In the last two weeks, we’ve seen what amounts to a sea change in the area of Print-On-Demand publishing, and what I think will be remembered as the first phase of POD is rapidly coming to an end.
In that era, the Lightning Source (LSI) era, clients of Lightning had almost complete access to world markets in a synergistic relationship between companies including Ingram, Lightning’s parent company (and large traditional warehouser/distributor) and Amazon here in the U.S. Equally powerful relationships were available in the U.K. via Lightning Source U.K., including with Amazon.co.uk. Though there were other POD companies offering author services such as AuthorHouse, iUniverse and BookSurge, and companies geared towards more towards authors rather than publishers like Lulu, Lightning Source offered complete control and a truly new way of printing and selling books for small presses.
Recently, Amazon has quietly been approaching high-volume LSI clients and telling them that if they didn’t switch to BookSurge for their printing needs, their “buy” buttons would be removed. For books to continue to be available on Amazon without BookSurge, publishers were told they would have to join the Advantage plan, complete with yearly fee and additional shipping costs, and with the knowledge that they would almost certainly lose sales (fewer customers purchase from Advantage than traditional Amazon). Amazon is saying little publicly, but publishers are saying a lot.
In POD, Amazon can routinely count over 75% of book sales, so the threat was real—in some cases, this could turn off the taps almost completely. Word eventually leaked out as publishers shared stories, and there was an uproar on the many POD groups, including my favorite, even amongst smaller publishers not approached. There was a feeling that the writing was indeed on the wall for each of them.
Throughout, LSI has put on a brave face, but the fact is, even their CEO admitted Amazon is keeping them in the dark. “Lightning Source will continue to monitor this situation and let you know when we have more information,” was how Mr. Kirby worded it in their April 1 email.
The fallout is still being rifled through and the good news is a supposed April 1 deadline has come and gone with no blanket actions by Amazon. Some discounts have apparently been removed and a “one title in stock” notice has appeared on some books [including on mine]. There have been some publishers reporting that titles have indeed been removed, but possibly only ones that offer a short (less than 55% discount). Of the services companies, Publish America seems to have taken the hardest hit.
For Amazon, this move makes complete sense. Why deal with a middleman? For the most part, Amazon’s LSI POD orders go to LSI and LSI drop-ships the titles in Amazon’s packaging (though Amazon does apparently keep a small volume of POD titles ready for Prime shipment). But now that Amazon owns their own printing machines, why shouldn’t they be printing the books directly? Why shouldn’t they maximize their revenue, by making a profit on printing costs as well as sales? Why take 20-30% when they can take well over 50% of the retail price? Theoretically, this could even benefit publishers as well, the revenue being split two ways instead of three.
As always, it’s about profit. And the stakes are quite high. Author Solutions, parent company of AuthorHouse, iUniverse, Wordclay and Inkubook, predicts selling 1 out of every 15 books in the U.S. this year. I’m not aware of any statistics, but I would guess that Lightning Source, simply by virtue of being a printer and not an author services company, could print as many as twice that or even more. So we could be talking 1 of every 5 books sold—and that’s only from these two companies. There are lots of POD printers out there.
What are the real numbers of POD?
Over last weekend, London’s The Times published an interesting story [Amazon furious after publishers undercut its book prices online] with rumors of strong-arm tactics by Amazon again some of Britain’s biggest publishers, insisting that if the publishers were selling at a discount on their own sites, Amazon would assume that was the retail price and take their discount from that figure. So Amazon’s actions weren’t limited to POD.
Many publishers wrote to the Washington State Attorney General who is now conducting an initial review. The Independent Book Publishers Assn., SPAN (Small Publishers Assn. of North America) and the Author’s Guild have all weighed in against Amazon’s actions. All in all, not good publicity for Amazon.
So why such seemingly clumsy moves on Amazon’s part? Are books that vital to their bottom line? To me, these are not the actions of visionary company, but rather a company in a corner.
Could the writing have been on the wall for BookSurge and CreateSpace? BookSurge offered little that a customer couldn’t find at Author Solutions except some discounts on publicity services, and there was no way CreateSpace would ever surpass Lightning’s market share in terms of printing or even perhaps Lulu’s for less business-minded authors. And many of BookSurge’s services related to Amazon were available to outsiders via Amazon itself.
Let’s not forget that Amazon got to the internet first. Their first desks were hand-made out of plywood on filing cabinets. They started from zero. They have continued to innovate—in terms of its affiliate programs, the offering of Marketplace (which many thought would be their downfall) and in the way they integrate product, user-generated content and advertising on their pages. An argument could be made that Bezos is to the web what Jobs is to Apple or even Gates is to PCs. With the exception of a couple of dark post-tech-crash years, Amazon has continued to impress Wall Street and has continued to innovate, venturing successfully into tech services (AWS
So what are they seeing here that we’re not? I think it’s simply that if Amazon doesn’t do this someone else will. Vertical integration makes sense. Controlling production makes sense. What is the use of the middleman if the costs/benefits argue against outsourcing?
Also, don’t forget that Barnes and Noble has brick-and-morter stores—soon, possibly, to be filled with Espresso Book Machines. Borders and Lulu have partnered. So LSI and Lulu in particular are a direct threat not only to Amazon but to online sales of POD in general—which, again, Amazon has largely controlled.
Other factors could be at play. CreateSpace contracts allow the perpetual use of content for Amazon’s Search Inside—so Amazon could be harvesting manuscripts for reasons we can only guess.
The rise of multi-printer titles:
How do I think this will play out? I think it depends largely on the pressure put to bear on Amazon, both legally and publicly. Maybe we’ll see LSI coming to an agreement with Amazon to accept a minimum short discount, as a way of finding common ground.
But in general I see publishers having accounts with multiple printers a requirement. I see the days of one printer serving one publisher or even one title rapidly coming to an end. CreateSpace for Amazon and LSI for Ingram/Espresso Book Machines seems to be the obvious one now, but in the future who knows? For publishers, if a niche company evolves to get product to eager customers, they will want, if not have, to join in.
So the trend is towards publishers and retailers, with nothing in between. Retailers, record companies, etc. have been hard hit with the changes in technology, but I truly do think that we ain’t seen nothin’ yet. The backbone of the industry—distribution—may be the next to go.
One random note: what’s also interesting is that many publishers on POD groups are wanting to boycott Amazon, and try to lead their traffic to Barnes & Noble. It wasn’t too long ago that Barnes & Noble was the boogeyman, along with Borders. As many have noted, Borders and B&N took many independents out of business and Amazon may be trying to do the same thing with other online retailers. Simply smash competition until they’re the only ones left standing, then raise prices. Control the whole show, Standard Oil-style.
Something in me wants to believe that this isn’t true.
For full disclosure, I’m a client of Lightning Source and have an affiliate account at BookSurge. For many projects, including the DisasterLand audiobook, I’m considering using CreateSpace.
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Comments (1 Comment)
Greg shared this on Jun 04 08 at 7:39 amGood post. As a present user of both createspace and lightningsource, my impressions are that the relative merits of one over the over are quite difficult to measure. The fact the CS allows free revisions means that for the early stages of a book’s life, especially a technical book were errata are more common, CS serves as a good place to start out.
The whole question of short discounts, and how the discount relates to stocking and sales, is very important and yet very hard to quantify (at least for me).
