Mike Shatzkin Hurls a Paving Stone at Etailer Discounts

Hard on the heels of author Orson Scott Card's fulmination against Amazon.com's "obscene" share of revenues generated by the Kindle comes a proposal by Mike Shatzkin to blast etailer discounts, currently averaging 50%, back into the Dark Ages. How far back? "I suspect that number is about 20%," he says in a recent Shatzkin Files blog.

I've described Shatzkin as a guru, but some reading his radical position may call him Jacobin. After you read it, however, you'll wonder why it took so long for someone to question why e-book retailers charge the same discount that retailers of traditional books do, when the two modes have scarcely a thing in common. "This is daft," he declares. "There is no comparison between the retailers’ costs and risks associated with physical books and those associated with ebooks. There is no economic justification to providing the same level of discounts."

"Now," says Shatzkin, "is the time to change this."

How does he propose to do this? Here's where things move from Jacobin to Red Brigade. "The publishers need to jointly fund and substantially own a virtual retailer whose mission would be to deliver all conceivable ebook formats...To stay on the right side of the law, publishers would sell to the new entity on the same terms they sold to everybody else. But the objective here is to limit the ability of retailers to force higher discounts through boycotting publishers or titles with impunity."

Is Shatzkin suggesting publishers fight boycott with boycott?

The terms "boycott" and "right side of the law" don't mingle very comfortably, but it's clear that Shatzkin is pretty convinced that no tactic short of ganging up on etailers will work. Unfortunately, experience does not encourage optimism about publishers' courage to join together to restore the balance of trade. Had they found the collective cojones to force bookstore chains to roll back the returnability of print books, the industry would not find itself in its current position, namely, over a barrel with its legs spread.

While he's tossing sabots into our complacency, Shatzkin dismisses publishers' initiative to sell their books directly to consumers rather than through retailers.

"The current effort by several general trade publishers to drive traffic to their own house-branded web sites is misguided and doomed. But Amazon (and Shelfari, GoodReads, LibraryThing, and our new entrant, Filedby.com) have demonstrated that sites with information across the trade book spectrum have real consumer appeal. With the support of the big publishers from the earliest possible moment to make the high-profile general trade books visible, at least a large portion of the discovery traffic could be liberated from being captive to Amazon, Google, or anybody else."

I'm not sure I agree. In a posting on the subject we wrote, "If the only source of profit (to say nothing of independence and dignity) left to publishers is consumer retailing, they will step up their activities in this area until in time they are in a position to challenge the Barnes & Nobles and Amazons. Though the only weapon they have is their content, that may be more than enough to vanquish these Goliaths."

If enough publishers pick up on Shatzkin's proposition to realign e-book retailer discounts, it may be the beginning of the end of the digital equivalent of the Ancien Régime. It's certainly time to air the issue, and Shatzkin has earned our gratitude for speaking up.

Richard Curtis