For the past three weeks or so a lot of digital ink has been spilled weighing the pros and cons of Amazon's announced decision to require publishers to store POD titles with BookSurge if they want Amazon customers to rely on 24-hour shipment for fulfillment on demand rather than from inventory.

Let me say at the outset that there is a lot more here than meets the eye – and in my opinion under-utilized market forces that can restore confidence among publishers are still alive and well, and need to be dusted off and activated. Amazon's move may represent opportunity rather than threat.

What is clear so far is that conglomerate and mid-range publishers are not seriously affected by the Amazon move since very few rely on POD for book-at-a-time fulfillment; rather they follow demand printing and short run strategies. Nonetheless it is known that Amazon had been pressuring and/or negotiating with selected publishers to commit their pod lists to Book Surge.

It also seems to be the general consensus that along with this requirement publishers are having to negotiate unfavorable arrangements and uncertain quality without the option of a competitive choice or else place titles, at addtional expense, with more than one POD printer to gain the distribution advantages that might accrue.

Those who are – or will be – affected are smaller publishers, self-publishers and author-publishing services who have relied both on not having to maintain inventory and also on the shorter discounts they could offer, making it possible to keep their retail prices competitive or to increase their margins while absorbing the increased unit cost of print on demand. Of course, at this writing I have no idea who is in or out. Many are complaining, few are talking.

For the demand publishing community the wake-up call is that there are other online channels and retailers to which they can direct their customers – Barnes and Noble is probably the best positioned because of their full service B&N.com web site as well as their network of stores.

B&N provides the same transparent 24-hour shipping service to its online customers for any titles placed with the Lightning Source. POD publishers who no longer have the "order now" status with Amazon can be referring customers to B&N instead of to Amazon. Other retailers have an opportunity here to step into the breech.

There are at least a half dozen viable online retailers in addition to Amazon who can also create "in stock" arrangements with Lightning Source. There are at least a half dozen other significant digital demand printers who also serve as repositories for the title libraries of demand publishers or for long tail lists of conventional publishers. Online retailers should also offer sales fulfillment arrangements with these other POD printers.

In my opinion the publishing industry trade associations  – PMA, SPAN, ASJA, Authors Guild, AAP, AAUP,ABA, BISG – should create a working committee to develop a best practices code for keeping the internet marketplace open to POD fulfillment and to facilitate for other online retailers and digital demand printers who want to open up sales opportunities similar to the one that Amazon had been offering.

I think it would be a more efficient expenditure of funds for legal advice to activate such a group than going to court to sue Amazon.

There is no doubt in my mind that Amazon is improperly bundling its wholly owned printing service by limiting non-inventoried 24-hour POD shipment to publishers who place titles with Book Surge – especially as it is commonly known that they are doing this selectively and that they continue to drop ship direct from digital printers anyway when they need to.

I also think we don't have a fair trade situation in the retail distribution of POD titles generally. I am told that different kinds of deals are being negotiated with different publishers by Amazon that are not justified by variations in cost or other logistic considerations. Whether that is in fact so is hard to verify since there is no communication here. Nonetheless it is the demand printers like Lightning Source who determine the efficiency of service, not the small one-title or mid-range many-title publisher.

While Amazon remains opaque and elusive after a brief effort to explain itself and respond to the explosion of negative reactions from the publishing community –  I do not believe they are immune to market forces nor to the benefit of maintaining good relations with the people who produce the books they sell. (Of course I don’t have any evidence of this at the moment, since from what I have been able to discover they have been cherry-picking their publishing targets for BookSurge and make no plans public.)

For the moment they have the upper hand, earned by their success in building a fabulous marketing and sales channel for books, although they have been wielding it crudely and unilaterally. With the major exception of bundling their own printer selectively, their moves are within their rights to determine who they will do business with, what discounts they are willing to pay, and now they will ship.

