The Shatzkin Files


Don’t blame Amazon, Facebook, and Twitter for the fact that technology changes behavior


In the past week, we have seen the Louis C.K. rant against smart phones, the Jonathan Franzen deep intellectual swipe at what Amazon is doing to the world of publishing, and I had an exchange with a very dear old friend who does email (his wife doesn’t), but can’t handle texting or Facebook. Or thinks he can’t.

I remember about four years ago telling a family member of mine that it had gotten to the point that not having a cell phone was anti-social. I am quite sure that people who don’t have cell phones or Facebook accounts miss out on communication they’d have been glad to get. And by being outside communication streams that are increasingly ubiquitous, they actually place an unintended burden on people around them to keep them informed.

Futurist David Houle has pointed out that eighty years ago some people would refuse to get a telephone because a) people could just call you on it and intrude into your private space and b) people would know where you lived by looking you up in the phone book. These things were true (although eventually we got to “unlisted numbers”), but so were a lot of other things that were benefits. I was thinking about my friend who won’t do texting or Facebook. Hey, they’re just means of communication! Do you want me to mail you a letter to find out if you want to have dinner next Saturday night?

When the first means of electronic communication arrived, telegraph inventor Samuel F.B. Morse had the prescience to make the first message he sent be “what hath God wrought?” Indeed, progress in electronic communication changes the world in ways that prior generations would have expected were possible only from God.

Yes, we have entered a world where all of us are connected to the entire planet all the time, except at the moments we specifically choose not to be (leaving the cell phone in a drawer or turning off all audible signals from it). This is as good a thing for each of us as we make it. But we are also increasingly depending on everybody else to be connected this way too.

Many of us announce our most important life events (and some insignificant ones too) on Facebook. That keeps our friends and family apprised of marriages, illnesses, births, and political opinions without us having to send out cards and make sure we have all the up-to-date addresses. Many of us (me not yet among them…) can use Twitter effectively to get the most up-to-date information about a breaking news event. (No self-respecting journalist could be without this capability today, I suspect. Certainly any journalist who knows how to use Twitter has an advantage over any who doesn’t.)

About 15 years ago the CEO of a major publishing house, a person with a reputation for digital forward-thinking, told me he was questioning whether everybody in his shop ought to have email! (After all, people with email are tempted to have communication that isn’t necessarily about their job. He was okay with internal electronic communication on a closed system.) It seems like every technological change faces skepticism because every technological change brings along a set of possibilities for behavior that needs to be controlled.

But, this being a blog about publishing, I’m most interested in rebutting Franzen’s suggestion that Amazon is somehow bad for reading, or bad for reading good books. (I agree with him that Amazon makes things harder for publishers, but that’s not the same thing.)

First of all, let’s not blame Amazon for two things: being really good at what they do and the natural impact of network effects. The “network effect” is that the more people are on a network, the more valuable it is to each person on it. In the first two decades or so of the 20th century, phone companies could only reach their own subscribers. A person who wanted to reach all their friends in an area might have to have several phones with different companies. Most wouldn’t, so even with a phone, communication was minimized. Gradually, the “roads got paved” and the phone systems were knit together.

You know one of the things that resulted from that? Reform politicians who were outside the central city finally became competitive with the urban machines, who could communicate easily without phones because they were in close geographical proximity in the center of town. (Thanks for this fact to my late friend, Professor Richard C. Wade, who invented the field of urban history.) It is also true that over time many kids wasted countless hours talking to each other on the phone. I know because I was one of them in the 1950s and 1960s during my adolescence when all my friends were available through them. I would have been outside getting fresh air 40 or 50 years earlier. Oh, those terrible telephones!

Amazon and Facebook and Twitter have more value than any possible competitors because they have more people actively engaged with them every single day. B&N can’t compete with Amazon around reader reviews because it has far fewer of them. Amazon tells you that X people out of Y found this review helpful. You need numbers to do that. Only one person in many writes a review. Only one person in many reads any posted review. And only one person in many bothers to post that they found a review helpful. That’s one in many cubed. The denominator is one enormous number. Amazon’s book customer traffic is probably 10 times or more what BN.com’s is. So it is possible for Amazon, and for nobody else, to tell you that X out of Y found this review helpful with meaningful numbers. (Even if Jonathan Franzen and others aren’t impressed with the provenance of the reviews. And even if some of the reviews have been deliberately gamed.)

Meanwhile, New York Times book reviews are available to far more people than they were before Amazon came into being and through the same computers that bring in Amazon. And when Jonathan Franzen writes his piece for The Guardian, far more people (including me and anybody who clicks the link I provided above) will read it than would have when there was only print. And anybody interested in the new book of his that he is promoting can just click a bit more, probably to Amazon, and buy it.

