The move to electronic publication of books is creating some of the same issues and problems for publishers and distributors that the music industry—not to mention, the information industry—has been dealing with for years now: disintermediation.

For print books, the use of distributors and aggregators to streamline order fulfillment and distribution is well-established as a key value-added service. As we move to books and materials that live in the cloud and sales resulting from some type of electronic payment for access anytime/anywhere, many of the traditional delivery services and roles are no longer needed. Early in 2012, signs of increasing tensions have appeared regarding control of the evolving distribution process for both print and electronic books.

Booksellers: ‘We’re Not Shocked, Just Disappointed’

For some time, booksellers and publishers have expressed concern about the growing power and influence of Amazon in the book arena. For 140 years now, Publishers Weekly (PW) has reigned as a “bible” of the publishing industry. Co-managing editor Jim Milliot believes that “Amazon’s strong-arm efforts to work special deals from publishers [are] having major impacts on the publishing industry.” Whether it’s the company’s price check app or its aggressive demand to publishers on co-op and retail discounts,” Milliot explains, “many have come to actively explore ways to lessen publishers’ dependence on Amazon.”

On the print book front, tensions arose during the last holiday season when Amazon offered potential customers a discount if they went into brick-and-mortar bookstores, applied the Amazon price check app on books they wanted to purchase, and then chose to purchase them from Amazon instead of that bookstore. In return for conducting this test, Amazon gave customers a discount of up to $15. Called “showrooming’” by the industry, statistics show that an increasing number of customers were already doing just that.

The American Booksellers Association’s CEO Oren Teicher published an open letter at the time to Amazon founder, president, and CEO Jeff Bezos in which Teicher questioned Amazon’s motives and intent. “We’re not shocked, just disappointed,” he declared.Labeling the program, which would deny local booksellers the ability to collect sales taxes used to support their communities “a cheesy marketing move,” Teicher called this “the latest in a series of steps to expand your market at the expense of cities and towns nationwide, stripping them of their unique character and the financial wherewithal to pay for essential needs like schools, fire and police departments, and libraries” (“ABA Responds to Amazon App Promo,” Dec. 11, 2011 [http://news.bookweb.org/news/aba-responds-amazon-app-promo]).

In January, Barnes & Noble (B&N) decided to stop carrying Amazon-published titles in their brick-and-mortar stores “based on Amazon’s continued push for exclusivity with publishers, agents and the authors they represent ... [which] have prohibited us from offering certain ebooks to our customers.” In B&N’s view, “Amazon has proven they would not be a good publishing partner ... as they continue to pull content off the market for their own self interest.” This decision applied to all 705 B&N stores. Since this initial skirmish, Canada’s Indigo Books and Music “congratulated B&N for taking a leadership stance on the matter.” Indigo VP Janet Eger explained, “In our view Amazon’s actions are not in the long-term interests of the reading public or the publishing and book retailing industry, globally” (“Indigo and Books-A-Million Join Boycott of Amazon Print Titles,” Lisa Campbell, Feb. 6, 2012 [www.thebookseller.com/news/indigo-and-books-million-join-boycott-of-Amazon-print-titles.html]).

Books-A-Million, the second-largest brick-and-mortar bookseller in the U.S., followed quickly, noting that it had “joined with B&N and will not carry Amazon Publishing titles, including those published under Houghton Mifflin Harcourt’s New Harvest imprint.” The dust had no time to settle when IndieCommerce [www.indiecommerce.com], the American Booksellers Association’s “e-commerce product for independent bookstores,” began to remove all Amazon titles from its database. Director Matt Supko confirmed to member independents that “only publishers’ titles that are made available to retailers for sale in all available formats will be included in the IndieCommerce inventory database” (“IndieCommerce Adopts Policy Change for Title Listings,” Feb. 11, 2012 [http://news.bookweb.org/news/indiecommerce-adopts-policy-change-title-listings]).

“While Amazon is seeking to distribute its print catalog through conventional means,” Supko continued, “it seems that they are simultaneously pursuing a strategy of locking in ebook exclusives which other retailers are not allowed to sell. IndieCommerce believes that this is wrong.”

