Amazon

In the growing digital age, it is important to pass legislation protecting brick and mortar publishers and bookstores from the behemoth that is Amazon. In the US, discussions have begun about how Amazon should be treated in regards to anti-trust laws. Due to their immense access to data and size, big online companies like Amazon, Apple, Google, and Facebook are being scrutinized more and more, with the US Justice Department announcing they intended Attorney General Jeff Sessions to meet with state attorneys general to discuss “a growing concern that these companies may be hurting competition and intentionally stifling the free exchange of ideas on their platforms” (Bernstein 2018). Although Jeff Sessions is no longer Attorney General, the scrutinization of these major companies is likely to continue. This might be good news for the publishing industry, which has been put in danger by companies like Amazon.

 

It is hardly the first time Amazon and publishing have been linked in the press, demonstrating the bad blood and power moves on both sides of the aisle. Amazon had a falling out with Hachette books in 2014 in which it “delisted the publisher’s books from its website during business negotiation” (Khan 2017). In 2012, Apple and five of the top six publishers in the US; Hachette, HarperCollins, Macmillan, Penguin (now Penguin Random House) and Simon & Schuster- were accused of “collusion in e-book prices and sales models” (Carmody 2012). Mathew Ingram goes so far as to describe these publishers as a “cartel” in his article (Ingram 2015). With the rise of Amazon’s power in the ebook industry, these five publishers and Apple decided to band together, agreeing to “act collectively to force up Amazon’s retail prices and thereafter considered and implemented various means to accomplish that goal, including moving under the guise of a joint venture” (Carmody 2012). Publishers cited fear of driving not just ebook prices down, but print books as well. Ingram states that their actions originated, “[…]from a desire to maintain the existing favorable price structure for books, which allowed them to milk the market for high-priced hardcover versions of new novels before eventually releasing cheaper versions” (Ingram 2015). Apple, on the other hand, was accused of desiring to raise their own profit margin on ebooks, supplanting Amazon and other competitors (Carmody 2012). While the publishers saw this as an effort to supplant the growing monopoly of Amazon’s hold on ebooks, the US government saw it as an illegal attempt to break the American anti-trust laws. Although Apple, MacMillan, and Penguin initially intended to fight the lawsuit, these plans were rejected (Ingram 2015). It was determined that the companies “engaged in collusion with what amounted to an oligopoly” (Ingram 2015). A settlement was reached that called for a disbandment of Apple’s preference towards the publishing houses and for a “cooling-off period…during which agency relations would be potentially halted (a clause titled “most favored nation” in Apple’s contract with the publishers) and publishers could not renegotiate new contracts with retailers” (Carmody 2012).  It seems strange now to look back at this case, as it is clear that, although the publishers were in the wrong (they destroyed email evidence to attempt to hide their crime), they were fighting what we now know as a behemoth of ebook publishing that is driving the publishing business into danger. 

 

Anti-trust laws in the US do not affect Amazon the same way that they affect publishers. Anti-trust laws are not necessarily set up to stop monopolies or to protect corporations and business; rather, they exist to protect consumers from overpriced goods. Unfortunately for Hachette, HarperCollins, Macmillan, Penguin, Simon & Schuster, and Apple, Amazon’s particular strategy is to sell books at a lower price to establish an understanding of their customers through data and algorithm. Lina M. Khan’s focuses on this issue in her journal entry “Amazon’s Antitrust Paradox,” emphasizing the outdated nature of antitrust laws in the digital age. She states, “the current framework in antitrust—specifically its pegging competition to “consumer welfare,” defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon’s dominance if we measure competition primarily through price and output” (Khan 2017). Drawing from Khan’s findings, Lewitt writes that “it is therefore highly rational for online companies [like Amazon] to engage in predatory pricing” (Lewitt 2018). Although this is bad for publishers, who make less and less money on ebook and print sales through Amazon, it is great for the American consumer, who is the subject of anti-trust laws. The Guild and Author’s United writes, “unregulated and unchecked growth of the major internet monopolies has squeezed the publishing and news industries, resulting in lower pay for authors and journalists” (Authors Guild 2018). 

 

There need to be changes to the antitrust laws in the future to accommodate the growing power of these online companies that escape traditional antitrust laws with these law prices and discounts that run smaller business models out of business. These bigger companies might argue that they bring other opportunities to smaller business through distribution, with almost half of reported online sales coming directly through Amazon (Khan 2017). They might also argue that the old antitrust laws that protect consumers still stand up in the 21st century, which is in line with their consumer-centric business model. However, there is no denying that these companies are taking advantage of their size in order to control industries and crush competition. 

 

Khan argues that “gauging real competition in the twenty-first-century marketplace—especially in the case of online platforms—requires analyzing the underlying structure and dynamics of markets” (2017). It seems as though these issues are finally being addressed by the Federal Trade Commission, which is launching a series of hearings entitled “Competition and Consumer Protection in the 21st Century” (Authors Guild 2018). This commission will focus on how to deal with internet monopolies that cater to consumer interest but drive down prices for other business. Among the topics covered in these hearings are listed as things like “Antitrust Law; Mergers and Monopsony or Buyer Power”, “Algorithms, Artificial Intelligence, and Predictive Analytics”, and “Antitrust Evaluation of Labor Markets” (Hearings 2018). These hearings are ongoing, having begun in September 2018 and continuing well into February 2019. It is difficult to tell if anything definitive will arise from these hearings, but it is important to note the issues with Amazon’s power online are being addressed. 

