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March 28, 2008

Victoria Strauss -- Use BookSurge or Die?

A flurry of reports since yesterday (originating with Angela Hoy at WritersWeekly, picked up by numerous blogs and several newspapers, including the Wall Street Journal) have broken the news that Amazon is apparently seeking to force independent POD-based publishers to use its BookSurge POD service.

According to Hoy,

Reports have been trickling in from the POD underground that Amazon/BookSurge representatives have been approaching some Lightning Source customers, first by email introduction and then by phone (nobody at BookSurge seems to want to put anything in writing). When Lightning Source customers speak with the BookSurge representative, the reports say, they are basically told they can either have BookSurge start printing their books or the "buy" button on their Amazon.com book pages will be "turned off."

Hoy found this so hard to believe that she called a BookSurge representative who'd recently been trying to contact her. She says that he confirmed it. As an alternative, he suggested that authors of POD books could use the Amazon Advantage program (where you offer your own books for sale, and Amazon takes a 55% cut plus an annual registration fee).

On hearing this news, I immediately checked my calendar, wondering if perhaps I'd lost a few days and it was actually April 1. I mean, can you say "restraint of trade?" Not only would this enable Amazon to profit twice by basically disallowing the competition, it would be a huge burden for Lightning Source customers, who'd have to transfer their digital files to BookSurge. And since BookSurge doesn't have an arrangement with Ingram, they couldn't simply switch--if they wanted to keep their Ingram distribution, they'd still have to maintain files with Lightning Source. If indeed Amazon intends to implement this policy, it would seem to be inviting a lawsuit--not to mention, an enormous backlash of anger and ill will that could turn into a PR disaster.

The whole thing seems so bizarre to me that I'm reserving judgment until there's some response from Amazon. It's always possible that there has been a misunderstanding of some kind, or that this is a BookSurge initiative rather than an Amazon company policy. Hopefully, Amazon will have the sense to back away from it. It will be interesting to see what happens over the next few days.

43 comments :

Anonymous said...

I think tortuous interference is also on the legal list for this one.

Diana Castilleja said...

""The whole thing seems so bizarre to me that I'm reserving judgment until there's some response from Amazon. It's always possible that there has been a misunderstanding of some kind, or that this is a BookSurge initiative rather than an Amazon company policy. Hopefully, Amazon will have the sense to back away from it. It will be interesting to see what happens over the next few days.""

You and me both. This is nauseating and I don't know how they can justify basically refusing thousands of authors and tens of thousands of books with this move. You're not the only one who sees this as a bad business decision.

Anonymous said...

It will indeed be interesting.

Microsoft, in the early days of Windows, essentially denied DOS to PC manufacturers who wend with a competitor to Windows. Since Windows (and all its competitors) ran on top of DOS, that essentially set the bar so high for competition that it cemented Windows' place as the PC's windowing software.

Oh yes, there were viable competitors in the early days. You just didn't know about them because clone makers wouldn't risk pissing off Microsoft to bet on a dark horse.

I wonder if it's a coincidence that Microsoft and Amazon are neighbors?

Diana Castilleja said...

Just to cure my curiousity, I reviewed the Restraint of Trade common laws on a couple different sites.

""The principle that a covenant restricting the freedom of an individual, or organisation, to do as they or it likes will be void unless it is:

*

Designed to protect legitimate business interests.
*

No wider than reasonably necessary to protect those interests.""

""Illegally interfering with free marketplace participation. Regulated by the Federal Trade Commission. ""

I believe the second definition is closer to what most of us can understand without a law degree. But the purpose has to to first be discerned as illegal in the intention first.

Any Lawyers in the house? I really hope that whoever cooked up this idea really, really only had a bad coffee day or something and will soon realize the damage they are doing. I honestly can't see publishers, large or small, converting when Barnes and Noble doesn't have the Us or Die tone. There's more than one option here.

Eric Marin said...

This isn't my area of the law, but one entity acting alone in an anticompetitive manner is not a "restraint of trade" under the Sherman Act. The Sherman Act's bar on "monopoliz[ing] . . . any part of the trade or commerce among the several States, or with foreign nations" would be the potentially applicable portion of the act in this type of instance. Whether BookSurge's alleged move would be considered anticompetitive under the act or other anticompetition statutes in the U.S., I don't know.

If you're interested, here's a useful U.S. Department of Justice-Antitrust Division page: http://www.usdoj.gov/atr/foia/divisionmanual/ch2.htm#a

Diana Castilleja said...

