Wednesday, April 2, 2008

Amazon Power Play

This Monday, Amazon unleashed a firestorm with its announcement that it will now require that all print-on-demand (POD) books be printed inside Amazon's own fulfillment centers by its own print-on-demand subsidiary, BookSurge. Why? In a March 31, “open letter to interested parties” Amazon justifies its decision as follows:
“Modern POD printing machines can print and bind a book in less than two hours. 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 a customer orders a POD item together with an item that we're holding in inventory—a common case—we can quickly print and bind the POD item, pick the inventoried item, and ship the two together in one box, and we can do so quickly. If the POD item were to be printed at a third party, we'd have to wait for it to be shipped to our fulfillment center before it could be married together with the inventoried item.… Simply put, we can provide a better, more timely customer experience if the POD titles are printed inside our own fulfillment centers. In addition, printing these titles in our own fulfillment centers saves transportation costs and transportation fuel.” 

As an aside, I have to say I find this shipping-everything-in-one box justification strange. I recently ordered (in one Amazon order) five items for my three-year-old grandson (one book and four toys). The items were shipped in four separate shipments, within a day of each other. I saw this as a huge waste of packing materials and fuel—which bothered me not only because it’s bad for the environment, but also because (full disclosure here), I’m an Amazon stockholder.

It looks like the Amazon move is aimed directly at eliminating competition from the largest print-on-demand printing company, Lightning Source (LSI).

Publishers who use LSI to digitally print their books and don’t want to switch all their printing to Amazon’s BookSurge are offered two choices in the Amazon letter:

  1. Use BookSurge just for those units that ship from Amazon and continue to use a different POD service provider for distribution through other channels; or

  2. Use a different POD service provider for all your units, and pre-produce five copies of each title and send those in advance to the Amazon Advantage Program for in-stock inventory.


Publishers who choose option #1 (use Amazon’s POD company, BookSurge to print all books that ship directly from Amazon), face an unpleasant situation.



  • BookSurge has a reputation for printing low-quality books, with pages falling out, missing pages, etc.

  • BookSurge’s printing prices are higher than LSI’s, so the publisher and/or author will earn less per book sold.

  • Publishers will have to modify the files they have set up for LSI because those files aren’t compatible with BookSurge’s specifications.

  • Because BookSurge does not offer Ingram distribution, which is virtually essential for bookstore sales, publishers will want to continue to have their books available for printing though LSI, which provides the Ingram distribution. Using two printing companies means extra formatting and extra fees.



Publishers who choose option #2 (stay with LSI for all their book printing) would have to participate in the Amazon Advantage Program to sell books directly through Amazon. To do that, they will have to print and ship copies of their books to Amazon for them to warehouse and ship to customers. And they will have to pay Amazon $29.95 per year plus 55% of the list price of each book sold.

It not clear at this point whether Amazon intends to impose the new requirement on all publishers that use POD printing, which would include thousands of small presses, or if they are primarily targeting the subsidy (author services) publishing companies that use digital printing. I haven’t heard yet of any small independent publishers that have been affected by the new Amazon policy.

The story was originally broken by Angela Hoy, co-owner of BookLocker.com, in her ezine, WritersWeekly.com. She has continued to follow the story with frequent updates on a special WritersWeekly page. One of her most recent updates says that AuthorHouse/iUniverse has reached an agreement with Amazon to allow Booksurge to print their books.

Apparently AuthorHouse had originally refused to comply with Amazon’s demands, with the result that their book listings on Amazon had their buy buttons removed. This meant that a customer who wanted to buy one of the books would have to buy it from one of the marketplace vendors and the book wouldn’t qualify for Amazon’s free shipping offer. I checked some AuthorHouse book listings on Amazon earlier today (Wed 4/2) and the buttons were gone. Then after I heard about AuthorHouse reaching an agreement with Amazon, I checked again and the buttons were back.

My tiny publishing company has three books printed through the POD printing company, Lightning Source (LSI). I haven’t heard anything from Amazon saying that I should switch to BookSurge for printing, and the listings for our books are unchanged. I did get an email letter today from LSI President & CEO, J. Kirby Best, which said that LSI is following the discussions about Amazon requiring publishers to use BookSurge for their POD books in order to sell on Amazon, and reassured LSI cutomers that our titles are available to Amazon.com for shipment within 24 hours.This situation is changing way too fast to draw any conclusions. So what can we do besides follow the story and hope for the best?



  • Some authors and publishers are circulating an online petition "Stop the BookSurge Monopoly," that has 600+ signatures. Personally I haven’t signed it, because the originator is anonymous. But some of you may want to.

  • Some authors and independent publishers are removing links to Amazon from their websites and sending customers to BarnesandNoble.com instead.

  • Some are trying to work through the professional organizations PMA (The Independent Book Publishers Association) and SPAN (The Small Publishers Association of North America) in hopes they will join together, question Amazon on behalf of their members, and advocate for their members’ interests.

  • • Some are contacting Amazon officers and directors to express their displeasure and to let the directors know they will no longer buy from Amazon.


I’m still in the watch-and-wait camp right now. And maybe I should sell my Amazon stock?