 

Tech-based companies like Amazon force us to reexamine our understanding of antitrust laws in America. The Department of Justice needs to carefully analyze new antitrust legislation that does not give either side of the argument an advantage over the other and does not put customers in a difficult position. This is a particularly difficult task because of the vastness of the issue and the myriad of factors like data analytics and consumer rights. It is unclear what these changes might do to the publishing industry, but it is clear that there needs to be change in order to save traditional publishing from becoming a thing of the past.

 

Work Cited

“Authors Guild Comments to FTC on Internet Monopolies’ Impact on Creators.” The Authors Guild. August 22, 2018. Accessed November 24, 2018. https://www.authorsguild.org/ industry-advocacy/authors-guild-comments-to-ftc-on-internet-monopolies-impact-on- creators/. 

Bernstein, Leandra. “Does the Government Have an Antitrust Case against Amazon, Google and Facebook?” WJLA. September 10, 2018. Accessed November 24, 2018. https://wjla.com/ news/nation-world/does-the-government-have-an-antitrust-case-against-amazon-google- and-facebook.

Carmody, Tim. “DOJ Files Antitrust Suit Against Apple and 5 Publishers Over E-Book Pricing.” Wired. April 11, 2012. Accessed November 24, 2018. https://www.wired.com/2012/04/ doj-files-antitrust-suit-against-apple-and-five-publishers/.

“Hearings on Competition and Consumer Protection in the 21st Century.” Federal Trade Commission. November 14, 2018. Accessed November 24, 2018. https://www.ftc.gov/ policy/hearings-competition-consumer-protection.

Ingram, Mathew. “Apple’s Mistake Was Hooking up with the Book-publishing Cartel.” Fortune. June 30, 2015. Accessed November 24, 2018. http://fortune.com/2015/06/30/apple-court- books/.

Khan, Lina M. “Amazon’s Antitrust Paradox.” The Yale Law Journal 126 (January 2017): 710-806. Accessed November 24, 2018. https://www.yalelawjournal.org/note/amazons- antitrust-paradox.

Lewitt, Michael. “How Long Can Amazon’s Ingenious Antitrust Avoidance Last?” Forbes. May 01, 2018. Accessed November 24, 2018. https://www.forbes.com/sites/michaellewitt/ 2018/05/01/how-long-can-amazons-ingenious-antitrust-avoidance-last/#53dae6870ac0.

I bought it, own it! Once I purchase a product it is mine and it is my fundamental right to do whatever I want with it. If I want to lend it to a friend or sell it secondhand, I may. This is the way things have logically worked for a long time and is, frankly, common sense. Since the rise of the digital era however, this common sense is being challenged. We pay real money for products purchased online, so we feel that we have this fundamental right to later resell our used copies. Unfortunately for us consumers, it isn’t that easy. The laws around copyright licensing in the case of digital files are ambiguous at best. Back in 2013 Amazon received a patent allowing them to resell digital content. This news had many people excited to finally be able to exercise their rights to sell their used music, videos, apps, and ebooks, but it also had many people (for example, almost everyone who has ever created and sold digital content) up in arms. Since then, there has not been much news concerning what Amazon has been doing with this patent, and the answer of whether or not a marketplace of secondhand digital content is on the horizon remains up in the air. While such a marketplace seems like the answer to all our problems as consumers, as publishers we have plenty of reasons to be extremely wary. There are a number of issues that arise for creators of digital content when the concept of “secondhand” is added to the table. First of all, to transfer files, a copy of all those 1s and 0s is transferred from one computer to the next (keyword: “copy”) which is a little scary when it comes to selling copyrighted material. Secondly, digital files do not degrade in the same way that physical items do. And thirdly, if everyone can buy used digital content cheaply online, who is going to buy the more expensive “first copy” directly from the creator? These problems have no solutions yet, and until they do, publishers need to be cognizant of what is being done with their content.

In order to dive into the topic of “secondhand” ebooks we must first discuss the legal concepts surrounding “exhaustion.” While Canada itself does not yet have clearly-defined, legal documentation outlining this concept, the United States has the “First Sale Doctrine” that discusses exhaustion. The First Sale Doctrine revolves around this idea of “I bought it, I own it” and the owner of a legally-purchased product has the right to do whatever he or she wants with it. Put in another way, the rights to a product (or at least the enforceability of these rights) are “exhausted” after its first sale. In the case of intellectual property, this is a common and well-known exception to copyright and trademark laws as the notion allows for copyrighted and trademarked products to be used, as the owner sees fit, without a license from the copyright holder. It is this doctrine that allows us to sell our clothes, CDs, books, and other items to another person after we ourselves have used them.

The First Sale Doctrine and the concept of exhaustion have many grey areas, and as you may have guessed, they have a hard time fitting digital products under their umbrella. Because files can be reproduced ad infinitum, producers of electronic content license their products, protecting them from infinite copies. This is why, for example, a library can only lend an ebook a finite number of times, or you are only free to install software on a set number of devices, even though you legally purchased it.

Licensing also covers how ebooks are sold and bought. When I buy an ebook, the ebook seller does not transfer complete ownership to me. Instead, he licenses the ebook to me under certain terms and conditions (you know, those terms and conditions outlined in that huge document of legalese you always blow past in a hurry to tick the “I have read and agreed” box). In this way, I do not own the ebook in the same way that I would if I were to have purchased the physical copy of the book. Theoretically, if I were to “resell” this ebook, the ebook seller would therefore be transferring the license currently assigned to me to another person.

