Shatzkin recapitulates the recent history between Amazon, the Big Six publishers, and the bookstore chains. Amazon is in the process of inspiring much fear and loathing in the publishing industry by luring away the big celebrity writers whose megahits subsidize less popular works. Meanwhile, it continues to be able to undercut physical bookstores like Barnes & Noble on price, gradually stealing away their business.

B&N’s decision seems to me like the right move for them. Most very regular bookstore customers aren’t really surprised if any particular store doesn’t have any particular book. Indeed, the impossibility of stocking everything anybody might ask for in a store is part of the reason that online bookselling is such a useful service. In this day and age, most people who want a particular book don’t go to a bookstore to buy it; they just order it online. They go to bookstores to browse and shop and choose from what is within the store. So, yes, there may be some disappointed customers if B&N doesn’t have a high-profile Amazon title, but I don’t think that disappointment will be widespread.

On the other hand, authors and agents who might have considered an Amazon publishing deal will have to think twice if they know very few bookstores will carry it. Amazon can do some remarkable things to sell books to their mammoth online customer base and that won’t change. But there is both a practical and a vanity aspect to getting store display that will still be seen as indispensible by many authors and agents who otherwise might have taken the leap to sign with the newest big checkbook in town.

He draws a parallel to Random House’s original decision not to join the agency pricing cartel—puzzling industry observers at the time. Shatzkin said then, as now, that Random House was essentially taking advantage of Amazon’s largesse to turn a short-term profit, while its competitors raised their prices and cut their royalties.

Whether the move was sensible or not, I expect Amazon will probably not be hurt too badly in the long term—especially if it decides to open a chain of boutique stores where it can hand-sell the books itself. Will more authors think twice about signing with Amazon, or will they figure that the giant e-tailer’s marketing clout will make up for the lack of physical store placement? We’ll just have to wait and see.

Wright compares Kindle Select to Michael Roberts’s MP3.com independent music distribution site, which allowed independent musicians (such as Wright) to upload mp3 tracks to catch the attention of the Internet audience.

That was, without question, the most fun I’ve ever had online. MP3.com started providing tools for musicians, including the ability to upload mp3 tracks and convert them into a CD — so you could sell your CD alongside the tracks you were giving away from free. No one had ever thought of this before. It was nuts. And the best part of it was meeting other musicians.

MP3.com set up forums and the musicians would talk, trade recording tips, talk about what kind of marketing worked and what didn’t, advertise shows, and organize meet-ups in the real world. The best part was it was completely cross-genre — I was a punk/noise musician but I was making friends with country musicians, house musicians, funk musicians, metal, hip-hop, gangsta rap… you name it. And I got exposed to music I never would have considered listening to before hand. I still carry most of those MP3′s around in my collection.

However, after the site went public, MP3.com instituted a “Payback for Playback” program, which split a pool of money among the artists whose tracks were most played—a very similar idea to the Kindle Select lending library. This program served as an apple of discord, Wright writes, effectively ending the camaraderie and leading a number of artists to try to game the system. 

Wright sees history repeating itself with the Kindle Select program, and points out that Amazon already has problems with people trying to game the self-publishing system with plagiarized and duplicate content. He wonders how long it will be before the same thing happens with Kindle Select.

He also points out that giving Amazon exclusivity over works harms the publishing ecosystem as a whole. Even if Amazon is accounting for the lion’s share of income right now, keeping content off of its competitors handicaps the competitors’ ability to compete with Amazon.

In the end, whether authors go with Select or not is up to them, but it’s good to hear from all points of view on the issue. It remains to be seen whether Select is vulnerable to gaming or not. As Wright acknowledges in a postscript, the limitation to one book checkout per month for $80/yr Kindle Prime subscribers does restrict how badly the system can be abused, but he is not sure that necessarily removes the vulnerability.

According to their sources, Amazon is going to roll out a retail store in Seattle within the next few months to test the waters and see if a chain of such stores could be profitable. “They intend on going with the small boutique route with the main emphasis on books from their growing line of Amazon Exclusives and selling their e-readers and tablets,” Good E-Reader’s Michael Kozlowski writes.

As a small boutique, the store will stock mainly high-margin or high-end items—such as Kindle readers and accessories. It will also carry Amazon’s own published books, which will in part counteract the major chains’ decision not to carry them.

The store is expected to open before the end of the year to capitalize on the holiday season.

