Sep
28

Becoming an Empowered SELF-Published Author – Ethics & Practice

By on September 28th, 2011

Other the past few months, many authors have been writing to me all in a fluster over a controversy that apparently has arisen between Amazon and Lightning Source. I wanted to address this controversy because, frankly, I think a lot of people are having a knee-jerk reaction to what I think is basically an ethical issue, and I would like to show what I think might be a more ‘holistic’ response to it.

First of all, you need to know a bit about the parties involved and what is going on. Before we do that, let’s take a quick look at the flow that is involved in the production of any product, including your book:

1) It starts with the creator
2) It goes to the publisher
3) Then it goes to the manufacturer
4) Then to the distributor
5) Then to the retailer
6) Then to the consumer

STEPS 1 & 2: When you are truly self-publishing a book, YOU are also the publisher (so steps 1 and 2 are combined). But if you are going through a subsidiary press (such as iUniverse, Balboa Press or Create Space), you are not 100% ‘self published.’ On the one hand, you ARE self-published in that you don’t need a publishing deal and you retain all rights to your work. On the other hand, you are NOT self-published in that your subsidiary publisher is entitled to (usually) around 50% of your royalties as long as you print through them.

STEP 3: In printing, the ‘manufacturer’ is the printer. The publisher (even if that means you) then sends the book to the printer. Either we get a quantity of books printed in advance, or we use a “print on demand” (POD) service. Back when I first started out in the published world (and also when I ran a record company), you typically have to order 1000-2000 copies of your book (or record/CD) in order to get a decent price. Then, you always ran the risk of your publication sitting around collecting dust because you couldn’t move 2000 copies. Since the rise of POD in the publishing industry, that risk and investment has been removed for self-publishing authors. Lightning Source is one such POD service, certainly the most known in the world, and the one I use and recommend to my clients. Instead of having to buy 2000 copies of your book and the ship them to distributors, they print them ONLY when you have a customer for them (whether wholesale or retail), so you only pay for what you know you are going to sell.

STEP 4: The next step is to send the books to a distributor who then sells the books to retail shops. Of course, this saves the publisher a heck of a lot of time and energy, so the distributor is one of the most important pieces of the sales puzzle. Distributors typically buy your product between 50-60% off the retail price (55% is the most common), so they can sell it on to retails shops, and the retail shops can make a profit. That means if your book is selling for $10, they will pay around $4.50 for your book. From that price, you deduct your printing costs (I spoke about this in another article – Click HERE if you’d like to read it), and that is your profit.

Now what is so cool about Lightning Source is that they will also distribute your book for you via Ingram Book Company. Mind you, that does NOT mean that retail shops will necessarily BUY your book. It just means that they can supply them with your book if they order it.

STEP 5: The next step is the retailer. The retailer is the ‘shop’, whether online or on the ground, that sells your book to the customer. Typically, in my experience, retailers in the book and record industry buy your product for between 35-45% off the retail price. That means they will pay about $6.00 for a $10 book, which means the distributor makes about $1.50 per book sold, and the retailer makes about $4.00. However, as we all know, retailers like to be able to have a good profit margin so they can LOWER the price, to be able to entice customers to buy your product OR to get RID of a product that isn’t selling (let’s hope that doesn’t happen to OUR books!). Back when I was a retailer, I often had to sell “dead stock” at cost or even BELOW the price I paid for it. It’s the only way to keep cash flow going. So retailers take a risk every time they buy something. They want to know they can sell it.

STEP 6: The last step, of course, is the customer. The customer likes to get a good deal on a product. That’s why, if you give your distributor a good discount in the first place, the retailer will have the freedom to lower his price and get more people to buy your book.

SO WHAT’S WRONG WITH THIS PICTURE?

The thing that confuses me is how Amazon fits into this picture. Now I have a close connection to Amazon in that much of my business depends upon it, as I work with authors. And as a customer, I have also found them to be both reliable and convenient. Authors love to see their books on Amazon because they can reach a wider audience much more quickly than they could by going only through traditional distribution routes to retail shops. All in all, Amazon is a great asset for us authors.

But here’s where things are a bit hazy. According to their entry on Wikipedia, they are it is often called the world’s largest online retailer. Most of us associate Amazon with books, but they have really expanded and now sell just about everything.

