Friday, 25 April 2008


Amazon/Booksurge - Washington State Attorney General-Update


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As a follow up to the previous post on the initial statement issued by Washington Attorney General's office, it would seem some conclusions have been reached. Here is the link to the original posting from last week.

http://mickrooney.blogspot.com/2008/04/amazonbooksurge-washington-state.html

The Attorney General say they have looked at the current circumstances surrounding Amazon's moves to make POD publishers use their own in-house printers, Booksurge, and deem "it may be more appropiate to refer this matter to one of the federal anti-trust agencies for review" and "anyone feeling that they have been harmed and wish to pursue a remedy should consider consulting with private counsel."

Well, it would seem, at least for now, POD publishers are going to have to either row in with Amazon's plans and suck on their sweets, or find legal redress through a different agency.

It is notable that so far there have been few signs that POD publishers are willing to publicly form any kind of alliance. Though this issue has generated considerable debate, publishers continue to play their cards close to their chest.
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  1. If POD publishers don't "publicly form any kind of alliance," and if they prefer "to play their cards close to their chest," they're doomed. You don't fight fire with weeping and little bits of tissue paper.

    Even though I was the first to suggest the idea in some emails, I never thought the Washington State AG would actually take legal action. Politics and business in Seattle is as corrupt as it is in Chicago. The son of the city's mayor was recently caught in a multi-million dollar scam and no one was particularly surprised. Nor will the local press be of much help. Both the city's daily papers are in such a financial bind, they can hardly cover the local news, much less engage in hard-hitting investigations. Seattle was born in the Gilded Age of Robber Barons and Social Darwinianism, as Microsoft's bullying in the 1990s demonstrated all too well. Eventually the feds will probably go after Amazon like they did Microsoft, with this being just one of many charges, but we can live in the maybe or the someday.

    Contacting the AG was simply putting pressure on the system and generating news. It was a way to make Bezos pay attention to this issue, which might have been decided at a lower level, and cause him to react. Now we have his attention, we need to get tough. Given the secrecy that surrounds the company and the large sums they pay for his personal security ($1.2 million a year), he seems to be more than a little paranoid. We need to feed that paranoia with things that are genuinely scary.

    Forget supplying Amazon with five copies of books and paying an annual fee for the dubious privilege of adding to their profits. That's not a viable option. Anyone who does so is likely to find the ante soon upped.

    They have some ten shipping centers, all of which will need to be stocked if their ill-conceived Prime shipping scheme is to work. Do you want the hassle of keeping an inventory of five books for each title you have in each of their ten centers?

    If you have fifty titles, that's an inventory of 2500 books that have been printed and paid for without you getting a penny in income, as well as 2500 physical books you have to track week by week, lest Amazon ship them but not pay you. You'll have to have a computer tracking system as complex as that at Ingram. Do you have the budget for a full-time financial database and inventory tracking programmer? You'll need one.

    That sort of hassle and expense is not what we got into POD for. Besides, from what I hear, Amazon will nickel and dime you to death on this, sending a request for one book on Monday, a request for two different titles on Wednesday etc. You'll live in your car driving to the post office burning pricey gas. (So much for Amazon's "save the environment claims.) Remember, you're soaking the cost of all this. They have no reason to play nice with you.

    Also keep in mind that legally books are not like most other products, thanks to a 1930s law.. It's quite likely that offering that service to Amazon, but no other bookstore, online or otherwise, is illegal. Do you want to also be forced to supply B&N or Powells or any bookstore that decides to keep a few of your books in inventory? You will, if you sign with Amazon and one of them takes you to court, that is, after you pay all their legal costs, which are likely to run into six figures. Amazon will hire high-powered lawyers who will get them off scott-free while you become the criminal. After all, it was your fault for accepting an offer from them that you didn't immediately offer to others.

    And do you want to have to supply book files in some quirky format to every fly-by-night combo pod/online store that comes along? By law, what you do for one bookseller, you have to do for all.

    No, we must take charge of this dispute. Do nothing and we loose. POD publishers need to develop a list of reasonable contractual requirements that Amazon/BookSurge must meet before we sign with them. Here's a short list off the top of my head:

    !. Since Amazon is doing the printing, selling and shipping, Amazon must take care of all damaged returns and clearly state that on the Amazon detail page for the book. That means that for BookSurge books, publishers can clearly state inside the book that Amazon must be contacted for all returns, that the publisher has no responsibility and no liability. I suspect this reasonable demand is something Amazon's upper execs haven't considered.

    2. Amazon must offer high-quality return services, as high quality as we might like to offer. Having a 800 number manned by humans, paying shipping both ways, and promising to get a new copy to the customer within two weeks. Given the reputed dismal quality of BookSurge, that could get costly for Amazon.

    3. Remember, we're happy with the current arrangement and can find no benefit for ourselves in these changes. Amazon must use carrots rather than sticks to motivate us. BookSurge must take book cover and interior files in the same format as Lightning Source and match or better their prices. That'll eliminate the considerable conversion costs. Personally, I'd add another stipulation. If Amazon has 5% of the book sales in this country, their prices to put our books on their system must be 5% of LSI's. We should not have to pay as much to reach 5% of the market as we pay to reach 95%. Reporters are likely to find that fairness argument compelling.

    4. Since BookSurge can't print in the same sizes and formats as Lightning, Amazon must continue to sell all books in those sizes and formats, getting them from Lightning, until BookSurge offers that size and format. It must also sell titles from Lightning in any country BookSurge doesn't print (apparently in the UK).

    5. This is the most important. With Amazon in complete control of a book's publication chain, they must open up ALL their internal books and sales tracking to any pod publisher who asks, immediately, completely, and without charge. Remember, with the current scheme involving Lightning, Ingram, and an independent bookstore, we have multiple checks on what's printed and sold. With Amazon doing it all, they could very easily print 1000 copies, but pay us for only 800, turning a tidy profit at our expense. How would we know? We wouldn't. Can we trust Amazon? Of course not! We know they're scum. Their behavior already proves that. If they protest, we can reply, "What do you have to hide?"

    6. So we know when to invoke #5, they must report to us all sales of our titles weekly, detailing how many books were sold, when they were sold (to the minute), and where they were shipped down to the zip code. That would let a POD publisher make test sales and get friends to forward Amazon receipts for purchases they make. If a sale doesn't show up on the weekly report, the contract would allow us go into their accounting and tracking system to find out why. Any missed sale would incur a substantial penalty, perhaps 100 times our loss plus all our costs, including travel and hotel expenses and billing for our time.

    Will Amazon agree to those stipulations? Almost certainly not. But by refusing, Amazon will demonstrate that this isn't about customer service nor is it about business integrity. We take the moral high ground and leave them fuming and sputtering.

    I emphasize again, if we don't take charge of this dispute by dictating the terms of any agreement, Amazon will stay in charge and slowly wear us down, a little this year, a bit more the next. We need to act, we need to act now, and we need to act together. When BookSurge reps call, we need to be able to say, "Have you agreed to the POD industry's standard contract yet?" If they say no, then the conversation is over.

    We must seize and keep the initiative, putting the onus on them to meet our demands. If we don't do that, then what is happening now is only the beginning our our troubles with Amazon. They will continue to squeeze not just us but authors and everyone in the publishing industry.

    Remember, appeasement will not work. You fight bullies with all the skill and courage you possess, you don't try to make them happy. Every bit of meat we feed to the beast will just make it bigger and more dangerous, as well as make it want still more.

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