The leading American professional associations for authors, publishers, and booksellers write to the House subcommittee about Amazon’s ‘scale of operation’ and ‘share of the market.’

By Porter Anderson, Editor-in-Chief – Publishing Perspective

‘Extraordinary Leverage’

In a letter provided to Publishing Perspectives this morning (August 17), three leading American publishing industry professional organizations tell the House of Representatives’ Antitrust Subcommittee that “a few tech platforms in the digital marketplace” wield “extraordinary leverage over their competitors, suppliers, customers, the government, and the public.

“Regrettably,” they write, “as the subcommittee’s hearings have laid bare, the competitive framework of the publishing industry has been fundamentally altered in recent years—and remains at serious risk of further diminishment—because of the concentrated power and influence of one company in particular: Amazon.”

The letter is written to Rep. David Cicilline, Democrat of Rhode Island, who chairs the subcommittee, which is housed under the House Judiciary Committee.

The hearings referenced in the letter brought Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg, and Google’s Sundar Pichai into the line of fire. And as Joe Nocera wrote in his commentary for Bloomberg on the hearings, “Preventing abusive monopoly practices by today’s dominant technology companies has proved to be difficult in part because antitrust law never anticipated the business models that have made Google, Facebook and others so powerful.” And Amazon, which of course famously based some of its retail development originally in book sales, has been a target for years of many in publishing.

“Together,” the letter dated today reads, “our organizations—the Association of American Publishers, the Authors Guild, and the American Booksellers Association—represent thousands of authors, publishers, and booksellers in the United States who serve the democratic exchange of ideas by creating, publishing, and selling books. Our members rely upon a level playing field in the marketplace of ideas to reach, inform, and transact with customers for the delivery of books, whether in physical or digital form.”

Signed by the publishers’ president and CEO Maria Pallante, by the authors’ executive director Mary E. Rasenberger, and by the booksellers’ Allison K. Hill, the letter, in four pages, brings into coherent focus the peculiar the position of Amazon in the book business.

The Seattle-based giant sells more books than any other single retail outlet in history. In December, analyst Benedict Evans saw Amazon controlling some 35 percent of US e-commerce. But in adding in the fact that the company competes with physical retailers, not just with online rivals, he wrote, “Amazon’s real market share of its real target market is closer to 6 percent.”

In print books, however, Amazon has a generally recognized 50 percent or more of the American market “and at least three-quarters of publishers’ ebook sales,” Evans wrote.

In ebooks, it sells “at least three-quarters of publishers’ ebooks” and “also has its own ebook publishing business, for which it has never disclosed any data.”

Originally largely welcomed to the marketplace by many in publishing, the company has become, predictably, the target of many objections because its market prominence is unquestionable and its business tactics which, the three organizations today say, amount to “engaging in systematic below-cost pricing of books to squash competition in the bookselling industry as a whole.”

Indeed, the Association of American Publishers last summer, in June 2019, filed a statement with the Federal Trade Commission, urging examination of the platforms’ activities, with Amazon as the main target of the complaint.

This is how the letter lays this out:

“Amazon’s scale of operation and share of the market for book distribution has reached the point that no publisher can afford to be absent from its online store.

“A year ago, The New York Times reported that Amazon controlled 50 percent of all book distribution, but for some industry suppliers, the actual figure may be much higher, with Amazon accounting for more than 70 or 80 percent of sales. Whether it is the negative impact on booksellers of Amazon forcing publishers to predominantly use its platform, the hostile environment for booksellers on Amazon who see no choice but to sell there, or Amazon’s predatory pricing, the point is that Amazon’s concomitant market dominance allows it to engage in systematic below-cost pricing of books to squash competition in the bookselling industry as a whole.

“Remarkably, what this means is that even booksellers that avoid selling on Amazon cannot avoid suffering the consequences of Amazon’s market dominance.

“The ongoing COVID-19 crisis is exacerbating the problem: it continues to threaten the financial well-being of authors, publishers, and booksellers, some of whom will not survive the year.

“Amazon, by contrast, with its ever-extensive operation and data network, has grown only more dominant, enjoying its largest-ever quarterly profits during April, May and June.”

