Publishers terrified by Amazon’s “price war”

This gentleman from Melville House doesn’t appear too happy about the “breaking news” of what he describes as Amazon declaring war on the book industry.  He quotes an excerpt from an industry publication:

Yesterday quietly began discounting many bestselling
hardcover titles between 50% and 65%, levels we’ve never seen in the
history of Amazon or in the bricks-and-mortar price wars of the past.
The books are from a range of major publishers and include, for example,
Inferno by Dan Brown, which has a list price of $29.95 but is available on Amazon for $11.65, a 61% discount; And the Mountains Echoed by Khaled Hosseini, listed for $28.95, offered at $12.04, a 58% discount; Lean In by Sheryl Sandberg, listed at $24.95, available for $9.09, a 64% discount; and The Fault in Our Stars by John Green, listed at $17.99, available for $6.55, 64% off. A notable exception is The Cuckoo’s Calling by J.K. Rowling, using the pseudonym Robert Galbraith, which is discounted 42%.
The changes appear largely to be in response to an
campaign launched this week to be 10% lower than Amazon’s on “the
roughly 360,000 books sold on both and,”
according to Internet Retailer. Overstock has said the anti-Amazon campaign will last indefinitely although its site says “one week only.”

discounts are, of course, far higher than the usual 40%-50% range
offered by Amazon, warehouse clubs and other discounters–including
Overstock–and are more typical for remainders than frontlist

Why do the professional publishers care if Amazon starts offering its bestselling books at cost, just like many brick-and-mortar bookstores do?  After all, they get paid the same no matter what price the book is sold at retail.  The reason is that this move should suffice to kill off the brick-and-mortar stores, the sales to whom are the last remaining advantage of the professional publishers over the independent and self-publishers.

Look at The Throne of the Crescent Moon by Saladin Ahmed.  Right now, its Kindle ranking is about 30,000 and it has 127 reviews with an average rating of 4.2 stars.  Now compare it to A Throne of Bones, which has a current Kindle ranking of 52,000, 109 reviews and an average rating of 4.3 stars.  That 52k is in the middle of its customary range, as it bounces between 30k and 100k.

What that means is despite Ahmed’s book being published by DAW, being nominated for two major awards, and being pushed heavily by its publisher, it doesn’t sell much better on Amazon than my independently published book does.  It has almost certainly sold 10x more books total than mine has, but that is through the brick-and-mortar stores where it is distributed and mine is not.

Take those stores away, and suddenly we find ourselves in the grand experiment of “did the book buyer seek or discover the books he bought at the book store?”  It may be that Amazon will capture all the lost brick-and-mortar sales and they will be perfectly distributed among publishers and authors online as they were before.  But it usually doesn’t work that way.

I believe that the closure of the brick-and-mortar stores, the rate of which will increase as time goes on, is going to benefit writers with a strong online presence as well as authors who are popular with Twitter celebrities.  It is going to badly hurt the remaining midlist writers and new writers who are dependent upon having their books pushed upon unsuspecting readers by their publishers.

And that is what scares the publishers to death. The combination of declining ebook profit margins and paper book sales is going to put many, if not most of them, out of the fiction business.  Technical, academic, and trade publishing will survive, but conventional genre publishing will not.

Especially not when Amazon starts offering better royalties to established writers as an incentive to drop their existing publishers and go directly with Amazon.  Just as the traditional publishers snap up successful self-publishers, Amazon can skim off the most successful writers from the publishers.  It’s a no-win game for the traditional publishers, and it’s not going to take more than three or four years for them to figure out that even if they do everything right and make all the correct calls, they cannot win.

If you’re a writer, don’t waste your time trying to be the last rat to board the sinking ships.  Forget the idea of “book contracts” and invest your time and money into improving your self-publishing.  That’s the world in which you’re going to be competing soon one way or another, so you may as well get accustomed to it now.