Interesting news, if true. But one swallow does not make a summer, and one store does not make a chain. As a commenter on a previous article noted, Amazon does a lot of experimentation. (I recall that its delivery drop lockers first rolled out in Seattle too.) But not everything that it tests necessarily goes on to see the light of day.

Wilkert suggests that EPUB could be a solution to this if Amazon could be convinced to adopt it and drop DRM. (Well, of course it could. Heck, pretty much any e-book format would work if Amazon dropped DRM, thanks to Calibre.) He reiterates the usual music-industry-based arguments for ditching DRM.

Several years ago Steve Jobs posted a letter to the music industry pleading for DRM to be abandoned. My favorite part of that letter is where Jobs asked why the music industry would allow DRM to go away. The answer: "DRMs haven’t worked, and may never work, to halt music piracy." In fact, a study last year by Rice University and Duke University contends that removing DRM can actually decrease piracy.

Publishing-industry observers and consultants have certainly ramped up the anti-DRM rhetoric in the last few weeks, haven’t they? I wonder if there’s some particular reason for that. The Kindle Fire securing Amazon’s lead in the e-book market bringing on a fresh wave of lock-in panic?

I also wonder whether anything will come of it. Are publishers taking heed and even now holding secret discussions on whether to follow the music industry’s lead? I suppose we can hope, at least.

Amazon’s Kindle format 8 (KF8) relies on a completely separate process to create a fixed layout e-book than Apple’s version of fixed layout for titles that are design-led e-books. Both are based on XHTML, but there are important differences in how pages are laid out. With KF8, each page has to be specified as either portrait or landscape by the creator of the book, and one double page spread that you view in a fixed layout e-book on the Kindle Fire is one XHTML file. In iBooks fixed layout e-books, each of the two pages in a double page spread is a separate XHTML file, and individual pages can be rendered in both orientations. There are also various other notable technical limitations in the current version of KF8 for the Fire. You cannot currently play audio or video with KF8 e-books on the Kindle Fire, although you can do this on Kindle e-books within Kindle apps on the iPad and there is no support for read-along e-books. Finally, there is no pinch and zoom on a page. Instead, KF8 has a feature called ‘region magnification’ which allows the text to pop up when tapped to aid reading. There are advantages and disadvantages to each approach, but the feature is a further move away from a single standard.

Kobo follows similar specs to Apple, but doesn’t support embedded video. Barnes & Noble has developed its own separate tools for creating graphical content for Nooks so the actual format is “a bit of an enigma.”

These different formats pose a problem for publishers who want to create graphical and multimedia works such as picture books or children’s books—they could end up having to create the same book three or four different ways for three or four different platforms. That’s a lot of extra work.

I would add that even ordinary text e-books for which formats have been more or less standardized have their balkanization problems. The different DRM used by each provider, for one thing, and Amazon’s Mobi versus Apple’s and B&N’s EPUB formats for another. And the vested interest these e-book stores have in locking customers into their store only isn’t helping.

The Globe and Mail article characterizes this as a “setback” for Amazon, and quotes the Wall Street Journal that this is “sending a signal” to authors, agents, and publishers who might have been considering signing such agreements. It refers to authors “whose upcoming work will become inaccessible to the majority of North American book buyers.”

Say what? “Inaccessible”? “Majority”? I don’t think that those words mean what you think they mean. Going by Foner Books’s sales statistics, Amazon did more book, music, and DVD business in 2011 than Barnes & Noble, the late Borders, and BN.com put together. Seems like the “majority” of North American book buyers shop Amazon.

Anybody who has “access” to the Internet has access to Amazon. (Or, for that matter, BN.com, where Barnes & Noble will carry Amazon’s books.) And those who don’t should still be able to check the books out from the local library, which might lead to liking them enough to order them.

(Granted, there are some people who don’t—every so often in my day job I run across the proverbial little old man or lady who doesn’t have a computer or the Internet and so can’t download the manuals for our TVs from our website. But they’re considerably in the minority by now—and even if they don’t have Internet at home, they could place orders from a library or Internet café if they wanted it badly enough.)

Of course, there is something to be said for being able to run across the books while physically browsing a store. Losing that will be a disadvantage for Amazon, which might be part of why it’s rumored to be considering its own chain of brick and mortar stores. But on the other hand, the high-profile authors Amazon is courting will have a high level of demand independent of accidental browsing discoveries, which could help render that loss irrelevant.

(Found via The Digital Reader.)

There’s a Books a Million store in Joplin, Missouri, and I stopped by it a few months ago. I wasn’t particularly impressed. Unlike Barnes & Noble, the store does not offer free wifi for its customers—you have to pay for it. (How last-decade.)