The organizations go on to criticize “the astonishing level of data that it collects across its entire platform,” writing. “The result is that Amazon no longer competes on a level playing field when it comes to book distribution, but, rather, owns and manipulates the playing field, leveraging practices from across its platform that appear to be well outside of fair and transparent competition.”

And in setting up a series of four recommendations to the subcommittee, the groups write, “We believe that Amazon acts anti-competitively in multiple ways, dictating the economic terms of its relationships with suppliers so that publishers, their authors, and the booksellers who sell on Amazon pay more each year for Amazon’s distribution and advertising services but receive less each year in return.

“Amazon employs non-transparent data algorithms and recommendation engines to steer consumers toward Amazon’s own products, or even toward infringing products without disclosing to consumers that it is doing so. It has required suppliers to agree to most-favored-nation provisions (MFNs) that stifle the emergence and growth of competitive alternatives in the book distribution marketplace. And it manipulates suppliers and rivals by tying the purchase of distribution services to the purchase of its advertising services.”

Four ‘Concerns and Recommendations’ for the Subcommittee

In some ways echoing the sorts of constraints that the European Union and its member states have worked to place on Amazon and other tech-platform corporations, the three organizations today list these four recommendations. None of them is new. But the coordination of them into this statement meant to access a rational legislative investigatory program—rather than the sort of street-barricade inflammatory clamor sometimes heard in the past from various sectors of the publishing industry—arrives with welcome clarity and logic.

• Prohibit Amazon from leveraging data from the operation of its online platform to compete with and disadvantage the suppliers doing business there
• Prohibit Amazon from tying distribution services to the purchase of advertising services
• Prohibit Amazon from imposing Most Favored Nation and other parity provisions
• Prohibit Amazon from using loss-leader pricing to harm competition

Elaboration of these points is available in the full copy of the four-page letter, which has, within the hour of this publication, been posted by the Association of American Publishers here. We expect it soon to be available on the sites of the Authors Guild and American Booksellers Association, as well.

In the letter’s concluding lines, the organizations write, “We note that the American book publishing industry is and always has been uniquely intertwined with our democracy. Many authors, publishers, and booksellers along the way have contributed to the marketplace of ideas, and we hope that many more will emerge and thrive to the benefit of the public.

“This will not happen, however, unless government officials step in decisively to exercise appropriate governance of Amazon.”

AMG NOTE: I want to thank Rich Allen for submitting the information below to us to help YOU increase your book sales and marketing opportunities. While Rich applied this for the anthologies that DEAR Texas/Indie produced, this will work for any anthology you are listed in. A great way to increase your exposure and wealth of work.

I have been lucky enough to be included in two anthologies, Short Stories by Indie Authors: Volume 1, and Short Stories by Texas Authors: Volume 5, published by DEAR Indie, Inc., and benefitting its literacy programs. (http://DEARIndie.org).

I also have published two novels, Drafted and Identity Check, by Rich Allan on Amazon.

I was looking at my author page on Amazon Author Central, and it occurred to me I should be linked to the DEAR Indie books as well, cross-promoting all of my books to potentially different audiences.

Here’s how I did it:

First, if you don’t have an author page on Amazon, set one up.

If you do have an established author page, click on the Books tab. It will ask you if you want to add a new book. Click yes and then in the Search field, enter the book title, ISBN, or author name and click Go. Once you've found the missing book, click This is my book below that book. If the Amazon catalog lists your name as the author, you're all done. If you contributed to an Anthology and would like to claim the book to your Bibliography, send Amazon verification that you have contributed to the book, such as a link to your publisher's website or a table of contents that clearly lists your name.

I verified by clicking contact us at the bottom of the page, and then selected the following options:

1. What Can We Help You With?
a. My books
b. Add a book
c. I’m a different type of contributor
d. I wrote a chapter, story, or an article in a collection of works

2. How Would You Like to Contact Us?
a. Phone (must be a US number)

3. Talk with Author Central Customer Service
a. Enter your phone number, and they will call you back immediately or in five minutes (your choice)

I told him the name of my story in the anthology, my author name, and page numbers. The representative confirmed my info while I was on the phone, and in 24 hours, the books had been added to my page.

