Could have said it better
The appropriate response in this case is not "NUTS!", but the legal precedent of Arkell v. Pressdram.
Amazon has told print-on-demand book publishers that they better start using the retailer's print-on-demand service if they want their books sold on its website. In 2005, the world's largest online retailer purchased a print-on-demand operation known as BookSurge, and over the past several weeks, BookSurge sales reps have …
Amazon is an excellent service that allows you to store up a list of books that you would like to buy, get the ISBN numbers and then go to Foyles on Charing Cross Road (London) [England] and buy them. The recommendations service is excellent once you have clicked 'I own it' on a few recommendations and they email you with new releases from authors you have stated you own books from.
Sometimes when I can't get into London for a while I even have Foyles mail order me the books, I don't know what I would do without Amazon to look them all up and get me the ISBNs though....
Monday, March 31, 2008, 5:10 PM: Angela Hoy tried to reach Bob Young at Lulu this morning. His secretary said he would call at 4:00 PM. She called Angela after 4:00, and said he wasn't available, but agreed to put her through to Gale Jordan, Lulu's Director of Public Relations.
Gale Jordan said she would try to have the Vice President contact her. She called back a few minutes later to say he was not available (that he was on a plane). She then basically said they wouldn't be able to give us a statement before Angela's deadline. She asked if anyone could talk to her tomorrow morning. Jordan said no, that they were all out of town at a remote location. Angela asked if they really couldn't talk to her or if Lulu just didn't want to comment. Jordan said, "A little of both. We're just not going to comment."
Angela left a message on John Feldcamp's (Xlibris) voicemail today. He has not returned her call.
Angela left a message on Kevin Weiss's (AuthorHouse/iUniverse) assistant's voicemail today. He has not yet returned her call.
An AuthorHouse author contacted Angela today and said he was told by his AuthorHouse representative that AuthorHouse was in "intensive negotiations with Amazon." I can't, of course, confirm that is true, but the silence from these big three POD publishers speaks volumes.
Monday, March 31, 2008, 4:10 PM - Amazon.com has released an official statement about their actions HERE.
It basically just rehashes what you already know, but puts a pretty spin on things from their end.
They rationalize they can ship books faster. Our printer, Lightning Source, ships books to Amazon's customers directly, even using an Amazon.com return address sticker. They rationalize they can ship items together to save money, and that doing this saves transportation costs and fuel. What they don't tell you is that forcing a publisher to pay Amazon to print their book, plus setup fees for new books, plus 48% of each sale could and probably will mean higher list prices on books and, thus, less money in the customers' pockets, less money in the publishers' and authors' pockets...but more money in Amazon's pocket.
Furthermore, Amazon has several distribution centers in the U.S. and abroad. Are they currently printing Print on Demand books in each of those centers? I don't think so. So, they're "save money/time by packaging POD books with other products" rationale appears to have a few glaring holes in it.
If Amazon can't currently print POD books at all its distribution warehouses, why are they telling POD publishers to sign that contract NOW?
Notice they left out the setup fees ($50 for new titles), the printing costs, and the 48% they want from each sale. In fact, there's no mention of fees at all in the statement. They also don't mention that the average publishing package for authors at Booksurge is over $1,000.
Also, regarding the Advantage Program, they left out the fact that publishers/authors have to pay $29.95 per year, PLUS shipping costs to get the books to Amazon, PLUS 55% of each sale to Amazon. They don't seem too concerned with shipping and fuel expenses for this part of the statement, probably because the publisher has to pay for those.
Finally, they, of course, don't mention the past quality control problems experienced by Booksurge. If a customer gets a book with missing or upside down pages, who's going to get the blame? Not Amazon, that's for sure. The publisher will get the backlash for that.
What do you think about Amazon's official statement, readers?
I smell DOJ anti trust investigation.
This is like when standard oil told small store owns carry our product only or we will set up a competing shop next door, and sell every thing you do for half price
SHerman anti trust act
The Act provides: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal". The Act also provides: "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]" The Act put responsibility upon government attorneys and district courts to pursue and investigate trusts, companies and organizations suspected of violating the Act. The Clayton Act (1914) extended the right to sue under the antitrust laws to "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws.". Under the Clayton Act, private parties may sue in U.S. district court and should they prevail, they may be awarded treble damages and the cost of suit, including reasonable attorney's fees. 
