Amazon as Book Publisher May Change the Game for the Industry

With so many different companies jumping on the e-reader bandwagon, it might seem as if Amazon (AMZN) will have to share its dominant digital market space with fellow behemoths like Apple (AAPL), Google (GOOG), and Barnes & Noble (BKS). But anyone who thought the online retailer might not be keeping up on the device front is missing crucial elements of Amazon's long-term strategy. The company has bigger plans in store, and the most recent moves might qualify as "game-changing," that over-used but still meaningful expression.

Amazon has had its own publishing imprint, AmazonEncore, for a little more than a year. Until now it has primarily worked with new writers who had self-published or gone through on-demand services (like Amazon's own CreateSpace), as well as writers looking to republish out-of-print works. Encore's publishing output to date has been fairly limited, including Nick Nolan's comic coming-of-age novels Strings Attached and Double Bound and Eric Kraft's Herb 'n Lorna, the first Peter LeRoy novel originally published in 1988. Encore operates akin to a typical trade publishing imprint in that work is acquired, edited and published. There are two key differences: one is that Encore incorporates reactions from Amazon's customer base as part of its decision-making; the other is that Encore titles are often released as Kindle books first, trade paperbacks later on.

Starting this week, you're going to hear a whole lot more about Encore. On Monday, the imprint announced that it would publish an original novel by mystery and thriller writer J.A. Konrath. On the one hand, the news wasn't a big surprise, as Konrath has published several books exclusively for the Kindle and, according to his projections, is on track to make a low six-figure income from e-books alone. What raised some eyebrows is that the novel, Shaken, is the seventh in Konrath's Jack Daniels detective series - discontinued by Konrath's original publisher Hyperion and not picked up by other trade publishers despite escalating sales for each installment.

Royalties That Rival the Trades

What makes Konrath's move particularly significant were the terms. Amazon will publish the Kindle edition of Shaken at $2.99 in October and release a paperback at $14.95 three months later, in February of 2011. The royalty Konrath will earn on each e-book is approximately $2.10, or 70% of the list price, a percentage Amazon is offering authors as of July 1 to entice more of them to sell their work via the Kindle. That royalty rate, as publishing consultant Mike Shatzkin pointed out, is "as much or more as [Konrath] would make on a $14.95 paperback from a trade publisher, and significantly more than he'd make on a $9.99 e-book distributed under "Agency" terms and current major publisher royalty conventions."

But is this a game-changer? On it's own, I don't think so. Konrath's e-book success has something of a chicken-and-egg quality to it. His formidable online marketing and book promotion efforts on the earlier Jack Daniels books built up name recognition such that even if Kindle customers didn't necessarily know who he was when buying his standalone works as Kindle editions for $1.99, there was still some degree of name recognition at work (Konrath has refuted this, but part of his explanation -- low price and attractive packaging -- suggests an experienced author at work, not a newbie.)

Authors with a smaller backlist or who choose the self-publishing route without a track record with a trade publisher of known quantity may also face a rude awakening if they emulate Konrath's path. "If you are savvy, knowledgable, and above all talented, the e-book revolution can help you find readers and build a career," said thriller writer Jason Pinter in a recent column for the Huffington Post's books section. "But if you're simply impatient, eager to 'publish' a book because you feel you're ready despite what the skeptics might say, you might be shooting your career in the foot."

The book still has to be good enough, but the advantage Amazon can offer for the right author is the big marketing muscle it can put behind a direct author-reader connection simply by dominating the online retailing and e-reading landscape.

Translating Works in Translation into Hits

The real significance of Konrath's deal comes when taken together with Amazon's cumulative book publishing strategy. A day after the Konrath deal was made public Amazon announced the formation of a separate imprint, AmazonCrossing, devoted to works in translation, which will launch on November 2 with the first English-language publication -- in both trade paperback and e-book format, at $15.95 and $9.99 respectively -- of Tierno Monénembo's The King of Kahel, which won France's prix Renaudot in 2008.

Not only will Amazon publish international works in other languages, but it will foot the bill to
translate them into English -- a task that can get quite expensive. Chad Post, publisher of Open Letter Books, which releases many works in translation annually, told the Wall Street Journal that translators typically command between $100 and $125 per thousand words, and more experienced translators are paid even more for their services. "There's a perception that books in translation don't sell as well, so you have to spend more on marketing than you might with a typical American author," Post said. "You have to spend more to get their name into circulation."

Monénembo in particular might be an excellent test case, according to M.A. Orthofer, managing editor of The Complete Review. "The University of Nebraska Press brought out one of his novels in translation the way a large number of translations come out in the US -- i.e. in utter obscurity, sinking unnoticed," Orthofer has said. "If Amazon can actually shift some copies of The King of Kahel it would suggest the difficulty books-in-translation have finding buyers/readers has more to do with marketing and public awareness than the fact that they are translations. And if Amazon can notch a couple of successes here, it might even attract the attention of the major publishing houses."

The publishing consultant Mike Shatzkin, however, thinks the Konrath move is the bigger deal of the two. "Books in translation have never been a huge part of the U.S. market, so I think the impact of U.S.-based authors following Konrath is likely to be much larger than the impact of Crossing," Shatzkin told DailyFinance by email. He added, however, that AmazonCrossing "could be a strategic play on Amazon's part to make [translated books] more popular in parts of the world where they're not."

Changing an Industry

With only 3% of the American book market devoted to translated fiction, that gambit seems likely to succeed, considering the international edition of the Kindle is now available in over 100 countries. Unlike Shatzin, I think AmazonCrossing is the bigger deal because it illustrates the big picture that much more: Amazon truly considers itself a publisher, eager to battle trade publishing on familiar turf like editorial and marketing and intent on not just winning, but winning big. Dominating the e-reading landscape? That's old hat, and there's more money to be made from being a smaller fish in a larger pond occupied by so-called "frenemies" like Apple or Google. Going on a hiring binge? Sure, that signifies something important, which is that Amazon doesn't want to stop the massive profit party of the last couple of quarters by stagnating.

The game will really change if a major figure signs directly with Amazon. Not through an e-distributor, as motivational guru Stephen R. Covey did by going with Rosetta Books to make his work available through Amazon, or only with backlist, as Brazilian bestseller Paulo Coehlo or American horror novelist F. Paul Wilson did, but with an original work coveted by trade publishers.

In other words, if James Patterson wakes up and realizes he can get even richer by dealing directly with Amazon (or Apple, or Google, or Barnes & Noble, or all of them), and cuts out his longtime publisher Little, Brown, then and only then will the game change drastically -- and it will also be game over for publishing as we know it.

Update: According to a spokesperson for AmazonEncore, the 70% royalty rate offered to authors as of July 1 is for the Digital Text Platform (DTP), and it is incorrect to assume Encore will offer the same rate.

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