IPG Versus Amazon

In December 2011, PW reported that “Amazon has been asking for a steeper wholesale discount on books,” noting that “although e-books are sold on the agency model, print books continue to be sold on the wholesale model, in which retailers purchase titles at a certain percentage off the list price.” On Feb. 21, Independent Publishers Group (IPG), the country’s second-largest independent book distributor, sent word to its 400-plus publishing clients that “Amazon.com has failed to renew its agreement with IPG to sell Kindle titles.”

IPG president Mark Suchomel declared, “Amazon.com is putting pressure on publishers and distributors to change their terms for electronic and print books to be more favorable toward Amazon. Our electronic book agreement recently came up for renewal, and Amazon took the opportunity to propose new terms for electronic and print purchases that would have substantially changed your revenue from the sale of both.” Suchomel adds, “It’s obvious that publishers can’t continue to agree to terms that increasingly reduce already narrow margins. I have spoken directly with many of our clients and every one of them agrees that we need to hold firm with the terms we now offer.” Suchomel says he is not sure what has changed at Amazon over the last few months to make it now unacceptable to buy from IPG at terms that are acceptable to IPG’s other customers. (“Amazon vs. IPG—Here We Go Again,” Karen Holt, Feb. 24, 2012 [http://blog.authorsguild.org/2012/02/24/amazon-v-ipg-here-we-go-again]).

Most of IPG’s client publishers are small. Only nine publishers have 100-plus titles with IPG, and 71 offer only a single title. Publications cover all aspects of fiction and nonfiction, with particular strengths in biography, business, history, juvenile, social science, sports, photography, and travel. For most of these publishers, having a partner who can provide sales, marketing, and distribution is essential to their operations—making this issue with Amazon a bit of a David versus Goliath battle.

Countering claims that ebooks should be much cheaper than print books to align with apps, music, or other media, IPG’s CEO Curt Matthews argues that “an e-book still needs all of the expensive editorial services … and, if it is going to sell, it has to be marketed, distributed, and publicized, just as a print edition must be. And the author royalty on an e-book sale is usually about the same as it is for a print book, even though the list price of the e-edition is lower. We have noted that for our $14.95 paperback the printing amounts to about $1.50. Warehousing and shipping will add another $1.50 to the real cost of selling a printed book. A web retailer should be able to work on a narrower margin than a bricks- and-mortar bookstore, which could lower the price of an e-edition perhaps another $2.00. Deduct these specifically print-related costs from the price of a printed book and the minimum price for a straightforward e-book comes to about $10.00—less than the price of the print version but not some small fraction of the print price. Certainly not 99 cents, and not $5.00 either” (“What Should an E-Book Cost?” Curt Matthews, Feb. 24, 2012 [www.ipgbook.com/why-ipg-has-not-been-able-to-agree-on-terms-with-amazon-news-32.php]).

If Amazon had been hoping for a white flag of surrender, it instead received indications of strong support for IPG and its members. Educational Development Corp. pulled its Usborne titles from Amazon. EDC president Randall White explained that its support of open distribution channels was “critical to the long-term growth of EDC, and a way to demonstrate our support of the local booksellers, museum shops, gift stores, and others who sell our books to consumers. … We want to support them in every way we can, and we’ve seen how, working together, not only can we survive without Amazon, but we can thrive” (“EDC Discontinues Usborne Books on Amazon,” Feb. 27, 2012 [www.publishersweekly.com/pw/by-topic/industry-news/publisher-news/article/50810-edc-discontinues-usborne-books-on-amazon.html]).

The Science Fiction & Fantasy Writers of America decided to remove Amazon links for books listed on its website, unless no other source is available, noting that “our authors depend on people buying their books and a significant percentage of them have books distributed through IPG” (“SFWA Is Redirecting Amazon.com Links,” Feb. 28, 2012 [www.sfwa.org/2012/02/sfwa-is-redirecting-amazon-com-links]).