Now that we understand how ebooks might be able to fit into a used market, let’s discuss whether or not they should. As mentioned above, digital content is transferred by means of copies. This raises the issue of whether or not a sold file will actually be removed from the first owner’s device. It is one thing for Amazon to delete a file from a person’s Kindle, but there are other ways of storing files, for example, a person may have stored their digital files on an external drive, which is impossible for a third party to clear unless plugged in. A company may have to perform a full scan of the original file owner’s computer in order to be sure that the file has been removed completely: a task that is appealing to neither company (as this could prove to be extremely expensive) nor consumer (whose privacy would be compromised). If the original file has not been completely removed from a person’s computer after he has resold it, there is nothing stopping him from reselling that same file again and again.

The second issue with reselling digital content concerns degradation. Physical items wear down over time, which is why a used item can and should be sold for less than if it were new. This does not apply to digital files; they are always in perfect condition. With a secondhand ebook you can be sure that you will not come across notes in the margins or torn-out pages the way you might with a physical copy of a secondhand book. Deterioration is what keeps the secondhand economy intact. When you sell your secondhand items, you know they are of lower quality, so you are more comfortable asking a lower price. If all secondhand items were perfect (which is the case with digital files) the whole system would fall apart. This leads directly into the third problem of reselling used digital content: price.

“Because ebooks don’t deteriorate, there is no incentive for the buyer to seek out a new ebook, and especially not when they will likely be able get the secondhand ebook at a discount,” says Forbes contributor Suw Charman-Anderson. “This means that secondhand ebooks would be very likely to cannibalise sales of new ebooks, and probably to a greater extent than piracy because it will be legal, easy and entirely without emotional repercussion” (2013). If anyone is able to get a perfect copy of an ebook at a secondhand price, no one would choose to buy the “new” ebook directly from the publisher. Publishers would be forced to drop their ebook prices, which would in turn lower ebook resale prices, and the cycle would continue until all ebooks cost only a penny. This sounds great for consumers, but not so great for the content creators, and if the system rubs enough content creators the wrong way, soon the consumers will be left with nothing to consume. This “one-penny problem,” as The New York Times technology columnist David Pogue (2013) calls it, will eventually cause publishers and authors to withdraw their content from the ebook market altogether. For many authors and publishers, ebooks contribute a great deal to overall profit (in many self-publishers’ cases, ebooks make up their entire profit) so pulling away from this market will benefit no one. Judging by their past capabilities of domination, if Amazon decides to act on their 2013 patent, they will have a monopoly on the used ebook market. Since publishers depend heavily on sales through Amazon they will be between a rock and a hard place. Withdrawing from ebook resales will not be possible without withdrawing from Amazon. Ebooks will become a liability: prices will only go lower and lower at the same time as more and more sales will be lost to secondhand sellers.

Even though an Amazon Ebook Resale Extravaganza has not yet occurred, there are a number of other websites aiming to achieve this goal. Netherlands-based Tom Kabinet is an emarketplace that allows its users to sell their ebooks for credits with which they can buy more ebooks from the site. The site does recompense authors for every ebook sold, but the remuneration is only €0.50. Furthermore, it is unclear exactly what is to be done with the original copy after selling, as Tom Kabinet’s FAQ reads “…wis je jouw eigen kopie van het e-book van je devices zoals een laptop, een tablet of een e-reader” (…you erase your own copy of the e-book from your devices such as a laptop, a tablet or an e-reader). Leaving it up to the user to delete their own copies seems like an incredibly rose-tinted attitude and it seems unlikely that it will have the desired effect. All in all, Tom Kabinet seems like a publisher’s nightmare, and yet they have been legally allowed to continue operating. When several publishers filed a lawsuit against Tom Kabinet and requested a preliminary injunction, they were denied, and “the Amsterdam Court concluded that selling used eBooks is a legal grey area and not by definition illegal in Europe” (Van der Sar 2014). Tom Kabinet was allowed to continue operations and, because of this publicity, it has even seen an upsurge in its visitor count.

A new market for digital content is imminent. Everyone would love to believe that this market will be a boon to society, but without acknowledgement of the issues involved and a comprehensive game plan in place a secondhand ebook marketplace will hurt publishers in ways that will end up hurting consumers in the long run as well. By all means, embrace emerging opportunities, but until existing problems are resolved, tread carefully in the ebook world.


Works CIted:

Charman-Anderson, Suw. “Amazon Eyes Secondhand Ebook Market.” Forbes. February 8, 2013. Accessed November 26, 2017. https://www.forbes.com/sites/suwcharmananderson/2013/02/08/amazon-eyes-secondhand-ebook-market/#7ef2ed27712c.

Court of Justice of the European Union. “An author of software cannot oppose the resale of his ‘used’ licences allowing the use of his programs downloaded from the internet.” press release no. 94/12. July 2, 2012. https://curia.europa.eu/jcms/upload/docs/application/pdf/2012-07/cp120094en.pdf.

Crowne, Emir. “Anything but tired: the doctrine of exhaustion in Canada” Journal of Intellectual Property Law & Practice, Volume 10, Issue 11, 1 November 2015, Pages 801–802. OUP Academic. October 20, 2015. https://academic.oup.com/jiplp/article/10/11/801/2384832.

“First-sale doctrine.” Wikipedia. November 25, 2017. Accessed November 26, 2017. https://en.wikipedia.org/wiki/First-sale_doctrine.

Hoffelder, Nate. “Used eBooks 101: How Amazon Can Legally Resell eBooks.” The Digital Reader. February 21, 2013. Accessed November 26, 2017. http://the-digital-reader.com/2013/02/21/used-ebooks-101/.

