Since the great Amazon-Hachette feud of 2014 started this summer, many people have asked where we stand. It is no secret that we do business with Amazon—almost every publisher does. At the same time, what I see from Amazon, and where I see the book industry heading as a result, worries me.
To me, Amazon is a different animal. It is unlike any other corporation out there because of the way it treats the bottom line. The problem is, Amazon’s bottom line is growth, not profits. In sacrificing profits they have made a conscious decision to sell books at unsustainable prices, undercutting any and all competitors who are still operating under the profit model, which is everyone.
The consequences of this are twofold. First, it puts other companies out of business, straight and simple. We have seen the continual decrease in the number of independent and even chain bookstores over the last several years as Amazon increases its market share.
Second, selling books cheaply exacts a considerable price from the entire publishing industry. Books still require substantial capital to create, print, and ship. While the cost of doing business goes up, any price increases to help offset these costs are compromised by a major player who is not concerned with making money. Publishers are being squeezed for all they are worth, in a business that already operates with a great deal of risk and razor-thin margins.
Before Amazon, publishers and distributors had a symbiotic relationship. The distributors needed the books to sell and publishers relied on distributors to sell the books. Amazon is looking to upend this entire system.
Here is where I see the publishing industry in the next couple of years: Amazon will control the majority of retail bookselling. Currently, Amazon has 65% of all online book orders, which includes print and digital. As a result, they will have a say as to what gets published and will dictate book pricing. Can you tell me another industry where a distributor has this kind of control over content creators?
The Amazon-Hachette battle is a pivotal moment in our industry. If you are not familiar with this issue you should bring yourselves up to speed because this concerns everyone who cares about books. You should consider carefully the impact that rock bottom prices and free shipping will have on the publishing ecosystem in the near and long term. Here are a few good articles to start, which offer arguments on both sides:
As Publishers Fight Amazon, Books Vanish (NY Times)
Amazon’s Low Prices Disguise a High Cost (NY Times)
Amazon.com Trying to Wring Deep Discounts from Publishers (The Seattle Times)
Amazon vs. Hachette: What Would Orwell Think? (New Yorker)
My Week as an Amazon Insider (The Guardian)
In Defense of Amazon (The New Republic)
Agree? Disagree? We’d love to hear your thoughts.