Well, phooey, that makes sense. LOL

Thanks Erin. Even a little in the right direction is better than none.

I guess they really aren't doing anything different then becomeing the Gap or Old Navy of booksellers.

Diana Castilleja said...

sorry I meant Eric. Darned fingers. :)

Marion Gropen said...

A thought: This looks like an incredibly dumb move for so many reasons (like Booksurge is in no way ready to deal with all of the POD-original books), that I have been trying to think why it MIGHT look like a good idea to Amazon.

There has been a surge in small presses talking (in all the usual venues) about using lower than normal discounts to Ingram through LSI. 20% seems not to be uncommon. Amazon seems to pull the Ingram db into its system, and list these books. Maybe it's getting tired of losing money on those sales? Maybe it's trying to force LSI to tighten up on the allowed discounts?

Or perhaps it's just another batch of executives finding the limits of their knowledge and the consequences of arrogance.

I'm not quite ready for "viewing with alarm," but I'm certainly "watching with interest."

Sha'el, Princess of Pixies said...

I think this is a stupid business idea. Anger the authors you sell? Authors are readers too. Guess who buys books on Amazon? Guess who can go elsewhere.

Go back to your friendly neighbourhood bookseller and have them order for you. Think about it! Personal service. A friendly face. Reall books to hold and read. Maybe even cookies and tea. ...

If you want to file a complaint contact the FTC or email amazon through their investor relations page.

Pixie

Jamie Hall said...

Whether it is illegal or not, it sounds like it'll be a horrid public relations disaster unless Amazon backs away from it fast.

Dominating a large share of the online market doesn't mean much. Online customers are the hardest ones to hold on to. They find it so easy to go elsewhere if given a reason.

I think Amazon is going to regret giving them that reason.

Dave Kuzminski said...

This move by Amazon first came to me at P&E almost a year ago when they ran it against one small publisher. I wish I'd dated the posting I made beneath the Amazon.com listing in the Bookstores page on P&E. Anyway, I wrote an email to Amazon back then asking for more information, but they never replied. Obviously, they didn't want to divulge anything then and given the warm welcome their idea is receiving, that's very understandable.

Brent Sampson said...

Unfortunately, the ultimatum being sent to POD publishers is true, and is happening just about precisely how Ms. Hoy reported it. The fact that Amazon is being quiet about the whole thing fuels the fire that they're probably a little embarrassed about it. Embarrassed enough to pull the plug on the idea? We'll see...

As the President and CEO of Outskirts Press, I received my ultimatum on Tuesday. Unfortunately, Amazon is using authors as pawns in a power struggle with Lightning Source, and authors will unfortunately be the victims. It will not matter whether each individual POD company accepts the "terms" of the switch of not. There is a downside to the author both ways. If POD publishers choose not to convert to Booksurge, authors may see their book sales decline on Amazon. Although, as mentioned by other posters here, there are many other opportunities for the savvy book marketer. Amazon is not the nirvana it (and my book "Sell Your Book on Amazon") purports it to be.

On the other hand, if the POD company does switch, the author receives inferior pricing and inferior printing. I have personally worked with both Booksurge and Lightning Source products and there is a quality difference that authors should be aware of. Not surprisingly, Booksurge reps deny this.

Do I want to be extorted into offering an inferior product to our authors just so Amazon can make more money while my authors make less? No.

That is the dilemma being faced by every POD company, large and small.

I realize POD is not a fan-favorite on this blog, so it should also be noted this does not begin and end with POD companies. University and small, independent presses (even individual authors) are being targeted, or will be soon.

Authors should decide whether they want Amazon making their decisions for them. So should publishers, for that matter.

Brent Sampson
President/CEO
Outskirts Press
http://www.outskirtspress.com

Dana King said...

I've been a good Amazon customer for several years, but I can just as easily buy books elsewhere if they actually go through with this. I hear Border can use the business...

samuel tinianow said...

Or even better, buy direct from the publishers. Every major house makes their books available through their own website, except Houghton Mifflin trade (Houghton Mifflin academic does). They get bigger profit margins through direct sales, and they need them. Never a better time, right?

The Broken Forum said...

Forgive my ignorance if this has been addressed but where does this leave authors who used a service like Lulu or iUniverse?

Anonymous said...

I honestly hope this is a well-prepared April Fool's joke or something Booksurge is doing on their own.

If not, I'll definitely support anyone who wants to put Amazon back where they belong.