Anti-trust laws look good on the page but any large corporation knows that if the little guy wants to take on the big guy in court, the big guy will win in the end after all the appeals etc. A court room marathon is a strategy doomed to failure for the little guy.
Here's hoping one day, an Amazon will hopefully pick on the wrong person and an Amazon or similar company CEO will wake up with a horse head in their bed. If they are lucky.
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Where did the free market go?
It seems that nowadays it's impossible to do any sizeable business unless you accept to work with a huge corporation on the terms they decide.
- Want to sell books online: you have to work with amazon, on their terms, because they are the place the customers go to shop for books online.
- Want to sell videogames? you have to work with Walmart, on their terms (which often includes censorship etc...) because it's the place half of america goes to do it's shopping.
- Want to develop software? You have to work with microsoft because windows runs on 90% of computers, more or less on their terms (thanks the DOJ and the EU for the more or less).
- Want to sell with auctions: you have to work with ebay, on their terms (which are now far less good for sellers than before) because that's where everybody go.
let's not even speak of the music and movie bussinesses...
The list could go on... I read recently that the EU antitrust commission was busy as never: it seems that there are no corporations anymore, just monopolies and cartels.
The internet was supposed to allow everybody to do bussiness on a more or less equal footing, but it seems it's almost the opposite that happens: customers flock to big "walmartians" sites like Amazon or Ebay that end up with a near monopoly.
If this continues we'll finish like the old communist russia, where you had one approved provider of each thing where everybody must go, except it's big corporations/cartels that will be the providers and dictate the rules instead of the governement.
Let's hope we react before that...
Personally, I find that Amazon's recommendation efforts usually amount to listing other books / albums by the author / band I just purchased. As if I was incapable of doing that myself. Pandora does a bit better for the music, does anyone know of a service that does better for books?
This is the kind of flabbergastingly terrible corporate strategy that makes those of us who believe profit-driven business are essentially rational want to cry. Ethics aside, Amazon's book-printing service is too shit and they have too little market power to get away with this. I try to visualise the board meeting that came up with this and all I can see is five chavs in suits smoking crack, listening to the Wu-Tang Clan and thinking they're invincible like Microsoft. "Yeah! Gonna smoke them Lightning Source mutha****ers! No-one can touch us!" Only instead of their bullet-ridden corpses being chucked in a canal two hours later, they'll probably be able to turn around and play this into some chocolate-ration-increase PR triumph. Something beginning with "We've listened to our suppliers and", blah blah, you know the drill.
I can't disagree with a single point of Eric's post. Though there is a distinction, which is in danger of getting lost, between a monopoly and an industry with lots of competitors where it just happens that most people only exercise their free will to use one of them. Amazon, Microsoft, Walmart and eBay all fall into the latter category. I doubt many people would react that kindly if Amazon adopted the playground sharing business model. Try to buy a book and 50% of the time you'd get a message saying "Sorry, we've sold too many books today and it's not fair on our competitors if we take your custom as well. Instead your order is being passed onto Buggins Booksellers. They're more expensive and don't have free delivery but it's their turn to sell a book."
I'm off to Waterstones (they have a great loyalty card - I'm such a sucker) rather than continue to give money to a company that behaves like that.
Shame, because I used them a lot until now and had thought pretty highly of them - price/convenience/speed of delivery/customer service were all great.
I worked on a book project last year, and as part of it, I was asked to investigate online shop front options (including print-on-demand) through Amazon.
Let's just say that Amazon is, frankly, pathetic. The book we tried to sell would've had to sell for $45 (and it still does when ordered from Europe thanks to shipping) or £25 retail to keep the margins we expected to have. Instead Amazon wanted the pricing to be so slanted to their benefit that we decided NOT to use Amazon at all. Has that hurt us? Yes it has, no doubt. But on principle, I guess it would've probably hurt us more to ship through Amazon, pay them up front for storage and without guarantees of actually selling anything.
