Very recently, Amazon made a small, barely noticeable tweak to the way it sells books. And that little tweak has publishers very, very worried.
The change has to do with what Amazon calls the “Buy Box.” That’s the little box on the right-hand side of Amazon product pages that lets you buy stuff through the company’s massive retail enterprise. It looks like this:
It used to be that when you were shopping for a new copy of a book and clicked “Add to Cart,” you were buying the book from Amazon itself. Amazon, in turn, had bought the book from its publisher or its publisher’s wholesalers, just like if you went to any other bookstore selling new copies of books. There was a clear supply chain that sent your money directly into the pockets of the people who wrote and published the book you were buying.
But now, reports the Huffington Post, that’s no longer the default scenario. Now you might be buying the book from Amazon, or you might be buying it from a third-party seller. And there’s no guarantee that if the latter is true, said third-party seller bought the book from the publisher. In fact, it’s most likely they didn’t.
Which means the publisher might not be getting paid. And, by extension, neither is the author.
Understandably, both publishers and authors are deeply unhappy about this change.
Who gets to be the default seller in the Buy Box?
Amazon calls the default seller in the Buy Box — the one who gets the business when a customer clicks “Add to Cart” without looking for more options — the “Buy Box winner.” It uses an algorithm to choose a Buy Box winner for each product it sells, prioritizing sellers who offer low prices, use Amazon Prime, have good customer feedback, and keep their items in stock. It also requires that items sold by its Buy Box winners be new, not used, and only approved sellers may compete for the Buy Box. Sometimes Amazon itself wins the Box, and sometimes third-party sellers do.
When I asked Amazon about winning the Buy Box with regard to books, a company spokesperson sent me this statement and requested it be printed in full:
We have listed and sold books, both new and used, from third party sellers for many years. The recent changes allow sellers of new books to be the “featured offer” on a book’s detail page, which means that our bookstore now works like the rest of Amazon, where third party sellers compete with Amazon for the sale of new items. Only offers for new books are eligible to be featured.
However, the Authors Guild points out that “Amazon does not sell or stream copies of movies and television programs that are distributed by anyone other than the authorized distributor,” so the bookstore isn’t working exactly like the rest of Amazon.
If the author and publisher aren’t making money from book sales on Amazon, who is?
Here’s what happens to your money when you buy a book from Amazon itself: A certain percentage of the cost goes to the publisher. (Amazon’s terms vary from publisher to publisher, but that share is usually around 60 percent.) The publisher uses that money to pay the author, cover its expenses, and contribute to its profit margins. Amazon pockets the remaining 40 percent for its own purposes.
Here’s what happens to your money when you buy a book through Amazon but from a third-party seller: Amazon gets 15 percent of the total sales price, including shipping, plus a flat rate of $1.85 per item. The rest goes to the third-party seller. Not a single cent goes to the publisher, which means nothing goes to the author — but Amazon has made a profit either way, and without having to shoulder the expense of shipping and warehousing.
Why aren’t third-party sellers paying publishers?
Amazon’s third-party sellers have to offer new books, not used ones, but in many cases they don’t seem to have bought their books from publishers. No one is quite sure where their books come from, including, it seems, Amazon itself. The industry publication Publishers Lunch reports that Amazon third-party sellers who worry about breaking the rules have reassured one another that they’re not doing anything wrong by citing the fact that Amazon’s guidelines “as always, [say] nothing about provenance, nothing about purchasing through distribution.” It doesn’t matter, in other words, where the books come from, so long as they are new, unmarked, and sold cheaply.
A representative I spoke to from one of the big five publishers theorized that third-party sellers might be selling some of the free promotional copies that publishers routinely send out to critics and bloggers just before a book is published. Others have suggested that they might be buying books with minor cosmetic damage from warehouses, just damaged enough to be discounted but not so damaged that Amazon stops considering them “new.”
Penguin Random House has confirmed on more than one occasion that it sent a series of emails to third-party sellers inquiring as to where and how they acquired the Penguin Random House books they’re selling, and says it shared the results with Amazon. Amazon, for its part, has assured the industry that it is committed to “removing bad actors.”
Hey, all I see here is that I get easy and convenient access to cheap books. How is this hurting me as a customer?
For Amazon’s customers, this policy change has a few downsides:
1. If the Buy Box winner for a book is out of stock, it will look to most customers as though the book is out of stock everywhere. You’ll have to click through several buttons to get to a list of all the sellers on Amazon that carry the book and find one that’s still stocking it. Amazon’s algorithm is weighted toward sellers that are known to keep their books in stock, ostensibly to avoid this very inconvenience — but judging from the frantic state of Book Twitter, a number of books appear to have already fallen into this trap, particularly debuts.
— Kirsten Carleton (@kirstencarleton) May 5, 2017
In many cases, Amazon has eventually updated the Buy Box winner to replace the out-of-stock third-party sellers, but it often takes days for change to go through.
Just so you know, you guys, SECRETS, LIES, AND SCANDALS is NOT out of print. THIS is happening. 🙁 https://t.co/16lYFocPkB
— Amanda K. Morgan (@AmandaKMorgan) May 6, 2017
2. This policy makes it harder for publishers to make money. That makes them less likely to publish risky books. As Authors Guild president Mary Rasenberger told the New Republic, “The connection that people fail to make is that if publishers have less money, then they have less to invest. That means they can’t afford to take risks on the kinds of challenging books they’ve published for centuries.”
Exciting, artistically interesting new books are not guaranteed moneymakers. Well-respected middlebrow books are also not guaranteed moneymakers. Man Booker Prize nominees routinely sell as few as 3,000 copies. Right now publishers can afford to subsidize a few prestige titles every year with the profits they make on the types of books that generally do sell well — erotica that made a big splash when it was self-published, pulpy thrillers from established authors, and so on.
When publishers make less money, they have less money to spend on interesting, valuable books that are unlikely to make a profit. That means those books are exponentially less likely to ever make their way to you, the reader.
3. This policy is part of Amazon’s ongoing, years-long quest to drive down the price of books. If Amazon succeeds, fewer people will be able to make their living as writers. That means fewer and worse books will make it to the marketplace.
Amazon routinely takes a loss on its book sales, often charging customers less per book than it pays publishers and swallowing the difference. It’s a priority for the company to be your preferred bookseller, even if it has to take a hit; its business model can accommodate the loss, because it generally makes up the extra dollars on the last-minute impulse buys customers toss into their shopping carts. Meanwhile, on the e-book side of things, Amazon’s low prices help drive sales of its Kindle. But that also means it has set certain customer expectations: Many Amazon customers now believe that books should be cheap — cheaper to buy than they are to make.
It is already punishingly rare for writers to make a living wage from their books. As Amazon drives down the cost of books, it will become ever more rare. That means fewer people will be able to invest the time and effort it takes into becoming a writer, which means a lot of talented writers — especially working-class writers and writers of color — will go unheard. All of which means that you, the reader, will be missing out on some excellent potential books.