Is Amazon the most powerful organisation book publishing has ever known in its history? John B. Thompson, author of the book “Book Wars. The Digital Revolution in Publishing” (Polity, 2021), says it is. If that is true, we should analyse his theory to understand how this fact changes world publishing.
The author explained his point of view during a meeting organised by the Gutenberg Institute of the Johannes Gutenberg University of Mainz, in a panel discussion with Alexandra Geese MEP (Greens/EFA, Germany), Hermann Eckel (Thalia, Tolino Alliance) and Christoph Bläsi (Book Studies, Johannes Gutenberg University; moderator) to shed light on issues raised in the book under a German perspective and in doing so reflect on ways to prevent the power of Amazon from harming European-style book cultures.
Mr Thompson explained that his book, based on field work and rather inductive than deductive in approach, looked at the impact of the digital revolution on the Anglo-American (trade) book business, relying on two decades of observation. In the early 2000s, everyone in the book sector was looking over their shoulders at what had happened in music, wondering whether the same would occur: after all, sector seemed just as exposed, books could be digitised just as easily, print could be swept aside like the vinyl; consequences could be just as catastrophic as in the music sector (where revenues fell more than half in 2000-2010). After the arrival of Amazon’s Kindle (November 2007), it really seemed it was the publishing industry’s “iPod moment”.
E-book revenues in the US trade sector did in fact increase impressively from 2008 to 2012, from close to zero to more than 3 billion USD. The sector, however, was not completely upended: in 2013, ebook sales showed signs of stagnation, and after another increase in 2014, they actually started declining. After reaching close to 25% of the total trade sales in 2014, ebook sales were back to some 15% by 2018.
This broad pattern is however deceptive: things are more complicated and different kinds of books perform very differently as ebooks. Data on ebook sales as a share of total sales by category reveal all manner of trends, often different from the general one. Some categories do very well as ebooks: romance, science fiction & fantasy, mystery, fiction in general, even if also experienced a degree of decline of digital sales after 2014, maintained an ebook share of 25 to 50%. On the other hand, for some categories ebooks never took off: travel, cooking, juvenile book, for which ebook sales hardly reached the 10% mark. In the middle, various non-fiction categories (self-help, health & fitness and history, for instance) reached 25 to 30%, showing no immediate signs of digital decline, and plateauing at different levels (others remained lower, with digital sales around the overall average).
Mr Thompson also recommended caution in interpreting the data he presented, as these had come from mainstream publishers. Another major consequence of digitisation, he added, had been the explosion of self-publishing, which happened mostly in the form of ebook: ebooks tend to be cheaper, so possibly more attractive to readers, and it is hard to know the actual numbers involved as Amazon (the largest player in the field) gives no sales figures. An analysis has been carried out nonetheless, based on Amazon’s bestseller ebook list – this is what the analyst going by the moniker of Data Guy did. Looking at the daily gross Amazon sales of ebook bestsellers by category, it turns out that self-published authors’ revenues in certain genres constitute from some 20% of the total (teen & YA, mystery, thriller & suspense) to about one third (science fiction & fantasy) and up to 50% (romance, erotica). Adding the hidden universe of self-publishing, therefore, yields a very different picture: we might still see a plateau in ebook sales, but at a higher level, with a gentler decline and maybe no decline at all in some genres.
The extraordinary rise of audiobooks is another crucial point in Thompson analyses. Audiobooks are not a new phenomenon, he explained, having been around since the 1950s; but with the digital revolution and smartphones, they really took off. Data on estimated consumer spending on audiobooks in the US reveal a significant upward trend starting around 2011-12: sales went from about 1 billion USD in 2011 to 2.5 billion in 2017. At the same time, physical formats (CDs, tapes) have all but disappeared, with downloads representing close to 90% of sales by 2017. Audible, owned by Amazon, is a big player in this field.
The rise of audio had offset decline in ebooks, but had not changed the total share of digital, which remained around 20-25%. In other words, there has been no massive shift away from physical formats; the print book keeps constituting the bulk of publishers’ revenues. Fears about book publishing going the same way as music turned out to be misguided, concluded Mr Thompson; the book industry is different, and thinking it was the same led to mistakes and misunderstandings about the future. Future which, according to the author, is not a one-way shift, but a world of coexistence, of hybrid culture.
But for Thompson the issue of formats was only part of the story of the digital revolution in the book sector, which had completely transformed retail sector. The key factor here was the rise of Amazon, the most significant phenomenon of all, in the author’s view. According to him, Amazon today has become the most powerful organisation book publishing has ever known in its history; and this is a product entirely of the digital revolution.
