On Smashwords’s blog, Mark Coker writes about his predictions for the ebook industry in 2017. The predictions do touch on independent ebooks taking off, but largely seem to revolve around Amazon making everything worse.
I do have a great deal of respect for Mark Coker, as he’s done a number of great things for the ebook publishing industry—for example, when he faced down PayPal over the payment company’s attempt to become a de facto censor by setting restrictions on what sort of content PayPal-using companies could sell. But I can’t help thinking that, like many folks in the publishing industry, he’s very quick to blame Amazon for all its woes.
For example, he starts out by noting that the Kindle debuted and Smashwords were founded at about the same time—then he talks about the meteoric rise of ebooks over the last ten years, how they’ve broken through the publishers’ gatekeeping, et cetera, et cetera.
Ten years ago trade publishers were releasing about 300,000 new titles per year. Even back then, for readers and publishers alike it felt like there were too many great books and not enough time to read them.
Brick and mortar book retailers of yesteryear applied further constraint on writer opportunities, but it was not out of malice or disrespect for authors. Retailers faced their own challenges. They couldn’t stock every book given the high cost of operating physical stores. Shelf space is expensive.
Successful retailers managed their inventory with an iron fist. Small indie retailers could only stock maybe a couple thousand titles, while the large box retailers could stock maybe 50,000 to 80,000.
Distribution to booksellers has always mattered. If your book isn’t in stores, readers won’t find it.
The funny thing is, in the entire lengthy section, there’s not one word about the Kindle. If you came to his article without any other context, you could be forgiven for assuming that the publisher chokehold on bookstores was busted up and people wanted to read more ebooks now entirely because of Smashwords. Rather than, say, an ebook store who made the first e-ink reader the general public actually wanted to use, and was willing to tick off said publishers by selling ebooks near cost or at a slight loss to build the market.
Who wanted ebooks before the Kindle? Approximately one fifth of a percent of the entire global book market. They had held steady at that rate for about ten years, right up until Amazon released the Kindle. Now ebooks are about 25% of the book market. That’s opened new vistas for professionally and independently published authors and publishers alike. And Coker celebrates that fact while leaving out its biggest cause.
Subsequently, Coker holds that books are vulnerable to commoditization. Though Coker never actually comes out and defines commoditization, Wikipedia defines it as “the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers.” For Coker’s purposes, commoditization of books seems to equate to Amazon forcing the prices lower.
Coker notes that books aren’t identical and uniform the way corn or soybeans are, but because they all “strive to provide pleasure to the reader,” readers will find they can get the same amount of pleasure from a cheaper book as from a more costly one. Hence, Amazon forcing the prices lower means ebooks are becoming commoditized.
The odd thing to me is that, during the agency pricing furor, many independent publishers and self-publishing writers were happy about Amazon caving in to publishers’ agency pricing demands to force those publishers’ ebook prices higher, because that meant the indies could sell more books than the publishers—something that Author Earnings’s reports seem to have borne out. So perhaps not all independent publishers would find this commoditization to be such a bad thing?
(It’s also amusing that Coker insists books aren’t like corn or soybeans—but when it comes to complaining Amazon is a monopoly later in the piece, he resorts to a railroad analogy that directly compares books to corn. Perhaps Amazon isn’t the only one “commoditizing” books, eh?)
Coker also complains about Amazon’s expansion of Kindle Unlimited to places like India where incomes are lower bringing lower pay rates to authors because customers in India can’t afford as much.
In 2016 Amazon announced that because some markets outside the US, such as India, can’t afford KU’s $9.99/month subscription fee, that Amazon would lower authors’ already-paltry ½ cent per page royalty. So whereas a book read in the US might earn ½ cent per page (USD $.005), the same book read within KU in India might earn about 1/3 that, or about two-tenths of a cent per page. By way of example, at two-tenths of a cent per page, a reader would have to read about five pages for the author to earn one penny. A 200-page-book regularly priced at $3.99 might normally earn the author about $2.75 for a single copy sale. The same book might earn only about 40 cents in India. A 100-page novella normally priced at $2.99 would earn 20 cents in India. Woohoo, 20 cents!