4 comments:

  1. Inanna,You and I usually agree on almost everything, however one point in your post is not completely accurate."There is no other way to get into Ingram except to print books with Lightning Source, if you’re too small a publisher to meet Ingram’s criteria on your own."I am a small publisher with 3 books, all traditionally (not POD) printed that are carried by Ingram. Granted, it was not easy. However, I belong to PMA (Publishers Marketing Association) that put together a program with Ingram whereby small publishers who would not otherwise qualify could submit their titles to a juried panel of reps from PMA, BN, Borders, Ingram, etc. If the panel believed the books had potential, the publisher was offered a special deal by Ingram. I'm thankful my DAFFODILS books were accepted. So it IS possible for some small publishers to be carried by Ingram.I agree that Amazon is not "evil" and I did not interpret Lynn's comments to say or imply that (after all, she's a stockholder!) However, I don't view staying with Lightning and sending them 5 copies as an onerous requirement. I've been very pleased with Amazon's Advantage program, more so than dealing with B&T as a non-POD publisher.Publishing is clearly in turmoil. The genre associations have contributed as well as technology--Kindle, POD, etc.-- not to mention the large publishers with the new no advance, no return policy.Frankly I'd love a no return policy, but it would keep new authors out of the market. Bookstores, especially Independents, can't afford to take a risk on a title they may be stuck with.Technology may take care of all of this, but in the interim, I am disturbed by the anticompetitive flavor of all of these new developments. I believe this whole issue (including cons and Amazon) is something the FTC and Justice should examine.

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  2. Mary Clay writes:"I belong to PMA (Publishers Marketing Association) that put together a program with Ingram whereby small publishers who would not otherwise qualify could submit their titles to a juried panel of reps from PMA, BN, Borders, Ingram, etc. If the panel believed the books had potential, the publisher was offered a special deal by Ingram. I’m thankful my DAFFODILS books were accepted. So it IS possible for some small publishers to be carried by Ingram."Quite true, and I'm also a member of PMA. I never pursued that route because it was just as easy to go through LSI, given that I planned to use digital printing, anyway (at least to start with). The fact is, I don't use the pure "no-inventory, print-on-demand" model. I've got cartons of books sitting around! I like the fact that with digital printing, I can print short runs in batches, however, which isn't cost-effective for offset. Congrats on your book making that program, by the way!"However, I don’t view staying with Lightning and sending them 5 copies as an onerous requirement."Oh, me neither! However, I do run into a small snag with that model. LSI charges 15% more per unit for "publisher orders" including drop-shipping directly to a customer. My per-unit profit is already cut to the bone for wholesale orders from LSI--having to switch to Advantage and printing drop-ship orders from LSI will cut it to the marrow. It's going to be far more cost-effective for me to print Amazon copies through CreateSpace Pro. Not only that, but CreateSpace Pro does not charge more for batch orders. I'll pay less per unit for "short runs" of 50-100 copies from CreateSpace Pro than I will from LSI (unless I order when LSI does one of their occasional short-run specials). In fact, if I really had to sign up with Amazon Advantage (so far, I haven't heard that Amazon is going to force that on me), and CreateSpace wasn't available, I'd be looking for a different printer for my Amazon books, anyway--maybe Fidlar-Doubleday. I really would like to make more than pennies per $16.95 book. :-(I'm going to have to do some more thinking and number-crunching, but right now, it looks like this whole situation is going to benefit me financially, not hurt me--if only because it's impelled me to look at alternatives I wouldn't have investigated otherwise."not to mention the large publishers with the new no advance, no return policy."That is one interesting development. I think the writers' guilds are going to be screaming bloody murder over that...but we shall see.

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  3. Inanna, I had looked at BookSurge and found it more expensive than LSI and not really set up for independent publishers. I had also looked at CreateSpace, but wasn't sure Amazon was including it in this new requirement--since all the buzz was about BookSurge.After your comments, I ran the numbers at CreateSpace and you're right--the CreateSpace Pro plan is a better deal profit-wise for Amazon orders. Like you, I give Ingram 55% returnable terms--and, as you say--Amazon then gets the same. So, for example, on a 252-page book with a $12.95 cover price, my profit is only $1.65 per book purchased through Amazon. With CreateSpace Pro, my profit would be $3.64 on that book for an Amazon purchase.I also do all my own layout, covers, etc. I might need to redo my text block to meet their margin requirements, but as you say, in the future I could use a setup that works for both LSI and CreateSpace.I'm not sure whether the CreateSpace $50 upgrade fee for the pro plan is a one-time or yearly fee. They said they have a $5 yearly fee, which makes me think the $50 is a one-time fee. But they also have an option for downgrading from pro to standard in which the $50 is not refundable. I can't see why anyone would do that since the per-book charges are lower on the pro plan. So it makes me think maybe the $50 is a yearly fee. I couldn't find anything definitive on their website.

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  4. Charles L. LunsfordJuly 16, 2008 at 1:26 PM

    You've done your homework, Lynn. I just wanted to chime in with a disagreement on the quality of BookSurge printing. I've never had a problem with either of my books reported to me by anyone. I originally published with a firm called GreatUnpublished.com, which was acquired by BookSurge, was one of their earliest authors, and have stayed with them because I like the way they do business.I went through the traditional publisher battles for 4 years on the first book (a memoir, personal account not favored by traditionals) before going with GreatUnpublished, and when I finished my novel in 2005, BookSurge had taken over and I liked their agenda enough that I said screw the traditionals and published with them again. I have also revised the first book 3 times and very little expense--try doing that with a traditional and some of the other POD publishers.There is another thing I like about BookSurge--they haven't blown any smoke at me, promising me I'm going to be on the NYT Best Seller list in a week or so, or that my book is going to be made into a movie, or any of the other pie in the sky claims so prevalent in the self publishing industry at present. And when I have occasion to call them, I'm not talking to somebody in India or the Philippines.When they merged or were acquired by Amazon, I automatically got the benifit of that exposure, sales have just about doubled and although I'm not yet ready to retire to a villa in the South of France (near the yacht) I'm happy as if I had good sense.Chuck LunsfordAuthor of "Departure Message" and "Boxcar Down: The Albanian Incident"

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