Kozlowski, Michael. “Amazon is Secretly Developing a Used e-Book Marketplace.” Good E-Reader. February 24, 2016. Accessed November 26, 2017. https://goodereader.com/blog/e-book-news/amazon-is-secretly-developing-a-used-e-book-marketplace.

Pogue, David. “Reselling E-Books and the One-Penny Problem.” The New York Times. March 14, 2013. Accessed November 26, 2017. https://pogue.blogs.nytimes.com/2013/03/14/reselling-e-books-and-the-one-penny-problem/?_r=0.

“Reselling eBooks.” BookScouter. June 15, 2016. Accessed November 26, 2017. https://bookscouter.com/blog/2016/06/reselling-ebooks.

Ringewald, Erich. Secondary market for digital objects. US Patent 8,364,595, filed May 5, 2009, and issued January 29, 2013. Accessed November 26, 2017. http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=8364595.PN.&OS=PN%2F8364595&RS=PN%2F8364595.

Streitfeld, David. “Revolution in Resale of Digital Books and Music.” The New York Times. March 07, 2013. Accessed November 26, 2017. http://www.nytimes.com/2013/03/08/technology/revolution-in-the-resale-of-digital-books-and-music.html.

Tarantino, Bob. “First Sale Doctrine and Canadian Law.” Entertainment & Media Law Signal. April 14, 2010. Accessed November 26, 2017. http://www.entertainmentmedialawsignal.com/first-sale-doctrine-and-canadian-law.

Tom Kabinet. Accessed November 26, 2017. https://www.tomkabinet.nl/.

Van der Sar, Ernesto. “Online Store Can Sell ‘Used’ Ebooks, Court Rules” TorrentFreak. July 23, 2014. Accessed November 26, 2017. https://torrentfreak.com/online-store-can-sell-used-ebooks-court-rules-140723/.

Van der Sar, Ernesto. “Record Labels: Used MP3s Too Good and Convenient to Resell.” TorrentFreak. April 22, 2014. Accessed November 26, 2017. https://torrentfreak.com/record-labels-used-mp3s-too-good-and-convenient-to-resell-140422/.

AMAZON, THE UNDEFEATED AUDIOBOOK CHAMPION?

Audiobooks are undoubtedly the fastest growing segment in the publishing industry. The global audiobooks market is valued at $3.5 billion (Kozlowski, 2016) and the format has not seen the dwindling sales that eBooks have over the past couple of years. Rather it can be argued that audiobooks have replaced eBooks on readers’ metaphoric shelves. Carter (2016) reported that the format is outselling print editions too with Richard Thaler at Amazon claiming that “books in every imaginable genre [are selling] better as spoken rather than written word ­– four times as well” to be exact (Olshan, 2016). Unlike what Octavio West (2017) suggests, audiobooks are clearly proving that books do not have to be “printed to fully exist”. As the ‘new face of the publishing industry’, they offer readers the chance to multitask whilst giving them an adequate reading experience (“Are You Still Listening?”, 2015). In an age where time is nothing short of a luxury, audiobooks are the pioneers of literature on the go.

It is no wonder that numerous organisations are battling each other for a piece of this lucrative market. With Amazon declaring that they are the “unmatched… largest producer of digital audiobooks” in the world (“What is Audible?”, 2017). “Largest” most likely but “unmatched” is up for contention. Using quantitative and qualitative evidence, this essay will argue that Amazon is ruling the auditory waves and pioneering the audiobook market. This reign may be curbed however if individual publishers merge their functions, to specialise in techniques that the conglomerate has not tapped into.

 

Amazon’s general presence in the book industry has been met with controversy, hostility and outright disdain. The main accusations being that the company is undercutting traditional publishers and acting as a monopoly both in bookselling and on the functional front. Insert the recent news of the Amazon Buy button here for a small glimpse into the ire of traditional publishers. The launch of the Kindle eReader in 2007 is what catapulted Amazon to “major player” status in the industry and is also what spearheaded doubts that digital formats were on the path to replace print books. What was for the most part ignored in all of this was that Amazon was building an auditory empire too, when it purchased Brilliance Audio in the same year and Audible for US$300 million in 2008. Brilliance Audio was the largest independent audiobook company in the United States, a market with $1.8 billion in audio sales (Kozlowski, 2016) .

By 2013, The Atlantic had reported that

“60 percent of audiobooks were downloaded to digital devices, and nearly all of those came from Audible or through its long-standing license to supply audiobooks to Apple’s iTunes.” An important aspect to note here is the not-so-surprising collaboration with iTunes, one of the world’s most encompassing auditory platforms found on almost every Apple product. This partnership bought Amazon an unparalleled amount of visibility. Gorey (2017) describes it more succinctly: Amazon and Apple “ran the two largest distributors of audiobooks in the world, with no room for any smaller third-party operations to compete”. Their exclusive, monopolistic relationship despite it being deemed illegal in countries such as Germany equipped both and in particular Amazon to dominate the market today.

In 2016, Forbes reported that Amazon and Audible were the most frequently used audiobook online retailers, Audible seeing 20.7% of purchases (compared to 14.2% in 2014) and Amazon seeing 21.0% (compared to 21.5% in 2014). Listed here as two separate companies but functioning under one umbrella, the Amazon Group as of 2016 controls 41.7% of online audiobook sales. The company performed a feat of cross-marketing genius: linking its audiobook service to its Kindle eReader and Amazon Prime Reading whilst advertising Audible on almost every popular podcast in the world (Carter, 2016). Listeners of podcasts are more likely than anyone to jump on to the audiobook wave. Good eReader performed an earlier more qualitative study corroborating my reasoning and proving that Audible is the primary place to shop for Audiobooks:

“The most popular audiobook genres in 2016 were mystery, thriller, romance and fantasy/science fiction. 53 people voted and it looks like Audible is the most popular service, which garnered 16.6% of the vote.” (Kozlowski, 2016)

 

Whilst these figures clearly show that Amazon is leading the retail side, they fail to take into consideration the presence of libraries, free downloads and good old pirating (see below).