Distributor Copia expressed its own concern about “a very big bookseller [that] has stopped selling ebooks from the Independent Publishers Group. Why? Allegedly because the scrappy, innovative IPG refused the bookseller’s ‘laws of the jungle’ pricing demands. Copia salutes IPG for protecting their authors.” Copia also began offering special pricing for IPG best-sellers from its webpage .

IPG’s Suchomel tells Searcher, “The industry response has been incredible. Accounts are contacting us asking how they can help. Others in the industry are offering support and are helping to spread the word to consumers. Our publishers have been wonderfully supportive.”

Others wonder how long IPG can hold out against Amazon. Amazon has signed co-op agreements with two other distributors of independent presses recently—Perseus Books Group and National Book Network. Is this an effort to freeze IPG from the market?

Amazon Moves Into Publishing

In May 2011, Amazon hired publishing insider Larry Kirshbaum to lead its new New York-based Amazon Publishing imprint, which has been working hard to attract key authors and publishing alliances. At the time, the company stressed that this was an experimental endeavor. “What we’re building is more like an in-house laboratory where authors and editors and marketers can test new ideas,” Jeff Belle, vice-president of Amazon Publishing and Kirshbaum’s boss, was quoted as saying. “Success to us means working with authors who want to find new ways to connect with more readers” [http://mobile.businessweek.com/magazine/amazons-hit-man-01252012.html]. Given the company’s deep pockets and thirst for conquest, Amazon could, in fact, become what Bloomburg Businessweek has called “an unstoppable competitor to big publishing houses” [www.businessweek.com/magazine/amazons-hit-man-01252012.html]. In an article in TheNew York Times, David Streitfeld noted that Amazon published 122 books last fall “in an array of genres, in both physical and e-book form. It is a striking acceleration of the retailer’s fledgling publishing program that will place Amazon squarely in competition with the New York houses that are also its most prominent suppliers” (“Amazon Rewrites the Rules of Book Publishing,” Oct. 16, 2011 [www.nytimes.com/2011/10/17/technology/amazon-rewrites-the-rules-of-book-publishing.html?_r=2]).

One of Amazon’s stated missions is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.” As IBISWorld analyst Mary Nanfelt reports, “Amazon does have a very strong position within the distribution of ebooks especially since it controls the most popular e-reader, the Kindle. Currently, Amazon is not at too much risk; however, if more publishers refuse to agree to Amazoncontract terms, the number of books Amazon offers will decline. Then the company could lose some book sales to BarnesandNoble.com who has more favorable agreements with book publishers and continues to increase the number of books it offers.”

Good E-Reader staff writer Mercy Pilkington explains, “While it’s easy to imply that Amazon bullied its way to the top, it could not have done so without the customers who approved of the business model and made them who they are. No company is completely bullet-proof in terms of keeping its status in the market. Amazon has shown a fairly decent track record of not only adapting to the wants of the customers and the industry, but actually spearheading the new technology.”

“Amazon wants more content, which is why they are getting into publishing,” Milliot confirms. “The margins would be better without the middlemen.” He adds, “Amazon works on pretty small margins now. For their ebook discounts, they admitted that they were losing money pricing titles at $9.99. So,” Milliot concludes, “skipping the middlemen would allow them to fatten their margins and make some money on this.”

Where Stand the Authors?

Authors appear generally focused on their own changing roles and opportunities throughout this debate and escalating battle. Authors haven’t necessarily been completely satisfied with the existing publishing model. Many are finding moderate success using the web, social media, and self-promotion. Others are finding success through Amazon, Apple, and other new publishing opportunities.

“So far,” notes Milliot, “Amazon has not been able to offer widespread distribution to authors that it has signed. No major fiction author has signed with Amazon yet, although a few bestselling nonfiction authors—including Tim Ferriss and Deepak Chopra—have signed with Amazon.”

