By Jeffrey A. Trachtenberg
Amazon.com Inc., which over more than two decades made itself
the world's largest book retailer, has created an unrivaled display
window that can catapult titles from obscurity to must-reads.
More recently it has built something else: Its own line of
published books.
When veteran book author Mark Sullivan tried to sell a World War
II saga in 2015, eight New York book publishers rejected it. Then
Amazon's publishing arm scooped up "Beneath a Scarlet Sky" for an
advance in the low five figures.
The novel was released in 2017 and featured on Amazon First
Reads. The online promotion also is emailed each month to more than
7 million U.S. subscribers and exclusively showcases titles from
Amazon Publishing.
"Wham, we get 300,000 downloads," said Mr. Sullivan, whose title
has sold more than 1.5 million print books, e-books and audio
books. It was ranked No. 56 on USA Today's top 100 best-seller list
for all of 2018.
The Seattle-based giant houses 15 imprints in the U.S. under the
Amazon Publishing banner, turning out everything from thrillers to
romance novels to books translated from other languages. Amazon
published 1,231 titles in the U.S. in 2017, up from 373 in 2009,
the year it entered the $16 billion-a-year consumer book publishing
business.
To promote these works, it has tools other publishers can only
dream about owning, including Amazon First Reads and Kindle
Unlimited, Amazon's e-book subscription service. Together, they
reach an estimated 10 million or more customers who can read
offered titles with a few keystrokes.
"They aren't gaming the system," literary agent Rick Pascocello
said. "They own the system."
The promotional levers that Amazon has built to lure consumers
can boost the opportunities of little-known writers and recharge
the careers of experienced authors such as Mr. Sullivan. Amazon
Publishing, the company's book-publishing unit, together with its
self-published authors, has made it a fierce competitor in
lucrative genres including romance.
To some in the industry, it is an inherently conflicted
structure, in which the most powerful retailer has a competing
incentive to favor books it publishes and those from authors using
its self-publishing technology.
On Jan. 9, 79 of the top 100 books on Amazon's romance
best-seller list were featured in Kindle Unlimited, and 15 were
titles from Amazon's book publishing arm.
Amazon said its marketing and retail programs don't give its
books an unfair advantage, and that it offers all publishers a
chance to use them.
"Our focus is on making sure that our customers get great
content," said Jeff Belle, vice president of Amazon Publishing.
"The feedback from authors, customers and agents has all been
positive."
Amazon commands some 72% of adult new book sales online, and 49%
of all new book sales by units, according to book-industry research
firm Codex Group LLC.
Tensions over Amazon's role as a retailer and a producer of
goods extend to other parts of its business. As the company
develops more of its own private-label goods and aggressively
promotes them, it faces complaints from competing merchants and
brands that sell on its site.
The tech giant, which got its start as an online bookseller in
Jeff Bezos' garage in 1994 to become the world's largest public
company, is estimated to have more than 550 million retail items of
all kinds on its website, as well as data from billions of customer
transactions. Amazon's digital advertising business is the third
largest, after Google and Facebook.
For authors, the company offers a huge potential audience,
especially given the decline in large bricks-and-mortar bookstores.
Amazon has more than 100 million Amazon Prime members world-wide,
and its U.S. subscribers can pick one title from Amazon First Reads
free each month. Non-Prime members pay $1.99.
On Jan. 2, Amazon First Reads sent an email to members about six
new titles from Amazon Publishing. By early evening, those books
were the top six on Amazon's Kindle store e-book best-seller
list.
The power extends to Amazon's $9.99-a-month Kindle Unlimited
e-book subscription service. The service enables subscribers to
select as many as 10 e-books at a time. It had an estimated 4.6
million paid subscribers in June 2018, according to Codex. Amazon
Publishing titles and Amazon's self-published books get prominent
display, industry executives said,
Kindle Unlimited gives authors a better shot at making many of
Amazon's e-book best-seller lists, which counts every title chosen
by subscribers as a sale. The subscription service is open to rival
book publishers.
This month, CBS Corp.'s Simon & Schuster publishing unit put
approximately 80 titles on Kindle Unlimited. The publisher wants to
see if the program can generate new readers for some of its
established authors.
Amazon declined to reveal the royalty rates it pays publishers
for books in Kindle Unlimited. Major publishers typically generate
$7.00 in revenue from a 300-page e-book priced at $10 and sold
through a typical retail website.
Romantic interest
The scale of Amazon Publishing isn't readily apparent because
many rival booksellers decline to carry Amazon Publishing titles on
their shelves.
"They get enough support on their own," said Lori Fazio, chief
operating officer of R.J. Julia Booksellers in Madison, Conn.,
which doesn't stock them.
Amazon operates 18 Amazon Books retail stores, including two in
Manhattan.
Industry trackers say Amazon is shrinking publishing revenue in
adult fiction by releasing so many low-price books from Amazon
imprints and its self-published authors. Publisher revenue from
adult fiction fell 16% to $4.4 billion in 2017 from 2013, the
Association of American Publishers said.
"My suspicion is the cumulative impact of Amazon's highly
integrated retail and content programs is cannibalizing traditional
publisher fiction sales." said Peter Hildick-Smith, chief executive
of Codex Group, the research firm.