 

 

Amazon is manning the commercial front but free/public access is still drawing the largest crowds. If Amazon extends its “free for one month” Netflix-style subscriptions and includes a deal offering numerous free audiobook downloads, then libraries might be in serious trouble. Until then, they can hang on to their lifeboats of government grants and rest assured that they are still the most popular place to acquire audiobooks.

 

On the commercial front, “discoverability is [the utmost] important consideration for audiobook publishers”  (Duffer, 2016). To prove this, I performed a basic experiment and typed “audio book” in Google search on both Safari and Chrome. Amazon’s “Audible” was the first result to show.  Like hoover is to vacuums and Kleenex is to tissue paper, Amazon is making its subsidiary synonymous with the term audiobook. It is therefore not surprising that Audible is mirroring its parent company through its expansion into the world of self-publishing with their Audiobook Creation Exchange (ACX)  service.

 

“ACX is a marketplace where authors, literary agents, publishers, and other Rights Holders can connect with narrators, engineers, recording studios, and other Producers capable of producing a finished audiobook. The result: More audiobooks will be made.” (Yau, 2016)

 

Through ACX, Amazon is making itself the primary meeting place for all of those with a stake in the audiobook industry. By facilitating the production process, they are positioning themselves as a necessity; fostering long term relationships with the other players in the industry and listeners alike (Maxwell, 2012) whilst solidifying their position in what Jane McGonigal dubs “the engagement economy”.

 

Where is Canada?

There is a general lack of Canadian content in audio format. BookNet Canada reported that out of 1.1 million active records and 21 650 audiobooks in 2015, only 398 had Canadian contributors (BNC, 2015). Outsourcing content from the United States has become the norm, as expensive as it is, it is aggravated by the fact that there are only a handful of audiobook producers in Canada (Carter, 2016). Audible has set itself the task of changing this. Their ‘mandate’ is to provide Canadian content on their Canadian eStore, Audible.ca, where “approximately 300,000 titles reside, thousands of which are by Canadian authors and publishers” (Carter, 2017). Audible is also making its presence known on the Canadian literary scene by sponsoring the most prestigious prize in the country, the Giller. This is a further attempt by Amazon to make the company a household name. Audible Canada is also the company’s first bi-lingual store, which Audible’s chief content officer calls a “unique and immersive experience for French Canadians” (Carter, 2017). Attempting to bridge the tense language divide in Canada is the smartest business move on Amazon’s part. Furthermore, Amazon is able to jump on whatever wave is currently popular with a quicker turnaround than its competitors. For example they are offering Margaret Atwood’s, The Handmaid’s Tale audiobook for free to any first time subscribers. It is needless to say that this book has been the buzz book in the industry this year as a result of its TV adaptation. Strategically offering Canadian content and promoting a nationalist front in an age where Canadians are increasingly responding to audiobooks, is a marketing strategy for the gods.

So what about the competition?

According to Kevin Williams from Talon Books, audiobooks are extremely expensive to make and independent publishers cannot burden the cost on their own. On the contrary companies like Amazon are benefiting from economies of scale as they are large enough to host the infrastructure needed to produce the books. Other multinationals with successful audio arms such as Hachette, HarperCollins and now Penguin Randomhouse, are also benefitting from advantages attributed to size. I believe that independent publishers in Canada will not be able to compete in this market unless they merge their auditory arms. ECW is one of the publishers pioneering these “collaborations”; with help from Coach House Books. Both have spearheaded a project to publish 100 audiobooks using Canadian content and local resources (Yau, 2016). Mergers are the lifeboat in this Amazon world.

Macmillan Audio’s collaboration with hoopla digital is necessary to deter Amazon’s monopolistic advantage in online retail. Whilst the Audiobooks.com partnership with Android Auto to bring 60 000 titles to over 60 million cars within the next five years is a feat Amazon has not tapped into yet (Kristons, 2015). Audiobooks.com allows subscribers to stream their books whilst Audible, Amazon and Apple offer downloading options only. The biggest collaboration that will withstand Amazon is that of Kobo and her sister company Overdrive. Overdrive is “the largest company [powering] 75% of all Canadian and US libraries audiobook and e-book collections” without leaning on a third-party distributor (Carter, “Kobo” 2017). Libraries go beyond the scope of Amazon’s reach by  offering audiobook services for the blind or partially sighted alongside people with other disabilities. The need for libraries will never wane. The only reason Overdrive is at a disadvantage is because multinationals are reluctant to provide them with content. On the commercial side, however,  Kobo entered the audiobook subscription market in September 2017 by pricing its books at $12.99 as opposed to Amazon’s $14.95 a month. Time will tell whether this will have an impact on Amazon’s clientele.

 

Lastly, publishers need to be innovative in this fast-paced environment. Audible has partnered with dog psychologist Cesar Millan to create Audible for Dogs, a guide to help people care for their pets. Unless other publishers match this level of experimentation, they will remain invisible and a step behind. It is my belief however that constant alliances, the larger they are, are the only way to weaken Amazon’s grip on the audiobook market. Until then, may their kingdom continue to reign.