This is bad?

It is true that Amazon is the pointed spear of change in the world of communication (although they are not alone). From the moment they made a massive database of books available online, they challenged the core proposition of bookstores and the biggest ones with the biggest selections were the most challenged. It isn’t really Amazon’s fault that buying books online is so attractive to so many people, it is the nature of the beasts: the book choice beast and the Internet database beast.

But Amazon takes advantage of this opportunity better than anybody else. This is where their superior execution comes in. I am very close to somebody who vastly prefers to buy her books from Barnes & Noble for reasons that would probably appeal to Jonathan Franzen. But, over many years, she has found that their search engine just doesn’t work effectively. So she finds what she wants at Amazon and then goes over to BN.com to purchase it! Most people won’t do that; they’ll just buy where it is easiest to shop. Is it Amazon’s fault that they’re cleaning BN’s online clock through a better service?

I spoke this past week with the communications director at a think tank who has their publishing arm reporting to him. He’s new to the world of books. He reports that his team keeps portraying Amazon as the enemy; from his perspective, they are “the answer”. Yes, he’s worried about whether their increasing hegemony over the book-buying public could ultimately result in some nasty cuts to his margins. In fact, probably they will. Amazon is likely the most profitable account for almost every publisher because their sales are massive and their returns are minimal. Some publishers report that even their demands for co-op spending are less onerous than Barnes & Noble’s. Of course, they will probably push the envelope over time and claw back more of that margin from publishers. Most retailers would.

In fact, Amazon can sometimes use network effects and its capability to execute (all of which could be summed up as “scale”) to improve its margins by creating new business that nobody else can. They may have done that with their new Matchbook program, which offers a print-and-ebook bundle. Perhaps Barnes & Noble could have done this (and perhaps at some point they will), but only publishers with a very large direct-to-consumer business could execute this themselves.

Amazon is probably smart enough not to want a world in which, as Franzen fears, they publish everything that isn’t self-published by an author. They know they benefit from the investments publishers make and they’re probably even detached enough to know they benefit from books being in the marketplace because they’re supported by sales Amazon doesn’t have the breadth to make. And let’s remember that book sales are probably down to a low double-digit percentage of Amazon’s business. They have bigger fish to fry than building their market share or their margin at the expense of publishers.

Here’s another historical perspective to ponder which I believe is analogous. In the first half of the 19th century, many of the bestselling writers in the US were poets. One big reason why was a low level of literacy. Books were read aloud by the person who could read to the others who couldn’t. That was an environment that favored poetry over prose.

But then came the crusade for universal public education and improvements in transportation that boosted it along. By the latter part of the 19th century, poets had yielded to novelists and, in fact, poetry has declined in commercial popularity pretty much ever since.

So we can say that universal public education was a dagger to the heart of poetry’s commercial advantage. In some people’s minds, that might be a good reason to reconsider it. The arguments against the natural effects of digital communication, selectively finding perhaps-true negatives and dwelling on them, strike me the same way.

We have two great shows running this coming Thursday, September 26, being staged by Michael Cader’s and my Publishers Launch Conference in conjunction with the team at Digital Book World. The Marketing Conference is a collaborative effort with Peter McCarthy, who is rapidly gaining recognition as the industry’s leading thinker about books and digital marketing. The Services Expo is three mini-conferences that will help publishers find the service providers they need to help with tech on editorial/production, digital asset distribution, and rights and royalties. The Services show is priced low so that you can attend just one of the three mini-conferences if you want and still get a very fair deal. I’m co-moderating the Marketing Conference with Pete and I can assure you that it will be amazing. If you have any time left on your calendar on Thursday and you’re near NYC, you’ll be glad if you spend some of it with us.

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  • Bob Mayer

    Yawn. Two years behind the times.

  • John Andrews

    I probably read more out-of-copyright books than in-copyright books and I only read the sections which interest me. For this, I find Googlebooks wonderful. The advantage is having so many books instantly available and being able to find exactly what I want through full-text search. They are non-fiction books and for this category I wonder if publishers could regain some of their territory by not publishing books. They could make them available on line instead. Similarly, some newspapers and magazines give you a free monthly quota or only let your read the first paragraph of a page. Could this type of arrangement work for non-fiction publishers? (I remember your view that publishers are likely to lose ‘how-to’ books to other types of business organisation.)

