Friday, August 22, 2008

Publishers Worry About Amazon

Mike Shatzkin and I were intereviewed for an article published by SNL/Kagan about's relationship with publishers in light of the Hachette UK situation, Booksurge and the Kindle.

Mike Shatzkin, founder and CEO of the publishing advisory firm The Idea Logical Co., said in a June 26 interview with SNL Kagan that Amazon is likely not getting those titles from publishers for under $9.99 and is probably taking a loss on those books. But Shatzkin added that situation could change if Amazon succeeds in establishing the Kindle as the dominant e-book platform. "If the Kindle reaches a critical mass, Amazon will have the ability to tell publishers that if they want their books available on the Kindle, they will have to sell them to Amazon for $6 or less," Shatzkin said. "That's going to be pretty rough." One reason it is so hard for publishers to meet Amazon's demand for increasingly lower prices, Cairns said, is because they must continue to offer their authors competitive advances and royalty packages to ensure they get the best titles. "Particularly for the brandname authors, publishers have to pay a very high price for that content," Cairns said. "It would be difficult for publishers to go back to their authors and say 'Give me a better price for your books.'" As a result, when Amazon asks for steeper discounts on titles, publishers are left trying to maintain their margins in other ways — such as by putting their marketing and distribution expenses. "And in this day and age, many of the larger publishers have already sweated out as much expense out of those cost areas as they possibly can, so there's not very much room left at all for them to do that," Cairns said. "It's very tight."

1 comment:

Anonymous said...

Publishers are missing the whole value of the Kindle. No overhead. No printing cost and no shipping. No printing of overages which have to be destroyed later because they didn't sell.

Kindle sales are practically free. It's pure profit for publishers and authors. The authors and publishers who get this are going to catch the wave to a whole new ocean of revenue.