Amazon and Hachette, a Big-5 publisher, are having a very public spat over terms. Amazon has always operated with very tight (for years nonexistent) profit margins, keeping prices low in order to gain customers. This kind of trade-off of short-term profit for long-term growth can work in a big corporation, but sooner or later, investors want dividends, and that money has so come from somewhere, so Amazon has decided to try squeezing the middle man, which in this case is a publisher.
As this Publishers' Weekly post makes clear, lots of people have a dog in this fight. Authors feel threatened, agents are wary, and publishers and booksellers are all claiming Amazon is the bad guy who is out to destroy them. As a self-published writer, I'm less affected by this; my dog is more of Tamagotchi.
The PW article says publishers are worried about bookstores, but I doubt that comes from their goodness of their hearts. Basically, everyone is worried about their own best interests. The real problem publishers have is that they need their enemy. They can't refuse to do business with Amazon because that's a huge percentage of the market. At the same time, what's clear to me is that in the very long term (as in 20 years into the future), things may be very different.
Until the web came along, print books have always been sold almost entirely in retail stores. This was true of other goods, too--furniture, clothes, pet supplies--but now consumers can order books and other things while sitting at home or travelling on a bus or anywhere else they can pull up a browser or an app and click a button.
Some goods are less vulnerable to online erosion. I have not had much luck buying shoes on the web because I have a high instep. On the other hand, brand name pet supplies are the same thing whether I drive all the way to the store or order them online. Some products, like books, are ripe for online selling; there are so many, many titles a bookstore has to stock, that it's hard to compete on price and selection when the competition is a series of giant warehouses. eBooks have upped the ante considerably, but even before the Kindle, bookstores had a handicap.
The digital transition made things worse for bookstores, and to some extent publishers, but for publishers, there is some light at the end of the tunnel if only they could be more agile and less resistant to change. Jeff Bezos, love him or hate him, is a true visionary. He recognized very early on that the internet was going to radically change the way business is conducted, and he jumped in with both feet. Publishers have (so far) mostly refused to leave their comfort zones. What they should realize is that change also brings opportunity.
Being a retailer of digital books takes money and expertise, but it does not take the same amount of capital as huge chains of bookstores. eBooks provide publishers with a chance to finally, at long last, make the reader their customer. Right now Amazon and Barnes & Noble and smaller bookstores are their customers. They have no way of knowing who the readers of their books are.
But they could. If they dare.
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