Joe Konrath posted a blog last year in which he and Barry Eisler explored the new world of self-publishing; both are authors who have signed on to publish with Amazon. “I’m selling 3000 ebooks a day by pricing reasonably. There aren’t too many Big 6 authors selling that well. And I’m getting much better royalties than they are,” Konrath notes. “Simon and Schuster or Random House should have invented the ereader. They should have been selling ebooks from their websites a decade ago. Instead, an online bookseller, Amazon, is leading the revolution” (“Ebooks and Self-Publishing—A Dialog Between Authors Barry Eisler and Joe Konrath,” March 19, 2011 [http://jakonrath.blogspot.com/2011/03/ebooks-and-self-publishing-dialog.html]).

Writing in the Guardian, Frédéric Filloux notes: “At some point, for the market’s upper crust, by deploying agents under the leadership of Mr. Kirshbaum and of its regional surrogates, Amazon will ‘own’ the entire talent-scouting food chain. For the bottom-end, a tech company like Amazon is well-positioned for real-time monitoring and early detection of an author gaining traction in e-sales, agitating on the blogosphere or buzzing on social networks” (“Ebooks: The Giant Disruption,” Feb. 27, 2012 [www.guardian.co.uk/technology/2012/feb/27/ebooks-giant-disruption-publishing].

Sol Rosenberg, Copia’s vice president for business development and content acquisition, believes that “self-publishing is also a new opportunity. In a certain light it could almost be looked at as a minor league system.” As he puts it, “Lots of authors don’t want to deal with marketing and production. So if they break through as a self-published author, some of them will be happy to sign with a bigger publisher.”

“I’ve had giants of self-publishing assure me that my problem is that I have to price all of my books at $0.99,” explains author Jim C. Hines, “but plenty of $0.99 e-books fail. I’ve seen people raise their e-book prices and sell ‘more’ copies. Lots of people experiment with offering free books long enough to hit bestseller lists, then change the prices back. And of course, this all depends on whether or not Amazon’s pricing terms stay the same … that lovely 70% royalty is nice, but there’s no guarantee it will stick around forever.”

Author Jim Hanas, whose book Why They Cried was one of the IPG titles removed from Amazon, blogged that although “I have not been an Amazon-hater in the past,” he was now encouraging readers to get his book elsewhere, even removing Amazon buttons from his website. He added that: “I blew my entire Amazon gift card balance on—and this is the delicious part—a Kobo Touch eReader. That’s right. Amazon doesn’t handle these directly, of course, but you can spend gift card balances with Amazon merchants, which is how I was able to buy the Kobo. It should arrive in a week and then, as a reader at least, I’ll be Amazon-free” (“Next I Blew My Entire Amazon Gift Card Balance On,” posted Feb. 21, 2012 [http://jimhanas.com/post/18126941334/next-i-blew-my-entire-amazon-gift-card-balance-on]).

Hanas believes that “Amazon has generated a tremendous amount of goodwill by creating the most usable e-reading system available and by providing a path for aspiring writers to bypass traditional publishing. However, as the company becomes more willing to exert its influence—on both traditional distributors and self-publishers—it risks alienating its best advocates with every step.” Hanas adds, “Perhaps the company has enough to spare—or at least enough users financially committed to its platform, either as consumers or content creators—but each aggressive move costs them at least some of that goodwill.”

Understanding Terms—How Much Wiggle Room Exists?

The world of bookselling is a bit more complicated than it might seem to the casual buyer. Many policies and practices have evolved over decades if not centuries. “Amazon is always looking at ways to improve their position across the board,” notes Milliot, “from co-op dollars to better volume discounts.” But then, everyone involved—from authors to buyers—also wants to get the best deal that they can in a product category famous for small margins.

“The way it works is that there are volume discounts on the number of titles you get; if you buy five, you might get 43%; if you get 1,000, you might get 50%,” Milliot explains. “Today, the top range might be 52%. I don’t know what number Amazon is trying to get, but they are trying to go beyond the top range. The huge problem with this is that the chains and major publishers were sued about 10 years ago by ABA for disparity of discounts. It’s a power play, because for publishers to grant Amazon a better discount, they’d have to grant that to all of their accounts, and they can’t do that and remain competitive.

