Chip MacGregor

June 9, 2014

Why I love Amazon


After some recent blog posts, it was pretty clear some readers thought I was bashing Amazon. A word about that… I love Amazon. They are the single largest seller of the books I get to represent. The are fast, inexpensive, and innovative. Amazon created the first e-reader, the Kindle, thus setting up an entirely new market for books. Their customer service is usually great. And they help me make money for the authors I represent.

Think about this for a moment… According to a Codex Group report that was distributed at BEA last week, Amazon sold 41% of all new books in the month of March. They sold 65% of all ebooks that same month. And, not to swamp you with numbers, but that study revealed that of ALL book sales in March of this year, 41% were sold via e-commerece, and 22% were sold in bookstore chains. (If you’re interested, 3% of all book sales came from religious bookstores, 3% from independent stores, 3% from Costco & Sam’s Club, 2% from supermarkets, 2% used book stores, 2% were sold direct-to-consumer, 2% nontraditional bookstores such as craft and health food stores, 6% book clubs, and 8% from mass merchandisers.) So in other words, two sales avenues dominate book sales — bookstores chains and e-commerce. And there are only TWO companies that have a significant chunk of both the e-book and print market: Amazon and Barnes & Noble. I’d like to see them both survive. Consumers win when there is competition.

Amazon has been incredibly well run, and they have some advantages over other booksellers, including the largest list of books of any bookseller on the planet, and a huge scale of operations to make it succeed. I own a Kindle, and I love the fact that I can go on, any time, find several million titles to browse through, then download the ones I want with the click of a button. (Imagine if you could buy groceries that way… oh wait! You can, if you use Amazon’s grocery-shopping services.) The actual shopping experience at Amazon isn’t nearly as satisfying as wandering around through the aisles of Barnes & Noble or Books-a-Million, but sheer scale is amazing, and the ease is like something out of The Jetsons. Push a button and WHAM. It’s done.

Not only that, but I work with several of the editors at the various Amazon Publishing imprints, and they are very good at what they do. They work hard, do a fine job, and are always trying to beat the other publishers — which is their job. And I mention all of this because, in the current dispute between Amazon and Hachette, it’s easy to make it seem like there is a Good Guy and a Bad Guy — and most of the industry is siding with Hachette. I don’t think it’s fair to characterize the parties as good and bad — it’s a negotiation. It’s certainly not fair to characterize Hachette as wounded or struggling (they’re part of a multi-billion dollar conglomerate in France that is one of the most successful entertainment companies on the planet, so I think they’re still able to pay the light bill). But I DO think it’s fair to point out when a company, even a company you like and respect, is doing something you don’t think is best for writers and readers. And in this case, what Amazon is doing (not listing some ebooks, delaying the delivery of books, not allowing pre-sales, just to squeeze one publisher so that they can continue to push smaller companies out of business), I think it’s perfectly fair to cry foul.

There are at least two negotiation points that Amazon and Hachette are fighting over, and they both have to do with the greater world of publishing. One is the notion of loss leaders — Amazon wants to buy some books for five dollars and sell them at four, which means they take a loss on the sale, but it keeps a lot of readers coming to the site to buy other titles. Hachette wants to prevent that, because that in turn drives out retailers who don’t have the resources to compete with those types of losses. The other is the notion of windowing — a publisher selling only the expensive hardcover edition of a book upon first release, then moving to trade paper, then eventually releasing the lower-priced ebook edition (much the way publishers used to use mass market sized books). Windowing is a way to maximize the dollars generated on a title. We see moves sold this way, with the most expensive edition coming out initially, followed later by a lower-priced edition without the special packaging, and then later still by a plain-Jane edition with the movie on a disc but no features. But Amazon is opposed to windowing, since they make the bulk of their money via e-books. Again, these are just two items (but an important two) that both have long-term implications for the industry. I’m of the opinion that we need bookstores and publishers, and that retaining them helps keep our industry healthy.