    • http://idealog.com/blog Mike Shatzkin

      Yes, John, it could work, but it is a lot of work to set it up for publishers who don’t have a lot of direct traffic. One thing I’m getting interested in at the moment is publishers creating magazines out of their books. Last week, my friend Rebecca Smart told me Osprey had a program to do this. Then in the past 48 hours Random House has announced a program using Flipboard’s technology to do the same thing. That’s a way to present discrete subjects, get ad support to bring prices down, and create a whole new way to introduce it. So digital magazines might become a part of the non-fiction publisher’s toolkit.

      Mike

  • Richard Bard

    Excellent article, Mike. Amazon-bashing has been in vogue for far too long in the publishing industry, and it’s refreshing to read your take on it. Sure, they’ve become a giant in the new digital age of publishing, but that’s simply because they had the foresight to recognize the inevitability of what was coming down the pike, and the courage to do something about it.
    Don’t blame the player, blame the game, right?
    I’m an author and 3 years ago I had the good fortune of seeing my first novel, “Brainrush”, reach the top of the Act/Adv bestseller list just a few weeks after launch–all because I was able to self-publish it on Amazon after my agent received rejection letters from all the major houses. Of course, the success of the book opened publisher’s doors that had previously been slammed closed, but when I learned that Amazon was going to jump into publishing as well, I told my agent to make a deal with them and forget the others. Three books later I couldn’t be happier. Sure, you won’t find my books on the shelves at Barnes & Noble because of the squabbles–but heck, I’m headed into the ever-changing publishing jungle for the long haul, and I’d just as soon be doing it on the back of an 800-pound gorilla…

    • http://idealog.com/blog Mike Shatzkin

      Thanks for the comment, Richard. Amazon is in a position to present a viable commercial alternative to conventional publishing, even without the B&N (or other retailer) shelves. It is likely that they’ll be able to capture an increasingly high percentage of the possible sales, since sales are still moving from offline to online, or from inaccessible to them to accessible to them. I hardly think it is a “no-brainer” to go with them (unless they, like some publishers do, offer more money than anybody else for your rights!), but it is also certainly not a no-brainer to avoid them just to get the store sales. This new paradigm presents authors with a choice worth deliberating over, but the direction of future things tilts to Amazon, not away from them.

      Mike

  • Max Alexander

    Mike, an interesting aspect of Amazon’s new Matchbook bundling program is in the fine print (I’m one of the 100,000 authors they’ve approached), which I have not seen discussed anywhere, including in David Wilk’s DBW post to which you linked. Namely: in order to qualify for the program, the e-book must be exclusive to Kindle–no iBook or Nook or Smashword or any other version. I declined.

    • Jeanne Tomlin

      Actually being exclusive is not a requirement for Matchbook. You are mistaken.

      Here from the KDP Matchbook page:

      “2. What kinds of books are eligible to enroll in Kindle MatchBook?

      Any KDP title that has a print version and that is sold by Amazon.com is eligible for the Kindle MatchBook program. If you need to create a print version of your book, visit CreateSpace to learn more.”

      You are evidently confusing the Matchbook requirements with those of KDPSelect.

      • Max Alexander

        Thanks Jeanne–my mistake. I thought the two were linked but Question 7 answers that in the negative.

      • Jeanne Tomlin

        A lot of people have made that assumption which is pretty natural. I’m happy that they didn’t go with that.

      • http://idealog.com/blog Mike Shatzkin

        Sorry, didn’t mean to imply that exclusivity was any part of Matchbook. What I meant to say was that only Amazon was in a position to do something like this, or that they were in by far the best position. Not sure what wording of mine was misleading, but that was not my thought.

        Thanks for the clarification.

        Mike

      • Jeanne Tomlin

        My reply was to Max Alexander rather than you, Mike. Sorry I didn’t make that clear. Since quite a few people seem to have the impression that exclusivity is required for Matchbook, I wanted to bring out the information from Amazon to show that was incorrect.

      • http://idealog.com/blog Mike Shatzkin

        Glad you did. And I’ve checked with people I know at Amazon and had that, once again, confirmed. Absolutely no exclusivity requirement.

        Mike

    • http://idealog.com/blog Mike Shatzkin

      Maybe that’s for the self-published authors, but I kinda doubt they’re telling Random House they don’t want a book because it exists in other venues!

      Mike

    • Hugh Howey

      Not true. My books aren’t exclusive, and I signed up every single one of them.

  • http://www.jeffrutherford.com Jeff Rutherford

    Completely agree re: your example of BN.com and Amazon. I happen to do the same thing. As we all know, BN.com has long lagged Amazon in almost every respect.

    As you note, blaming Amazon for technological innovation is missing the point in a big way. If Amazon didn’t exist, another company would have created a superior online bookstore.

    • http://idealog.com/blog Mike Shatzkin

      Or, if Amazon didn’t exist, even a lesser online bookstore would have reaped the benefits of the natural migration to buying books online.

