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Amazon: Pushing Publishers
For thousands of years, the only way to read a book was in its physical form. Even when computers had some years around, and people were used to them, nobody imagined that someday physical books wouldn’t been the only way to read. E books appeared on scene in 1971, but they weren't the century's invention. The new digital books could be downloaded from several online sites, were free most of the time, and the only way to read them was from a computer screen. E books started to appear like a whisper and not everybody knew of their existence, however, e books would be the cause of the many changes in the publishing industry.
The next big shifts in publishing and book history would be cased by the e books and the reader devices that came with them. The Digital Era commenced with the E book and continue to go on and marked its place in history when the electronic readers appeared in the market. People no longer had to read their electronic books from a computer screen, tiny book like devices were made for the sole purpose of reading e books. Among these readers came the Amazon Kindle. In 2007, Amazon released their first reader, the one that would start a series of devices and that would change the way books were distributed. The first Amazon Kindle was very big compared with the new models, had minimal space to store books and was a device that displayed black and white images only. Even if it had its limitations, the first Kindle reader was well received by the public and there weren't enough to meet the demand.
After this first device, many more came in new shapes, sizes and capacities. With the reader proliferation many books started to convert to the digital format. Publishers didn't see the e books and electronic readers as a threat, little did they know, e books will force them out from their comfort zone and they would have to change the way they worked. Electronic formats saved companies a ton of money. The costs of printing and distributing were nonexistent. Amazon and other companies selling e books, could afford to have lower prices for their products. Some books were even free and the most expensive e book in store was about fifteen to twenty dollars, when their printed versions could double the price. Not only this left publishers with less and less sales, but many of their writers started to self publish with or without electronic companies' help. All the customers that changed the heavy physical books for lighter readers that held more than a hundred titles left publishers losing money, and desperate to keep up with companies like Amazon.
Threatened by Amazon E book industry's boom and their inability of keeping up with Amazon's growth, publishers did the only thing they know when times are tough: they merged. Two of the Big Six companies that controlled the publishing market before Amazon launched their first reader merged into a mammoth size company. Random House and Penguin Books probably were two of the biggest publishing houses in America, each with an incredible number of imprints that controlled many literary genres. Penguin Random House will now control more than 25 percent of the material to be published. An analysis of electronic books' history and tech innovations as the Kindle reader reveals the impact Amazon has had in the book industry. After dominating the e book market with its innovative technologies, Amazon has reshaped the publishing industry by forcing mass consolidation and getting closer to be the only link between authors and readers.
Proliferation of the E Book and Amazon Kindle
Electronic books appeared around 1971. E books were sure to be part of a major shift in publishing. However, before they could be the great success they are today, they started with a copy of the Declaration of Independence. E books appeared on the web and most of the times they were free. They were “ ...easily shared and stored on a hard drive or storage disk, [and] were generally written in specialty areas, intended to be documents that only small groups might share...” (History of E books) Electronic books started as a murmur. They were only found online and in very specific themes, meant for documentation or other type of material. This made e books hard to place. The market of this new technologies was unsure about how to sell, ship and even read electronic books. To solve this problem, many formats that supported e book reading, PDF for example, started to appear and with them the proliferation of the e book started. To climb their way to the top, electronic books depended on people's need of privacy to read genres that were hard to buy in public, because they were looked as lesser ways of literature. Romantic stories, among others, became the e book central market since “romance novels were perfect for e-books, the genre already considered a "guilty pleasure" by most of the public, due to its oft-ridiculed and notoriously salacious content. E-book romances were easy to shop for and buy from the privacy of your home, and just as easy to read without revealing your guilty pleasure to others. Unbeknownst to the rest of the world, romance e-books had become a quiet success” (History of E books). From this moment on, big publishers and companies started to take notice of the e books. They became a new hot topic in the industry. People were reluctant to accept them as part of the publishing industry. Some were inclined and excited to understand this new product and support it, while others wanted the industry to stayed the way it was: with its printed books and big publishers controlling the business. Nevertheless, e books were here to stay, and they marched right into the commerce of literature accompanied by electronic readers.
With the proliferation of electronic readers, the e book industry took a step forward, as people didn't had to read their e books from a computer screen anymore. Now they had the same portability that a book offers. The readers even started as big, square shaped devices, that mimicked a light book, and could store hundreds of titles. Among this innovative readers that supported electronic formats, came the Amazon Kindle.
The Amazon Kindle, as it first model was called, would become one of the number one devices dedicated to the sole purpose of reading. This technological innovation first in 2007, as a “6-inch screen and 250MB of memory, which was expandable by SD card, and originally went for $400” (Wagner). The device was highly expected by the public, and to add to its popularity, Oprah got involved. She announced that “... Amazon's Kindle e-book reader was her favorite gadget - and [that] e-books met popular culture” (Simons). The first Kindle was more expensive then its future models, but its demand was greater than the number of devices in stock. This first reader was so popular that the devices that came next to it where easily ignored. Amazon continued to add items to its list of electronic readers products almost every year, and left the rest of the companies behind. With the Kindle, the e book market started to grow and more independent publishers grew as well and were successful.