“Co-op fees are another area that publishers work with their distributors,” Milliot clarifies. “Co-op is extra dollars that booksellers get to promote the books—sort of a shared advertising fund. Based on sales, now with online retailing, you pay for putting up pictures of the books and other information on their sites. Most of the money, though, goes to the bottom line. Co-op is a bit fuzzier. You don’t have to really offer every vendor the same co-op deals. For bricks-and-mortar stores, especially in the chains, most of the books given prime display in store windows are paid for by the publishers of those books.”

Beyond co-op deals and pricing, publishers are investigating a variety of other options, including an increased role for independent booksellers. However, Milliot advises, “Booksellers will still need to work closer with publishers to develop a more profitable relationship.” As he explains, “There is a need to address the fundamental selling model, such as extending the dating, allowing booksellers to keep titles on shelves longer, or giving booksellers a chance to build an audience while helping them improve their cash flow.”

Another experiment being tried is the selling of books on consignment. Windowing, “offering print books for a time before ebooks go on sale,” is also under consideration, according to Milliot. Both instituting minimum retail pricing and extending the agency model are also under discussion. Adding more sales channels for publishers is another possibility.

Robinson Patman and the Future of Amazon’s Model

Amazon isn’t the first company powerful enough to impose concessions out of its suppliers. Walmart has used its market prowess in this way for years. However, publishers and other producers have legal issues, as well as small margins, that prevent them from bending to the wishes of Amazon or any other company. The Robinson Patman Act was passed by Congress in the 1930s to prevent the development of monopolies.

“Robinson Patman Act doesn’t stop companies from asking for a better deal, but it stops the producers, the publishers, from caving in. So if some publisher gives Amazon a special deal,” explains former publisher and now respected consultant Joe Esposito, “that publisher has to give every distributor that same deal, forcing their prices and profits down. The spiral continues, then, as Amazon comes back to ask for even more of a preferential price.”

The Shelf Awareness blog notes that Amazon’s “terms call for publishers to begin paying co-op on e-books (3% in at least one case) in addition to print books, and change allocation of all co-op so that less of it goes to specific merchandising programs and more to what might politely be called Amazon overhead. In some cases, the e-tailer is also boosting its fee for converting PDFs or print books to Kindle files. We assume that such terms are at the core of the dispute between Amazon and Independent Publishers Group” (“IPG-Amazon Update: On Bad Terms,” March 1, 2012 [www.shelf-awareness.com/issue.html?issue=1679#m15217]).

Can independents such as IPG hold out for long given this pressure? “It would be very, very hard for major publishing houses and university presses to be heroic. A large percentage of their profits comes from Amazon today,” Esposito believes. At the same time, “I can assure you that there isn’t a publisher in the United States that hasn’t been schooled in this act by their legal departments.” How will the IPG-Amazon problem be resolved? “It’s difficult to predict,” Esposito concedes. “We don’t know the particulars of the disagreement, of what Amazon is requesting, and what the company refuses to do.”

Asked specifically about the act and its restrictions on IPG’s potential response, Suchomel would only tell Searcher, “There always has been and always will be pressure on publishers from accounts for more margin. As a representative of many publishers, we can help protect the margin of our clients and level the playing field somewhat, but we need to continually keep our publishers healthy and give them the best environment possible for success.”

Is there another resolution possible? “There is a way to avoid this and Amazon knows what it is,” Esposito notes: “Charge more for the products. Amazon’s strategy is to try to drive the price down so that their competitors have to match their pricing. This,” he says, “is how they continue to grow by using the market as a scale to continue to shift the market to lower and lower priced goods.” However, as Esposito points out, “Some types of goods aren’t going to be able to be produced any longer.” While Amazon claims it is representing the best interests of the consumer by driving the prices down, Esposito questions how consumers are being served if prices are being driven down to a point where the editorial quality is being compromised.