BuffySquirrel said...

Maybe their complete, uncontested victory over the ebook sellers has made them think they can get away with this too.

Diana Castilleja said...

I just thought I'd update in case it hasn't been mentioned.

As of Saturday morning, authors began to notice their buy links gone. The listing is still there, along with the kindle ebook if it was formatted, but it's no longer purchasable through Amazon.

One of the printers: PawPrints. I don't know who else has been affected yet.

Tasha said...

I think the target of this tactic was the major publishing houses and the academic publishing houses, who use POD for out-of-print backlist titles. Perhaps Amazon didn’t think things through and did not expect the backlash from the smaller presses who are going to be hard hit by the new policy.

Anonymous said...

Borders sells with Amazon now. I'm trying Barnes and Noble.

Keyan

Lee Goldberg said...

Sure, it's a strong-arm move to boost Booksurge's business...but how has Amazon created a "monopoly" or engaged in "anti-trust" activity with this policy?

There are many other book retailers on the web -- like Barnes & Noble, Chapters, Wal-Mart and Borders -- that will continue to "stock" and sell POD titles produced by Lightning Source, Lulu, etc.

Besides, Amazon will still list titles produced by other POD companies...they just won't sell them directly any longer or include them in their free shipping program.

The POD outfits also have their own websites where they can offer their list of titles directly to consumers...though I would argue there aren't that many consumers of POD books to begin with.

Granted, there are some reputable companies that rely on POD to produce their books (Point Blank is a good example of one) but "self-publishing"/vanity press companies like Authorhouse and PublishAmerica account for the majority of the POD business -- and their "consumers" are primarily authors, not readers.

I can see how companies utilizing POD to print their books might be irked by this news, but the vast majority of Amazon's customers won't notice or care.

Cat Chapin-Bishop said...

Hi,
As a Pagan book addict, I've written on this subject, and my personal windmill tilting, over at my blog. I thought I'd let you know that I've linked to this post, too, and I'm collecting links to post via the Metapagan blog aggregator.

Pagans are huge book buyers, and most of our best titles are offered via small presses. (Quakers are, too, but more often have small, not-for-profit publishers they can work with, so I'm not clear how the other half of my spiritual lineage is likely to be affected.)

If readers here would like to send me links to their own blog entries on the subject, I'll be happy to add those links to the collection for Metapagan.

Blessings,
Cat Chapin-Bishop
Quaker Pagan Reflections

Emily Veinglory said...

If it's a "misunderstanding" then it is one that has already caused PA author to lose their buy links.

Emily Veinglory said...

p.s. I don't see how this can be illegal or unprofitable for them given that they already did this with ebooks to basically no protest at all. That is requiring ebooks to be distributed by Mobi to be listed on Amazon. Expect audiobooks to be next.

Victoria Strauss said...

If it's a "misunderstanding" then it is one that has already caused PA authors to lose their buy links.

It's unclear to me exactly what the deal is with PA. I've seen the letter it sent to its authors on Friday, and it doesn't make a lot of sense. For instance, PA claims it has been given just two weeks to switch its books over to BookSurge. But Angela Hoy says she was told that Amazon would leave the buy buttons on Booklocker books active for as long as needed, as long as she agreed to make the switch and "the relationship was moving forward."

I ran checks on a number of other POD-based publishers that I'm pretty sure use Lightning Source, and on some POD self-publishing services, including AuthorHouse. All have active buy buttons.

So yes, PA has been caught up in the situation, like every other Lightning Source customer--but I very much suspect that right now, the disappearance of its authors' buy buttons is down to PA itself. Another thing to be grateful to their publisher for.

chris said...

I was wondering if Canadian publishers use Lightning Source as a printer.

Chris

TWCP Authors said...

Chris: I know of one Canadian publisher, Coscom Entertainment.

Amazon has notified publishers who print books on demand that they will have to use Amazon's POD facilities if they want to sell their books directly on Amazon.com, the Wall Street Journal reported. Publishers Weekly

There are other books missing buy buttons, along with PA.

Another problem for many of the affected parties is that publishers or authors will have to reformat their files (which is no quick task) for BookSurge because their book sizes are not standard.

I don't have a dog in this hunt, but there is always the chance that I would use the services of LSI one day, under the right circumstances. However, it galls me that Amazon continually makes things difficult for authors and publishers. Oh, we'll continue to hear about amazon in the future.