      Mike

  • http://mindtherant.blogspot.com/ MindTheRant

    I’m not entirely convinced that Jeff Bezos wouldn’t be content to have the Big 5 trade publishers disintegrate. After all, their strength comes from their authors, and once the publishers go under Amazon can place this rootless talent under contract and go on selling them as if the houses they’d once called home had never existed.

    Seriously: I’d imagine Bezos views the Big 5 as a source of content that will gradually — and for him, painlessly — fade away … and in the meantime he can go on locking more and more customers into the Amazon ecosystem, which will in turn provide a greater and greater share of the content they used to turn to Random House/Penguin, S&S, HarperCollins, et al. to receive.

    • http://idealog.com/blog Mike Shatzkin

      First of all, Penguin Random House ain’t going away anytime soon. And the others have some staying power too, if only because of the enormous backlists they have. In a post-B&N world, there’s no doubt that PRH will have its hands full competing with Amazon, but, even then, I think it can.
      I personally think the other big trade publishers have more to fear from PRH than they do from Amazon over the next five years.

      Mike

      • Felix Torres

        The power of the backlist and the well-nigh perpetual copyright is constantly ignored by Amazon foes. Even if the BPHs stopped publishing new content they could survive for decades as pure IP holding houses. There is ample precedent in both the movie and music businesses.

      • http://idealog.com/blog Mike Shatzkin

        I imagine that one of the milestones we will reach at some point along the wa is a company realizing that it loses money publishing new books and that, even though it will grow relentlessly smaller, it can make more profits just managing its backlist (which would take a fraction of the overhead).

        Mike

      • Felix Torres

        Harlequin comes to mind.
        They have a deep backlist and their reputation is approaching vanity press territory. And romance is moving to ebooks (and selfpub) pretty strongly.
        Or, one of the smaller BPHs might decide IP management is preferable to cashing in via merger. There’s several partial variants that might be tried before jumping to a full shutdown, like shutting down a genre or two to test the backlist-only business model.
        But the margins are going to call out to the corporate finance types. It will happen and soon.

      • http://idealog.com/blog Mike Shatzkin

        You’d have to be unable to cover the directly attributable costs with your frontlist publishing. I doubt very much that Harlequin fits that description. Remember that having a moving backlist is an advantage when publishing new titles. I agree that the market is going to get increasingly difficult and major authors are going to get harder to sign. But some level of opportunistic publishing will continue for quite a while to make sense. These are things for the post-B&N (as a big bookstore chain) era, which is still itself at least a few years away.

        Mike

      • Hugh Howey

        Especially if said companies moved into cheaper real estate because they were no longer having to court new clients. If the Big 5 moved out of NY, the bottom line would improve drastically.

      • http://idealog.com/blog Mike Shatzkin

        We’ll certainly see more and more parts of the operation moving to cheaper digs. Even within Manhattan: HarperCollins is moving downtown. John Wiley made the move to Hoboken a decade ago; they’re still a short rapid transit ride from midtown in much cheaper real estate.

        Be hell for my consulting business; I like being able to walk to most of the big houses. But by then I’ll probably be blogging as an ex-player anyway.

        Mike

      • Hugh Howey

        And didn’t Random House sell their new digs right after moving in?

        It would certainly be annoying for the industry. Unless you have a Disney World or Silicon Valley effect. If publishers were going to collude on anything, maybe they should go in together on some cheap land, set up shop, and then sell parcels as the rest of the industry settles in around them.

      • http://idealog.com/blog Mike Shatzkin

        Hugh, the publishers don’t need to be near each other. The publishers and *agents
        *need to be near each other. Even for situations like that for your agent, who is not based in Manhattan, it is a big help to her business (and the publishers’) that she can hit them all in a few days in New York. But, even more important is the large number of agents based in NY who meet with publishers every day. There’s a whole eco-system there. But it’s an eco-system being blown up by other forces and you’re right that Manhattan real estate prices will ultimately come into the equation as something to think about.

        RH didn’t sell their building. They consolidated into less space and rented out some floors they previously occupied.

        Mike

      • Hugh Howey

        Ah, thanks for clearing that up.

        Agreed on the need for publishers and agents to be near one another. We could drain more land down here in Florida and get cozy!

      • http://mindtherant.blogspot.com/ MindTheRant

        OK — fair enough. I guess the only point I was making is that it’s likely a matter of some indifference to Jeff Bezos whether the major trade houses survive and prosper or fade away into the sunset. I can’t see either outcome much impacting Amazon’s bottom line … though dissolution would obviously benefit Bezos.