So Amazon is a ‘retailer’ (Step 5 in the model above) BUT for some strange reason, when it comes to purchasing power, they are not paying the same price for the books they sell as other retailers. In fact, they are paying the price that wholesalers/distributors pay for your book (Step 4). That means they are buying books at an average of 15% LESS than other retailers. This means they have a tremendous advantage in that they can seriously undercut your High Street book shop.

But wait… there’s more…

As many of you know, Amazon also now has a subsidiary press called Create Space. This means they are also now operating at Step 2 of the model above (I’m not sure who their printer is). This means they are now getting that extra 50% of your end profits when you publish through them. Now, fair enough, I can fully understand that Amazon saw the opportunity to profit from the self-publishing boon. It’s called free enterprise. I have no argument with that, as it totally makes sense.

However, here’s the problem…

Recently, word on the street is that Amazon is started a new policy of listing books that come from Lightning Source and other POD suppliers as being “Out of Stock” with sometimes an estimated 1-3 week delivery status! Lightning Source are aware of this, and say that they are ‘continuing to look into the issue and are evaluation our options to address it.”

Of course, this makes no sense whatsoever because when you use a POD service there’s no such THING as being ‘out of stock’. Your digital file is always ready to be printed and is in fact printed as soon as the POD service gets the order.

Some authors have been writing to me in a panic over this, and asking my opinion if I think they should switch from being 100% self-published to going with Create Space, because then they would be assured to be listed as “in stock” (as Amazon will ONLY guarantee this status for their own subsidiary press).

Here’s my answer:

Absolutely NOT!

Why? Partially from a practical level, and partially from an ethical one.

The practical argument: First of all, in my experience, authors who publish through Create Space appear ONLY on the US Amazon site (Amazon dot com) until they reach a certain sales status. I learned this the HARD way when a client of mine launched last year with me, and a couple of weeks before launch we realised she did not appear on the Canadian or UK sites. Now let me assure you, the Canadian and UK mind-body-spirit markets are nothing to ignore! Many of my clients sell as many books in Canada as they do in America, taking them rapidly up to #1 in Canada as Canada has 10% of the population of the US. These are very important markets for spiritual and self-help authors.

The ethical argument: Secondly, I have major issues about the ethics of this situation. Amazon is trying to wear 3 different ‘hats’ here: the publisher (Step 2), the distributor (Step 4) and the retailer (Step 5) in the sales chain. Each of these ‘steps’ has ethical obligation to be equitable to their customers, whoever they may be. And the break in this system is the conflict of interest they have between Step 2 and Step 4, which gives them an unfair advantage at Step 5. First of all, I have no idea how Amazon managed to gain the status of a distributor in the first place when they are not distributing to anyone; they are retailing directly to the public. But that aside, if Amazon are playing the role of a distributor to other publishers, it seems incredible that they would treat these publishers—who are their customers—any differently from their OWN publishing company. The two hats have to remain separate; otherwise, what we are verging on is a violation of anti-monopoly trade laws. In fact, I wouldn’t be at all surprised if we hear about a litigation in the near future.

So what do we do?

One blogger’s suggestion was to go with BOTH Create Space and Lightning Source, so as to ensure your book is shown as ‘in stock’ on Amazon all the time. Well, I’m sorry, but I refuse to succumb to the bullying.

My personal solution is two-fold:

1) Use your power of the pen to write about this in as many places as you can so Amazon starts to feel the heat and
2) Education your audience about the situation. In other words, when you do a launch or publicise your book TELL your readers that it might say ‘out of stock’ on Amazon, and that it is simply not true.

Authors should be able to set up their own publishing companies and be treated like any other company. I am a believer in FREE enterprise, which means that big businesses must not be allowed to bully the small business owner out of their own enterprise. Small business owners are the life-blood of the world, and nearly all of our current economy AND environmental problems are due to our current dependency upon big businesses in general.

I love Amazon and I have no desire to ‘take them down’. But as consumers, and self-publishers, let’s at least hold them accountable for their behaviour by not reacting to such unethical bullying strategies.

All power to the self-published author!


