Seattle Mystery Bookshop

The Vulture Capitalist Game

Now that our battle with Amazon has hit the front page of the Seattle Times, allow me to highlight the background of all of this in order to explain a few things to those who have not been following it for the last few months.

First of all, this is not simply a matter of Nancy Pearl’s new gig. She’s just the latest name that allows us to put a face to the math of Amazon’s game. The first blog post we did on the subject dates to June 22, 2011. This covered the back and forth between me and an author who was publishing through Amazon and wanted to have a signing. I said no and explained why. This post contains his message to me and my reply, as well as a few other thoughts.

This turned into a frenzy when it was picked up and mentioned by a few other book-related blogs and resulted in a number of additional posts in which I quoted and answered point raised by readers. It has always been my intention that the point of all of these posts is to enlighten and educate people who don’t know the nitty-gritty of the book world. At the bottom of that June 22 blog (Can’t Shake the Devil’s Hand and Say You’re Only Kidding) are links to the subsequent entries. [You can also find the blogs grouped under the category Bookselling These Days and they touch on more issues than what is being raised in this blog.]

On July 10, 2011, I tried to explain the math that is at the heart of the mess. Please read it for yourself – if you have read the recent post about Nancy Pearl, you’ll see that I was pointing out the problems with the math nearly six months ago, but what held true then for the McBains holds true for the Pearls. The post of Oct 7, 2011 deals with yet a different author but ties into the math. This post explains Amazon’s position about selling to other booksellers.

Dec 8, 2011’s post concerns Amazon’s app that would allow anyone with a smart phone to scan an item and check the price against Amazon’s. In effect, as many pointed out, it turned any brick-and-mortar shop into a showroom for Amazon – an outfit without a place where you can go in and handle the merchandise. The app did not apply to books but we saw it as yet another challenge to independents/small businesses as a whole and an unfair business practice.

On Dec 16, 2011, I constructed a post of various stories about Amazon’s business practices to try to show the greater problem and to convey that this isn’t just petty crankiness on what they’ve done to books and bookselling. These sorts of stories continue to appear. The latest that we saw this past week was about plagiarism and the wholesale passing off of another author’s e-book as your own through Amazon and whether Amazon is or will do anything about it.

There is still the issue of our ordering Amazon’s books and selling them at full price anyway. Why not do that? We could, sure, and have in a few instances, reluctantly. It financially supports a corporation that we think is fundamentally bad for our industry. Don recently posted a comment on our blog: “I understand that Amazon is really hurting independent bookshops, and I could understand not stocking their books because you don't want to send any money to your competition, but to be honest, Amazon isn't going away, and your existence is dependent on your ability to provide the things that Amazon doesn't have: readings, ambience, personal service, and a hand-curated selection of great books instead of a massive virtual barnload of every book in existence.” I’m glad that he grasps that but he also then misses an important thing: those things that we provide – readings, ambience, our recommendations and newsletter, even this blog – all go away if people don’t support it though buying books from independent businsses. Amazon’s deep discounts are then a threat to what he says he cherishes in an independent. It isn’t really a pickle, Don – support that which you want to enjoy, pay for what you use and, if you don’t, don’t say “Gee, that’s too bad, I used to shop there all the time” when Amazon is picking clean the bones of small businesses across the nation.

To be clear, we have special ordered a couple of these Amazon books for long-time customers. We won’t stock them not only for financial reasons but because that would also give Amazon a tiny slice of advertising through the spine of the book on our shelf. We reject the accusations that this is censorship. As pointed out in one of the earlier posts, there are all sorts of books that we choose to not carry – some just don’t sell well or at all, some just sound dumb or uninteresting, and some may claim to be ‘mysteries’ but the solution to a crime is not the central point of the book so we bypass them. And then there is the fact that we’re a specialty shop so there is a wide range of styles, genres and topics that we don’t stock. No bookshop stocks everything. Maybe Amazon says they do, but then they’re not a bookshop.

So you can see that we’ve been writing about this for months, long before Pearl joined forces with Amazon. I hope you'll take the time to read through these past posts to see what points have been raised, what issues have been addressed and what concerns have been aired.

According to the article that appeared in this morning’s Seattle Times, she laughed when told of what I’d said. Gallows humor – who knew it would tickle her!

Why us, why me, why should we speak out? Well, someone has to. What is going on is wrong.This is not just about Nancy Pearl, the Seattle Mystery Bookshop and Seattle. This is far bigger than just these little pieces. I’m insulated, somewhat. I have a specialty bookshop and Pearl hasn’t done much with mystery or crime or thriller books. She’s stuck mostly to children’s and general fiction. Those independents who have benefited from her past efforts have been the general bookshops. It is clear and understandable that they, along with publishers and other book-industry figures, would fear angering her. But I can say that I’ve talked to sales reps, booksellers and publishers and, while no one feels safe raising their voices, everyone tells me to keep at it. I hope that more of my colleagues will begin to speak up about all of this. It is something upon which we cannot stand silent. It is too important. 

If you agree with me, speak up.