        As far as publishers surviving and thriving as IP holding houses, you and Felix Torres make plausible arguments. Of course, if we’re invoking the music and movie business as examples it’s worth noting that both support independent labels/production companies that step into the IP breach where the behemoths may hold back. And in a world where the majors have turned into holding companies the indies should be far more central to frontlist publishing since it takes less capital to publish a book than produce a studio album or feature-length film.

        Apropos of nothing, longterm I also wonder about the fate of the book as we know it — physical or digital. Books are static. And as hard as everyone works these days to envision what a digital book *could* be, there are virtues to stasis. For fiction, it announces that the story is finished and the author won’t be revisiting it. For nonfiction, it suggests the author worked hard gathering and ordering and interpreting the facts and that, after due consideration, there’s no need to revisit them.

        That books are static, then, is something of a badge of honor. I wonder whether a generation that knows only Internet-connected smartphones and tablets — and the neverending updates they encourage — can be tempted by books and their defiant stasis.

      • http://idealog.com/blog Mike Shatzkin

        Movies are static. Recorded music is static. I don’t think it will be a requirement for IP anytime soon that it be endlessly dynamic. And while I think it is a good question what impact the new methods of communication will have on the amount of time spent reading novels, say, I would be surprised if there is a generational collapse of that kind of activity anytime soon. I think many recent successes like Hunger Games and even (longer ago, but continuing…) Harry Potter demonstrate that young people can still read through a lengthy yarn. Let’s remember how few people read more than a book a month now. Shifts in mass-market behavior don’t necessarily have a commensurate impact on the book business.

        I don’t think there will be fewer books. I just think there will be fewer books published by established publishers. And there will be far fewer of them. 10 or 20 years from now. Not in the next 2 years!

        Mike

  • Nirupam Banerjee

    Unlike the traditional publishers, Amazon.com does not ENDORSE the Content of the Authors. They may LIKE some of the books (published there) in the inner mind.—As they are just not machines, being organized also by human beings.—But they will still not endorse THE books officially, so far my understanding goes at the time.

    And I believe this is the ESSENCE of traditional publishing: In other words: if I see in distant future that Amazon starts ‘liking’ the books themselves publicly, I will—from that day onwards—call them as trade/traditional/conventional/mainstream/typical publishers.

    To tell further: if I share your blog post (right here) into my Facebook & Twitter telecasts, then I can call myself—in my own terminology—a publisher of even you (in terms of this particular post). But if I also ‘like’ it in my Facebook wall or ‘praise’ it alongside the given link in Twitter (even all total within 140 ‘letters’ only) then I become a Traditional Publisher of you in terms of this post.

    Was there once any sand visible in the midst of a river? (Say that other river in my locality!) But now it IS.

    Why? Because the philosophy that I personally endorse says: It is the *sitting activity* of God in into the Nature—not just my locality but throughout the earth, not just the earth but throughout the ether, in short: throughout the Universe too—WHICH is responsible for all these continual changes;-) In other words, it is God’s will that Amazon.com is born just as an island is born in the ‘flowing’ river. (Which could have rather eroded it in the very first place!!!) After few years you may see some water passes through the sand and the island divides, giving rise to even 2 more, thus 1+2=3. So also was the Facebook & Twitter born next.

    But even here (in this philosophy) a question definitely arises: Why is GOD doing this all? Why isn’t He satisfied with the Traditional Publishing?? I believe a lot of websites are NOW also expressing the Voice of Mr. God, in this regard.

    I’m not denigrating the great legacy of the Traditional Publishing. But it is also to note they were ‘all powerful’ once upon a time. And a saying goes that, power corrupts. At least there were always those chances, even if it is not proved. So the new era takes care of it.

    If a Trade Publisher doesn’t endorse a good writer, then the islands of Amazon/Facebook/Twitter/etc at least ‘share’ their work to the whole world. Which in turn would eventually endorse it through the readers ‘liking’ on it:-)

    • http://idealog.com/blog Mike Shatzkin

      I am not sure I follow all that but I would say that Amazon *does* “endorse” books when they publish them. Which they do sometimes, giving the author an advance and a royalty just like all the old time publishers. You’re right that they’ll sell just about anything, but I believe they would — like anybody who pays to make it happen — feel more responsibility for what they publish.

      Mike

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  • http://www.controlmousemusic.com/ Michael

    Another great post, Mike. Thank you. You are such a good writer. The piece could be called, “The Enemy or the Answer.” A simple musing for your entertainment as much as my own.

    • http://idealog.com/blog Mike Shatzkin

      Didn’t want to make this *just* about Amazon. But you’re right about the title.

      Mike

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