Lynn Serafinn, MAED, CPCC is a certified, award-winning coach and teacher, marketer, social media expert, radio host, speaker and bestselling author. Her eclectic approach to marketing incorporates her vast professional experience in the music industry and the educational sector along with more than two decades of study and practice of the spirituality of India. In her work as a promotional manager she has produced a long list of bestselling mind-body-spirit authors. She is also the creator of Spirit Authors, which offers training, coaching, business-building and inspiration for mind-body-spirit authors, whether established or aspiring. Passionate about re-establishing our connection with the Earth, she supports the work of the Transition Town network in her hometown of Bedford, England.

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The Garden of the Soul: lessons from four flowers that unearth the Self (2009)

The 7 Graces of Marketing: how to heal humanity and the planet by changing the way we sell Coming December 2011.

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Comments

comments

Comments

  1. Bravo! What a great post and summarization of this issue! I am off to share with everyone I know in the author/publishing world!

    Thanks!
    Donna

  2. Excellent post! I recently blogged about the matter, as well, to my readers and had seriously considered the advice of others to go with CreateSpace. To be frank, every time I logged in to their site, my stomach turned into knots. Usually when that physical reaction occurs, it’s time to think, stop, and proceed with caution.

    I call it the strong-arm of Amazon. After emailing them directly about my own status of 5-9 weeks on one of my books, they told me I could (1) go with Amazon Advantage or (2) go with CreateSpace, if I wished to rectify the current problem. Their smug response turned me in the other direction.

    Recently, I went on the U.S. Department of Justice’s website to read for myself “Anti-trust Enforcement and the Consumer.” Consider this statement: “An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that power, not because its product or service is superior to others, but by suppressing competition with anti-competitive conduct.” Hello!

    Amazon, as far as I’m concerned, is walking a fine line. However, for me, I’ve decided not to succumb to their strong arm. As one writer recently commented to me point blankly, your readers are intelligent enough that if they cannot get a book quickly on Amazon, they’ll go to Barnes & Noble or elsewhere. We need to have faith in our readers, they’re intelligent enough to figure it out and be proactive in informing them of the problem.

    I know we’re all scrambling for sales and Amazon is the biggest player in the picture. However, I never liked to be bullied, and I still don’t like to be bullied. As long as we have an address to the Department of Justice, perhaps if enough complain, at least an investigation of their tactics will ensure and they’ll back off trying to make CreateSpace the place to be, while they try and force authors to dump their competition to make a sale.

  3. This article is excellent on so many levels.

    Thank you for taking the time to break down the whole chain and process and then to speak objectively about what is happening and not happening. As a “true” self-published author (steps 1 & 2) (born out of frustration with those offerings and prices of others (in step 2)) then a publisher of others, all of this is of concern.

    The fact that we already have so many expenses and considerations like having to order separate ISBNs for each “type” of ebook, in addition to the printed material; that there are so many choices and channels and changes in the industry every single month; and that based on the realities of those choices, the work that it takes to publish seems more than it is worth now, I’m glad to know of this and just hope that by being proactive, we can maintain our rights – and rights to have real, tangible options which we can afford.

    Thanks again.

  4. Lynn, thanks for this great article on an important and confusing topic. The “out of stock” message for Lightning Source books on Amazon seems to only affect some books, some of the time. One of my clients printed through LSI and I have been checking his Amazon page periodically. I have never seen the “out of stock” message, but right now it does say “only 5 left in stock.” While a POD book would never be out of stock if it’s being shipped directly from the printer to the customer, it could be out of stock for some period of time in Amazon’s warehouse because they have changed the way that that these books are ordered from LSI and shipped to customers. Of course, I imagine that changes in Amazon policy were based at least in part on their desire to “encourage” authors to use CreateSpace.

    I recently read a good article from Joel Friedlander that gives more insight into this issue:
    Amazon and Lightning Source: The End of an Era? — The Book Designer http://bit.ly/rsMBH6

    And if anyone is interested in learning more about the pros and cons of POD printing and working with Lightning Source vs. CreateSpace, here’s an article that I wrote: http://bit.ly/aj1Hp1

    Dana

  5. Terry Kepner says:

    The situation is that there are laws against printers being the distributors, and distributors being the retailers. If some one brave person wanted to, they could force Amazon to split off their distribution/retail system from the printer system as a violation of the anti-trust laws by pointing out how Amazon is using its position as the world’s largest retailer (their very own brag) to prevent independent printers from using Amazon’s distribution system to get publishers to use CreateSpace (Amazon’s printer system) instead of their choice of a POD like LSI. (“unreasonable restraints to trade” mentioned in the 1890 “Sherman Antitrust Act”.)