If all the authors published in all of the DEAR Indie anthologies would do this, we could potentially increase our sales or find new readers/fans.

Here is my link as an example: https://authorcentral.amazon.com/gp/books

Published Originally in Publishers Weekly, this is a follow up with the Authors Guild.

In order to deal with congestion issues at its warehouses, Amazon has been cutting book orders to publishers over the last several weeks. It isn't clear how widespread the reduction in orders is, but several independent publishers contacted by PW reported cuts in their weekly orders since late October. One publisher reported that an order placed last week was about 75% lower than an order placed last year at this time. "It's a nightmare," the head of one independent publisher said.

Problems with controlling inventory heading to its warehouses is not a new issue for the giant e-tailer. In the summer of 2018, ahead of Amazon's annual Prime Day promotion, several publishers and distributors reported long delays in picking up orders because of capacity issues at Amazon's distribution centers. It appears that rather than ordering titles it won't be able to get into its warehouses, Amazon has chosen to cut orders, several companies told PW.

While not directly addressing the question of a reduction in book orders, a representative from Amazon said that the company's teams and systems are always evaluating what they expect its customers want to buy and place orders to its vendors to ensure that it has enough stock in inventory to meet its customers' needs.

With the holiday shopping season here, the reduction in orders comes at a particularly bad time. "We are missing our October numbers and November is slow out of the gate," the CEO of an indie house said about the impact on sales due to the cut in orders from Amazon. He added: "It’s hard to see how we can catch up in the next six weeks."

The head of yet another company said if Amazon orders don't rise to what has been typical ordering patterns in past years within two weeks, "we [could] lose the entire holiday season." He added that if problems with Amazon persist and orders continue to be low, it is possible that some online book sales could move to BN.com and other retailers such as Walmart, which has invested heavily in its online operations. If Amazon starts running out of stock, he added, "maybe they'll lose some market share to their competitors."

AMG Note:
How does this effect You?

In the short term, if you are with IngramSpark, Amazon publishing or a small press, your orders are delayed before sending them out. I have seen a good one-week delay over the past month. I expect it to continue to be delayed even further as we move further into the holiday season.

More reason to have your books on hand and selling through IndieLector.Store so that you can ship the orders our faster to those that want your books. In addition, YOU WILL MAKE MORE depending on the option you have chosen.

This is your money, your sales. If Amazon is going to start losing book sales to the competitors, it may as well be given to YOU!

The issues with Amazon’s new payment structure for self-published authors

On July 1, 2015, Amazon.com changed how royalties for self-published Kindle books are structured. Rather than paying authors when a book is downloaded, it will pay for the number of digital pages that are turned (so to speak). Thus, if a book is downloaded but goes unread, the author gets nothing. If the buyer only reads the first 100 pages and puts it away, the author gets paid for 100 pages, even though the book might be 300 pages in length. Authors don’t get paid extra if someone re-reads a book.

Put another way, Amazon will pay authors based on their share of total page views of books in the Kindle Unlimited and Kindle Owners’ Lending Library. KDP Select All-Star bonuses will also be affected. This new plan affects only those authors who self-published their books on Amazon’s Kindle Direct Publishing platform.

Amazon says the scheme is based on feedback from self-published authors, who asked the company to “better align payout with the length of books and how much customers read.” Apparently authors are happy because the opportunity exists to get paid more through this royalty structure than the traditional one; however, there are a number of issues.

First, it’s just creepy. Amazon has bestowed itself the “right” to track what individuals read. Amazon already knows what you read because it tracks what you have downloaded, but now it will know which pages of that Kindle book you read. It follows therefore, that Amazon will know what content appeals most to readers; it will not be enough to know that 50 Shades of Grey was a popular book, but it will know which particular scenes held the most attraction. How long did you spend on a particular page? On what page did you finally stop reading? In what chapter do most readers put down the book, never to pick it up again? The danger of turning printed pages into electronic bits and bytes that can be stored in a database, searched, and tabulated, is that we lose control of what happens to that knowledge. Obviously, Amazon will use it to better target advertising and suggested reads to customers, but by coming up with an algorithm based on most popular content, plot lines, character traits, locations and more, can computer-generated novels be far away?