The most efficient antidote is to activate immediate market alternatives such as I have suggested above. There are also longer term strategies. For example, Michael Cairns writes on his blog (April 1 http://personanondata.blogspot.com):

"Perhaps it is time for publishers to be more aggressive in becoming retailers as well as content producers. If so, it’s not as simple as setting up a store front that looks like a mini-version of the Amazon bookstore (obviously) since no one would switch. However, publishers do have the direct relationship with the author and can use this exclusivity to build a more robust presentation of the content. On Amazon you get the Buick version but on the Publisher site you get the Cadillac. None of the added or supplemental content would be made available elsewhere. What that extra content would be I don’t know. Maybe every author is twinned with an additional writer and site designer that builds/creates websites focused on the authors work but with far more expansive material about the works, process, background details, audio, video etc., any of which could be purchased by a consumer. This becomes the new marketing and promotions approach or the way to spend money that is traditionally allocated to print advertising, book tours and launch parties."

As Tim O'Reilly said recently, "Amazon has, so far, created huge value for the publishing ecosystem. Now, as they become more powerful, they need to be especially watchful that they don’t irreparably damage an industry on which they, too, depend."

In the past three weeks or so I have spent a fair amount of time networking with trade association people, industry analysts, distributors, wholesalers, publishers, digital demand printers and, yes, a few go-rounds with Amazon's Director of Corporate Communications, Patty Smith (psmith@amazon.com), until she fell silent.

In fact, falling silent seems to be the default position for the main actors in the demand printing and distribution chain. Until now, Amazon's powerful presence and occasional arbitrary moves had by and large been viewed in the industry with tolerant appreciation for the value it has added to the reach of booksellers and the search of readers.

The new silence is a self-imposed defense by major players in the distribution chain who have just seen how Amazon can wield its power at will and threaten the many business models built around its marketing gateway. Amazon sees it differently - as a reasonable move to improve efficiency and customer service.

Our trade organizations should rise to the occasion and collectively seize the initiative to activate marketplace options for an industry that seems for the moment frozen in fear, anger or frustration.

A guest blog by publishing attorney Lloyd Jassin


NOTE FROM EUGENE: I have been gathering background on the recent Amazon change in POD order fulfillment policy and will be doing my own report on it next week. Meantime, I asked Lloyd Jassin, a publishing attorney and Chairman of the Executive Committee for the NY Center for Independent Publishing, for comments on the current debate concerning Amazon's new policy. He has provided the following as a private citizen-professional, and not in his capacity with the NYCIP. He can be reached at Jassin@copylaw.com.


As the market changes and we move from traditional distribution options to digital distribution options, I find Amazon's move both troubling and exciting. They want to be active all the way along the supply chain from production, to marketing to distribution. As Amazon gets more involved in digital production and distribution, it's not long before they figure out that there should be an Amazon-based publishing company. Well, on the audio side, they've already figured that out. That's the troubling part.

It's a brilliant move. You have to admit. By force of will, Amazon has become the digital asset warehouse and distributor of choice. And, how many digital asset warehouses / distributors do we need? This gives Amazon the ability to manage digital files for POD, ebooks, mobile phone devices, etc. The exciting part is that when Amazon takes this next step, it will create new revenue streams for smaller presses.

While it doesn't look like the cost of gaining access to the number one online bookstore has gone up, I'm concerned about their monopolistic tendencies. Their claim that they are not seeking exclusively (i.e., requiring POD titles be printed exclusively through Book Surge), seems to be a subtle bit of specious reasoning. Amazon's gain is the ability to monopolize the POD market. They are offering a single printer option. Your email makes that clear.

If I were a publisher, I'd look hard at the current industry model. You have the potential to get squeezed on both ends. For example, you've got the Barnes & Noble - Sterling combo with an increasing number of book sales being titles self-published by B&N. Same deal with Amazon and Audible, both of which are actively going after new product to self-publish. See Amazon's Createspace. To the extent publishers covet virtual shelf space at Amazon (with one-click ordering), Amazon's move makes them the leading POD publisher. Of course, there will also be a plethora of other digital opportunities, including e-reader, iPhone and other selling opportunities, that they should exploit for those whose files have been entrusted to them.

Their virtual warehouse of digital files can now be accessed for all manner of digital derivatives. If Amazon remains committed to the indie press segment, which has been allowed to grow to its present size due, in large part, to Amazon, that's great. Their favoritism to Book Surge, is a slippery slope that can easily decrease diversity. They are steering consumers to books that are produced by their owned and operated press.

So, as a general proposition, I think vertical integration is a bad thing. Perhaps, the market will correct itself, as publishers move over to B&N, and other digital asset distributors pop up. Likely, that won't happen. Book distribution is not sexy enough.