Mr. Hildick-Smith said the decline in revenue for fiction issued
by traditional publishers coincided with the Kindle e-book store's
growing share of the overall adult book market -- up 43% between
2013 and 2017 -- to a bit more than a quarter of the total market.
E-books skew heavily to fiction, and much of that increase comes
from books self-published on Amazon.
Publishers that specialize in genre fiction, especially romance
-- a fount of publishing profits -- are feeling the biggest
impact.
Steven Zacharius, chief executive of Kensington Publishing, said
he has reduced the number of romance titles he publishes because of
the large number of competing romance titles from Amazon
Publishing, as well a boom in low-price, self-published titles.
"It's affected all romance publishers," he said.
In 2017, Harlequin, a division of HarperCollins Publishers,
closed five romance lines, saying it was responding to "changes in
retail landscape and readership preferences." HarperCollins
Publishers, which paid $414 million to acquire Harlequin in 2014,
is a unit of The Wall Street Journal's parent company, News
Corp.
HarperCollins Publishers Chief Executive Officer Brian Murray
described Amazon as a direct competitor and an "incredibly
efficient distributor."
Independent romance publisher Entangled Publishing LLC, offers a
small number of erotic titles on Kindle Unlimited. For many titles,
the small publishing house uses the distribution arm of a larger
publisher to get its books into retail stores, a distributor that
doesn't participate in Kindle Unlimited.
As a result, most Entangled books aren't likely to reach
Amazon's list of best-selling romance titles, which favors Kindle
Unlimited titles. While Amazon has opened a lot of doors for
authors and publishers, Liz Pelletier, Entangled's chief executive
said, the extra boost given to Kindle Unlimited titles makes
Amazon's best-seller list less applicable for publishers that don't
participate
That matters because the list of Amazon's top 100 best-selling
books plays a critical role publicizing new titles, she said, which
translates into sales.
"The limited visibility means readers are more likely to miss
out on some great books from small publishers," she said.
By the word
Self-published authors who join Amazon's Kindle Select program
give exclusive sales rights to Amazon for 90 days in exchange for
special promotions. The deal gives Amazon a percentage of every
sale, and buried among the titles could be an unexpected
blockbuster.
For self-published authors, Kindle Select offers greater
exposure at the risk of lower returns.
Under the arrangement, these titles are enrolled in Kindle
Unlimited, which pays authors based on how many pages of an e-book
are read. The payouts are usually around .004 cents to .005 cents a
page. Authors would receive $1.20 to $1.50 on 300-page e-book
priced at $10, less if readers don't finish.
Romance writer Lisa Renee Jones pulled her titles out of Kindle
Unlimited in 2018 after her income fell by about one-third over a
few months.
"I jumped on the bandwagon, but I later regretted it because it
devalued me as an author," said Ms. Jones, whose books have been
published by St. Martin's Press's Griffin imprint and others.
An Amazon spokesman said thousands of self-published authors in
2018 "earned more than $50,000, with more than a thousand
surpassing $100,000 in royalties." The spokesman declined to say
how many self-published books using Amazon technology were
published last year. "Hundreds of thousands of authors have
self-published millions of book since 2007," he said.
Some have hit it big. Laurie Ann Starkey, a certified public
accountant, quit her job in 2014 to become a full-time writer. She
now owns a small independent press and employs 10 people as
editors, managers and social-media staff. She generated $1.15
million last year in gross revenue, she said, mostly from her own
books. About 89% of her sales were from Kindle Unlimited.
Romance writer Inglath Cooper's self-published novel, "Down a
Country Road," was ranked No. 52 on Amazon's digital romance list
on Jan. 15. She said Amazon has changed publishing, much like
Netflix changed the movie and TV business, by making a large
inventory of books immediately available to readers.
"Rather than resent the changes," Ms. Cooper said, "I prefer to
choose the opportunities available."
Amazon Publishing helped resurrect the career of Mr. Sullivan,
whose World War II novel found little traction among New York
publishers. Previously, he had written than a dozen novels,
including with author James Patterson.
"My son urged me to try Amazon," he said.
In March 2017, the influential trade publication Publishers
Weekly reviewed "Beneath a Scarlet Sky," saying Mr. Sullivan "lays
on history with a trowel in this overstuffed tale of derring-do set
in Italy during WWII."
Amazon told Mr. Sullivan not to worry. "It was such a compulsive
read that I knew it had the potential to be a big book," said
Danielle Marshall, editorial director of Lake Union Publishing, the
Amazon Publishing imprint.
After a month, Mr. Sullivan's novel had nearly 1,300 customer
reviews and an average rating of 4.86 stars in the U.S. "Die-hard
readers love to tell others what to read," he said.
The book, which was initially released in e-book, audiobook and
in paperback, soon shot to No. 1 on Amazon. Editions are rolling
out in 33 foreign languages. Mr. Sullivan also has sold the film
and TV rights.
Mr. Sullivan said he has earned "in the seven figures." Rather
than put his next novel up for auction, he struck a deal with
Amazon's Lake Union Publishing, which is expected to publish it in
2021.
--Laura Stevens contributed to this article.
Write to Jeffrey A. Trachtenberg at
jeffrey.trachtenberg@wsj.com
(END) Dow Jones Newswires
January 16, 2019 11:29 ET (16:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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