Right now, not all self-published authors are affected. But once this technology is perfected, how long will it be before Amazon and other companies implement it for all eBooks? Traditional authors and publishers must be shaking in their boots.

This payments structure has the potential to change book content. The longer the book, the more an author gets paid; to own a greater chunk of the total page view pool, authors will either need to write longer books or more books. (FYI: Amazon has fixed it so that authors cannot get away with using a bigger font to achieve a longer book length, but they will include in the page count, pages that contain pictures, charts and diagrams.) Assuming that, in the future, authors get feedback on what content appeals most, will authors write what is popular or write for artistry? As David Sanderson wrote in The Times of London, the ideal book “will now be a 700-pager with a cliffhanger every few pages and a couple of pictures in each chapter.”

Then there’s the issue of fairness. Amazon is paid for each eBook in full regardless of whether or not the book is read. If they believe this to be a better model, then Amazon’s compensation should also be calculated per page read, no? Amazon is taking care of itself at the expense of the very people responsible for its revenue—authors—and at the expense of their customers’ privacy as well.

If you want to learn more about the new royalties structure for Kindle Unlimited and Kindle Owners’ Lending Library, refer to this page on the Amazon.com website.

How I Got My Book Listed Before the Amazon Resellers

Grace Allison, author (member of TxAuthors) of Do You Have a Dream and Einstein’s Compass, read the recent article by Amy Collins about the issues authors are experiencing with the Amazon ADD TO CART button and what to do about it. Grace generously offered to share her solution to the issue, one that put her book on the ADD TO CART button and ensured she received her royalties.

Grace’s Solution: Contact the Resellers

First she went to her Amazon page for Do You Have a Dream Workbook: 5 Keys to Realize Your Dream. She took note of the book resellers who had her paperback edition for sale. Grace then contacted each reseller to let them know that they were selling her book for a lower price than she was able to sell it for, and asked them to pay her a royalty.

Then she waited.

Unsure what to expect, Grace was pleasantly surprised to receive the following replies (names of resellers are deleted for privacy):

You have received a message from the Amazon Seller – xxxxx

Hello,
We received a message indicating that we were listing the products of your brand in our inventory and we sincerely apologize for this matter. Our intention was not to infringe your rights.

We have just deleted the concerned listings from our inventory and you can be assured that we won’t list it anymore.

In case you see reminding articles, please contact us and we will remove it immediately. Thank you for your kind understanding and cooperation regarding this matter. Best regards,

Reseller A

You have received a message from the Amazon Seller – yyyyyyy

Dear Ms. Grace
Thank you for the below email regarding the book ISBN: 0998830801. We want to apologize; it is not our intent to infringe on publisher/authors rights. We have researched this matter and, although the title was included as inventory of a trusted and reliable supplier; we would like to reassure you that we take such matters very seriously and would never list such items intentionally.

We have taken the following steps to correct this infringement:

We have permanently removed this title from our listings and quarantined it from being re-listed.

We have sequestered all copies of this title and will return to the supplier.

We have forwarded details of this matter onto our supplier so they can also take appropriate action.

If you have other listings that you would like us to remove please provide us with a complete list of ISBN’s or the prefix (1st four digits of the ISBN – identifying the publisher) and we will be happy to remove those from our listings as well.

For any questions about your royalties, you should reach out to your publisher. Please feel free to contact us if you have any questions or concerns.

Sincerely
Reseller B

Today, if you go to Grace’s book sales page on Amazon, you will find that the resellers have adjusted their pricing so that, at $6.39, Grace’s is now the lowest price available and is listed by the ADD TO CART button. By taking these steps, Grace has also ensured that she will be paid her royalty.

________________________________________ How to contact the resellers:

1. Go to your Amazon page where your book is for sale. Grace’s book sales page, as an example, is https://amzn.to/2JZpvBl

2. You will notice in blue writing under the “Paperback” price for your book, “# New from $6.39.”

3. Click on the blue copy. On the next page, you will find the list of resellers.

4. Click on a reseller link (listed under the Seller Information column), and you will find a button to contact the reseller.