    The problem is the people most affected by unfair Amazon tactics have so much at stake that they feel they can’t risk getting black-balled by Amazon while the court case litigates.(Remember Amazon locking out ALL publications (paper-based) from a couple of the major print houses over the issue of Kindle (non-paper) pricing?)

  6. Great article Lynn. As I like to say, Amazon does not play nicely with others in the publishing sandbox. My Lightning Source book shows a 5-8 week delivery on Amazon! In this time of instant gratification, most buyers won’t order the book if they see that delivery time period. It is up to the author and/or self-publisher to insure that our readers know all the places our books can be purchased.

  7. This entire conversation is interesting, but who actually cares?

    AMAZON is arguably, the best support network that ANY author could have. CreateSpace is a do-it-yourself resource for the most part. They also, are a dream come true for the literary world at large.

    In any business there are issues, and generally when attention is called to it, it gets fixed.

    Let’s be thankful AMAZON and CREATESPACE are here.

  8. Julie says:

    I was just at a function put on by createspace and amazon.com for authors last week and I mentioned this whole thing to one of the presenters who works for amazon and he was quite interested in the whole topic and said he had never heard about it but was looking into it. It will take more people taking action and contacting someone about the issue. You can announce it in your book info on your author central area.

  9. I have two books distributed through Lightning Source — one via a small press and the other through my own MWS Media. Except for a very brief time when both books were new (as in: their first week in Amazon’s listings) neither one has had the misleading “out of stock” notation.

    It’s important to note this article seems based on “word on the street” and a mention that Lightning Source is “aware of” the complaint. How many people are actually seeing an ongoing issue..?

    Amazon told my publisher that POD books appear as “out of stock” until Amazon has a sufficient sales history for that title… at which point they may elect to keep copies warehoused. This solves both the “out of stock” and the shipping issue.

    Finally, if your book is POD, then it actually is “out of stock,” since copies aren’t made until they are ordered!

    Anyway, I’m not sure if this is a non-issue. Is anyone having this problem with a POD book that’s been out for a while and has a history of sales?

  10. You make a great pont, Matthew, regarding the fact that a POD is technically “out of stock” but, it’s misleading to customers and is likely to have a detrimental effect on sales. From both a green and an economic angle, I think POD is superior, and I really don’t know why POD is penalised over books that have been pre-printed. It makes no sense to me at all, because technically a printed book has a much greater chance of going out of stock than a POD does.

    With regards to your point about sales history, yes, this is something I am noticing more and more. My own book is launching today, and I’ve been “kick-starting” the sales history for about a month, by sending a few copies to reviewers via Amazon rather than shipping them from my own stock. This has eliminated the “out of stock” issue (although, funnily enough it says “only 3 left” in Canada… not sure how that’s possible!), and the other thing it does is lower the estimated shipping time. It used to say “4-6 weeks” now it says “1-4 weeks” (which is also misleading as the shipping, in fact, seems to be taking about 10 days). Conversely, I’ve had some authors with major publishers launch on the say it came out on Amazon, and the indexing and info on the screen were extremely misleading to customers. I always recommend clients have their book in the system for a minimum of 30 days (6 weeks if possible) before launching, and to ensure they have “woken up” Amazon’s system if they want to see some rankings and accurate data being generated.

    Thanks so much for your comment, Matthew! It’s all good stuff for authors to consider.

  11. Hi Joseph. Please don’t get me wrong. I shop on Amazon. I sell on Amazon. I even do research on Amazon. I like Amazon. What I would like to see, however, is that they become more equitable in their dealings with other self-publishing options. There are some things that are not balanced, and because they are so powerful, they have to take care to be extra mindful of their bigger responsibility to their authors and to other publishers and retailers.

    Also, I don’t undertstand why CreateSpace doesn’t place their authors on anything but Amazon dot com (or at least that’s the way it was a year ago) until they have a sales record, while any other established self-publishing route (either through LSI or a subsidiary press) will get you on every Amazon site in the world.

    On the other hand, I have found them to be very helpful via Author Cental, and found their customer service to be very good. I am hopeful they can take what’s good about their company and examine some of these ethical issues and make some changes. To me, as I said in the article, it’s a matter of business ethics.