Meanwhile, Jason Calacanis reports hearing from “a very credible” (but anonymous) source that Amazon is going to launch its own brick and mortar retail stores. While the rumor has been around before, and on the face of it seems absolutely crazy, Jeff Bezos has done crazy things before and look at where he is today. And as the New York Times Bits blog points out, before 2001 the idea of Apple launching retail stores seemed far-fetched, but look at them now.

Jason throws out some ideas on what Amazon might do with the floor space—show you demonstration models then have you order the product from Amazon for shipping to your house, or perhaps provide a physical library for Amazon Prime subscribers in addition to the electronic ones. Whatever he does, it will probably have the same sort of unusual twist to it that has characterized a lot of Amazon’s new ventures.

The interesting thing to me is that, if this does happen, the big chain stores like Wal-Mart, Best Buy, and of course Barnes & Noble could find themselves hoist by their own petards. They have been campaigning to strip away Amazon’s tax-free advantage. Having physical property—their retail stores—in those states in addition to their on-line presence means chains like Best Buy or Barnes & Noble have to collect sales tax on physical items sold on-line. Amazon hasn’t had to do that until now except in states where it has distribution centers.

But if they succeed in making Amazon pay sales tax everywhere, suddenly the only reason for Amazon not to put physical stores everywhere vanishes—and so does the one big advantage that the brick and mortars have: instant gratification. I bought a Logitech K360 wireless keyboard at Best Buy today for $30, though I could have gotten it for $25 from Amazon. (Well, $24.99, so I would have had to add another item to qualify for free shipping.) But if I bought it from Amazon, I couldn’t use it right now.

If Amazon stocks even just its more popular items in physical inventory, and offers bennies to Prime subscribers and other Amazon regulars, it could start to draw more and more people away from those other stores for immediate purchases as well as the ones that can wait. And as a fringe benefit, it would provide a place for online-ordering customers to direct their packages to be sent to so they could pick them up instead of having to be home for delivery—as Wal-Mart and Best Buy already do. We already know Amazon has had package pickup on its mind, what with the locker kiosks it has been placing in convenience stores in various locations.

Oh, and it would also provide a place where people could go to buy those Amazon-published paper books in person—the ones that Barnes & Noble and Books a Million are declining to carry.

Of course, there’s still nothing to suggest that this is anything more than another unfounded anonymous rumor. But if it does come to pass, wow. Amazon could shake the brick and mortar landscape as thoroughly as it has shaken the e-commerce one.

(Found via GalleyCat.)

Billy Ray Cyrus, singer of a particularly overplayed country song and father of Miley “Hannah Montana” Cyrus, has landed a book deal with Amazon’s publishing arm for his memoirs, GalleyCat reports. Publication date is expected to be spring 2013 in both hardcover and e-book editions. The deal was brokered by Trident Media CEO Dan Strone, who also arranged the $800,000 deal for Penny Marshall’s memoirs.

As that anonymous publishing insider lamented a few weeks ago, Amazon is lining up some pretty big names for its publishing arm. What with bookstores bound and determined not to do Amazon any favors by carrying its books, it looks like an immovable object vs. irresistible force confrontation may come to pass within the next couple of years. I wonder who will blink first?

Mr. Lynn makes the case that Amazon’s dominance isn’t just a story of an industry disrupted by online commerce and digital upheaval, it’s about the abandoning of New Deal era protections of retailers in 1975 (promoted by backers as a means to fight inflation, says Mr. Lynn) and what he portrays as a shift in 1981 in the Justice Department’s interpretation of antitrust law based on “Chicago School” theories of efficiency and consumer welfare. The upshot appears to be that non-consumer markets (business-to-business markets and labor markets) are often insufficiently protected from monopolies.

Chicken growers are largely at the mercy of the poultry processors who buy their adult birds, who have a number of means to dictate the growers’ business practices. In Silicon Valley, Google and Apple had a private agreement not to poach each others’ employees. Even the 1,750 beer microbrewers in the US mostly sell through two distributors that control 90% of the market.

Meanwhile, Amazon has such tight control over the lion’s share of the book and e-book market that even the publishers who are the most vehemently outspoken against it will not go on record with their comments. It regularly throws its weight (and the weight of its $6 billion in capital) around, and publishers who do things it doesn’t like are prone to have their “buy” buttons removed for a while.