Print-on-demand through BookSource was only available to US customers (i.e. authors/publishers in the US), even though we could have arranged that, they were not interested. It could've saved us money, but hey - Amazon is king, Amazon demands, Amazon doesn't give a rat's about the authors and publishers.
So Angela - GIVE EM HELL!!! I would too.
Play.com do books - usually cheaper than Amazon. I don't know where they stand on the print-on-demand system, though.
I haven't used Amazon for years - I got sick of finding a book that I wanted, clicking the buy button, and finding it's one of those damn 'buy new or used' second hand eBay-ripoff links.
I agree with you that a distinction needs to be made, and that playground sharing wouldn't work.
The problem is not so much that these companies are monopolies, it is that in the modern market, once one single corporation reach a certain market share it becomes impossible to do a profitable business without their cooperation.
In practice companies like Ebay, Microsoft, Walmart and Amazon have become some sort of "utility" in their own market, like electricity or water providers. What is needed is some safeguard to avoid these companies abusin these dominant position to advance another part of their business or screwing the consumer.
The current situation would be like the electricity company being able to cut you off the grid because they want you to buy the hairdryer they sell and not the one you can buy for half the price at the shop down the street. Electricity providers can't do that because there is regulation that prevents them, but there is no regulation for ebay or amazon. Of course I suppose you can always buy a windmill and make your own electricity if you really want...
I've seen the comparison between eBay and the water company and it just doesn't fly. Utilities are monopolies, by their very nature, because the cost of laying miles and miles of track or cable or piping is so prohibitive that only a very large organisation uninterested in profit (under the current system, generally the state) can do it - and for a company to lay a second one would be not just costly but rather pointless. Becoming the next eBay is also difficult, but not because it's costly - "going viral" is greatly reliant on factors wholly or partly beyond your control (or "luck"), rather than massive infrastructure investment.
There is a reason there are dozens of startups and backroom coders trying to create the next Digg or Facebook, and zero companies laying a second rail network to compete with the current useless one. Johnny Q. Nerdface knows that even if the chance of success is minute, in the event of failure he can walk away with very little cost. Richard Branson knows that even if a shining new rail network would probably kick the arse of the old one, the cost of building it is so high it doesn't matter.
Both types of industry have barriers to success but only one has (significant) barriers to entry, and that is the only one where regulation is justified. If eBay cancels your account, there are other auction sites, (and it's relatively easy to create more), and if lots of people cancel their account then they would move to them as well, and the buyers would follow. You would suffer temporary loss of income, but it isn't comparable to having the electricity grid cut you off when there is no alternative grid and no-one is going to build one. The key word there is temporary. The damage a dominant player in a market with low barriers to entry can inflict before it undoes its own success is temporary, short-term. Regulation is forever. Once you let the government in it rarely leaves.
Sorry, Mark, this is no joke. Amazon are really trying to pull this one off.
I published a book with BookSurge a few years ago, and they treated me like crap. Ridiculous pricing with Amazon, bizarre terms, etc.
I've loved Amazon in the past but am going to move all my business to their competitors. Too bad, they were once a great company. But they need to realize that the content PROVIDERS need to make a living, or they'll have nothing to sell.
As Angela Hoy says of the Advantage programme, publishers (especially print-on-demand publishers) don't have 55% to give to Amazon. Let's take a smallish paperback book - demy 8vo 240pp. We're expecting to sell 500 copies at £10 each (all the market will bear) and the typesetting has cost us a modest £2 per page. We've paid a couple of picture fees of £100 each and we've agreed a royalty of 7.5% of the list price. The unit cost for printing and binding is £3.10. That means we need £5.21 just to cover our costs, and we haven't even paid for delivery to Amazon yet. Unfortunately, as we're giving Amazon 55%, our profit is £0.29. Actually, by the time we've paid for delivery to Amazon, we're in the red.
BookSurge have failed to compete on price, quality and customer service, so no-one in their right mind would wish to use them.
It looks like the only way to survive will be to link up with other online stores but, despite what some other posts have said, Amazon is so dominant that this will be very difficult.
It would be good to see a rather more robust response from Lightning Source.