They say that even a broken clock is right twice a day.  My percentage may not be quite as good as that broken timepiece, but by The Great Green Toad Frog, once in a great while – I’m right too. 

A while back, I started blogging about my dissatisfaction with Mobipocket.  As you may know, Mobi is the ebookbase distributor that used to be THE place for indie publishers to sell ebooks.  The little French company was going gangbusters until 2005 arrived and the American giant, Amazon, gobbled up little Mobi.  Many thought that the purchase meant that Amazon’s already immense assets and web presence would advance the brand, provide a killer venue to the indie publishers, and make the Mobi format the industry standard for ebooks.  But, of course, it didn’t work out that way.

It was a strategic takeover for the Giant which was apparently already eyeballing plans for an ebook distribution service of its own.  The purchase meant that Amazon could cannibalize the company by siphoning off pieces and parts of the Mobi technology. I’m no gadget guru (my hubby wears that hat), but I suspect that computer folk would be able to examine the Kindle app’s code and see the fingerprints of its Mobi forerunner.  Once the Giant licked all the red off the Mobi sucker, it could toss the sucker in the garbage. 

And that’s what its done.  Except, Amazon doesn’t want to pay for the sucker – so it hasn’t.  How could the company get all the goodie out and not pay the bill?  By not officially killing Mobi.  See, Mobi never paid royalties until they added up to $150.00 per indie publisher.  Right now, Amazon owes hundreds and hundreds, likely thousands and thousands, of little indie publishers (like yours truly) royalties.  In my case, they owe over $100.00.  If Amazon did the honest thing and killed off the Mobi ebookbase app, it would have to pay for the funeral.  So it hasn’t officially killed the company – it’s just neutered it.  Amazon has decreed that no new Mobi publisher accounts can be established.  Won’t those pesky writers eventually just give up and go away after they realize that they aren’t selling anything at Mobi anymore? 

The death of Mobi became crystal clear this week when Amazon announced partnerships with Microsoft and Apple.  Next month, PC and Mac users will be able to download free Kindle apps.  This means that all of those users will be able to buy Kindle books for their PCs and Macs.  This announcement follows on the heels of Amazon beginning to market the Kindle in countries outside the US.  So if it wasn’t clear earlier, now the whole world knows that Mobi will be no more.  And if that’s the case, Amazon owes Mobi publishers a duty of good faith.  What does good faith mean?  It means it should officially close the ebookbase app AND PAY OUT THE ROYALTIES IT OWES. 

If Amazon wants to be the voice of indie publishers – and it sure looks like that’s what it wants – then it also has to fix its royalty structure.  How broken is the Amazon royalty arrangement?  Lets say you want to sell your house.  Will you list it with a realtor who promises that you get to keep 35% of the profits?  35%?  That means that you, who own and have maintained the house, keep less of the money than the realtor who sells it.  You own the house and you sell it, so you make 35% of the money and the realtor makes 65%.  Would all the sellers run to sign up for that arrangement?  Not likely, because if you’re selling your house, you’ll think most of the profit should be yours.  Yes, the realtor is performing a service and yes the realtor should be paid.  But the realtor doesn’t get more for your house than you do.  Well, it doesn’t unless the realtor is Amazon.

Who’ll make Amazon be fair with the writers?  After all, if you want the market, you’ll pay whatever price Amazon sets.  Who else on earth could offer indie writers access to so many buyers? 

Well, sports fans, lets re-wind this week’s amazing adventures and examine events.  Who could challenge Amazon?  GOOGLE is one contender.  That company has announced a forray into the ebook market beginning early next year.  But, it appears from early announcements that while Google will sell ebooks direct from its store, that it will also allow buyers to purchase through its store via links to Amazon, Barnes and Noble and the like.  If that is the case, given Amazon’s already unfair royalty structure, it looks like sellers would make almost nothing for ebooks sold via Google books.  So Google has the online cred, but it doesn’t look like the real deal challenger to the Giant.  It looks more like Google wants to gather around the virtual campfire with Amazon and sing Kumbaya.  