 

Works Cited

 

  • Are You Still Listening. (2015). BookNet Canada. Retrieved 31 October 2017, from https://www.booknetcanada.ca/are-you-still-listening

 

 

 

  • Carter, S. (2017). Kobo enters the audiobook subscription market | Quill and Quire. Quill and Quire. Retrieved 31 October 2017, from https://quillandquire.com/omni/kobo-enters-the-audiobook-subscription-market/

 

  • Duffer, E. (2016). Forbes Welcome. com. Retrieved 31 October 2017, from https://www.forbes.com/sites/ellenduffer/2016/12/30/canadian-audiobook-users-favor-amazon-and-audible-over-itunes/#67c4494e55fc

 

  • Gorey, C. (2013). Amazon and Apple will now allow third-party audiobook sales in EU. Silicon Republic. Retrieved 31 October 2017, from https://www.siliconrepublic.com/companies/audiobooks-amazon-apple-audible

 

 

 

  • Maxwell, J. (2012). Amazon and the Engagement Economy (repost) | Publishing @ SFU. sfu.ca. Retrieved 31 October 2017, from https://publishing.sfu.ca/2012/11/amazon-and-the-engagement-economy/

 

  • Olshan, J. (2016). Forget e-books, this may be the real future of reading. MarketWatch. Retrieved 31 October 2017, from https://www.marketwatch.com/story/why-some-audiobooks-sell-four-times-as-well-as-their-print-versions-2015-12-08?siteid=rss&rss=1

 

 

  • West, Octavio. “The Printed Nature of Books.” PUB800, 3 Oct. 2017, https://tkbr.publishing.sfu.ca/pub800/2017/10/the-printed-nature-of-books/. Accessed 28 Oct. 2017.
  • What is Audible?. (2017). custhelp.com. Retrieved 31 October 2017, from http://audible.custhelp.com/app/answers/detail/a_id/4436/~/what-is-audible%3F

 

  • Yau, K., & Yau, K. (2016). Audiobooks: State of the union. BookNet Canada. Retrieved 31 October 2017, from https://www.booknetcanada.ca/blog/2016/8/5/audiobooks-state-of-the-union

Works Consulted

  • Beyond Audible: Other Options for Audiobooks. (2017). Costa Connected. Retrieved 31 October 2017, from http://costaconnected.com/beyond-audible-other-options-for-audiobooks/

 

  • Greenberg, S. (2016). Macmillan Audio Joins hoopla digital; Publisher Will Provide Audiobooks on hoopla digital to Public Libraries in Pilot Program. Marketwire. Retrieved 31 October 2017, from http://www.marketwired.com/press-release/macmillan-audio-joins-hoopla-digital-publisher-will-provide-audiobooks-on-hoopla-digital-2017204.htm

 

  • Kozlowski, M., & Kozlowski, M. (2017). Harlequin Audiobooks Now Available for Libraries. Good E-Reader – eBook, Audiobook and Digital Publishing News. Retrieved 31 October 2017, from https://goodereader.com/blog/audiobooks/harlequin-audiobooks-now-available-for-libraries

 

  • Kozlowski, M. (2017). Penguin Random House Audiobook Sales Increase in 2017. Retrieved 31 October 2017, from http://tps://goodereader.com/blog/business-news/penguin-random-house-audiobook-sales-increase-in-2017

 

  • Staff, Q. (2017). The explosion in ebook lending | Quill and Quire. Quill and Quire. Retrieved 31 October 2017, from https://quillandquire.com/omni/the-explosion-in-ebook-lending/

 

  • Staff, Q. (2017). Canadian Accessible Library Service to serve print-disabled patrons | Quill and Quire. Quill and Quire. Retrieved 31 October 2017, from https://quillandquire.com/omni/canadian-accessible-library-service-to-serve-print-disabled-patrons/

 

  • (2017). Libby can give you access to tons of free books and audiobooks on your phone with just your library card. Android Police. Retrieved 31 October 2017, from http://www.androidpolice.com/2017/04/06/libby-can-give-access-tons-free-books-audiobooks-phone-just-library-card/

https://www.theverge.com/2017/8/7/16109228/cesar-millan-audible-for-dogs-psychology

 

http://forums.welltrainedmind.com/topic/633429-is-audible-worth-the-membership/

 

As I am writing this essay, Katy Evan’s Racer went live on Amazon. I have been following the author’s social media promotion from the conception of the book; right from announcing the book, revealing the cover, teasing excerpts, pre-ordering and finally, the release day. She has a burgeoning group of close 70,000 followers on Facebook and close to 18,000 on Instagram. It’s been two days since the release of the book. It has already got close to 200 reviews on Amazon and just as many on goodreads. Her Facebook group, run by her fans, has close to 5000 members, including scores of bloggers, who are sharing and hyping about her book. The book is close to reaching ‘Top 100 paid’ in Kindle store and is already at #6 in Romance/Sports sub genre, which means she is selling high numbers. There is one detail though; Katy Evans is a self-published author.

 

Katy isn’t the only one riding this thrilling wave of digital publishing. Hundreds of self-published romance authors have managed to break into the market and establish a popular brand identity. Who are these authors?

 

Alison Baverstock, an associate professor in publishing at Kingston University, Surrey, said her research showed a clear gender split, with 65% of self-publishers being women and 35% men. Nearly two-thirds of all self-publishers are aged 41 to 60, with a further 27% aged over 61. Half are in full-time employment, 32% have a degree and 44% a higher degree (Brown 2014).