Without more information on the exact nature of the issues with IPG, it is hard to know if Amazon is seeking to separate print book distribution issues from ebooks, which, being electronic, might not require the presence of middlemen in the distribution cycle. Is the company bent on taking the central role in publishing as well as distribution? At this point, it’s impossible to say.

“Publishers are holding firm as best they can,” explains Milliot, “because they know that they can’t grant anything to Amazon that they can’t offer to every distributor or chain. The Department of Justice is investigating ebook prices and other issues, so I can assure you publishers are being very careful not to violate Roberson Patman and keeping to the letter of the law in any of their dealings.”

Do We Need Limits?

“Amazon controls about 60% of the ebook marketplace and, depending on the publisher, anywhere from 15% to 40% of print book market, with a combined market share of 25% to 50% to 60% of the total book market today,” Esposito states. Understandably, this level of control of the market is a growing concern to regulators, publishers, distributors, and others.

“It gets to the point where you say, look I’m a neo-liberal, I don’t like to have restrictions or regulations; I’m an advocate of an open market but in some areas and in some markets, maybe we have to draw a line here.” Esposito continues, “When you’re dealing with any sort of information-based industry, like publishing, at some point those free-market sentiments fail to resonate with our moral center.”

Esposito believes that although Amazon is now at a point where its economic influence is such that the company has gone from simply being the best—“They are the best, they innovate, they invest, they think long-term, they’ve gotten where they are because they are smart, and anybody who doesn’t agree with this is lying”—at some point, it has to be determined if there isn’t a social policy issue here. “Can we really allow Amazon to have such a major position in terms of the free-flow of information?” he asks. “In my opinion, Amazon has now begun to tiptoe across that line, for the first time, and it really bothers me because they don’t have to do this.”

Dosdoce founder Javier Celaya agrees: “Although I admire Amazon for its culture of innovation and superb customer service,” he writes on the Publishing Perspectives blog, “I do not consider it beneficial either for society (readers) or any of the entities involved in the book industry (publishers, bookstores, libraries, etc.) to allow one company to take on such a leading position in the cultural world and be able to determine its future at its own whim” (“How to Counter Amazon: Create a One World E-Book Alliance,” Feb. 29, 2012 [http://publishingperspectives.com/2012/02/how-to-counter-amazon-create-a-one-world-e-book-alliance]).

‘Like Being Caught in the Eye of the Hurricane’

Amazon has, to date, made no public statements on these issues. Efforts to contact Amazon for comments or interviews as a part of this story were not successful.

Today’s situation is hardly calm, but as one publisher commented, we are still in the midst of a mighty seismic shift. No one is really sure what is happening next or how this will all end. “But,” this publisher notes, “you know that you don’t need a weatherman to tell you what the weather is today.” The publisher adds: “It isn’t so much that publishers are entrenched as that this is a much more complex issue than readers might think—legal issues, and the rest of it. We are changing, but like with libraries, change takes time to do it right.”

“Digital publishing now is publishing,” noted Random House digital publisher Dan Franklin at the Independent Publishers Guild January conference. “This should now be in everyone’s heads as a completely integral part of what we do. Even though, yes, at the moment it’s 10% of the market. But by the end of this year it should be 20%” (“Ebooks and Apps Innovation Exciting Publishers Despite Price Concerns,” Stuart Dredge, Jan. 13, 2012 [www.guardian.co.uk/technology/appsblog/2012/jan/13/ipg-publishers-ebooks-apps-innovation]). As the move to digital accelerates, the issue of how this content will be delivered is becoming a front-and-center issue for producers, publishers, and distributors—and something likely to become even more disruptive, controversial, and unsettled for some time to come.

“Amazon is both one of publishers’ biggest customers,” notes Milliot, “and also one of their biggest potential competitors. Amazon is moving into publishing—and we have no real indication of how far they will go with this—but they seem to be ramping up almost month by month.”

Independent distributors are looking at their future as well, with collaboration on strategy being used by Copia, as Rosenberg explains: “Copia operates globally, and in many places in the world, we are joining with other like-minded companies, forming consortia to successfully serve our customers and compete in this ever-changing digital shift.”

