In practical terms...

I thought it might be useful to show how Amazon's new requirements for POD books (see yesterday's post) will affect some small presses, using my own press as an example. (I realize not every reader of this blog gives a hoot about POD and retail distribution, but a lot of us micropresses and individual self-publishers use these services, so bear with me.)

My press uses Lulu.com for convenience and value. I could have the books printed more economically--I'd still be using a digital short-run printer to do it--but Lulu's distribution packages include the purchase of an ISBN, database listings for Books-in-Print (without which nobody knows the book exists), and availability via Ingram to physical and online bookstores, including Amazon. Lulu also offers online store space at Lulu.com (though personally I don't emphasize it, preferring to encourage people to buy directly from my press). In addition, with my Lulu account, I get a dashboard where I can maintain all my book files, and keep up with sales reports broken down by channel. That's one-stop shopping for me. Extremely convenient.

With Lulu, I get bulk discounts on the per-copy cost--the more books I order, the cheaper they are. I pay an additional flat fee per title of $99.95 for the ISBN, listings, and distribution network access. (Until recently in fact, this flat fee was on sale for more than a year at $50.00, so I took advantage of that. Periodically Lulu offers special bulk discount rates on top of their already discounted rates, and I take advantage of those when I can.)

Working with Lulu this way means I can release a book for less than $100 up front. It ends up costing me more than that up front because I order proof copies, author copies, review copies, and some stock to fill direct orders. (That's when I take advantage of the bulk order discounted rates.) Still, compared to buying a full print run from another digital short run printer (forget offset--a press as small as mine would be nuts to try to afford that), I'm paying less out of pocket up front--and eliminating any risk that I will have unsold or returned copies on my hands down the road. I'm also eliminating the potential cost of damaged copies, and saving quite a bit on shipping, since there aren't boxes and boxes of books being trucked from printing facility to warehouse. Once I place this order, the distribution network channels--Lulu's store, Ingram's customers-- take care of the rest. When a bookstore orders from Ingram, I do nothing. I just log in to view my reports on my Lulu dashboard, and each quarter they send me a check. When a customer orders from Amazon, same thing. I make less Ingram these sales than I do on Lulu.com sales, and I make the most on direct sales that I fill myself. Because I emphasize direct sales, I am able to clear quite a bit more than I would do otherwise.

Remember, we're talking relatively more here. This is still book publishing. I can't afford to pay myself a salary yet, but I can reasonably hope to recoup the cost of purchasing my bulk order as well as the cost of mailing supplies and postage associated with publicity mailings, etc. (2 out of 4 of the books I have released have already hit this threshhold, and I may get to pay myself a pittance after all in 2008.) Like many micropresses, I'm pretty happy to break even, thrilled if I earn beyond that. If I'm shrewd about how I promote the books (the spring tour is going to end up costing me only $200 out of pocket for instance, but that's another show!) I can potentially not only break even but generate enough sales to become profitable. (Again, note that I did not say "rich.") That puts me squarely in the DIY realm of doing this because I love it. While it may sound more like a passion or a hobby than a profession, thanks to the distribution reach and presence I'm able to create with Lulu's service, my books are just as available as Random House's (where I used to work). You can even get them outside the US.

Choosing this model allows me, so far at least, to be a staff of one sitting in my home office. And I have a nonpublishing day job. Compare that to the wages of 10 full timers, a couple of part-timers and a gaggle of interns we used to maintain at Soft Skull Press (where I also used to work), plus the expense of renting office space and paying associated utilities, etc., and you can easily see the how value and convenience make this a good option for me. If I were publishing something other than poetry the volume of sales might be too much for this pared-down scenario. If I had to spend much more time actively chasing down payment for orders, processing returns, coordinating with warehouses, etc. I'd not have time for my day job. Which means I couldn't afford to run the press at all.

On an 80 p. poetry book sold directly by the press, I can clear anywhere from $9 to $12 dollars, depending on how much of a discount I got on my bulk order and whether the customer is a bookstore or an individual. (That's how I can afford to do buy-two specials, etc.) I clear $7 on books sold through Lulu's store, which takes a commission in this case. I get $3.50 on books sold through Ingram, which supplies bookstores...and until this new policy goes into effect, Amazon. This amount reflects not only Lulu's commission, but Ingram's distribution commission and the retailer's cut of the cover price.

Additionally, on every book sold, I pay my authors a 7% royalty on the cover price. That's $1.05 on a $15.00 book. That means with my current set-up, the press retains a little less than $2.50 on Amazon and bookstore orders processed by Ingram.

You can see where this is headed, yes? My press currently makes $2.50 per book sold on Amazon. Amazon will (reportedly) be taking %48 of the cover price. Since there will be no additional Lulu or Ingram commissions on these sales, that translates to $7.80 (52% of the cover), minus the author's royalty of $1.05: $6.75. That's more than I make now on Amazon sales, but less than I make in any other way. But that doesn't take into account the $50 set-up fee per title. This is where it gets a little fuzzy and will affect every POD-based press a little differently.

$50 a year per title may not seem like much--except all that gets you is availability at Amazon, the channel where you make the least money. Even if you stand to make a bit more on Amazon sales, if your press doesn't do enough Amazon sales to reach whatever your total set-up cost will be (determined by how many titles you want to put into their system at $50 a pop), you're just paying more and not earning more. What this means for different sized and differently structured presses will vary. A lot of presses use Lightning Source in a manner similar to how I use Lulu. They print their in-house stock with them and then buy a distribution package to make additional sales possible through Ingram to bookstores. If a small press focuses exclusively on Amazon--through their Amazon Advantage program or as a Marketplace seller, for example--this could be an OK deal for them if they can consolidate digital printing with Amazon availability. My press can't give up Ingram--college course adoptions and bookstore sales for readings are too important. (See yesterday's post; these are two big factors that apply particularly to POETRY.)

I think the real sticking point is this: before this new policy, Amazon availability was already a benefit of distribution via Ingram. I was the press, Lulu was the printer, Ingram was the distributor, and Amazon the retailer. Amazon is changing the terms of the relationship. Amazon, unlike retailers and distributors in the rest of the industry, is taking itself out of an integrated network and creating a closed loop. Because they can. And presses have to pay to play.

My press make the least money at Amazon already, and Amazon doesn't count for the majority of my sales. While my calculations above show that I could clear a better margin per sale with Amazon, running the numbers that way doesn't accurately reflect what I'm getting for <$50 and 48% x number of sales>. For my press, and probably for many others, when I project how many sales I'm likely to do via Amazon, the value of the "service" goes down. If--and as of this morning there's still no word from Lulu--Amazon's new policy affects my press, I will have to decide whether or not to pony up. Even if it's not worth it financially, finances are not my only concern. What will my authors think if they are no longer available on Amazon?

I'm leaving in the morning on the book tour, and won't have much time to think about this (yay!) while I'm away. But when I get back and see how things have shaken out, I'll probably be removing all Amazon links from the press site and encouraging customers to avoid them, even if my books remain available. In my house we've instituted an Amazon ban. I already didn't buy books from them unless I had to, but my husband shopped with them quite a bit, for both book and nonbook things. Not anymore.

There's a petition here. I never really know if those things are effective, but it might make you feel better.