 

These authors—men and women, come from all walks of life and life experiences but have one thing in come—they have successfully bypassed the traditional publishing channels and incumbent middle men, after being turned down everywhere else in most cases, to reach their target audience. That is, kind of, priceless. Self-publishing has created a brand new, level playing field where romance authors are blooming unchecked. It’s a romantic wilderness.

 

Romance publishing, for long, has been a highly lucrative, but moderated genre of publishing. Romance has evolved. It has been the money-maker, albeit underrated, for the publishing industry. If we look at the romance publishing life-cycle to date, we’ll be able to ascertain that the innovation and content, in romance publishing, has been driven from the reader’s side. The publishing industry has been forever playing catch-up to the market demands. It could be the move from traditional ‘sweet romances’ produced by Harlequin for decades, to the uproar of spicier historical romances termed as the ‘bodice-rippers’, to the tsunami of 50 Shades of Grey, which singlehandedly revived the bookstore sales across the spectrum. The audience has been ahead of the publishers (Markert 1985). The content has reflected the path of self-awareness in women. According to best-selling author Jenny Crusie, ‘‘the romance industry is more responsive to reader feedback than any other genre … Romance novels do not determine what readers think; readers determine what romance novels get published” (Crusie 2007).

 

An editor is a hunter-gatherer—a person who scrounges through the slush piles, networks with agents, actively looks for writers and ultimately gives the publishers the actual content to publish. This is a vital role. The editors are the gatekeepers. They keep track of the market’s wants and needs and calibrate their searches accordingly (Williams 1993). One of the reasons that romance has remained relevant in the era of globalization is that romance publishers have shown a unique willingness to diversify their offerings, along with a stalwart refusal to flinch away from social, cultural and demographic change (Tapper 2014).

 

The romance market is a different ball-game altogether; unlike other genres of publishing. It’s a demand driven market. Where an average American reads about 12 books a year, a romance reader devours about 15 books a month. That figure alone, should give you a pause. To put things into perspective, according to the Romance Writers of America’s annual report, the estimated total annual romance sales amount to $1.08 billion. Romance novel share of the U.S. fiction market is 34%, of which, eBooks is 61%, Mass-market paperback is 26%, Trade paperback is 11% and Hardcover is 1.4% of the pie. The readership constitutes 84% female and 16% male (RWA 2015).

 

You can love self-publishing or doubt it, but you cannot ignore it. The numbers speak for themselves. Kim & Mauborgne conducted a study of 150 strategic moves spanning more than a hundred years and thirty industries and argue that companies can succeed by creating blue oceans of uncontested market space, as opposed to red oceans where competitors fight for dominance, the analogy being that an ocean full of vicious competition turns red with blood (W. Chan Kim 2005). Traditional publishing has been a red ocean for long, primarily because of the checked flow of content and the restriction on volume.

 

Digital publishing, by the way of its business model, has opened the doors to blue oceans, where independent writers could get their books to the intended audience without having to go through the traditional distribution network. Considering the behemoth size of the romance field and the new wave of self-published or indie authors, the editors today have a new avenue to find their next big find. These relatively unknown authors, who do respectable amount of business and have a ready-made following are the perfect candidates for the traditional model of romance publishing.

 

The hunter-gatherers in the romance publishing have finally caught up the insurgence of self-published contemporary romance, YA romance and adult fiction. Scores of self-published authors have been signed up by publishers to capitalize on the ready-made market. To find the next best-seller, maybe the editors need to analyze Amazon’s sales data (how much ever it is). The publishers have been cognizant of the changes. Harlequin Mills and Boon (HMB) ventured into a self-publishing imprint in 2009, but received severe flack from the publishing world for exploiting unsuspecting writers, as they charged ‘for services’. It was argued that what HMB were offering was NOT self-publishing but vanity publishing (Friedman 2009). Following the furor, HMB changed the name of the venture from Harlequin Horizons to DellArte press (Gardner 2009). But that too died a slow death over the following 4-5 years.

 

Jane Friedman argued, “Harlequin is clearly at an advanced stage of considering how it will evolve—or devolve, considering on your perspective. But most writers and writer organizations (and publishers) have NOT grappled with these questions yet. Publishing has often been slowest to change and adapt of all industries. Some argue Harlequin should’ve been better prepared and planned more strategically to respond to the criticisms that would arise. But when you’ve already moved on, like Harlequin—and are seeking solutions—it’s tough to backtrack to the mindset of those people who are stunned, angry, and indignant, and can’t even conceive of adaptation” (Friedman 2009).

 

Friedman also quoted Shatzkin in her blog post.

 

A friend of mine in the financial business wrote a book 20 years ago and wanted to get an agent to sell it. He knew the advance would be low, but he also knew the book would add credibility to his business. He wanted it sold. An agent told him that the agency only handled books on which they thought the advance would be $25,000 or more, yielding a commission of $3,750 at the normal 15%. This friend told the agent, take the first $3,750. The agent took the book, sold it for $6,000, and everybody was happy. This kind of arrangement, as well as others where the agent actually charges a fee for helping an author manage self-publishing options, are going to have to become more common in the future. Let’s not be too judgmental about the pioneering agents who change the paradigm. (Shatzkin 2009)

 

This is tricky. Because the market is flooded with self-publishing options for budding writers. Author Solutions is well-known for this. But the publishing industry is not quite ready to give their stamp of validation to the party crashers—the self-publishing authors. HMB tried to bridge the gap between the two forms publishing, but weren’t successful. They have, since then, launched Carina Press, a digital-first publishing platform, where they publish new authors in digital format and later go into print.

