers—people
> would see books in the store and then buy them online.

I think there might be room for some retail outlets to embrace this. You could
imagine a bookshop that was an amazon affiliate, stuck QR codes with their
affiliate link to the book over all of the barcodes, had a nice cafe and
environment for browsing the large numbers of books they have in stock, but
don't actually sell any themselves. They could even arrange to be close to an
amazon drop/warehouse so you could get things delivered super fast to the
store itself for a small convenience fee.

~~~
pyoung
Hmm, seems like this could be useful for more than just books. I bought some
camping gear from amazon, and I recall that my biggest hesitation was not
being able to evaluate the physical product, and therefore unsure of the
construction quality. The Amazon reviews help a lot, but I was still left with
some uncertainty.

Realistically, the amazon income is much too small for a business to be
viable. I think the commissions are around 5-10%, whereas the traditional
retail markup is around 50%. Seems like there is too big of a gap there to
make things work, even if using this business model resulted in lower storage
and stocking costs for the retail outfit.

------
rayhano
If what is relayed in this story is factual (most intent to purchase a book,
discovery, happens offline), then surely bookshops still have a lot of power a
should refuse to stock books distributed on Amazon.

It's not realistic, but would be an interesting controlled experiment.

~~~
huxley
I can't imagine the Big Six publishers are eager to cross Amazon after the
last run-in with the DoJ

------
Taek
" But buyers first discover their books online only about 17% of the time."

Buying merchandise online is often far more convenient and less expensive than
buying merchandise in the store. But discovering products is much more
convenient when you can handle it, read the first chapter, etc.

Brick-and-mortar storefronts may become outlets for marketing. Instead of
making their money by generating sales, they make their money by charging book
owners to have a copy on the shelves. Customers get the convenience of
discovery, bookstores stay in business, and authors get their material out
into the world.

Online retail is probably going to change the way we consume goods over the
next decade in larger ways than it already has.

------
pmr_
One interesting thing I learned from this article is that the US does not have
a VAT, but a sales tax on a state level. It took me a while to understand this
as most countries in Europe usually have only a VAT on the nation state level.
I guess the US system does have some benefits but it seems shockingly
insufficient in the face of online retailers.

Wikipedia also tells me that there have been pushes to introduce a national
VAT in the US, but they have failed. To me that only seems to have benefits:
less administration, less rules, less loopholes. Could someone outline the
arguments against it?

~~~
valar_m
One reason is that it taxes consumption, not income, so the poor and middle
class are hit the hardest because they spend a larger percentage of their
income on food, clothes, etc.

~~~
jacalata
I think the question is why have state sales taxes instead of a national sales
tax.

------
bryanlarsen
I'm willing to bet that bookstores would be willing to give more prominent
placement to books which aren't available at Amazon, as well as steering
customers towards those books when they ask for recommendations.

~~~
larrys
"to give more prominent placement to books which aren't available at Amazon"

Ask any "old timer" about how "stereos" used to be sold.

At the start there were specialized shops (and of course there still are but
"back then" that was the channel) where you went to get a stereo and got
knowledgeable advice and good service. Then mass retail came about and all
those good brands (that could) just went mass retail and forgot about all
those small fokesy sales channels. Once again, because they could and someone
dangled the opportunity. This happened with Apple as well which (as all
computers were) was originally offered through small computer stores.

My point is giving prominent placement is great but don't assume that if
something becomes popular it won't automatically go where the money and
opportunity is and quickly forget the people who first gave it an opportunity
(mainly because new sales people get hired that aren't rewarded for the past
loyalty).

------
nicholassmith
It's an interesting problem space, I actually quite like retail as I grew up
around it and it's fascinating as it's constantly under threat so what do you
do to push on. Beating Amazon prices is almost impossible, unless you like to
work for free, but it does seem there's a push towards smaller independents
that don't need to compete on price as they sell an experience. There will
always be people willing to pay a little extra for a perceived value, and
always people who'll try and find the best price possible.

I have nothing but respect for people willing to follow their principles, but
Amazon is here to stay and contains a huge customer base so leaving is cutting
your nose off to spite your face. Work out what you can do better than Amazon
to earn your premium, there's plenty of places to go with it.

~~~
alan_cx
"so leaving is cutting your nose off to spite your face."

Well, according to the article.....

"It has been nearly two years since the Amazon decision and I can proudly
report that our company is still alive, well, and prospering. Our direct-
selling division has recorded seven consecutive months of year-over-year
growth, and new sales force hires are up 25% over last year as well. And,
thanks to our loyal retail customers, we recorded the largest ever sales month
in the history of that division in October—and we did it without Amazon!"

.... clearly not.

------
gumby
I also consider Amazon predatory and find my products elsewhere. Usually it is
more convenient for me to shop locally (but I don't live in the sticks) and
even when not, I try to get locally or else a smaller, specialized vendor. But
I have friends who operate small businesses and use Amazon for fulfilment.
Their shops appear integrated into Amazon, so this distinction is no longer
clear.

With books, however, the distinction _is_ clear and so if I do recommend a
book to someone I ask them not to buy it online but instead to get it from a
small independent bookshop.

Amazon: a moment of convenience, but a lifetime of regret.

