Jeff Bezos Explains Amazon’s Booksurge Move at BEA 2008

Most of Jeff Bezos’ session at this year’s Book Expo America amounted to an extended sales pitch for the Kindle and Amazon’s plans to get every book in or out of print digitized into Kindle format. This was actually pretty interesting, even though it wasn’t the reason I was listening to the podcast. It did make me see the appeal of the Kindle, though Bezos did not address the real problem facing any such device: you can’t “rip” your existing library of books onto your Kindle the way you can rip your CD collection onto your iPod. That makes replacing your print books with Kindle books prohibitively expensive—at least for compulsive readers like me, who can sell five grocery bags full of books to the local used-book store and still have overflowing shelves. Scanning printed books is a clumsy, time-consuming process that simply isn’t feasible for consumers today, and that’s a serious obstacle to widespread uptake of the Kindle.

But I digress. The reason I wanted to hear the presentation by, and interview with, Jeff Bezos was that I wanted to know more about Amazon’s recent move to insist that all their POD authors use BookSurge for fulfillment. Amazon owns BookSurge, so the move looked not merely self-serving but downright monopolistic to competing POD houses.

I have nothing against BookSurge. One of my clients has been using them since before Amazon bought the company, and while they aren’t perfect, they produce quality books for a fairly low set-up fee. Or, at least, it was low by comparison with AuthorHouse (then First Books) and its competitors at the time. And in 2003, at least, BookSurge was able to offer services that AuthorHouse couldn’t, namely including a color insert section for some critical illustrations.

Since then, companies like Lulu have drastically undercut BookSurge, and the differences in what an author has to pay are one reason for authors to object to Amazon’s decision. There are plenty of others, all with varying degrees of validity. And Amazon’s argument that printing all POD books at BookSurge made distribution easier seemed weak.

Yet it wasn’t at all difficult for Bezos to make a clear argument in favor of the move in his discussion with Chris Anderson at BEA. (Skip to 42:27 in the recording if you want to bypass the Kindle eulogy.)

If you’re going to pioneer something, you are going to create some controversy from time to time, and you have to be willing to be misunderstood. You have to be sure feel good about what you’re doing, and if you don’t, you can go back and course-correct. But if you’re simple-minded about the customer experience, that usually keeps you on the right side of that line… Even small things that we have done that people expect and later find helpful, have initially caused controversy…

Modern Print-on-Demand printers can print and bind a complete book in two hours. In our own fulfillment centers, we have millions of traditionally-printed books. They’re on shelves and in pallets in cartons, ready to be shipped out to customers. Latency for shipping these books is very short, and transportation cost is critically important to us. If somebody orders two books—and most orders are for more than two units—it basically costs us twice as much to transport two books if we have to send them in two separate boxes as it does if we can marry them together. [We have] things like Amazon Prime, where we make two-day shipping free, and things like Super Saver Shipping, where we make shipping free if you order $25, and that $25 [minimum] often gets people to order two items…

Very few books in a demand sense are POD books. Most books are traditional books that we sell. You probably ordered a traditional book and a Print-on-Demand book if you ordered a Print-on Demand book. So we want to marry those things in one box. We can save a lot of money by doing that, we can get the product to customers faster, we can pass on the savings to customers in the form of lower prices, and that’s a great customer experience. But it does require that the book be printed, if it’s a POD book, in our fulfillment center. That’s going to make some people unhappy…

System-wide, it does not make sense to print a POD book anywhere but in our fulfillment center…If you print it somewhere else, to get it in a single box, you gotta cross-ship that book to us, which is a delay, and we’re going to ship it to you tomorrow instead of today. That’s a bad customer experience.

So yes, it’s definitely to Amazon’s benefit to have all POD authors use BookSurge. The specifics of BookLocker’s class action suit against Amazon make it clear that Amazon has some less-than-altruistic motives. No one seems to be clear yet on what additional costs (if any) will be passed on to authors who use POD houses that agree to Amazon’s terms and use BookSurge for printing any books sold through Amazon. It’s possible that customers of Lightning Source or Lulu or Xlibris might have to pay an “Amazon surcharge” of some kind. But I doubt it will be as high as the set-up fee paid by BookSurge customers, because the files Amazon gets from these companies will already be set up and ready to be printed.

Given the way people shop at Amazon, printing books at Amazon’s fulfillment house really is to the customer’s benefit. Despite probable additional charges, it may well prove to benefit the authors of POD books. It might even benefit the other POD houses, because it saves them shipping costs and wear and tear on their equipment. It’s certainly better for anyone than if Amazon refused to carry POD books because the shipping costs are too high.

BookLocker, Lulu, and Lightning Source will continue to make the bulk of their money from the additional services they offer to their authors. It’s worth remembering that traditional publishers don’t have that added source of income, and all bookstores—not just Amazon—have required them to accept lousy terms since the 1930s.

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