There is an ipetition that people can sign at www.ipetitions.com/petition/protectPOD

--cyn

Emily Veinglory said...

Indeed, I don't see why the enemy of PA should be suspected of being my friend. In fact i can believ they started with the pariah to ease the policy in.

You can already add Whiskey Creek Press (not perfect but a basically viable and okay press) and people using Pawprints to the list. I bet there will be more by the end of April 1st. Direct quotes from Amazon staff are now all over the internet and buy links are starting to disappear at Amazon UK as well. I have had specific confimration for several of my publishers and accounts of ongoing negotiations from others--just like what happened after the Mobibooks purchase.

I don't really see how this can be seen as just a rumor anymore. Nor, after the Mobi-purge, do I think benefit of the doubt would be warranted, in any case.

Samuel Tinianow said...

Well, I've seen enough. I'm switching my blog to a Barnes & Noble affiliate.

Cat, here's my post on the subject

Anonymous said...

Amazon has publicly posted on the subject, here: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-printondemand

And they say, yes, it's all true. And tough boogers to anyone who doesn't like it. It's all in the name of customer service. Oh, and saving the environment. (They didn't mention whales, but I'm pretty sure whales will benefit from this move too.)

HH

Anonymous said...

Crap, trying that link again:
http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-printondemand
HH

richard hoy at booklocker.com said...

Hi everybody,

I had several issues with their official statement today, but one glaring problem is this.

They said, “If the POD printing machines reside inside our own fulfillment centers, we can more quickly ship the POD book to customers—including in those cases where the POD book needs to be married together with another item...If the POD item were to be printed at a third party, we’d have to wait for it to be transhipped to our fulfillment center before it could be married together with the inventoried item.”

First, notice they said “IF” the machines reside in their fulfillment CENTERS (plural). Hmm… Let’s look at that more closely.

According to Wikipedia, Amazon has 10 distribution centers in North America alone; and 14 more abroad.

Do they have POD printing machines at those 24 distribution centers yet? Or even just the 10 in North America? Or even more than just one? Do they even have POD printing capabilities anywhere except at the Booksurge office?

Are they currently printing print-on-demand books in each of those centers and able to “marry” those books with the other products they’re shipping?

I don’t think so. So, their “save money/time by packaging POD books with other products” rationale appears to have glaring holes in it.

I challenge Amazon to provide proof that they are indeed printing POD books in all their facilities. Something tells me they will remain silent on this matter.

If Amazon can’t currently print POD books at all its distribution warehouses, why are they implying they can in their statement today, and why are they telling POD publishers to sign that contract RIGHT NOW?

Also, IF they are not currently printing the books at all their CENTERS, and marrying those books with other products, there is no way they can beat Lightning Source’s current ability to print and ship POD books in 24 hours.

A former Amazon Catalog Developer (who left on good terms) took a red pencil to their "statement" yesterday. See his comments under this article:
http://www.paidcontent.org/entry/419-amazon-does-damage-control-on-its-print-on-demand-demands/

We are posting frequent updates regarding this situation to WritersWeekly.com.

Angela Hoy
WritersWeekly.com
Booklocker.com

Victoria Strauss said...

Link to the Amazon statement.

Basically, they say that in-house printing of POD titles enables quicker shipping. Plus, if a customer orders a POD title plus another item, they can ship both in the same box, saving shipping costs. At face value, this makes sense, but Angela makes an interesting point.

Some people are also suggesting that Amazon is tired of eating the short discounts Lightning Source allows its POD customers (such as PublishAmerica) to impose.

I've been thinking about this over the past few days, and I've come to a couple of conclusions. First, Amazon will not back away from this decision, no matter how much anger it generates. Second, while it's a short-term PR firestorm, a long-term PR disaster it ain't. Amazon's statement refers to the controversy over its decision to carry used books; I think this situation will play out in much the same way. There will be a lot of editorializing, a lot of anger from authors and some publishers, and a lot of removing of Amazon links from websites and blogs. But Amazon will easily ride it out, because its customers will be happy and also because, I suspect, POD sales make up such a small percentage of its bottom line that it can afford to sacrifice some, or even a large proportion, of them.

So much for the long tail. Call me cynical, but I'll bet that a year from now most people will barely remember this controversy.

Anonymous said...

There are restraint of trade issues because of Amazon's size and market share. Essentially Amazon's move will make it impossible for any other POD printer to compete. It will force Lightning out of business.

