Amazon Tightens Grip on Long Tail; Info Requested
From: The Authors Guild
Last week Amazon announced that it would be requiring that all books that it
sells that are produced through on-demand means be printed by BookSurge,
their in-house on-demand printer/publisher. Amazon pitched this as a
customer service matter, a means for more speedily delivering
print-on-demand books and allowing for the bundling of shipments with other
items purchased at the same time from Amazon. It also put a bit of an
environmental spin on the move -- claiming less transportation fuel is used
(this is unlikely, but that's another story) when all items are shipped
directly from Amazon.
We, and many others, think something else is afoot. Ingram Industries'
Lightning Source is currently the dominant printer for on-demand titles, and
they appear to be quite efficient at their task. They ship on-demand titles
shortly after they are ordered through Amazon directly to the customer. It's
a nice business for Ingram, since they get a percentage of the sales and a
printing fee for every on-demand book they ship. Amazon would be foolish not
to covet that business.
What's the rub? Once Amazon owns the supply chain, it has effective control
of much of the "long tail" of publishing -- the enormous number of titles
that sell in low volumes but which, in aggregate, make a lot of money for
the aggregator. Since Amazon has a firm grip on the retailing of these books
(it's uneconomic for physical book stores to stock many of these titles),
owning the supply chain would allow it to easily increase its profit margins
on these books: it need only insist on buying at a deeper discount -- or it
can choose to charge more for its printing of the books -- to increase its
profits. Most publishers could do little but grumble and comply.
We suspect this maneuver by Amazon is far more about profit margin than it
is about customer service or fossil fuels. The potential big losers (other
than Ingram) if Amazon does impose greater discounts on the industry, are
authors -- since many are paid for on-demand sales based on the publisher's
gross revenues -- and publishers.
We're reviewing the antitrust and other legal implications of Amazon's bold
move. If you have any information on this matter that you think could be
helpful to us, please call us at (212) 563-5904 and ask for the legal
services department, or send an e-mail to
staff@authorsguild.org .
Feel free to post or forward this message in its entirety.
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Copyright 2008, The Authors Guild.
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