The Problem with the Amazon ADD TO CART Button and What You Can Do

Thank you to guest blogger Amy Collins for this week’s post on the issues with the Amazon ADD TO CART button and what authors can do. Amy is the owner of New Shelves Books, one of the fastest-growing book distribution, sales and marketing companies in North America.

Let’s see…. What shall we talk about this month? What is on author’s minds more than anything else right now? Well, if you are reading my email, here is an item that is worrying authors at the moment. For this month’s DO THIS NOT THAT we will focus on the Amazon ADD TO CART button and what we can do.

What Is Bothering Some Folks About the Amazon ADD TO CART Button

More and more authors are seeing that the ADD TO CART button does not place an order with the author/publisher like it used to. This is not a new phenomenon, but for the last year, Amazon has been awarding the button to the lowest-priced seller and that is often not the author. This has, in some cases, resulted in a dramatic drop in their Amazon sales.

How Is This a Thing?

Amazon’s computer brain reviews books every day and takes retail price and shipping speed into account when awarding the precious BUY button. The person who can make an Amazon customer the most happy AND make Amazon the most money will win the button. So retailers, knowing this, take a look at new books released each week and look them up on INGRAM to see if they can order at a 20% discount or more. If an author has put their book up on IngramSpark or KDP Expanded Distribution, then their book will be available to ANY retailer at a 20-40% discount.

All the retailer has to do is list the book, drop the price a bit and when an order comes in, grab the book from Ingram. Please understand that most of the retailers listing a book 20 cents below the retail price do not actually have the book.

How Does This Affect Authors?

If a book is purchased on Amazon directly from the publisher/author, then the publisher/author will make almost TWICE as much profit as if they sell the book to a retailer through Ingram.

KDP gives an author 60% of the retail price of the book when selling to an Amazon customer, but only can give the author 45% of the retail price of the book when the order and printing goes to IngramSpark. When you factor in the printing costs, that will often mean the difference between $4 profit and $2 profit.

In addition, the book’s front and center positioning looks weak when going through a third party retailer because the book shown has a button that may not offer overnight or PRIME option.

Another problem with this scenario for authors? Once these guys get an order, they will need to order, pay and have the book printed and shipped to an Amazon customer. This will often cause grumpy readers.

What You Should Do

If this is happening to you, I recommend that you shut OFF Expanded Distribution. If you want to open YOUR OWN IngramSpark account (and I highly recommend that you do), then you can set the discount you want for other retailers. YOU are in charge of what competing retailers get from Ingram (and that feels good….)

You can set the discount to 30% which will mean that retailers will not get a 20% discount when buying your book and they will not want to list your book.

Amazon will still have your book available from KDP and you will make more money on each sale.

Things To Keep In Mind

If you want bookstores to stock and sell your books, then you will have very little choice but to offer the full 55% discount to Ingram Wholesaler so that bookstores can get the 40% discount that they require. This means that ALL retailers can get that discount and you will be right back where you started.

For a lot of authors, the loss of profits from Amazon is NOT worth the bookstore sales that come from a full discount relationship with IngramSpark. For some, bookstores and other retailers ARE worth the Amazon button loss…. It is a decision for us each to make individually.

Second item to remember? This only works with paperback. Remember that KDP does not offer hardcover books at the moment.

Another thing to keep in mind? It is NOT Ingram or IngramSpark’s fault that Amazon awards the button to the best priced book option. And it is not their fault that retailers will use that fact to gain more sales. Heck it is not even the retailers/third party button stealer’s fault that this system works in their favor. They are just trying to sell books.

Remember that YOU STILL GET PAID for every book that Amazon sells no matter WHO owns your button. The stores that get the order that you feel belongs to you will STILL have to order the books from Ingram and you will still get paid. Just not as much as if you had gotten the order from KDP directly.

(Updated April 2019 to reflect the merger of CreateSpace and Kindle Direct Publishing.)