Amazon's line of readers are started to shape the publishing industry, but other bold movements of the company are giving publishers and retailers a run for their money. Amazon has demonstrated to be an independent and fast-growing company from the beginning. In 2011, Amazon “...had $48 billion in revenue, more than all six of the major American publishing conglomerates combined, with a cash reserve of $5 billion. The company is valued at nearly $100 billion and employs more than 65,000 workers” (Wasserman). As a growing company, Amazon's intentions are to have “Every book ever printed, in every language, available to buy in 60 seconds...” (Hunt) and to be “... the only link between author and reader” (Wasserman).
Amazon and Publishing
Amazon grew as a publishing company fast and today is the company that controls the e book market. However, the company is planning to control print as well. Amazon started its move to enter the world of publishing books on paper in 2011, in order to “re-invent reading” (Wasserman). The movement started with Amazon hiring Larry Kirshbaum, former CEO of Time Warner Book Group, as the head of Amazon Publishing that would be launched in New York. This movement would require authors, editors, publishers, and retailers. when it came to retailers, the company found an obstacle, since many retailers announced they refused to carry any book published by Amazon. Barnes and Noble among others rejected Amazon's books, but “for its part, Amazon swiftly struck an alliance with Houghton Mifflin Harcourt to handle placing its books in physical stores” (Wasserman). Nevertheless, the decision of becoming a publisher of physical books as well is not what sucks the air out of publisher's these days.
Amazon has facilitated self publication for many writers and magazines. They call it Amazon's Kindle Single Program. This program offers writers the chance to publish an e book. The Kindle Single Store offers “a showcase of carefully selected original works of 5,000 to 30,000 [words]” (Kaufman). Writers are welcome to send their manuscripts to the Kindle Singles e mail address, including the title and summary of the work. The selection process is fast and easy. The work is revised and the writer receive a response within six weeks of submission. Many writers have been attracted to the program for its simplicity and speed. For example, Stephen King "...turned to the site for their own purposes. In January Mr. King published an 8,000-word essay on gun control as an Amazon Single. He opted for Singles because of its speed, he said. A week after he offered the script, it had been copy-edited, had cover art and was for sale online.” (Kaufman). Even if the singles or e shorts don't sell for less than 0.99 cents and for no more of 4.99, a quick calculation, by Leslie Kaufman, has showed that the authors make an average 22,000 dollars, amounts varying by piece. More and more writers are considering not to run after the publishing houses anymore. This has publishing houses losing more money, since they don't own writers any more. With writers not having to use a publisher to reach the public, big publishers are realizing that they may not be needed any longer. Things are looking tough for Publishers now that Amazon has lower prices than them, is taking their writers away, and it's preparing to enter the world of printed publications. Amazon has forced their hands into mergers.
The Big Six and Merges
Before Amazon, its virtual Walmart format, and its e books existed, the publishing trade was controlled by the Big Six companies. Random House, Penguin, Hachette, HarperCollins, Simon & Schuster, and Holzbrink were the only conglomerates that published and managed the literature market; with Random House and Penguin at the front of the pack. Just this year, the two major publishing companies became one. Penguin-Random House is now the biggest publisher in America. This two companies came together against the protest of agents and writers, who worried there would be less companies to pitch their work to. Together, the companies “...will make up the biggest and most dominant publisher in the business, one that has unmatched leverage against Amazon.com and the potential to inspire other mergers in the industry” (Bosman).
This new merged company that now is the biggest publishing house world wide. On one hand it is formed by Random House, who lead the way as the biggest publisher in America. Random House started as a small company in 1925, “when Bennet Cerf and Donald Klopfer purchased The Modern Library, reprints of classic works of literature” (About Us). In 1927 the company made its debut when they expanded their publishing activities. Random House was the number one publishing company in America. The company has expanded globally. “Random House [has] publishing companies in nineteen countries: Argentina, Australia, Austria, Canada, Chile, Colombia, Germany, India, Ireland, Japan, Korea, Mexico, New Zealand, South Africa, Spain, the United Kingdom, Uruguay, U.S., and Venezuela.” (About Us). According to Random House's web site, they have been long committed to publish only the best literature by writers located in America and abroad. Books published by Random House have won Pulitzer and Nobel Prices. This is a company that prides itself on publishing the best of the best in literature and that has grown by the integration of many imprints. Subsidiaries like Dell, The Dial Press, Modern Library, and Bantam publish and sell books in virtually every country. On the other hand, Penguin Books was always battling for second place with the rest of the companies. Penguin Books is a company that focused on publishing good quality fiction on paperback books. Allan Lane decided in 1935 that “fiction should be available at an attractive price and sold not just in traditional bookshops, but also in railway stations, tobacconists and chain stores” (Penguin Company History). With this in mind, he created the Penguin Books company that became an independent publishing house in 1936 with its respective supporters. Today, Penguin resides in fifteen countries, owning imprints like Firebird, The Viking Press and Gotham Books. According to its web site, Penguin has more than 5,000 different titles in print at any time.
