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Amazon: A New Kind of Publisher

While most of the attention and ire of the publishing industry seems to be trained on Google these days, the most clueful colleagues I speak with appear unanimous in the view that the biggest threat to their livelihoods is actually Amazon. I think they're right, as this recent announcement shows. It may just prove to be the publishing news of the decade.

To see why, consider first that the publishing industry — from agents and publishers to wholesalers and retailers — essentially exists to connect people who have interesting content to those who are willing to pay for it. In general the system works reasonably well, but in the age of the web all those layers look mighty inefficient and ripe for disintermediation. Furthermore, as Clay Shirky and Chris Anderson have pointed out, infinite online shelf space and smart computer algorithms are turning traditional publishing approaches on their heads: "filter then publish" has become "publish then filter".

This new "post-filter" paradigm (as Chris puts it) is potentially a much more efficient and effective way of carrying out the matchmaking role currently fulfilled by the publishing industry (among others). The snag is that to make it work you need a large set of data about individual and collective tastes (so that, based on analysis of collective behaviour, you can accurately predict which individuals will be interested in a particular item). Google achieved this in search by studying the link patterns of the web; Apple achieved it in music by getting everyone to load their CDs into iTunes, and buy new tracks from the iTunes Store.

For books, of course, Amazon is the owner of that precious data set. They know more than any other organisation about my reading habits — heck, they probably know more than I do about my reading habits. In contrast, Waterstones knows nothing at all about my preferences even though I must have bought at least as many books there over the years as I have at Amazon. The other players in the current publishing chain know even less.

Which puts them all in a frighteningly fragile position. So far Amazon have employed their user data mainly in improving search results and delivering personalized recommendations, all with a view simply to selling more stuff delivered through traditional channels. But in principle there's no reason why they shouldn't take a leaf out of Lulu's book by accepting content direct from authors, promoting it direct to users who are likely to have an interest, fulfilling any orders using print-on-demand, and sending a cut of the revenue back to the original authors. Fast, efficient — and not a traditional intermediary in sight.

Which brings us back to that announcement:

CreateSpace, part of the Amazon.com, Inc. group of companies (NASDAQ: AMZN), today announced the launch of a new online Books on Demand service. Also announced today, the company is no longer charging setup fees for books, audio CDs and DVDs. Authors, filmmakers and musicians can now offer their works to millions of customers on Amazon.com, CreateSpace.com and via their own free customizable eStore without any inventory, setup fees or minimum orders.

<snip!>

CreateSpace books sold on Amazon.com are printed on demand, display "in stock" availability on Amazon.com and can be shipped within 24 hours from when they are ordered. The books are automatically eligible for Search Inside!™, Amazon Prime™, Super Saver Shipping™ and other Amazon.com programs as well.

So there you have it: Amazon becomes the ultimate clearing house for books of all kinds (and much else besides), with none of the traditional middlemen getting a look in. Genius. If you're an agent, publisher, wholesaler or retailer of books and you haven't just soiled your undies then you don't understand what's going on.

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Comments

Timo - Many thanks for pointing this out. Most interesting...

It seems to me that the key to this success (other business issues notwithstanding) rests on the size and quality of the data set of intentions of the potential purchasers though. Now as Amazon, Google and Apple have demonstrated, with broad subject areas with a lot of activity, this works rather well. But as the size of the dataset for a particular area comes down - as the area becomes more niche - I think the signal to noise ratio becomes a real problem. I think this could be a real issue in the various niche areas that scholarly publishing encompasses.

And then there's the issue of the current post publication filters. Excluding 'the database of intentions' type filter that you have talked about here, the other post pub filters are rubbish - they are too easily gamed. Just take a look at the top reviewer for Amazon.com - Harriet Klausner and do the math. Afterwards one can reflect on whether she is a real person or not.

As another example, the voting type filter on DIGG also has some serious issues attached to it - I would say that it is totally flawed as it currently stands. I think Chris Anderson is right in principle - but the technology is nowhere near good enough yet.