Writing at GigaOm, Matthew Ingram believes we may be heading to a world that will be more like a “walled garden” where “just as a few massive chain stores eventually came to dominate the traditional printed book market in North America, the e-book marketplace is a kind of oligopoly involving a few major players—primarily Amazon, Apple, and B&N.” Ingram says that “while bookstore owners of all kinds are free to decide which books they wish to put on their shelves, these new giants have far more control over whose e-books see the light of day because they also own the major e-reading platforms, and they are making decisions based not on what they think consumers want to read but on their own competitive interests” (“How the E-Book Landscape Is Becoming a Walled Garden,” Feb. 29, 2012 [http://gigaom.com/2012/02/29/how-the-e-book-landscape-is-becoming-a-walled-garden]).

With investigations coming from both the Department of Justice and European Union on pricing, “action is the word,” Milliot believes. “It seems pretty obvious from what we’ve been able to gather that DOJ is planning to do something, and publishers are certainly paying close attention. It depends on what might be able to be worked out. Same thing with the class action lawsuit. DOJ’s investigation is giving more credence to the existing class action suit, which is also moving along.”

Like a gathering storm, the coming years will be interesting to follow. Welcome to the new world of publishing, reading, and access!

Which Way Is the Wind Blowing?  Forecasting the Future For ...

Amazon – Except for DOJ and other potential legal/regulatory pressures, Amazon has little to fear. It is sitting on a huge pile of money, has strong customer loyalty, and currently controls the market. No wonder Amazon is so bold in its actions. As we go to press, PW reports rumors that Amazon may be considering a change to its policy that ebooks from its publishing division should be sold exclusively through its own website. Perhaps its failure to attract more big-name authors is causing a course change—or perhaps Amazon is seeking to soften some of its policies under DOJ scrutiny today.

Apple – “Publishers are really happy to have Apple in the game for ebooks,” Milliot believes, “because they have provided more balance to Amazon in this area. Publishers are a bit frustrated because Apple hasn’t really pressed aggressively to develop the marketing of the iBookstore and it’s not the easiest bookstore to navigate, although they have recently improved the iBookstore functionality. Publishers are happy to have Apple involved with ebooks, but they’d like to see them do more.”

Nanfelt agrees that Apple balances Amazon, but neither is really a threat to the other: “Amazon is the largest ecommerce retail site and sells a wide range of products. Yes, Apple and other major companies are invested in ecommerce; however, they have different overall business models. Amazon is primarily an online mass merchandiser. Amazon could be vulnerable to Apple as Apple expands its ebook offerings, but Amazon’s overall business is not threatened by Apple because it sells more than ebooks.”

Google – “Google will never be a publisher,” Milliot believes; but through its work with academe (from email services to offering a suite of productivity tools), the company clearly is establishing deep roots in at least the scholarly marketplace today. Lately the search giant appears to be pulling back on its book digitization efforts in favor of focusing on core businesses. However, Google is huge and must be watching this closely. You can’t count Google out.

Barnes & Noble – B&N has done a good job with ebooks as well, but it doesn’t have the resources or reach, especially internationally, that Apple does to grow ebooks or to provide balance to today’s Amazon-dominated marketplace.

American Booksellers Association – “ABA has always been for a level playing field. That was the basis of their lawsuit 10 years ago, so they don’t want to see Amazon getting anything that isn’t available to every distributor or retail,” Esposito explains. “ABA doesn’t have anything near the lobbying clout of something like Amazon. Look at what Amazon’s been able to do with holding off on paying local taxes.” According to Esposito, “ABA is trying more for public support, comparing Amazon with Walmart and their impact on distribution and competition.” However, if you look at ABA’s lobbying assets compared to Amazon—which was more than $2 million in 2011, according to OpenSecrets.org—you can see that perhaps DOJ will have a better chance of controlling these challenges to publishers and bookstores. The Authors Guild, Association of American Publishers, and other trade groups suffer from similar problems of scale. Perhaps some type of consolidated efforts with other kindred groups will evolve to counterbalance these retail giants.