Amazon's statement is massively BS because, taken to not even its logical conclusion, Amazon should be demanding that all publishers sign up with BookSurge because all conventional methods of printing are slower than printing in house. So we see it for what it is: A landgrab.

Should there be a rush by publishers to sign up with BookSurge or CreateSpace, there's really no way those two companies can accommodate the number of books currently in print via Lightning Source. So all this "concern" on Amazon's part about serving their consumer, well again, it's concern troll-like concern. It's not genuine. The system would be screwed up for months. BookSurge has never been very good at what they do. If suddenly they get 4 or 5 times the amount of volume they currently have or more, just how good will they be at that?

Robert Marston said...

If they do try to force exclusivity for their BookSurge brand, I will go out and seek venture capital for a competitor that will list LSI books. It would be a fantastic way to offer an alternative to Amazon.

This is nothing short of monopolization tactics.

Anonymous said...

We need to start a class action against Amazon. This is ridiculous.

Victoria Strauss said...

Lightning Source responds.

PW has a statement from John Ingram.

And the conspiracy theories are bubbling. Among them: Amazon has secretly been digitally producing books all along using the high-quality files it requires for its Search Inside program.

In freaky news, PublishAmerica is trying to present itself as the hero of the hour. Reputable sources are quoting it (doesn't that make you want to barf?), and some people are theorizing that Amazon is scapegoating it (since its buy buttons were among the first to be turned off).

Worth noting, however: as of this writing, the buy buttons for BookLocker, which broke the story and has been one of the major voices of opposition, are still on.

I'm sure PA would love everyone to think that Amazon is using it as a whipping boy, but dollars to donuts it was PA that told Amazon to turn off those buttons, and it's now making hay out of the situation by strutting around shouting "Nuts."

What does this really say about PA? Not that it's a heroic little guy confronting a "Goliath Bookselling Biz," but that such a tiny percentage of its sales come from outside sources (i.e., not from authors or their friends/family) that it can afford to trash the Amazon relationship. And now its authors will have to buy even more of their own books so they can participate in the Amazon Advantage program!

The irony of it all: PA has been forced to come out of the closet as a POD publisher.

Anonymous said...

Clearly a well-planned move in the long term for Amazon. They've already established themselves as 'the' place to buy books; soon they will be the only place to publish as well.

If a person had the liquidity, right now would be the time to start a definitive book source online. Something to compete with ammy... a website that could promise nearly every title in existence, at incredibly low prices, with free shipping. Such a business could ride the wave of Amazon's current bad publicity and launch itself into an overnight dynasty.

Or maybe not.

Anonymous said...

No, Victoria, we won't have forgotten this by next year. Do you really think that Amazon will stop with small presses?

It isn't just this new 'policy' that stinks; it's also the secrecy and the threats. They called the POD companies and gave them ultimatums-no public announcement, no real time to inform their authors or start any real discussion. The calls started on March 28 and the deadline was April 1.

But many buy buttons are still on. It looks like many companies have called Amazon's bluff.

Shame on iUniverse and Lulu for caving to these bullies!

Fight the Power!!

Victoria Strauss said...

The calls started on March 28 and the deadline was April 1.

But many buy buttons are still on. It looks like many companies have called Amazon's bluff.


Angela Hoy's article makes it clear that the calls started before March 28. And though I've seen many rumors about the April 1 deadline, I haven't seen anything that actually confirms it.

This scenario (calls starting March 28, do-or-die deadline April 1) fits the notion of Amazon as a kind of bookselling Sauron, out to conquer the world and leave no one else standing, but it doesn't make much sense from a business perspective. Until I see some real confirmation of this timeline, I remain unconvinced.

There are a number of possible reasons for buy buttons still being on, other than publishers "calling Amazon's bluff." Publishers could have agreed to make the switch, and had their titles grandfathered in (Angela describes in her article how this arrangement was offered to her). The publishers could have decided to stick with Ingram and go with Amazon Advantage. Or the deadline could, in fact, not have been April 1.

I'm not happy about what Amazon is doing, and I feel terrible for the small publishers and self-publishers who are caught in the vise of this situation. But IMO, the conspiracy theories are getting out of hand, and there is a too much relaying of rumor and hearsay without checking facts.

Victoria Strauss said...

BookLocker has filed an antitrust lawsuit against Amazon. The suit was served on Amazon on May 21, 2008.

Carlo said...

Good Job! :)

Victoria Strauss said...

Amazon has settled with Booklocker.

 
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