Ultimately, the time to be really scared will be when someone solves the trust problem and the authority metrics that would really make such a publishing approach fly - niche or larger scale.

But isn't this where us old school publishers come in? Haven't we got some pretty good authority metrics lying around the place? And there's some really good work being done out there on new/enhanced trust and authority metrics in the scholarly area - using the database of intentions type datasets. But somehow (and are you alluding to this at the start of your post?) our fusty old industry doesn't seem to be that interested in chasing these new and exciting opportunities...

There is still the issue of why people will want to do this in the first place: they want to see their name in print. This does not mean that vanity publishing will alone suffice; rather I would suggest it implies that as soon as someone has some success through CreateSpace they will run off to find an agent and an established publisher. People ultimately want to be part of the publishing mainstream and will jump at the first chance, assuming their book is a success. In this scenario agents and publishers are likely to jump on board and we are back to the current position.

Secondly if the quality of the CreateSpace books is consistently low, as it is likely to be, both in terms of production and writing, then they will rapidly gain a reputation as not worth buying. So even if CreateSpace books pop in your recommended list then people might give them a wide berth for books they feel they can trust. From what I understand POD offerings are still sub standard and can be actively hard to read.

Amazon is a large retail outlet but it is still only one outlet, and so that already limits the impact somewhat. It would be hard to imagine high street stores or supermarkets getting involved, even if they are beefing up their web presence. Moreover I think CreateSpace will encounter some of the issues that face digital publishing on the trade side: people do not buy books for the their content alone, books are bought for their image, as gifts etc etc, and these kind of purchases are unlikely to be CreateSpace books (for the reasons given in the previous paragraph).

This is speculation, but I am not sure how many people buy a book based solely on a recommendation from amazon alone. What I think is more likely is that when a recommendation coheres with a book that you had already thought about buying then you have a “hit” or possible sale. CreateSpace is going to be unable to produce the prior seeding of a book needed to produce the recognition in amazon suggestions which would then translate (possibly) into a sale. So in that sense the power of amazon’s data set is massively reduced, as people are unlikely to want to buy from titles and authors they have never heard of even if it is being nudged by amazon. In essence the filter cannot exist in isolation. That said the internet offers so many means of seeding a book through non-standard information channels that this point may fall down given some cunning internet marketing.

So it is slightly worrying. Personally if I want to read CreateSpace kind of stuff (or what I snootily regard as CreateSpace kind of stuff) then I read it for free online. That's just me though. I am consistently amazed by some of the stuff that sells (that snootiness again?) so perhaps this really will take off. Brown pants time indeed. Maybe.

Amazon is doing a LOT of things right:
http://exacteditions.blogspot.com/2007/08/amazon-is-innovating-in-all-directions.html

Arguably they are not going to be very good at the things that publishers are traditionally best at: design, conception, encouragement, editing etc.... So I reckon that publishers will be able to work well with them. But it will be important that Amazon dont develop a monopoly of digital distribution channels. But there are lots of players who will be competing to see that doesnt happen. Lets see what happens in film, music, TV not to mention newspapers, magazines, radio etc. Publishers should be wary and alert to Amazon's reach but I am not sure that alarm is called for.

I think that this is exactly the kind of service that many "mid list" authors need and have been waiting for. Since the death of the NNBA in the UK, it has been increasingly hard for "mid-selling" authors to get more than 2 or 3 books published, yet they'd have a respectable number of readers if they could find a publisher, hard to do in the agent/celebrity/profit margin culture of book publishing today. (Of course there are some exceptions, but these can be restricting, eg Macmillan's excellent scheme is restricted to "new" writers.) POD technology together with the internet has been helping many specialist authors with important things to say to get published -- Mary Scrivener and the Blackfoot tribal histories for example. This Amazon announcement is great for all these authors, in reducing further the "middleman" and associated technical expenses, as well as harnessing the Amazon search and social-web facilities.
As a self-confessed "Amazonaholic", I find their own search (A9) inferior to their previous Google version (harder for the user to direct a search to her own specifics), and nowadays too commercial (you get too many ads inserted in the returns), but nonetheless, there is no book site to beat them.

