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Godzilla’s Gumball Machine

This is Part 2 of an entry I began yesterday.

Nine years ago, I called for the creation of a digital content gumball machine; that is, a Web site that would accept payment and send back a file of some sort, whether a song, a video, or an ebook. It was the start of a popular series and I got a lot of good feedback. I’ve since walked back on several of the original essay’s points, primarily the notion that every author should have his or her own ebook gumball machine, but also the notion that DRM needs to be accomodated. At the time, I thought that while DRM might not help much, it wouldn’t hurt. I think the experiences of Baen and Tor (and probably other imprints) have proven me wrong. Lack of DRM helps. Besides, DRM is what gave Amazon its market-lock, and publishers demanded it. Petard, meet hoist.

The really big lesson Amazon taught us is that Size Matters. What we need isn’t a separate gumball machine for every author or publisher, nor even a clever P-P network of individual gumball machines, though that might work to some extent. We need Godzilla’s Gumball Machine, or Amazon will just step on it and keep marching through the ruins. To compete with Amazon, all publisher/author storefronts must be searchable from a single search prompt. Payment must be handled by the gumball machine system as a whole, via Paypal or something like it. Publishers will probably sell direct, and pay a commission to the firm operating the system.

This could be done. It wouldn’t even be hideously difficult. The technology is not only available but mature. Best of all, well…it’s (almost) been done already. There is a second e-commerce titan in the world. Its name is EBay. (Ok, there’s also Alibaba, which I have never used and know little about aside from the fact that it’s bigger than Amazon and eBay combined. Oh, and the fact that their TMall site is already hosting stores for Chinese print-book publishers.)

I’ll cut the dramatics and get right to the point: The Big Five need to partner with eBay and possibly Alibaba to produce a digital content gumball machine (or two) as efficient and seamless as Amazon’s. EBay’s affiliate store model is a good one, and I’ve bought an awful lot of physical goods on eBay, both new and used, outside the auction model. In fact, in the last few years I’ve bought only collectable kites at auction. Everything else was a fixed-price “buy it now” affiliate sale.

Admittedly, eBay has some work to do to make their purchasing experience as good as Amazon’s. However, they are already providing digital storefronts to physical goods retailers. I haven’t seen any plans for them to offer digital content so far, but man, are they so dense that they haven’t thought of it? Unlikely. If eBay isn’t considering a content gumball machine, it can only be because the Brittles won’t touch it. That’s a shame, though I think there’s an explanation. (Stay tuned.)

A large and thriving eBay media store would provide several benefits to publishers:

  • Print books could be sold side-by-side with ebooks. Publishers could sell signed first editions to people who like signed print books (and will pay a premium for them) and ebooks to everybody else.
  • Selling direct means you don’t lose 55% to the retail channel. Sure, there would be costs associated with selling on such a system, but they wouldn’t be over half the price of the goods.
  • Cash flow is immediate from direct sales. It’s not net 30, nor net 60. It’s net right-the-hell-now.
  • Publishers could price the goods however they wanted, at whatever points they prefer.

So what’s not to like?

Readers who have any history at all with the publishing industry know exactly what’s not to like: channel conflict. In our early Coriolis years, we sold books through ads in the back of our magazine. They weren’t always books we had published; in fact, we were selling other publishers’ books a year or two before we began publishing books at all. The Bookstream arm of the company generated a fair bit of cash flow, and it was immediate cash flow, not the net-180 terms we later received from our retailers. Cash flow is a very serious constraint in print book publishing. Cash flow from Bookstream helped us grow more quickly than we otherwise might have.

However, we caught a whole lot of hell from our retailers for selling our own products direct. That’s really what’s at stake here, and it’s an issue that hasn’t come up much in discussion of the Amazon vs. Hachette fistfight: Publishers can’t compete with Amazon without a strong online retail presence, and any such presence will pull sales away from traditional retailers, making those retailers less viable. If the Big Five partner with somebody to create Godzilla’s Gumball Machine to compete with Amazon, we may lose B&M bookstores as collateral damage.

Then again, the last time I was at B&N, they’d pulled out another several book bays and replaced them with toys and knicknacks and other stuff that I simply wasn’t interested in. The slow death of the B&M retail book channel has been happening for years, and will continue to happen whether or not the Big Five create their own Amazon-class gumball machine.

Alas, the Amazon-Hachette thing cooks down to this: Do we want Amazon to have competition in the ebook market? Or do we want B&M bookstores? We may not be able to have both, not on the terms that publishers (especially large publishers) are demanding.

And beneath that question lies another, even darker one: If eBay/Alibaba/whoever can provide an e-commerce site with centrally searchable ebook gumball machine for anybody…do we really need publishers in their current form? Publisher services can be unbundled, and increasingly are. Editing, layout, artwork, indexing, and promotion can all be had for a price. What’s left may be thought of as a sort of online bookie service placing money bets against the future whims of public taste. People are already funding books with kickstarter. B&M bookstores may not be the only things dying a slow death.

