Amazon Beginning to Flex its Considerable Muscle
Reported today in various publishing newsletters and blogs is the news that Audible.com, the audiobook company now owned by Amazon, is lowering the royalty rates it pays to content creators.
The headlines for these articles varied from Amazon’s Move That Should Have Authors Worried to Amazon-owned Audible lowers royalty rates on self-published audiobooks and Audible Reduces ACX Royalty Payments. The previous royalty rates were between 50% and 90% depending on the terms negotiated. From here forward, the maximum rate will be 40% for exclusive distribution and less for non-exclusive titles.
Amazon has built a megalithic marketplace and a matching customer base, and it may well be that the time has come for Amazon to start making a profit. The predatory practices the company has used to build their reach and power have been well documented (most recently in the bestseller The Everything Store by Brad Stone (Little, Brown 2013). Selling below market, even below cost was a common practice and shook a number of industries, but let’s focus on the publishing industry.
There were many reasons for the demise of the Borders book chain in the fall of 2011, but one of the factors might have been that they outsourced their website and internet sales to Amazon. Another might be that they simply could not match price with Amazon. Many an indy store has shuttered for similar reasons.
The recent and unfortunate action by the Department of Justice and flawed decision by Judge Cote finding Apple guilty of the price fixing of ebooks has further entrenched Amazon as the most powerful monopolistic force in e-tailing of ‘books’. There are a few alternative resellers, but it would not be a stretch to call Amazon a monopoly.
And monopolies can exercise their power in ways that can rock even the most jaded souls. There is a hint at the beginnings of Amazon flexing the massive muscle it has in the aforementioned book The Everything Store, but a more recent article I’ve read is at Salon.com. You can find Stephan Eirik Clark’s article here: http://www.salon.com/2014/03
For the publishing industry as a whole Amazon is both a blessing and a curse. For authors who wish to self-publish, mainly in digital form, Amazon can be a boon (although it is documented that the percentage of self-published authors that earn reasonable royalty income is tiny). For publishers, it is a double edged sword, accounting for a third or more of annual sales but at increasingly difficult terms. Also, Amazon’s growing publishing programs must be a big concern for the “Big 5” publishers. Perhaps these alternative publishers might open up a bookselling site of their own. But beware the Amazon muscle – they are the 800 pound gorilla. They can crush competition, and as long as the government allows it, they will.