INSTA-LEADS: Our Full-Service B2B Marketing Program Delivers Sales-Ready Leads ∑ Click to Learn More!
Welcome Guest | Sign In
ECommerceTimes.com

Why Publishers Are Afraid of Amazon

Why Publishers Are Afraid of Amazon

An author today can now publish a book quickly, set the sales price and set the commission. Just a few years ago, the idea that would ever happen would have been almost laughable. Amazon can take significant credit for this. It would seem to me that traditional publishers, if they have not already done so, should be adapting their business models in order to compete and stay profitable in the 21st century.

By Theodore F. di Stefano
12/01/11 5:00 AM PT

My previous experience with book publishers was over 10 years ago when I wrote a book about buying a business. It wasn't a great experience because first I had to find an agent -- not an easy task.

The agent then had to go through the long and arduous task of finding a publisher.

The process took a great deal of time and energy. The majority of authors can relate to how difficult it is to get anything published unless, of course you, are a known writer.

Amazon Changes the Publishing Landscape

All that seems to have changed now because of Amazon. Today, any author can use Amazon's tools to self-publish an e-book or a paperback. This is what I recently did with my first non-business publication, Mother's Guide to Daily Living.

The process was relatively seamless, save that one has to post the manuscript both on Kindle Direct Publishing (for the e-book) and CreateSpace.com (for the paperback).

Though it does take a bit of time to fully upload your book in the two distinct formats, it gets easier as one gains experience navigating within each platform. It's just a matter of time and a little effort.

One of the major hurdles for anyone attempting to self-publish has been finding distribution channels. After all, the publishers controlled the distribution channels your book would be available through. Amazon has now, to a great extent, given the author the power to choose his/her own distribution channels.

And, as amazing as this may seem, one can independently set the selling price for both the e-book and the paperback. This holds true for the commission that you will earn on your book, with some minor exceptions.

Imagine -- an author can now publish his/her book quite quickly, as well as set the sales price and the commission that will be earned. Amazing! If one were to make this statement a few short years ago, the listener would have been incredulous. It was just too hard to imagine, let alone to believe.

But that is where publishing is today.

Where Is Traditional Publishing Heading?

One has to wonder whether e-commerce and e-books will push some traditional publishers into oblivion. In a January, Amazon made the following statement when announcing its fourth quarter results (which in fact showed a 36 percent increase in sales to US$12.95 billion):

"Amazon.com is now selling more Kindle books than paperback books. Since the beginning of the year, for every 100 paperback books Amazon has sold, the company has sold 115 Kindle books. Additionally, during this same time period the company has sold three times as many Kindle books as hardcover books. This is across Amazon.com's entire U.S. book business and includes sales of books where there is no Kindle edition. Free Kindle books are excluded and if included would make the numbers even higher."

The New York Times recently quoted Russell Grandinetti, one of Amazon's top executives, who said, " The only really necessary people in the publishing process now are the writer and the reader. Everyone who stands between those two has both risk and opportunity."

I happen to agree with Grandinetti's statement. It speaks to a watershed in the publishing industry. Publishing will never be the same again.

It would seem to me that traditional publishers, if they have not already done so, should be adapting their business models in order to compete and stay profitable in the 21st century. The e-train is speeding down the tracks with breathtaking velocity! If an Amazon executive is basically saying that no one should come between the author and the reader, then it's truly time for publishers to be worried.

A New Path for Publishers

Publishers should soberly and objectively look at and accept the rather sudden turn of events in their industry. E-commerce and e-publishing are here to stay. A publisher might stubbornly, and correctly, assume that not everyone wants to read a book via an electronic reading device. As of today, that publisher might be correct. I'm not sure, however, how long this state of affairs will remain true. In fact, I met someone who told me that she read my book, Mother's Guide to Daily Living, on her iPhone while she was commuting between Providence and Boston. I later tried reading some of my book on my iPhone. It was doable, though not my long-term preference. I prefer to read an entire book either using the physical book itself or my iPad.

But for the publishers who feel that it might be years before people become adapted to reading e-books, I would suggest that they keep in mind that Amazon has created a site whereby writers can self-publish in paperback. Therefore, the Amazon executive's statement about no one coming between a writer and a reader is quite prophetic.

How a Publisher Can Compete Today

Given Amazon's prowess, the publisher certainly has been put on the defensive. There is, however, an old law of physics about inertia of motion and inertia of rest that publishers can use to their benefit. Isaac Newton was correct in saying that objects in motion tend to remain in motion. This law is well described in Wikipedia: "Inertia is the resistance of any physical object to a change in its state of motion or rest, or the tendency of an object to resist any change in its motion. It is proportional to an object's mass."

My point is that traditional publishers have, as of today, a certain inertia of motion -- the larger the publisher, the greater resistance for that publisher to be knocked off. This is especially true of today's major publishers, vis-a-vis their distribution channels. Most successful authors would want to take full advantage of the strength of the major publishers' distribution channels. Not only would they be assured that their book will get out to the general public, but also that, if they happen to be a popular author, they will get a reasonable advance royalty on their book.

This is a time of decision for the traditional publishers -- a time of change. Amazon has already changed the landscape. It's up to the publisher to step onto this new landscape and compete aggressively.

Good luck!


Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which provides a wide range of investment banking services to the small and medium-sized business. He is also a frequent speaker to business groups on financial and corporate governance matters. He can be contacted at Ted@capitalsourcepartners.com.


Facebook Twitter LinkedIn Google+ RSS