You can only use CreateSpace if you are a US Citizen. This is buried in the small print but I confirmed this with a person at CreateSpace. The rest of us, apparently, don't matter.

Thanks for all the comments and sorry to have been slow to respond.

Henry, that's an important proviso that I wasn't aware of. I also urge everyone to read your post over on Nature Network, which is both pointed and hilariously written.

David, I agree that the technology still has a long way to go. The recommendations I see when I go into Amazon don't always interest me. But they already do a better job than my local bookshop, and they'll only get better. I don't think this is going to take over the world tomorrow, or even next year. But I think it holds enormous potential in the longer term (say 5-10 years). Are publishers interested in exploiting similar opportunities? I don't know, but I don't see much evidence yet, and quite possibly it's already too late.

Michael, I don't agree that authors who are successful on CreateSpace will necessarily run off to traditional publishers (though traditional publishers will surely try to nab some of them). But I do agree that ensuring a baseline level of quality is a problem that CreateSpace will need to overcome. I have no idea what their plans are, but I can think of a few different ways they could tackle it. For example, they could give away portions of these books -- or even whole books -- online until the title hits a certain popularity threshold, then start charging commercial rates. Building a community of reviewers who get early access in return for filtering out the best material also isn't out of the question. I'm no expert on POD, but I've seen samples that look every bit as good as the books I routinely buy. You're right that Amazon is just one outlet, but as we move more towards POD (say at your local library or convenience store) and e-books (yes, I believe they'll make it into the mainstream one day), the last remaining strengths of bricks-n-mortar retailers will pretty much disappear. Then, sadly, many of them will go the way of Tower Records. And the flip side is that some popular titles could well end up being available only through Amazon, at least for a time.

Adam, I think you're right that there will still be jobs to be done in nurturing talent, editing books, creating artwork, designing fonts, and so on. I have no idea if Amazon would ever want to take on those sorts of role (any more than, say, Apple appears to in music). But that still leaves a lot to be disrupted, and with no certainty that the remaining roles will be organised in anything like the way they are now.

Above all, the reason I wrote about this is that publishers, especially book publishers, seem to me to be ill-equipped to handle truly disruptive threats -- and I think this is one. Ironically, it's because most of them seem to have neglected to read a particular book: The Innovator's Dilemma by Clay Christensen. In contrast, technologists have read this (or at least intuitively understand its core message). So when Microsoft was confronted by Linux they were able to respond even though that was a profoundly different threat than any other they had ever faced. I can't help comparing that with the frankly much less clueful (and, yes, less paranoid) response that I saw from reference publishers when I alerted them about 6 years ago to the existence of Wikipedia. This feels a bit like déjà vu, and that leads me to worry, perhaps unfairly, that the industry as whole still doesn't appreciate the true nature and magnitude of the changes we're going through.

I agree with Maxine. It is increasingly hard for even those authors with a publication track record to get new books published. For example, I know of one SF author who published a slew of good stuff in the early 80s who can't get himself arrested these days - so he uses POD. Therefore I think POD has appeal to this group of authors (as opposed to complete unknowns), whose established track record is a mark of quality in itself.

But I also think it would be excellent for authors of academic and technical works which will be eagerly read by a very small number of people. I once heard Jeffery Archer quip that his wife (the fragrant Mary, remember?) wrote academic books so specialized that she probably knew everyone in the potential market personally. For that kind of book, POD offers a truly excellent way for authors to reach their market with speed and efficiency. Reputation is not an issue (readers will be aware of it already) and these are the kinds of books that academics must have - but only now available from academic publishers at exorbitant prices, and often many months or years after the manuscript is delivered. It is these acadenmic publishers who should watch out, in my view, because if theyd on't, then CreateSpace, Lulu, whoever, will run off with their underpants...

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