Apr 03 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.
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 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?
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Stumble it!
I’m going to address your bulleted points first, because they purport to express facts about Booksurge that, based on my observation, have been greatly exaggerated.
Quality: We have been having books printed by Booksurge since their infancy as a company, and once they learned what they were doing their product has been of consistently excellent quality. When it wasn’t, it was promptly replaced. We have also heard it reported that at least one customer purchased one of our books on which the binding hadn’t been properly done, and a similar report from another publisher of our acquaintance. Nevertheless, overall, the quality of the books printed by Booksurge is equal to and in some instances better than that produced by LSI.
Price: Our per-copy prices on books we have listed with both Booksurge and LSI are within pennies of each other. I have also heard this from other people in the same situation. The fact is, the prices and information that have been made available in discussions of this issue are based on subsidy publishing NOT the program for actual publishers. Both the set-up fee and the price per copy are lower than those cited in the publisher-only program. So is the amount paid for printing and distribution compared to LSI.
The only modifications need on files are if the trim size used for another publisher isn’t available at Booksurge/CreateSpace, and for the cover flat. My partner has developed a template that makes it a matter of minutes to do the latter; she’s currently in the process of tweaking it. For 6 x 9 trim, I send the same book block to both printers.
Double Listing: Been there, done that, make more money shipping books to Amazon from Booksurge. That’s not to say there aren’t things about LSI I don’t prefer over Booksurge, but at the same time I’ve always gotten good service from the latter and problems that have arisen have been resolved promptly.
It’s unfortunate that Amazon seems to be plagued by a very real clumsiness when it comes to this sort of situation, because when you think of it all they’re really doing is taking POD to the next level–files are stored with the vendor and the books printed when purchased. LSI just announced a joint venture with On Demand, the people who brought you the Expresso, for what sounds basically like a file-sharing program. There’s nothing to prevent them from doing the same with any other printer, including Amazon.
Of course, then the question on our side arises: What’s it going to cost and who’s going to pay for it?
I must respectfully agree with Elizabeth. This whole matter blew up while I was out at a convention, and since I got home, I’ve been much more distressed by the hyperbole, misinformation, and hysteria being promulgated than by Amazon’s policy decision. I see almost no difference whatsoever between Ingram telling small publishers that they have to print with their wholly owned subsidiary, Lightning Source, if they want their books handled by Ingram, and Amazon saying they will not directly order single POD books from other POD printers. The “almost” is that Amazon is being far more fair than Ingram. There are other ways to get your books into Amazon if you don’t want to use their POD service. You’re still welcome to sell your book on Amazon. 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. There’s no room for negotiation: either you’re a big publisher, you print through Lightning Source, or you’re SOOL, as far as Ingram is concerned. That’s exactly how Lightning Source got to be the largest POD printer!
Amazon is not angling for any “monopoly.” No one is being “forced” to do anything (including sell on Amazon at all). Amazon does not say “everyone has to use BookSurge.” What Amazon says is that they want publishers either to keep them stocked with a few books, or to use their own “POD services.” These services also include the new program, CreateSpace, which does require its users to be savvy about book design and production. (There is even a statement to this effect on the CreateSpace platform.) I had already been thinking about CreateSpace because one of my ex’s just produced a music CD on that platform, and I trust her judgment. But until this Amazon policy change, I hadn’t taken a serious look.
What I’ve discovered is that the CreateSpace “Pro” plan is actually a slightly better financial deal for production costs, and a much better deal in terms of per-unit profit. I’ll pay just a little less than the lowest tier of rates that I’m charged by Lightning Source, including for short run orders for myself, and I’ll make two and half times more profit per book on Amazon sales because I only need to give Amazon the 40% retail discount for CreateSpace. I give Ingram 55% fully returnable, because I want stores to have that. About half my Lightning Source orders are orders from stores. But if I want to set that wholesale discount for stores, it has to apply to Amazon, too. I can’t set different discounts with Lightning Source. To do that, I have to use more than one service.
In the final analysis, I’ll make more money by producing my Amazon editions on CreateSpace and my store copies with Lightning Source! I’m giving CreateSpace a trial run right now, and I’ll make a final decision after I examine the proof. I had to redo the cover file because apparently, CreateSpace uses a heavier-weight cream paper stock, so the spine width was different, and that was a bit of a pain. But I only have to do that once, and with future books, I’ll know to adjust the cover templates right out of the gate, just as I’ll be formatting Kindle editions and Search Inside the Book files all at the same time. I used the same bookblock, no changes needed. Yes, the selection of trim sizes is more limited–but why use an odd trim size, anyway? That just complicates everything from shelving the books in stores, to packing them for shipment. I can use CreateSpace to produce the audiobooks I’m developing, as well.
I also agree with Elizabeth that file-sharing directly with Lightning Source seems to be an ideal solution for Amazon. But given the relative flexibility of the two companies that I noted in my first paragraph, which one of them do you think most likely rejected that idea?
Lynn, I find it a bit confusing that in your second paragraph, you first say, “As an aside, I have to say I find this shipping-everything-in-one box justification strange.” and then go on, “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.” Isn’t that precisely Amazon’s point? By the way, if you ordered one book and four toys, I’m confident that each thing you ordered actually came from a different retailer/manufacturer who sells through Amazon.com. I’ve ordered lots of non-book items from Amazon and they come from all over the place.
I don’t think Amazon is evil just because they’re large. Change happens, and I think the best use of my time and energy is to figure out how I can benefit from the change, and then do that. I’ve been working with Amazon for a long time, and I appreciate them as both a customer and a publisher. It’s a partnership, as long as I treat it like one.
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.
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.
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.
Lynn wrote:
“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.”
Understandable–part of the clouds of smoke that have been generated by the “boycott/sue/fight Amazon” arguments include the sweeping claim, “everyone is being forced to print with BookSurge.” But if you read Jeff Bezos’ letter (located at http://www.amazon.com/gp/feature.html/?docId=1000213141 ), he never mentions BookSurge. He says, “Amazon’s POD service.” CreateSpace is Amazon’s newest POD service, as its information pages make explicitly clear. I’m sure all the CreateSpace books are printed on the same equipment as Booksurge’s anyway.
On the CreateSpace Pro information page, http://www.createspace.com/Products/BooksPrices.jsp, it states that the $50 fee is “per book” [i.e., per title]. So, it’s basically the set-up fee for the lower printing rate. Basic CreateSpace, as others have mentioned, is essentially like Lulu.com’s system: no set-up fee but the costs are covered by charging a higher rate per book to the publisher. If you sell any number of copies at all, you’ll recoup the $50 investment very fast, not only in the per-unit printing cost but in the higher commission from Amazon. (That’s probably why the $50 is non-refundable.) The $5 annual fee compares favorably with LSI’s annual “catalog fee” of $12 per title.
I’m sending RFQ’s to a number of digital printers to see how they compare. I just got the quote from Fidlar-Doubleday and I’m startled at how high it is, given how warmly I have seen this company recommended by the “experts.” I think I’ll give them a call and see if I inadvertently specified a more costly paper weight or something.
My CreateSpace proof copy is on the way, so we’ll see how that comes out.