Another potential rival is Barnes and Noble.  The company’s new Nook and its partnership with Smashwords gives it some serious ammunition.  At this point, the Smashwords partnership is mostly hypothetical, as (to my knowledge) none of the Smashwords books have yet appeared for sale on B&N or Fictionwise.  I know mine haven’t appeared on either site yet.  While B&N may build an online presence that will rival Amazon’s someday, its strength in the past has been through actual bookstores where customers walked in to buy a print and paper book.  B&N’s saavy strategy look to make it a future heavyweight, but it needs some growing time before it could best the Giant.   

So is there out there in the universe any company that could and likely would challenge Amazon in a real, Giant-killer fashion? WAL MART COULD.  And after this week, it looks a lot like Wal Mart will do what it often does.  Wal Mart will don the white hat and ride into the ring and offer indie ebook publishers a fair deal.  Why not write the ads that way?  I would if I were writing the copy for Wal Mart.  This week’s hardcover price wars look like the first shot in a future ebook war.  I’m only surprised that it has taken Wal Mart so long to join the battle.  I e-mailed the company ages ago, well before the Kindle, to ask the company to consider an online ebookstore.  Of course, I was a little dog, yapping in the wind.  But now it looks like the storm has finally gathered. 

I hope Wal Mart enters the e-book fray because if it does, it’ll do it the Wal Mart Way.  I expect the company would demand huge price concessions from sellers, but it might enter the market with the first one-price e-book store.  Why not have Wal Mart partner with Smashwords and use the price model recently suggested by Smashwords founder, Mark Coker’s Huffington Post blog?  Mark suggested selling e-books for $4.00 each.  I don’t think that price would ever work in an Amazon world.  Under the Amazon structure, a $4.00 price tag would net the author $1.40 per book and the company $3.60.  Ahmmm, I don’t think so……..

I’d love to see Wal Mart enter the e-book war with a 50/50 deal with the writers.  Let the big dog come in as a partner to the little guy.  Wal Mart founder Sam Walton would cheer from the lofty perch in Heaven where he surely resides.  All e-books selling for $4.00 would be a good deal for the buyers and the sellers if the author and Wal Mart each made $2.00 per book.  Because at a $4.00 price with Wal Mart’s web presence, the store that Sam built could slay the competition.  Wal Mart could even partner with Lightning Source to set up that company’s machines in its stores and give buyers in the store access to all e-books from the Wal Mart site.  That way in store buyers could pick up a $4.00 print and paper version of all the e-books.  In my head, I hear both the cha-ching of more money trucks driving up to Wal Mart, the coffers of indie writers doing a hell of a lot better, and the cries of the Royals in the Publishing Castle growing louder.

For now, it still looks like an Amazon World, but the companies’ growing pains are showing.  Just yesterday, the Kindle store had some sort of gigantic snafu that erased all sales of Kindle authors.  The problem appears to have gotten fixed, but on the Kindle website, the authors’ comments clearly showed that they didn’t trust Amazon.  One author published a post that included the phrase in all caps – NO TRUST.  Why no trust?  Because the company doesn’t treat its authors as partners.  It treats the authors as peons.  Add to that the factor that amongst the Kindle authors are lots of folks who’ve already been burned by Amazon’s unethical Mobi methods.  If Amazon won’t pay the Mobi royalties, and it’s keeping more money than writers make for their Kindle books, who knows what the Giant is up to with the Kindle accounting?  

I hope that Amazon fixes its problems.  Yes, that would mean the ebook world would remain an Amazon kind of place to be, but that wouldn’t be so bad if Amazon would clean up its act.  The company must come to realize that it will reap what it sows.  To date, it’s sewn bad faith and inequality.  That breeds mistrust and disloyalty.  If Amazon becomes a partner instead of a dictator, it would have a shot at defeating all contenders because it would have the advantage of time and the devotion of its writers and customers.

If Amazon doesn’t clean up its act, then I think it will learn a business lesson the hard way — the Wal Mart Way.

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