Among the reasons for this accumulation of power, Mr Thompson acknowledged Amazon’s excellent customer service. The retail giant also developed a digital reading innovative ecosystem; their unprecedented power stems also from their systematic gathering of user data in this ecosystem, which they turn into a proprietary resource (the author called it “information capital”) they use to their advantage. It is a form of data power, deriving from Amazon’s pioneering of information capital in the book world: they accumulated and used it to market more effectively to their customers, establishing a special kind of market dominance.
Retail chains had a great deal of power in their heyday, but that was nothing compared to Amazon; no one could ever collect that much data about customers, and Amazon is way ahead of all its competitors, who are at a serious disadvantage – and so are Amazon’s suppliers (the publishers). Amazon has thus maintained a dominant place: 75% of the ebook market in the US, and likely underestimated, not counting Amazon Unlimited; 45% of all print sales in the US; it owns Audible, with an estimated share of 35 to 90% of audiobook sales.
The author argued that whether Amazon had monopoly power in the Anglo-American book market was debatable, depending on definitions in the age of internet. However, he stated that without getting into legal and technical debates, Amazon was clearly the dominant player in that market in a way that was dangerous. The giant is also dominant in book retail and can capture data on all transactions, including from third party sellers. Moreover, they can be a monopsony, with great power on suppliers; if 50% or more of a publisher’s business comes from one retailer (as it happens in the US and UK markets), that retailer has a great degree of leverage.
In Thompson’s view, publishers today were being forced to ask themselves fundamental questions about their nature and orientation, and who their customers were. For most of publishing history, publishers understood their customers to be bookstores and other retailers – they operated B2B; they left to retailers to display books to customers and drive demand, and they themselves knew little of the readers. As the digital revolution gathered pace, retail space declined, and a new retailer emerged with vast amounts of data about readers upon which it made decisions. Publishers had very little control over this process and thus realised their traditional view as B2B was working against them; they needed to focus more on their ultimate customers (the readers), become more reader-centric, shift to a B2C approach. As the digital revolution forced them to take readers seriously, it gave them tools to do that at scale; publishers thus took a leaf out of Amazon’s book, began developing tools and databases of readers, to open direct channels of communication with readers. It was not just about having more effective tools for direct marketing; it was about the role of publishers in cultural dialogue. Publishers started pioneering new kinds of publishing, integrating readers’ feedback in decision making processes: crowdfunding (not just for capital, it is an audience building machine), participative processes that turned traditional publishing on its head (such as Wattpad).
The real challenge is: how to make your businesses more reader-centric, how to build new channels of communication, what role would publishers take up in the changing communication and information environment of the 21 century? Those who not only can market, but listen to readers more, will ride the wave of the digital revolution more successfully in the years to come.
Nethertheless, the power of Amazon shouldn’t be overestimated. As Hermann Eckel (Thalia, Tolino Alliance) explained, Tolino Alliance had managed to successfully compete in the German ebook market with the US giant, obtaining a 40% share in that market through the Tolino e-reader thanks many factors.
These factors were: a long-term strategic view and a sense of urgency out of fear (the steep rise in ebook sales in the years before seemed to foretell a hard time for brick and mortar stores, ebook sales were expected to reach a 25 to 40% share, the Tolino Alliance was launched and in 9 months the first e-reader was on the market); the joining of forces by competitors, in a spirit of co-opetition (cooperation and competition), which meant more than just a combined customer base; the development of an open system, in particular open to all bookshops (all indies can join and sell Tolino); an openness extended to readers, as customers can use Tolino to read digital books bought elsewhere; as a consequence of all the above, the fact that Tolino became a brand for the whole book trade (“our” e-reader). Mr Eckel then explained that 30% of Thalia’s sales came from e-commerce, a high level compared to the overall German average. He said that their data confirmed the previous analysis: a lot of digital sales are not accounted for (Amazon self-publishing, Tolino’s own self-publishing, free content on apps, etc.); Tolino Media offers a self-publishing platform, which has grown a lot in the last few years and still is, but it remains hard to put a finger on it, nobody really knows the size of the phenomenon.
Another crucial point to be considered is the regulation field. Alexandra Geese is a german MEP, Green Party. She is in favour
of regulation, adding that she thought most EU politicians would agree. She argued that the GDPR might help with part of the data monopoly problem, especially regarding personal data. She added that the problem was enforcement: the Irish data protection authority is overwhelmed, with so many Big Tech companies headquartered there. Mrs Geese attributed the success of Amazon to 3 factors: convenience (a ubiquitous site, available in all languages, etc. – something she said publishers needed to match); cheap labour, always on the edge of breaking the law (exploitation, no unions, etc. – something which public authorities could do remedy by better enforcement of labour laws); and data usage. As to the latter, the proposed DSA and DMA regulations should improve things. Many parts of the European economy are worried about Amazon, as the data they own have allowed Big Tech to enter any sector. Given how the success of these giants relies on their capacity to collect huge amounts of data, one of the aims of the DSA for example is banning targeted advertising, a huge source of profit for them.
The event page is here.