If I had to prognosticate, I'd say in the next 24-months Google buys Ingram (Googlegram?) and out-Amazon's Amazon, by creating the ultimate digital warehouse - distributor in the sky.

If Google were to exhibit digital favoritism, it would steer book buyers to its wholly owned Lightning Source. Amazon owns the store. Google owns the web. Amazon merchandises books. Google sells them contextually. Balance is restored to the planet.
 
-Lloyd Jasssin

For starters, I would like to share with you my own recollection of the printing business in New York City, which is how I got into all of this, and is why I have been a champion of small business, free markets, and the civil societies on which they depend, ever since.

Reading recently an article in "Heard on the Web" (www.bosacks.com) – a bulletin from Bosacks (Robert Sacks) – brought me back to an earlier era in the 1950's in New York City, and a neighborhood a bit northeast of the rumbling (and sometimes roaring when you got close) presses of the Hudson and Varick Street sector of the printing  business in lower Manhattan.

I'm thinking of the network of commercial printing job shops south of Union Square and north of Canal that handled much of the short run brochure, announcement, newsletter, booklet, broadside and direct mail needs of the city's businesses, agencies and studios, and non-profits.

I started out as a young salesman in 1954 for Carnegie Press, Inc., a small letterpress shop (two #2 Kelleys, a Miller Simplex and Miehle Vertical), on the 10th floor of 104-110 Green Street, corner of Prince - now converted to an upscale condo in Soho. My bosses, Lou Auerbach and Ozzie Schroeder (the outside man and the inside man) took me in and taught me the ropes.  My beat was South Ferry to 57th Street.

We shared the floor with Winslow Ink Co., and all the 12 or so floors of small businesses relied on one freight elevator and a wide flight of stairs.. If Winslow couldn't come up with a special ink we needed (I would sometimes watch the chemist mix matching swatches with his pallette). I would hike over to get it at Superior Ink in the Puck Building on Lafayette Street. We did all our binding (except for small Baumfolder jobs) with Tomash Bindery on Astor Place, who picked up sometimes twice daily.

We got our paper from houses such as Lindenmeyer, Milton, Case and Marquardt - ordered by phone and by the job (early forms of just-in-time inventory), and delivered by them the next day. Marquardt was just a few blocks away and so we could pick up a rush order of pastel colored Strathmore or Curtis texts in emergencies. Lindenmeyer provided us with rice paper and other specialities. We used a steady supply of Warren antique book, lustro gloss and machine coated Printone - firsts or job lots - from a variety of merchants.

Occasionally an account gave us a large job to farm out, and we'd get 77" offset sheet work done at Landes Offset on Broadway, or get a book plated and printed and bound at H.Wolff.

Athough we had our own two Model 8 linotypes, foundry and Ludlow selections, we jobbed out a lot of special typesetting jobs - I remember one of those times when that elevator broke down, and I lugged a load of monotype that we got from H.O. Bullard up 10 flights of steps for a NY Bar Association publication that was on deadline.

We had a folding box shop on the ground floor, and various die-cutting, engraving and finishing shops dotted all over that neighborhood. Those were the days of zinc and copper engravings, Dupont's introduction of Dycril as a plastic substitute (which we tried with some success), and decorative wood type from American Wood Type.

There was a great old mahogony bar-anchored tavern at the corner of Prince and Green, with cut glass windows in the doors, and a special ladies entrance (for the evenings I suppose), where we'd get a quick savory corned beef and cabbage and/or potatoes hotplate, rye on  the side, and a mug of beer for lunch.

From dawn to dusk the neighborhood was teeming with people coming and going on the sidewalks, and with trucks vying for curb space for pickups and deliveries. NYU, Carl Fishers, Wanamakers, Cooper Union, Little Italy, Kleins on the Square, used book store row on 4th avenue (Park Avenue South), Greenwich Village -- all those great features of lower Manhattan so easily accessible ringed the area and were part of our reward -- we who powered the clatter and the hum of the printing shops and all the other light manufacturing, converting, supply and distribution services that pumped life and opportunity into our great city.

Which, at the time, seemed perfectly normal  -- seeing as the whole island was alive with enterprise.

What's on your mind?

Posted by: Eugene G. Schwartz