Amazon has such a big chunk of the market, the Authors Guild notes, that even the disappearance of Borders did not drive as much traffic to remaining brick-and-mortar bookstores as one might have expected:

To understand just how precarious things are, realize that last year’s Borders’ bankruptcy represented an enormous reduction in browsing space, shuttering 650 stores. (B&N has about 700 stores.) One benefit of the loss of Borders should have been a short-term lift to B&N’s 700 stores and the 1,500 or so remaining independent bookstores. B&N’s sales were indeed up in the nine weeks before Christmas, Ms. Bosman reports. How much? Borders’ collapse led to a bounce of just four percent, compared to the prior Christmas. That’s what’s passing for good news in brick-and-mortar bookselling at the moment.

The Authors Guild paints Barnes & Noble as the one bright spot in the market, which has managed to claw its way up to a 27% share of the e-book market over the last two years (roughly half Amazon’s current 60% share) and, the AG argues, largely out-engineered Amazon in developing usable e-reader and inexpensive tablet technology.

As a number of comments below the article point out, the Authors Guild is not exactly an unbiased source, and that does show through in the slant from which the article is written. (For example, a claim that “Amazon wanted to price every Macmillan e-book, and indeed every e-book of every publisher, at $9.99 or less” is demonstrably untrue.)

But still, Amazon’s market dominance ought to be a little worrying even to those who currently like the company. Competition keeps companies honest—if Amazon does manage to kill off all its competition, it doesn’t have to be so nice to consumers anymore.

(Found via eBookNewser.)

So, Carey said, if B&N customers want Amazon titles, they’ll just have to order them online at bn.com. Um, what?

Look, guys, if you’re going to take a principled stand, go all the way. Decline to carry the titles on your web store too. I’m sure there are plenty of books stocked in the web store that don’t end up in brick and mortar stores just for lack of space.

B&N is making a lot of noise, but then turning around and trying to have its cake and eat it too. I predict this principled stand will last only until Amazon comes out with a best-selling title that everyone wants to get their hands on. Then watch B&N turn around and carry Amazon titles after all, “bowing to overwhelming customer demand” or some such excuse.

In the first part, he talks about why he made the decision to go exclusive with Amazon. It boiled down to having greater comfort developing for Amazon’s platform, and liking the kind of control Amazon gave him over the presentation of his book that he didn’t feel he could get with Barnes & Noble. (And also, he never ended up selling that many copies of works he had offered through B&N anyway.)

Then he gets into discussing the Lending Library.

This is an interesting wrinkle here in this story. See, Amazon dedicates a set amount of money (right now it’s $700,000. It was $500,000. It fluctuates a bit) for it’s Amazon Kindle Owners’ Lending Library, and so, when readers “borrow” one of my books, it’s not like giving it away. I get a little portion of that money.

The interesting thing: apparently, the size of the portion one receives is unrelated to the price of the book borrowed. At least, so far as I can see. I have several short stories and an essay available for sale for 99 cents, and for which I receive 35 cents or so of every sale (as opposed to the $1.70 I would receive from a $2.99 sale, or the $3.50 I receive from a $4.99 sale). But whether someone “borrows” a 99-cent short story or a $4.99 novel (or even, I would assume, novels costing $7.99 or, egregiously, $9.99 or $12.99 or higher yet), the royalty is (or was, anyway) $1.70.

Entrekin notes that, of course, the amount will fluctuate over time. But it’s still a decent chunk of money, and it has important implications for pricing: if you’re going to get the same royalties every time your book gets checked out, why price higher? And it’s also a pretty good argument to go exclusive with Amazon, he points out—if Amazon wants to give you money for letting someone read your book without even having to pay for it, why not let them?

I would point out that nobody knows how much longer Amazon will be content to pay authors that kind of money for library checkouts—but on the other hand, as long as you don’t let yourself get too dependent on it, perhaps it is a good idea to grab the money while you can.

Croft urges that writers should know their audience, and write the sort of thing that audience wants to read. He says that writers should not set unrealistic goals, but rather set goals that they know they can attain so that they can put their efforts toward attaining them. He notes that writers have to do more than just write—they have to use whatever other skills they have in creating the book and getting the word out.

Use your other skills where you can, be it in graphic design or marketing. For me, marketing is not a problem as that’s my professional background. I promoted my books heavily using Twitter and Facebook, both of which are vital tools in the modern day. Free book giveaways are always a great way to attract new interest; one of my most successful avenues was to offer free copies of my book to a set number of new Twitter followers on a given day. Try this, and you’ll find that you get a surprising number of new Twitter followers very quickly.