E-Reading Devices – The marketplace for mobile e-reading devices continues to evolve. IDC recently released its 4th quarter 2011 data which finds that “the Kindle Fire made up 16.8 percent of tablet shipments (that’s 4.7 million units), while Apple gobbled up 54.7 percent of shipments, or 15.4 million units. Strong demand for the new iPad has pushed up estimates of tablet sales this year to more than 106 million units, but devices such as the Kindle Fire could outnumber Apple’s tablet numbers by 2016” (“Thanks to Amazon, Android Could Overtake iPad by 2016,” Christina Bonnington, Wired Gadget Lab, March 15, 2012 [www.wired.com/gadgetlab/2012/03/android-overtake-apple-2016]).

“Amazon is able to sell its 7" tablet essentially at cost because of its revenue model, which allows the company to make its money on content purchased through Amazon services on the device,” notes Bonnington. “Apple, on the other hand, offers itself as premium hardware bolstered by its own software ecosystem of iTunes, iCloud, and the like. The Samsungs and Motorolas of the world are trying to follow Apple’s model, but instead of using their own software platform from which they can get extra revenue, they’re relying on Google’s.” Bonnington maintains, “With Amazon dominating the $200 tablet space, and Apple at both the high end and mid-range with its $400 reduced price iPad 2, traditional Android players are going to have a tough time finding a niche they can take advantage of. But,” she adds, “as with the smartphone market, the sheer number of Android tablets out there, combined with Amazon’s capture of the low-end market, could very well mean Android will eventually win the tablet numbers game.”

The Future Role of Libraries and Ebooks – “There is a big question for publishers today on how to approach distribution of ebooks in the library space,” Milliot admits, “because publishers think it’s just too easy for patrons to borrow ebooks from a library without even having to go to the library. If you are able to sit at home and get books. Random House is suggesting pricing that is about three times the list price. Harper and Collins has a ’26 uses’ model before the library would have to buy another copy. Those are two ways that publishers are trying to work this out. There are discussions going on to try to resolve this, but I’m not sure what the final answer’s going to be.”

Good E-Reader’s Pilkington believes the next issue, library lending, is “still a source of dissension, but that [it] is also beginning to repair thanks to the efforts of people such as Steve Potash at OverDrive and Tom Mercer at 3M Library Systems.” While copyright issues and piracy are still a huge concern, as Pilkington sees it, “There’s nothing about a library edition of an ebook that makes it any more or less likely to be pirated than a retail edition. It is simply far easier to pirate an ebook than a print edition, and I believe the publishers are more keenly aware of that.”

The Future of Print Versus Electronic – Although this seems like a rather stale issue, it still remains very much unsettled. Verso Advertising believes that, for the near-term future, we are seeing the development of a “hybrid market” of both ebooks and pbooks. With older Americans (Boomers, Silents, and Eisenhowers) responsible for 60% of book-buying today, its recent survey results beg the question of whether this is a “generational or chronological phenomenon: Will young Americans read (and buy) more books as they age?” The study urged “the maintenance and nurturing of a diversified retail ecosystem (indies, chains and online) … [as] a matter of business necessity because it mirrors consumers’ preferences” (“2011 Survey of Book-Buying Behavior,” Jan. 19, 2012 [www.versoadvertising.com/Wi7survey2012]).

The Brick-and-Mortar Store – Michael Kozlowski, blogging at Good E-Reader, reported that Amazon itself is studying whether to follow Apple into the brick-and-mortar arena by opening storefronts to sell their wares (“Amazon in the Process of Launching a Retail Store,” Feb. 4, 2012 [http://goodereader.com/blog/electronic-readers/amazon-in-the-process-of-launching-a-retail-store]). If true, this either means that perhaps local, hands-on commerce isn’t dead after all—or, perhaps it’s yet another transitional move to better support Amazon’s initiatives into publishing by giving readers another avenue to discover new talent and imprints, especially at a time when other outlets are pulling Amazon titles from their inventories.