Book Publishers: You Can't Beat Amazon -- So Join 'Em

Tuesday Dec 22nd 2009 by Mike Elgan
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Buffeted by technology and the Internet, major book publishers need to change or die. The solution is to stop fighting the self-publishing revolution and instead join it.

Walk into your local bookstore, and all is peace and order. But the tranquility masks an industry on fire. The traditional book business is being burned to the ground by technology, by recession, by the Internet -- but mostly by Amazon.

Here's what's going on.

East Coast

The epicenter of the traditional book publishing industry is New York City, where you can find the headquarters of most major publishers.

Nine companies (and their various divisions and imprints) -- Random House, HarperCollins, Simon & Schuster, Penguin, Hachette, Thomas Nelson, St. Martin’s, Tyndale and John Wiley & Sons -- control two-thirds of trade book sales in America.

In order to publish a first book, authors or their agents must submit a lengthy, detailed proposal that includes a few finished chapters. The vast majority of book ideas are rejected. A tiny handful is accepted, based on criteria that are changing rapidly as the industry evolves.

The tougher things get for traditional publishers, the fewer risks they take. So increasingly publishers look for authors with an existing "platform" -- which means either fame or conspicuous credentials. That's why thousands of literary geniuses and brilliant thinkers go unpublished each year while Suzanne Somers never fails to get her work published -- even her poetry.

For the lucky minority that gets book deals, submission to acceptance can take six months. From acceptance to actual books in bookstores can take an additional year to 18 months.

Until recently, the alternative to getting a book deal was a slow suicide by alcohol poisoning. But thanks to digital technology, all that has changed. Now anyone can publish a book and put it up for sale to the public.

West Coast

Several technology and business transformations have obliterated the industry's monopoly on book publishing.

The "vanity press" has existed for ages. Any wanna-be author with money has always been able to get books published "privately." But revolutions in digital layout, printing and manufacturing have brought the costs for self-publishing way down.

Traditional "vanity press" publishing still exists. The author picks a number of copies to print -- say, 1,000 copies, sends a check to pay for the printing and binding, uploads the formatted manuscript, and the publisher sends back boxes full of books that can look semi-professional.

A newer kind of publishing, called print-on-demand or publish-on-demand brings the costs and risks down even further. With these businesses, the author sets up the book, ready to print, but no book is printed until somebody orders one. The per-copy cost is higher, but the up-front cost is far lower.

Self-publishing has moved from the shadows and into the sunshine. And today, it's the most exciting new area of publishing. But let's be clear: The legitimization of self-publishing is really attributable to Amazon, which lists self-published books for sale exactly as it does New York Times bestsellers.

Self-published authors can gain a following, win positive reviews, benefit from searches and go viral on Amazon. With a few hundred or thousand dollars, self-published authors can use Amazon marketing tools to give their books discovery advantages over other books -- for example, when a specific book is being viewed, you can "buy" placement so that your book is always recommended.

But selling self-published books on Amazon is simply the better known aspect of the company's threat to traditional publishing. Behind the scenes, upstart Amazon is fomenting two more revolutions.

First, of course, is the whole Kindle business. Amazon works hard to establish $9.99 as the de-facto price for eBooks. My understanding is that Amazon loses money on most books at this price, and pays the publisher a couple dollars more than it sells the books for, on average. Publishers typically make more for Kindle books than print books in the bookstore. But that gives them small comfort. Obviously this won't continue, and at some point -- once Amazon's control has been solidified -- the publisher's share will likely come down.

To combat the growing threat from Amazon, publishers often delay Kindle editions by a few months to make them less attractive to eager buyers, who are essentially forced to get the paper version if they want a book right away. But this pathetic policy just makes the publishers look like the bad guys.

Meanwhile, publishing on Kindle is super easy -- far easier and cheaper even than on-demand publishing. That's yet another point in favor of self-publishing. Publishing electronically on Kindle brings the initial cost and the time to publish both down to approximately zero.

