Sunday, April 17, 2011

Why Some Publishers Cannot Afford to Sell Books on Amazon

That the old book-selling business model no longer works very well is old news.  Common sense, however, still dictates that every copy of a book a publisher sells to a consumer has to be a good thing.  But according to Linen Press (complete article on The Guardian Book Blog), common sense, in this case, is very wrong.  For every copy that this tiny U.K. publisher sells through Amazon, it loses the equivalent of three dollars.  Here's why:
Amazon don't tell their customers how much they take from a small publisher like me, nor do they advertise the fact that I have to pay the postage on the books sent to them.
Linen Press books cost £4 a copy to produce, for several reasons...The RRP is £11.99. The postage is £2.50. On my website I sell the books for £8.99, so I'm not ripping you off; I'm just trying to persuade you not to buy from Amazon.

Here are the scary sums:

Amazon takes 60% of my RRP (in the book trade, the bigger the sales outfit, the bigger the discount they demand from the publisher: Amazon 60%; Waterstones 50%; independent bookshop 35%). On a £11.99 book, Amazon's takings are £7.20. Mine are £4.80.

Out of this comes £2.50 to pack and post the book to Amazon, and the author's royalties on a heavily discounted book reduced to 50p. My writers lose out on an Amazon sale, too. That leaves 82p for Linen Press, but the book cost £4 to produce. So I lose £2.18 on every sale by Amazon.
All of this is bad enough (and, yes, the arithmetic shown above is a tad misstated although its bottom line is the same), but the scariest statement in the article is this one:
For all its vast catalogue, Amazon's market domination is actually reducing choice by squeezing out small publishers who are prepared to take risks.
So for publishers with the per-book cost that is built in to small press runs, selling through Amazon is a whole lot like an individual selling something through eBay.  After paying postage fees to deliver an item and the advertising fees demanded by eBay, there's very little left to claim as profit for the seller.  That's why I no longer deal with eBay other than as a buyer.  I wonder how many small, independent booksellers will reach the same conclusion about dealing with Amazon.


  1. One has to ask why they're still selling through Amazon? There are other options now-a-days. Ten years from now, I expect most books to be purchased in e-formats directly from the authors.

    I haven't sold anything on eBay for several years, but I have noticed that most sellers seem to charge more for shipping than the postage actually costs. I had assumed they were building the increased fees into their shipping charges.

  2. I haven't bought many small press paper books, but I've bought a few, and all were through Amazon because for me, as the buyer, it turned out to be cheaper. I could lump my orders and take advantage of Amazon's free shipping for orders of $25 or more. I think the books themselves were also sometimes slightly cheaper through Amazon, but the main draw was the free shipping - that wasn't something I could get if I had bought the books directly from the publishers, at least not as far as I could tell on their FAQ pages. Plus, it was usually several books, each from different publishers - I could lump that in Amazon, but if I had ordered directly from the publishers each book would have been a separate order from a separate publisher.

    This sounds really painful from the publisher's perspective, but I have to admit that, even knowing this, I wouldn't change my buying habits. One thing I can say: if a publisher wants me to order directly from them, then they need to offer their book in e-book form, DRM-free. In my lifetime, I think I've only ever bought 1 book directly from an author (the book wasn't available any other way) and 5 books directly from the publishers. Two of those five were at a conference, so I think they probably don't count. Three of them were e-books, which I bought directly from the publishers because it was clear that the product I was getting would be DRM-free and I hoped that, if the files had any problems, this would make it easier to get those problems fixed.

  3. Interesting. I cant beleive a company can lose money on amazon

  4. I am reading a local history book that I got at the library. I want to buy a copy for my mom. $20 on $15 from the West Allis Historical Society (shipping included). I guess they've figured it out, too.

  5. James, I think they're still selling through Amazon because they are hoping for that one, big breakthrough book that will make their company. I suppose it's sort of like playing the lottery for big payoff would offset all their previous losses.

  6. Library Girl, you're right. The market will work itself out because consumers will almost always purchase where they can get the best product for the least money. It is much easier to say that one will buy from indie bookstores and directly from small publishers; it is another thing to do that on a consistent basis, especially since consumers are caught up in the same economic crunch that businesses find themselves in.

  7. Cody, apparently it happens to those who don't have the "economy of scale" that larger publishers have. The numbers just don't work out for the little guys, sometimes.

  8. Factotum, that kind of thing indicates to me that the market will work itself out as it always does, somehow. It will be painful for the smaller publishers for a while but, hopefully, they will be able to do enough direct business with book buyers to survive.