So what’s my point?

  • Amazon works because it’s a single system through which customers can order damned near any book that ever existed. Any system that competes with Amazon must do the same.
  • Digital and physical goods may not be sellable by the same firm, through the same retail channels. How many record stores have you been to lately? We may not like it, but it’s real.
  • Neither B&M bookstores nor conventional publishers are essential to keep the book business alive and vibrant. We may not like that either, but it’s true.
  • Publishing will probably become a basket of unbundled services. Big basket, big price. Smaller basket (if you can do some of the work yourself) smaller price. (I have an unfinished entry on this very subject.)
  • The real problem in bookselling is discovery. This is not a new insight, and however the book publishing industry rearranges itself, discovery will remain the core challenge. You need to learn something about this, and although I’ll have more to say about it here in the future, this is an interesting and pertinent book.

And to conclude, some odd thoughts:

  • The future of print-media bookselling may lie in used bookselling. Used bookstores seem to be doing OK, and it’s no great leap to imagine them taking a certain number of new books. Expect it to be a small number, and expect them to be sold without return privileges.
  • The book publishing business may fragment into segments that bear little business model resemblance to one another. Genre books work very well as ebooks. Technical books, not so much.
  • Change is not only inevitable, it’s underway. Brittle will be fatal.

Any questions?


  1. Carrington Dixon says:

    The local used-book giant, Half Price Books, already sells some new books. Of course, this is a dozen or so titles out of the thousands of used books in a store.

    In the long term the used-book retailer will follow the new-book retailer when the supply of used books begins to age for lack of newer entries. I estimate the median age on HPB’s shelves is no more than five years, possibly much less. At some point used-book store becomes antiquarian-book store and the customer base changes and becomes smaller.

    1. As I understand it (there being no stores in my area) Half Price Books depends heavily on returns and remainders, which are basically NOS books. (I include “hurt skids” in returns, since they are returns that publishers do not return to inventory.) Do they really carry any frontlist books that are neither returns nor remainders? That would surprise me a little, as the accounting for frontlist books is radically different than for returns/remainders/used.

      That said, I could see the value of stocking, say, the top 25 titles on the NYT bestseller list to pull people into the store.

      1. Carrington Dixon says:

        They have one (small) stand of books that they label as ‘new’. I believe that this is apart from the returns and remainders, which are part of the general inventory.

  2. Tom Roderick says:

    Not sure what you meant by discovery Jeff since the link is broken, but one reason I keep going into B&M book stores (when I can find them) is just that — to discover something I did not know existed.

    A mail order/web used book store I have used quite a bit is Edward R. Hamilton. They send out paper catalogs that I usually scan pretty carefully. I have found some treasures including one of the best “popular” books on RADAR and SONAR that I have ever seen.

  3. Bob Halloran says:

    On the Kickstarter front, I’m sure you’re aware that the Foglio’s have used KS for the last two hard-copy collections of the Girl Genius webcomic, with ridiculous success. The problem I see with that approach is that it favors ‘known’ authors, while up-and-coming writers would presumably have problems winning the ‘popularity contest’ to get sufficient funding. Your thoughts?

  4. TRX says:

    There used to be about a dozen used book stores in the local (30 mile radius) area. By ten years ago, it had dwindled to four; now down to three. And one of those is almost exclusively romance paperbacks.

    Reasons for their decline:

    1) price. When new paperbacks went over $7, used ones were $4 or $5. (no half price around here) When bookies found they could hit flea markets and get books for less than half that, the bookstores lost a lot of their buyers.

    2) no new books in the chain. Most of the new book stores have vanished. Every convenience store and grocery store used to have wire racks with paperbacks. All that is gone now.

    3) we lost several stores that bought into the “get rich selling comic books” thing. They focused on comics to the point that they not only weren’t acquiring new stock, they were ignoring their book customers. And then the comic fad evaporated.

    4) increasing specialization of readers. There’s the romance-only store I mentioned, and there used to be a couple of others, that closed when their owners retired. I realize “romance” is a catch-all that incorporates everything from bodice-rippers to SF or westerns now, but when you stock nothing else…

    5) fewer readers in general. A lot of people used to be “casual readers”; if they were killing time somewhere, they might pick up something to read. Now they’re more likely to occupy their time with Facebook or Hulu.

    1. Rich Shealer says:

      @TRX – Point #5 seems to be very true. TV hurt reading, but when you are on the road reading was all you had. Now smart phones have pushed that away.

      I’m not immune to the connected world. I read less fiction than I used to and I’m not addicted to Twitter or Facebook, but I do listen to Podcasts and read blogs. All take away from the books I used to read.

      Although I have bought several eBooks at the spur of the moment when I hear something mentioned on the radio or a podcast. Finding time to read the whole thing is harder.

      My grandparents had a book case full of books. I read many of them when I was a kid. I remember actually reading Alice through the Looking Glass because I recognized the name. My grandkids won’t have the same opportunity. They think mirrors are for selfies.

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