Who Says Amazon Is Bad For Publishers?

Felix Salmon wishes to call into question this "article of faith". In a blog post this past weekend, he poses the question

what’s the argument which says that Amazon has proved itself to be a mortal, existential threat to the publishing industry?

The picture he paints is one of Amazon as an agent of change, making it vastly easier for people to buy and read books. This ought to be good for publishers who, after all, should be wanting people to buy and read more books.

The big losers in the past couple decades have been bookstores. First the small stores got crushed by big chains and then those chains lost out to Amazon. So if Amazon is carrying so much of the book-selling ball, why is everyone mad at Amazon?

Salmon theorizes that the two biggest factors are Amazon's price aggressiveness and publishers' inherently conservative nature. Both are true, but I think he's missing several key pieces of his story.

For one thing, he notes that Amazon was taking losses on its aggressive price discounting of e-books, but fails to note that publishers only made profit on the retail prices for e-books, not the wholesale. You can argue about whether an e-book should cost sufficiently less to make than a physical book that a discounted price is in order, but it's still true that when Amazon cut its price the publishers took a hit that was out of their control.

Salmon further asserts that, "It’s not like Amazon has disintermediated publishers" - but in fact that's exactly what is happening. There's a massive explosion of self-publishing in the e-book world, driven in large part by programs such as Amazon's CreateSpace. These programs completely take publishers out of the loop, allowing any author to reach their audience not exactly directly but through the Amazon infrastructure, including the site and Kindle devices. If that's not disintermediation, I don't know what is.

Salmon may be looking at the wrong thing, perhaps comparing the dollars. Certainly big-name professional publishing is likely to be much more profitable than self-publishing for the vast majority of authors. But in terms of number of authors published and in terms of number of books produced, self-published e-books are racing past their physical counterparts.

Money aside, I think the biggest threat that Amazon poses to publishers is loss of control. As publishers lose control over pricing, over the selection of the next big thing, over schedules and distribution, etc. they find their existence threatened. If they're not in control of these things, what's the point of having a publisher anyway?

Well, we know that self-publishing is really hard work but that's not something immediately obvious and of course Amazon and others try to make it seem easy. If you can't see any value in publishing through a traditional publisher then you almost certainly can't see any reason to give that publisher a cut of your earnings. And if that idea gets firmly enough entrenched, those publishers are gone. So, yeah, Amazon's bad for publishers (too).