~JB

Pearls Before Swine? The Joker in the Game

We've covered the economics of Amazon in the past but it seems worth repeating. The general public does not realize how it works. So this is how it works:

Throughout the publishing industry, the standard discount is 40%. That means that we order a book and we pay 60% of the cover price to the vendor (publisher or wholesaler). Usually we get a higher discount ordering from the publisher. From the wholesalers there is normally a sliding scale - you get a slightly higher discount if you order more copies. But you can take the 40% as the norm.

Out of the 40% that we make when we sell the book, we pay the rent, payroll, pay for the actual books, and all of the other bills that any business has. That 40% is the 'profit'. The higher the discount, the more you make because you keep more of the sale. In bookselling, that does not mean 3 martini lunches, an account at Tiffany's or a new interior for the DeLorean, it means you can be a little less in debt to the vendors because that 60% we have to pay them can add up quickly.

For the last 20 years or so, the book world has been ruled by discounts to buyers, to customers, not to booksellers. When the Big Box stores began, they'd offer, for example, the books on The New York Times' bestseller list at 30% off the cover price. They were not making much money on the sale of the book but they could afford that for a variety of reason (they had corporate money behind them, they relied on volume sales to make up the 'loss leaders' that brought people into the joint, and they were paid by the publishers to display books in prominent locations to encourage sales, etc.). Independents couldn't match those reduced prices because, well, you have to have that 40% 'profit' to pay. Those who tried to do the same price cutting often ended up cutting their own throats.

OK, so now Amazon is begining to publish books and people (and authors who want to have signings with us) want to know if we'll stock the Amazon-published books. The answer is no. It would be financial suicide to do so.

For an example, let's take Nancy Pearl. She's published a number of books about books. We used to stock them to support her and to support a local author and because they were fun and different and popular.

Her first book, Book Lust, has a retain price of $16.95. If we order it at a 40% discount, we pay $10.17 for it and make $6.78 if it sells. Once again, that 'profit' of $6.78 (hardly what Bain Capital makes, but we're not in the "1%") goes toward the rent, a new belt for the vacuum cleaner, bubblewrap for mail orders, pencils for the bookkeepers and M&Ms for the machine on the front counter. However, if you order Book Lust from Amazon, you pay only $10.29 - a 39% savings. That means that you can buy a copy of the book from them for nearly what we pay for it. How can we compete with that? We can't and won't try.

The announcement on Jan 11th, 2012, that the former librarian has joined forces with Amazon to launch a publishing line of her favorite books that, up to now, have been out of print will no doubt cause much headscratching. We don't know yet if any of her favorites will be mysteries so this may not come into play with us, but it will bedevil other independents as Amazon's mystery imprints have bedeviled us. We will not stock their mystery books. Will general independents stock her new line of reissues?

Here's the math:

One of the first books to be released is Merle Miller's A Gay and Meloncholy Sound (we know nothing about this book and have just picked it as an example). Amazon notes that it will be available on April 2nd at a list price of $14.95. However, they're selling it for $8.97, a 40% savings. You save $5.98. If you buy the e-book version for Kindle (something you cannot do through us), you pay only $5.99. You see, they're not only undercutting any other bookseller, they're also undercutting themselves their own publications. [The other title announced as part of Pearl's new gig is Rhian Ellis' After Life and the math - discount, retail price/Kindle price, etc - are identical, so this is Amazon's standard, similar to their other publishing lines.]

Thus, it is uneconomical for us to stock and sell printed books published by Amazon and we believe it would be financially pointless for any independent to do so. (And, again, while we can sell e-books through our new website, no one but Amazon can sell the versions for Kindle - that is proprietary) If you can't realistically make money selling something, why stock it? You can't and expect to keep your business healthy. "Pointless" really doesn't capture it, though. It would be financially destructive to stock Amazon's books. They've already stacked the deck against us. It isn't just that the odds always favor the house. It is more that, when playing with Amazon, there is no deck, the dice are so loaded they're heavy, the house has no doorknobs on the inside and the joker is shuffling the cards.

There is no way to win so we don't sit down at the table.

If it is uneconomical for independents to sell books published by Amazon, and no one but Amazon can sell e-books for Kindle, and if those two facts mean that the audience for Amazon's books is automatically limited, what is the attraction of working with Amazon for someone like Nancy Pearl?  She has more to lose from this alliance than gain.

She can no longer continue to be accepted as an objective and impartial promoter of books for by joining forces with a single and controversial player in the book world - one that is both a major retailer and now a publisher - her stance is now tainted.

She's no longer going to be simply a librarian; she's now a publisher and, as such, cannot be viewed as objective. No publisher is. And, by being affiliated with Amazon, she's lending her 'brand' to them and can no longer be viewed as free agent. No matter what she recommends from now on, the appearance, suspicion or assumption will always be, fair or not, that Amazon is calling -- or at least influencing -- her shots.

Very sad. It's like hearing a favorite old song used on a car commercial. You can never listen to it the same again. It's no longer just a great song - it's been reduced to a jingle.