Now that these two companies have merged, the publishing market has narrowed even more. Penguin Random House has become the first company to truly trade books globally. The new mammoth company “...will control more than 25 percent of the book business, with more than 10,000 employees, 250 independent publishing imprints and about $3.9 billion in annual revenues” (Bosman). To fight the worries of many agents, editors and employees, the conglomerate assured that things will remain virtually the same and that the main objective for now is to make the merge perfect so the the two companies can sync completely. They have also assured that the relationship between writer and editor will remained untouched. The chief executive of the new company sent a message out to the existing employees: “Today, we are Penguin Random House,” he wrote. “You should be proud of what you’ve accomplished and what we are all now a part of: the first truly global trade book publishing company. Together, we are even better positioned to fulfill our core purpose: to bridge authors and readers by publishing the very best books” (Bosman). With such bold and inspiring announcement, it would seem that the merge has been just what the companies needed to defeat the rising menace Amazon is to them. Although, a merge alone won't be a permanent solution to publishers becoming unnecessary.
Merges between companies that lead to mass consolidation in America first happened in the 1960s. During this time, independent publishers assembled together. These merges came to happen as a result of an economic trend. The first movement that forced the publishing industry to mass consolidation was the attraction of shopping malls over the customers. The consolidation of retailers was the force that made small libraries disappear. Small retailers couldn't follow their consumers into the malls, where the bigger businesses, like Barnes and Nobles had taken over. Following this trend, came the consolidation of publishing houses. Working with the new big retailers affected publishers deeply. They depended on backlist titles as a steady income, when other books wouldn't sell as much. The new retailers didn't had a big volume of these titles, “...publishers had to cultivate a roster of authors whose books could almost always be counted on as instant bestsellers. In developing this roster, publishers had to pay premiums to attract and keep these authors” (Epstein). This lead to the merging of houses for the first time. The first merger took place when Random House purchased Alfred A Knopf. From this point on, mergers occurred every time publishers were threatened by some new trend or movement in the industry.
Today, the merger between Random House and Penguin was made in order to defeat the rising corporation that Amazon is. As Jack Shafer explains in his article Mergers Alone Won't Save Book Industry, these merges are a defensive crouch that say: “We've got the books, Amazon, you got bupkis, and we're going to set the terms for the digitization of the book industry, not you!” The plan of these companies is control more titles than the rest of the publishers, and thus sell the e books themselves.
Shafer continues to argue: “...as important as that struggle for control might be, it still leaves Penguin-Random House operating in a moribund and hidebound enterprise that looks and acts like something out of the 18th century. Book publishers are playing against a stacked deck. They don’t own the distribution channels, they don’t own the stores, they don’t control any proprietary technologies or patents, they’re terrible at inventing new products, and the market value of their brands is dwindling. Plus, their most valuable properties, their writers, are free agents who don’t really belong to them.” The meaning of this arguments is that book publishers are out of their element when it comes to e books. Unlike Amazon, they don't own any of the means to success in the e book world. Amazon has taken the lead on the industry and has started to advance into the publisher's territory. Amazon might not present a threat now in the printed books market, but it has less to loose than the publishing houses. This company has been scoring points against publishers since the moment it gave writers the ability to self publish. When publishers lose their writers to digital publishing, they'll have nothing but backlist titles to publish. “This merger is less about winning that it is losing more slowly” (Shafer). With this in mind, it is more likely that the future of publishing ends up in the hands of companies like Amazon.
Amazon and the Publishing History
The e book proliferation marked the beginning of a new era in publishing. This new format of literature gave the opportunity to companies like Amazon of grow selling new technologies to read the new electronic books. Amazon was the most successful of the electronic companies. It grew fast and earned more money than the publishing conglomerates together. Today, Amazon still looks for ways to expand its empire. It has started a movement to publish, sell, and distribute physical books. However, this excessively fast growth and Amazon's need to expand even more, is not what have publishers worried. Amazon was one of the first companies to give writers and magazine the option of self publication with their Kindle Singles Program. This digital publishing is here to stay. Many authors are preferring this type of publications for its speed and the surprising revenue they can get out of this works. Nobody believes that the days of publishing or print are over, just the days of publishers. Major conglomerates have run out of options to fight against Amazon, so they have fuse in a desperate attempt to stop it. The fusion between big publishing companies might feel like the solution, but its only a way of dying slower. Big publishers can say goodbye to the days where they controlled the business. After analyzing all these points, it is safe to assume that the industry will end with one company organizing, and controlling the literature commerce. Until this point, Amazon is the company that seems more likely to fill in this position. The trends imposed by Amazon will continue to be relevant, since it has, like may other trends in the past, force mass consolidation in the publishing industry. Amazon has already marked its way in the publishing history. Amazon would always be the one company that forced the two biggest publishers into one.
Are you pro e books or against them?
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