He also advises asking your friends for help if they have useful skills, or even just as proofreaders. It’s also important to choose an outlet that will let you sell the most books (and, naturally, Amazon comes up here). Then you tell everyone about your book, because you are your own best (and often only) marketing tool.

Of course, self-publishing isn’t necessarily for everybody, and there’s no “magic formula” for success, but given how many of the successful ones have advice extremely similar to Croft’s, it seems like there might be something to these suggestions.

By the time VIP Deals ended its rebate on Amazon.com late last month, its leather case for the Kindle Fire was receiving the sort of acclaim once reserved for the likes of Kim Jong-il. Hundreds of reviewers proclaimed the case a marvel, a delight, exactly what they needed to achieve bliss. And definitely worth five stars.

Amazon has since pulled the reviews and all VIP Deals’s products. It told the New York Times that its guidelines specifically prohibit compensation for customer reviews.

As the Times points out, as popular as the Kindle is, there are enough cases on the market to make it hard for any particular one to stand out from the rest. But there are plenty of other products that also feature that kind of competition, and since a lot of customers make their decisions on the basis of user reviews there is growing incentive for merchants to cheat.

Researchers are working on ways to detect fake reviews, but for now the best philosophy might be caveat emptor—pay attention to the contents of reviews, not just the star ratings. A number of the reviewers of VIP Deals’s products did note the compensation in their reviews. (Amazon declined to comment why it nonetheless took a query from the New York Times to get them to act on the matter.)

Of course, this isn’t the first time fake reviews have come to light on Amazon. Earlier this month we posted about a book that had been salted with 250 fake reviews by its author, and I seem to recall seeing reports of similar “astroturfing” scandals in years gone by.

For all that the title and magazine cover are a bit (literally) inflammatory, the article is a reasonably balanced look at Kirshbaum’s career and the history of the controversy and animosity that has sprung up between Amazon and the publishing industry.

Kirshbaum’s connections with Amazon go all the way back to 1997, when he introduced Jeff Bezos to publishing-industry magnates at a party thrown by Rupert Murdoch. He had been in publishing since the early 1970s, and became chairman and CEO of Warner Books, where he spent three decades before retiring to become a literary agent. However, publishing was where his heart really was, and when Amazon offered him a position heading up its own internal publishing imprint, he jumped at the chance.

Needless to say, many of Kirshbaum’s former colleagues in the publishing industry have not been terribly enthusiastic to hear that he has joined the company whose pricing practices are in danger of putting their companies out of business. But the literary agents who have worked with him over the years are much happier about it:

As he began to work on Amazon’s behalf last summer, agents, at least, were excited, because getting deep-pocketed Amazon into the game of bidding for books could translate into larger advances. “I want to do business with Larry wherever he is,” says agent Scott Waxman, who sold Amazon the Bob Knight book. “Do I think this is something that would make the Big Six publishers uncomfortable? Yes, with a big capital Y.”

It was interesting to see the description of Amazon’s Kindle launch wherein Bezos sprung a big surprise on the publishers who had up until then been extremely cooperative in preparing e-book editions for Amazon to sell. Bezos’s promise that New York Times bestsellers would go for $9.99 or less did not endear him to those publishers, as this was the first they had heard about it.

Another point that caught my attention was that Kirshbaum was an early proponent of e-books, and convinced Time Warner to invest $10 million in publishing for the Rocketbook. (As an aside, I’d just like to mention how old it makes me feel to hear the Rocketbook referred to as an “early e-reading device.”) Of course, it took the Kindle to make e-reading really popular.

At any rate, Amazon clearly could not have picked a better executive to head up its publishing division. It remains to be seen how well its publishing efforts will go over when it tries to place its books in the bookstores that it is also trying to put out of business, but given where Bezos’s razor-sharp business acuity has led him so far, I’m not about to say he’ll fail just yet.

(Found via Galleycat.)

In particular, Amazon will not allow sites using the API to link to the book on any other on-line retailer except Amazon, but Goodreader provides links to titles on multiple retailers. Also, Amazon will not allow content from its API to be used in mobile sites or applications. Goodreads will switch to paying to license data from Ingram, and will also use information from the Library of Congress and other sources.

The change is causing concern amid a number of Goodreads users that data about some of their books might be lost in the shuffle, but Goodreads is hastening to reassure users that their data is “100% safe” and it is taking measures to safeguard any books that are in danger of losing their information.

The moral of the story is to be careful about relying too much on “free” services provided by a company out to make a profit. You never know when their needs will come into conflict with your own.