The second and most devastating revolution by Amazon is a company they own called CreateSpace. A roll-up of two self-publishing companies Amazon acquired, CreateSpace is aggressively evolving as Amazon’s soup-to-nuts self-publishing service, offering editing, proofing, design, printing, binding and widespread distribution, including into brick-and-mortar bookstores.

Aspiring authors put a properly formatted manuscript into one end of the CreateSpace system, and out the other end comes the Kindle edition, as well as a physical paper book for sale on Amazon.com and in smaller bookstores.

Theoretically, at least, CreateSpace does everything traditional publishers do. But they don't do it nearly as well, and therein lies the opportunity for the publishing industry to survive, succeed in and even dominate the new world of publishing.

How to Save Big Publishing

The New York publishing giants cannot beat Amazon without changing. If they do nothing, major publishers will become minor, and Amazon will rise to own the industry. As more people buy books online and electronically, the advantages of traditional publishing will be whittled away.

Besides, the problem with the publishing industry's overemphasis on "platform" is that authors who already have one don't need publishing companies anymore. It's only a matter of time before they discover this. In the book business, the publisher's brand is irrelevant. The author is the brand. Stephen King could self-publish, hiring his own designers, editors and so on -- and keep a lot more of the money. He sells because he's Stephen King, not because of his publisher.

Publishers need to beat Amazon at its own game. If Amazon can buy a self-publishing company, so can Random House. If Amazon can offer a low-cost marketplace for editing, design and publishing services for self-published authors, so can HarperCollins. And if Amazon can get electronic, self-published books to market in days rather than years, so can both Simon & Schuster.

Although it appears that Amazon and the self-publishers have all the advantages, in fact the opposite is true. Self publishing is extraordinarily inefficient, because the author has to be good at everything -- or at least make good decisions about all aspect of a book's creation.

By competing directly with Amazon in the Internet-based self-publishing market, publishing powerhouses have several points in their favor. Increasingly irrelevant advantages include distribution relationships, marketing money, name recognition and access to and influence over book reviewers.

By far the biggest advantage book publishers have is that they still have most of the talent. Book designers, editors, and other professionals at the big publishing houses tend to be very good at what they do.

The core problem in publishing today is this: Book publishers have a floor, and self-publishers have a ceiling. Book publishers feel they can afford only to invest in sure-thing mega-hits. But they know there's gobs of talent out there they're turning away. Meanwhile, the best self-published authors -- who would be bestsellers with a book deal -- can only sell so many books or get so much exposure because they simply can't marshal the resources.

Big publishers can't afford small sales, and self-publishers can't afford big sales. There's a barrier. And the elimination of that barrier is the key to survival for the book industry.

By acquiring and cultivating quality online self-publishing companies, the big publishers could use author-financed publishing as a kind of "farm program" for the "big leagues." The companies could operate on two tiers. The self-publishing tier could freelance out editing and design work like Amazon does, and keep the business largely separate from the existing business.

Instead of looking at books as a risky, publish-it-and-forget-it affair, publishers need to view self-published books as drafts that are pre-tested in the marketplace. Self-published books that gain surprising sales could be fast-tracked into the mainstream system, re-edited and given new cover and design, then pushed into mainstream distribution.

Aspiring authors would know that their best chance of a big publishing deal would be to use the self-publishing services of one of the major houses -- instead of using Amazon's CreateSpace. The tables would turn. Instead of Amazon devouring the traditional publishing business, the publishers would use their existing power to attract authors and decimate Amazon's publishing business.

In the same way that literary talent could be surfaced with lower risk by this process, so could editing and design talent. Stellar freelance creative people might be "discovered," and offered full-time positions.

Everybody knows that major book publishers need to change or die. The solution is to stop fighting the self-publishing revolution and instead join it.

The combination of self-publishing and traditional publishing is a killer combination, and one that Amazon can't touch.

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