For those of you who write in CBA (and we represent a number of authors who write in the Christian market), an analogy to the Amazon/Hachette fight would be how fiction is currently being treated by Lifeway Stores. The Lifeway chain is huge in CBA circles, but their tastes are very restrictive — no sex of any kind (to the point of sometimes being silly — we had a book rejected by them once because a character touched his fiance’s thigh in the text), no language of any kind, no adult themes of any kind, no theology of any kind that isn’t in line with conservative evangelicalism. All of that may sound fine to you, if you’re in that camp. But it begs the question, “Why isn’t anyone under the age of 35 buying CBA fiction?” Sales of Christian fiction are way down, particularly in CBA stores, and CBA publishers are cutting fiction editors and trimming their lists. I keep wondering, “Why is a publisher willing to let Lifeway put them out of business? Why don’t they tell the conservative, middle-aged, Bible-belt Baptist white guys who are running that chain to take a flying leap?” Because, sooner or later, the retailers will need good books to sell.

So let’s say you have a book releasing with Hachette next week. Normally it’s up for pre-sales, but Amazon, because of the ongoing negotiation with Hachette, has decided not to make it available as a pre-order. The ebook isn’t listed at all an Amazon. When someone comes onto the site to purchase a copy, they are told it will take six weeks to arrive. And this isn’t because of the fault of the author — it’s because the author is a pawn in the bigger game between two giant companies. Who is it that really gets damaged in this? The author, who won’t be making money. And the reader, who can’t find the book. And that’s my point. As an agent, I’m here every day trying to help authors make a living. And, in this case, it’s the authors that are hit hard. And Amazon, who has always made it a point to treat authors and readers with respect, is failing to do that.

Sure, readers can go buy the book elsewhere. But… is that really the point Amazon wants to make? That readers should go elsewhere? As a businessman, I’d suggest that’s a terrible argument. So, yes. I love Amazon. I appreciate all they do. I want to keep working with them. But let’s not act as though they’re above any form of criticism.

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  • Peter DeHaan says:

    I love Amazon, and at the some time, I fear what they are capable of doing.

  • cynthiahickey says:

    Thank you. Amazon has been very good to me.

  • Ron Estrada says:

    As a guy who’s been an automotive engineer for 20 years, I understand less-than-honorable methods of dealing with supplier negotiations. Detroit is surrounded by shuttered tool builders, thanks to the all-profit-is-ours mentaility of the Big 3. Amazon is clearly involved is some unpleasant tactics. But Amazon also knows that most of their customers won’t even notice what’s going on, and the mild uproar coming from a few authors and agents won’t make it past blogs like this one. In other words: yes, it’s wrong, but there’s nothing anyone can do about it. You know my stance on government intervention. Our $1.99 e-book will go the way of the $9,000 car and $20,000 college education. The 21st century author and his agent can only watch these situations, then pick through the rubble to determine how to take advantage of it to best suit our financial situation. I’m sure many more of these battles are in our near future. The industry has gotten too dynamic and the old paradigms will be challenged. Love your perspective on this, Chip. I can only catch snippets, so you’re keeping me in the loop.

  • Jodie Bailey says:

    I’ve been following this whole Hachette/Amazon battle through your posts, and I’m glad for this one. We love to have things be black and white, good guy and bad guy. Fact is, there is no all good or all bad. I’m like you. I love Amazon for what it does and does well, for the convenience and the value many times. But I don’t love when they get a little “big for their britches” and try to take over the world. I haven’t stopped using Amazon and likely won’t, but this has made me take a hard look at how I buy my books.

    • chipmacgregor says:

      Thanks, Jodie. I think a lot of folks feel that same way — they’re going to start thinking carefully about where they purchase their books.

  • Love that you referenced the Jetsons — favorite cartoon of all times and that reveals our generation, yes? Enjoying all your insight and wise counsel on these posts Chip. Thanks for writing them.

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