  12. Deana says:

    In response to the whole “sales history” theory…

    One of my author’s books had, for years, had very consistent sales. Amazon placed the author’s title on delayed delivery status and the sales / ranking nose-dived. The other book in this series, didn’t have as good of a sales history, and Amazon hasn’t touched its delivery status. After speaking with other authors / publishers , it seems that the better selling books (that are being printed through Lightning Source), are the main target.

    I think Amazon has been a major force in giving unknown authors virtual shelf space, for selling their books on the open market. For that, I both thank and applaud Amazon. However … I believe that their practices over the past few years have been, at the very least, unethical — and at the most, in violation of anti-trust laws. This is not the first time they’ve tried to force authors / publishers to use them exclusively.

    A few years ago they started removing all of the “buy” buttons from books printed through self-publishing services / vanity presses. In order to have the purchase option returned to a book’s listing page, the author / publisher had to have their books printed through its own print facility (now known as Createspace). A self-publishing service took Amazon to court, and won. Amazon had to back down…but not before forcing a lot of authors / self-publishing services to open an account with / print through Amazon’s print facilities.

    Now Createspace (via Amazon) is going after one of its biggest print competitors, Lightning Source. I am still astounded by this move — for the mere fact that Createspace can’t offer “expanded distribution” without Ingram … which owns Lightning Source. I’m more astounded that Ingram doesn’t step up and protect Lightning Source and its clients.

    Oh, and there is Amazon’s new Kindle lending program. The only way authors / publishers can participate in this program is if they agree to pull their books from other retailers, while in the lending program.

    You’re right, Lynn. Something is very wrong with this picture.

  13. I totally agree with everything you said, Deana. And I’m really glad you brought up the point about the Kindle lending service, as it brought up red flags for me as well. I have my new book enabled for lending ONLY because right now I don’t have it ready in any other eBook format. As soon as I do, I’m disabling the service. I simply cannot believe they are making up all these aggressive strategies, rather than collaborating with other publishers and distributors, who are actually bringing in revenue to them. I can’t help but feel we’ll see a major litigation brewing sometime in 2012.

  14. Great article. I have books published under Lightning source and plan to keep them. It’s good to know the difference with Create space

  15. Bonnie Zink says:

    Fantastic posting! Thank you for sharing this well thought and informative piece with the world. As an author I must agree that we might be verging upon falling into the abyss of a publishing monopoloy the power, of which, is in the hands of a few.

    I agree that free enterprise is the way to go, but how do we keep the powerful from ruling us all?

  16. Kahlen Aymes says:

    Excellent post. My publisher (Telemachus Press) keeps none of my royalties, which helps to a degree. We use LS, or course, but if you use the 55% model for retailers, there isn’t much profit after printing.

    I will definitely be telling readers the books are not out of stock. Thanks for the tip!

  17. Thank you so much for addressing this issue! Even the best researching a writer can do in terms of how to publish, would not turn up information like this until after they published. I only saw light mention of it in forums where authors were asking the question of Customer Support “why is it that my book is listed as out-of-stock”, and getting no answer, or computer-generated response. Sad. I agree with you Lynn, on the potential for a lawsuit this year. When I read up on the Kindle “Lending” program it was a red flag for me as well. It does not benefit the author nor the reader/borrower, and author were complaining on that forum as well that they weren’t receiving payments (as meager as they actually are). When I re-published one book, and newly published my latest two books, I saw a lot of other writers really struggle with the whole process and felt it was almost a responsibility to pass on the knowledge to those people. Indie Authors & Publishers need to support each other…share what we learn. It is a gift to be able to become published, in whatever way that happens. There’s a lot of information out there, a lot of opinions, and it’s hard work to do alone. But it can be done, and done well. I did it, you did it and so have many others. We need to stick together, especially on issues such as this.

  18. Thanks Lynn; Great article. 1 1/2 years ago I checked out Lightning Source and liked what I read. When I found out Amazon can list your book as out of stock, I decided to go with CreateSpace which I like to avoid problems. My book is listed on Amazon in Canada and U.K. because I went to each site and listed the book myself.

    I agree Amazon has too much power.

  19. Lynn,

    This is a very informative article. Very well done. Personally, I don’t think there is a single benefit to going with an “assisted self-publisher” like Create Space. Authors need to fully take control of the process if they are going to self-publish. The upfront process can be laborious but the backend benefits are definitely worth it!

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