This is what happens when you hand a commodity retailer sole control over the price of your book and your royalty rate. And there’s nothing stopping Amazon from tightening the screws further. In fact, you can count upon such further downward pressures because it’s the only way Amazon can stay in business.
And yet, Amazon isn’t exactly alone when it comes to varying pricing to meet the local standard of living. Indeed, publishers of physical books and movies have long practiced this very same form of market segmentation. That’s why we got region protection on DVDs—to try to prevent people from buying discs from countries that sold them cheaper. And that’s why the Kirtsaeng v. Wiley case was such an important matter to the publishing industry—establishing the right of US consumers to import and resell cheaper editions of physical books from overseas. (And why publishers have cut back on selling those cheap books overseas in the wake of the Supreme Court okaying Kirtsaeng’s reverse importation and resale.)
With Kindle Unlimited, the choice isn’t whether the author earns $2.75 or 40 cents for a given book. It’s whether he earns an additional 40 cents for that book from a read in a poor country, or whether he earns nothing at all from that person in a poor country not being able to read it. And the author doesn’t even have to worry about someone in the US pulling a Kirtsaeng and reselling a cheap India-bought book at the cost of a higher-priced US sale.
Coker believes that Kindle Unlimited is harming and will continue to harm single-copy book sales. I suppose that’s a possibility. Personally, I’ve never been interested in subscribing to any subscription service because they don’t offer books from major publishers. Why pay $10 a month and continue to buy major publisher books too? There are major-publisher authors and series I do want to keep reading, after all. But I’m certainly an atypical reader in a lot of respects.
And I do see that streaming video subscriptions and Redbox are harming home video sales, though no one seems to be especially worried about that yet. But then, books take a lot more time to read than a movie does to watch, so people can’t consume as many of them—so perhaps the lost sales from people who don’t care so much what they read as long as they have something to read will be more keenly felt. I suppose that the end results still remain to be seen.
Mark Coker concludes by predicting Amazon will face anti-trust scrutiny for its “unfair business practices.” I’ll believe it when I see it. We’ve been seeing a lot of people banging this same anti-Amazon drum for years now. The Justice Department looked into Amazon’s ebook pricing and found nothing wrong, all the way back when that pricing aggravated publishers so much that they conspired to break the law to try to change it. Author Earnings asked for an anti-trust investigation 18 months ago, making what anti-trust experts have called “highly unorthodox” arguments, but I haven’t seen any signs it’s actually going to happen. What’s changed that causes Coker to think we’ll get one next year?
Well, all right, the political administration has changed. And as much as Trump has sniped at Jeff Bezos, I could see a new Trump-appointed Justice Department taking another look to see what it can throw at Amazon and get to stick. It seems like a kind of petty thing for a Presidential administration to do, but Trump’s already proven himself nothing if not petty. But Trump can’t change the makeup of the judiciary that quickly, and we’ve already seen the publishers’ attempt to smack Amazon’s hand with a ruler lose in the courts at every level all the way up to SCOTUS.
And we’ve also seen a lack of any private parties stepping forward to try to sue Amazon for anti-trust issues—even the ABA, whose success suing the publishers and major bookstore chains in the ’90s seems like it should have been a template for this kind of thing. I’ll be very surprised if Amazon ever faces any sort of anti-trust scrutiny, at least in the near future. This “prediction” seems a lot closer to wishful thinking to me.
Coker closes by calling on his readers to fight for the publishing future they want to see:
Recognize that the collective actions of authors and publishers like you will determine the course of this industry. If you have strong feelings about a particular future you’d like to see realized, it’s incumbent upon you and everyone you know to take a stand, organize with fellow authors and put words to action.
Much as I disagree with certain points of Coker’s post, I certainly can’t disagree with that one. If you believe Amazon is harming the industry, by all means stand up and fight back. If you don’t, then keep right on buying from and publishing on the site. I’ll look forward to seeing how it all turns out.
(Found via The Passive Voice.)