 

It ought to be simple; this amalgamation between print and digital platforms; this meeting of hunter-gatherers and the romantic wilderness. It isn’t.

 

Even though the scenario is well laid out, the integration between the two isn’t as simple. Consider this: Author Marie Force has 50 titles in her backlist—30 titles self-published and 20 titles with traditional publishers. She took her early works to numerous publishers, got published in 2008 (very small release) and made no waves. Around 2010, she took the plunge into the self-publishing and has been swimming strong, since. She prices her books between $4.99 and $6.99. She is consistently ranked in the Top 100 best-selling authors on Amazon and does decent business in print. But nothing compares to her returns on Amazon. She is digitally present in a market that primarily reads eBooks. Also, Author Kristen Ashley, who routinely tops the Amazon charts. She has the attention of her audience and even managed to get her books into Wal-Mart, which is no small feat. She has small team handling her editing, design and PR. Her focus is solely on writing. These authors also have presence on Kobo, iBooks and Createspace. (Observer and Dale 2016)

 

Now consider the pricing model of these self-published books. Most self-published works are priced between $2.99 and $6.99, with most authors pricing the earlier books low and progressively going higher as a series evolves. Collectively, these authors are looking at a $30 proposition in each customer (assuming it’s a 5 book series). It makes sense to reel in the reader early on with lower prices. Romance readers are extremely price sensitive, so the authors can only play around so much.

 

Now consider the traditional publishing pricing. Hard covers are priced at $25, paperbacks at $14 and eBooks at $9.99 (averages). There has been a raging discussion about publishers increasing the rates of the eBooks, which in turn has hampered them from making any headway into the digital market, although it has led to the resurgence in print sales. Even if successful self-published authors wanted to go through traditional publisher, there is no room for potential agreement when it comes to pricing. The readers will not pay $9.99, if they know they can get comparable books for less. This has been a key deciding factor for many authors, who don’t see merit in publishing only through traditional methods.

 

Also, the traditional model of publishing allows for maximum 15% royalties for the author, as opposed to 70% they earn when publishing with Amazon. That is a big chasm to fill. So what does it mean for the hunter-gatherers and the blooming romantics?

 

Traditional publishing and self-publishing are not mutually exclusive. It would be erroneous to think that in the current market you can do either-or. Publishing is transforming organically, hence, everything is changing. Digital and print publishing, as we know it, are transmogrifying. The market is turning a new leaf. Although, the market is more dynamic and price sensitive; the good news is—there is plenty of demand.

 

Publishers have an incentive for hunting in the self-publishing field, for newer, yet tried and tested content to meet the high demand of the romance readers. It would be wise to skim the top, but  focus on the next tier of writers who are on the verge of breaking out in the market. On the other hand, the self-publishing segment can gain more ground with print sales. Even though it is a digital market, 30% of readers still read print, and only print. There is no other way of reaching these people, but through traditional publishing.

 

Ultimately, publishing industry needs new talent and the authors need the validation that can be achieved only through traditional forms of publishing. It could be a win-win situation, but only if the wheels of publishing can align. As is the nature of business, in due time, it always re-calibrates itself. It would be interesting to see how this unfolds.

 

Anumeha Gokhale

Master of Publishing, Fall 2017

Simon Fraser University, Vancouver

Works Cited

Brown, Maggie. The Guardian. 11 9, 2014. https://www.theguardian.com/world/2014/nov/09/fifty-shades-of-grey-women-dominate-self-publishing (accessed 09 28, 2017).

Crusie, Jenny. http://arghink.com. 04 14, 2007. http://arghink.com/2007/04/please-remove-your-assumptions-theyre-sitting-on-my-genre/ (accessed 09 25, 2017).

Friedman, Jane. Writer’s Digest. 11 03, 2009. http://www.writersdigest.com/editor-blogs/there-are-no-rules/digitization-new-technology/harlequins-self-publishing-venture-is-it-the-future-of-publishing (accessed 09 26, 2017).

Gardner, Suzzane. Quill & Quire. 11 26, 2009. https://quillandquire.com/omni/harlequin-bows-to-pressure-changes-name-of-self-publishing-imprint/ (accessed 09 23, 2017).

Markert, John. “Romance Publishing And The Production Of culture.” Poetics Vol.14(1), 1985: 69-93.

Observer, The, and Brady Dale. Titans of Kindle. 03 16, 2016. http://observer.com/2016/02/kristen-ashley-digital-author/ (accessed 09 28, 2017).

RWA. Romance Writers of America – Romance Statistics. 2015. https://www.rwa.org/p/cm/ld/fid=580 (accessed 09 28, 2017).

Shatzkin, Mike. The Idea Logical Company. 06 29, 2009. http://www.idealog.com/blog/the-evolving-role-of-agents/ (accessed 09 26, 2017).

Tapper, Olivia. “Romance and Innovation in Twenty-First Century.” Publishing Research Quarterly 30, no. 2 , 2014: 249-59.

The Observer, Brady Dale. Titans of Kindle. 03 16, 2016. http://observer.com/2016/02/kristen-ashley-digital-author/ (accessed 09 28, 2017).

Thompson, John B. Merchants of Culture. New York: Penguin, 2012.

  1. Chan Kim, Renée Mauborgne. Blue Ocean Strategy. Boston, Mass.: Harvard Business Press, 2005.

Williams, Alan D. “Who is an Editor?” In Editors on Editing, by Gerald Gross, 3-9. New York: Grove Press, 1993.