Should publishers open stores to compete with Amazon?
Now that Amazon.com has come to an agreement with Simon & Schuster to sell the publishing house’s print and e-book titles, it’s tempting to think that all the other major publishers will soon follow. They may very well or perhaps they’ll continue to balk at Amazon’s demands. If so, where will that leave them?
Some within the industry believe Amazon exerts undue influence over the publishing market. A group of authors including Douglas Preston, Stephen King, Malcolm Gladwell, John Grisham, Salman Rushdie and Philip Roth have asked the U.S. Justice Department to investigate Amazon’s business practices to determine if the retailer is acting as a de facto monopoly. In the unlikely scenario in which the Justice Department takes up an investigation, there is no guarantee it will come to a conclusion that supports the views of the authors.
One other possibility, recently floated by Michael Wolff in a USA Today column, is that authors and publishing houses should get over being mad at Amazon and get even instead. To accomplish this, the publishers would follow the lead of Apple and other manufacturers and open retail businesses (brick and click) to sell directly to consumers.
According to Mr. Wolff, Amazon is looking to achieve a commanding position in publishing by locking up the e-book business. While there is plenty of evidence to suggest Amazon is successfully moving towards that goal, the real money in book publishing remains in printed titles.
According to figures published on the Statista site, worldwide print sales are $53.9 billion compared to $8.5 billion for e-books. Seventy-six percent of readers in the U.S. prefer reading from print publications that digital versions. There may come a day when digital versions of books do to physical books what music downloads have done to CD sales, but that is unlikely to happen in the near-term.
Mr. Wolff asserts that publishers opening their own stores and sites have a pricing advantage over Amazon that they can exploit if competition becomes nasty. "Amazon is still buying books from publishers at something around a 50 percent markdown for physical books," he writes. "Discounted beyond that, Amazon begins to lose serious money, whereas publishers have further room to discount and yet still profit."
- Amazon quickly reaches book contract with Simon & Schuster – GeekWire
- Authors seek antitrust investigation of Amazon – RetailWire
- Wolff: Real books can defeat Amazon and e-books – USA Today
- Statistics and facts about the Digital Publishing Industry in the U.S. – Statista
- Statistics and facts about the Digital Publishing Industry in the U.S. – Statista
Discussion Questions
Do you agree with Michael Wolff that publishers should consider selling their titles directly to consumers? How do you think retail bookstores or websites operated by publishers would differ from what’s available in the market today?
While the idea of fighting Amazon may evoke the romantic imagery of the small guy taking on and beating the “corrupt” corporate giant, the reality is that existing book sellers such as Barnes & Noble are having difficulty surviving. For a single publisher with a limited line of authors and titles to create a viable competitor to Barnes & Noble, to say nothing of Amazon, is not likely.
The only way this might be done would be though forming a cooperative and concentrating on internet sales. The big decision that then would have to be made is, does the group stop selling to Amazon? Or Barnes & Noble for that matter. The answer is, not likely. However, Amazon and/or Barnes & Noble would then probably downplay the publishers’ wares on their sites. The one upside to the publishers operating a site might be the availability of less well-known authors’ titles.
Publishers are omni-channel laggards compared to the software industry. The software industry has embraced selling online, selling in stores or offering software as a service through the cloud, and it also uses Amazon channels instead of fighting Amazon. The publishing industry needs to take a clue from the software industry instead of fighting others they should be working with to create an omni-channel strategy.
Publishers have to be careful not to alienate the retailers who sell their books. Selling direct to the consumer jumps over the retailer. However, if they are just selling the e-book, I don’t see a problem. Selling hard copies might be able to be done through an agreement with the retailers, where the retailer fulfills the order.
As an author, I like the idea of the publisher pushing my book to the public. It’s another distribution source.
Isn’t it true of any industry that they could “cut out the middleman” and—presumably—realize higher profits by selling directly to consumers? Here the issue isn’t just higher profits vs. lower ones, but the question of profits—or sales—at all, but that more don’t do so should make us ask why.
One problem is that manufacturers may not be good at retail: the dynamics of dealing with a few (large wholesale) customers is much different than consumers. Another problem is that a store offering only titles from a single publisher wouldn’t have sufficient selection (anymore than a store selling Kellogg’s cereal would); publishing is much different than fashion, then, since the brand per se isn’t meaningful to consumers. They might overcome this latter problem by banding together—or if selling online maybe it really isn’t much of an issue—but I’m skeptical…it just seems “too easy” an answer.
For the life of me, I don’t understand why publishers don’t sell their titles from their own websites! What is stopping them? They could do it just as successfully, and of course cheaper, than Amazon.
As for opening stores, that’s a different story (sorry about the pun). Continuing to sell to retailers makes sense, why get into bricks and mortar business when they are already built.