Aiming At Amazon

by John Holbo on December 26, 2008

Eszter’s Amazon Price Discrimination post generated some heat and also light. Clearly folks are fascinated by how it all works. (I am.) So here’s something: Aaron Shepard, author of Aiming At Amazon, has posted the draft of the 2nd edition as a free PDF download (here’s the blog link; here’s a direct link to the zip file itself.)

What’s it about? I’ll quote the subtitle: ‘the NEW business of self-publishing – or – how to publish books for profit with print on demand by Lightning Source and book marketing on Amazon.’ That’s pretty narrow, so maybe you don’t care. If you do think that might be interesting, I’d say it’s a good book, and an excellent how-to. If you want a practical step-by-step to starting your own micro-publishing business, he’s got the blueprint. If that’s not for you, it’s still interesting. For example, he has smart things to say about Amazon’s apparently hair-raisingly ruthless attempts to stamp out the POD competition. (If you don’t know about that, you could start here, then graduate to reading the actual legal complaint here. It’s an ongoing class action suit.) Shepard doesn’t deny that Amazon is ruthless but he takes a small-fish-can-still-swim-here line. I’ll quote from his blog (presumably he doesn’t want his draft quoted, but it says pretty much the same):

Though I’ve already written about’s supposed policy of no longer buying books from Lightning Source—and though nothing has changed—I keep getting asked about it by people who simply cannot believe that self publishing through Lightning is still viable. So, let me say this quite clearly:

Not a single independent self publisher is known to have been affected by Amazon’s new “policy” in any way. Only larger publishers and self publishing companies have been affected—and it doesn’t look as if Amazon ever intended it any other way. If you are self publishing through Lightning Source in the manner described in my book Aiming at Amazon, it is business as usual, for now and the foreseeable future.

Small comfort to the more medium-sized fish, of course. And none of this bears on Eszter’s shipping cost irritations, not directly (so I didn’t clutter her thread with it); but it’s relevant in that a source of the confusion (certainly there was some of that) is that Amazon is this funny Puzzle Palace of a Bazaar. Amazon isn’t just selling stuff to customers. It’s selling access to customers to other stores. Amazon Prime is this funny sort of deal because it’s sort of an attempt to lock the likes of Eszter into Amazon within Amazon. Well, anyway: Shepard is staring hard at one puzzle-piece, from the point of view of a seller. That’s an enlightening angle, if you are used to looking just as a customer. (Obviously it’s nothing new for bookstores to deal with publishers on one end and customers on the other. But the two sets of dealings now come together and mix in new ways).

In other Amazon news, the DVD for Joss Whedon’s Dr. Horrible’s Sing-Along Blog is actually a POD. (Or a MOD – manufacture-on-demand.) Whedon used Amazon’s CreateSpace service, which is Amazon’s attempt to eat’s lunch in a serious way. Interesting that such a big name would decide this is the way to go. In effect, it’s another lock-in. CreateSpace provides high quality (so everyone seems to say) and it’s cheap to use, so profit margins for creators can be higher than at, say, Lulu (which is seriously expensive. I use it to make family X-Mas albums, and I think I’m paying too much. I also use Blurb, which seems like a good service.) Your stuff gets listed on Amazon. But: it’s not going to be available anywhere else. So Dr. Horrible is only available from Amazon (I take it.) This is Shepard’s publishing philosophy as well: you can do well enough aiming only at Amazon. (Chapter 1 is: Forget Bookstores.) That’s a crucial tipping-point that scares lots of folks: when the inside of Amazon is big enough that whole businesses can live there. But it’s actually quite convenient for a crop of small businesses.

Discuss. I’d be curious to hear more about Amazon CreateSpace. Anyone have anything to say about it, good or bad?

UPDATE: just to clarify. Amazon’s CreateSpace doesn’t lock you in in any legal way. All POD services leave you owning your own stuff. (If any don’t, then run, don’t walk, in the opposite direction.) It’s just that being listed on Amazon is so attractive that Amazon can, in effect, offer nothing further, and still have an attractive service. If you want more you aren’t going to get much help from CreateSpace, but they aren’t stopping you from D.I.Y.



Tom S. 12.26.08 at 6:52 pm

Was there clear evidence of price discrimination from the prior post? “Total” and other posters pointed out the main driver was “free shipping” eligibility. “Price discrimination” is varying the price based on willingness to pay–not whether you have a sunk cost. Amazon doesn’t seem to be price discriminating, they seem to be sorting prices with various priorities.


Rich Puchalsky 12.26.08 at 7:07 pm

So — if you use both Blurb and LuLu, which is better? Or do you use them for different things?

I’ve disliked Amazon ever since they insisted that their customer data was their asset and then refused to delete mine when I requested that they do so. On the other hand, I’d send out more self-published things as presents if they were cheaper than Lulu prices. Has anyone done a comparison?


justcorbly 12.26.08 at 8:54 pm

Amazon is this funny Puzzle Palace of a Bazaar…

Not really much of a puzzle. Products sold and shipped by non-Amazon vendors are clearly indicated. Whether or not the product is shipped by Amazon (eligible for Prime) or another vendor (not eligible for Prime) is also clearly indicated. To buy something sold on Amazon by a non-Amazon vendor and not know that requires a willful act of inattention.


Eszter Hargittai 12.26.08 at 9:33 pm

Was there clear evidence of price discrimination from the prior post?

No there wasn’t. I posted an update to the post up front (and also in the comments), but I’ll copy it here. An email I received from the Director of Strategic Communication at Amazon stated the following:
“Amazon is a marketplace of many sellers, and while sellers are free to set their own prices for items they list, every customer pays the same for every individual offer.”

The reason for the price differential I encountered was different vendors and different shipping costs.


MarkUp 12.26.08 at 10:31 pm

every customer pays the same for every individual offer.”

I wonder what constitutes an “individual offer?” Seems that could be a large and wide open barn door.


Total 12.26.08 at 11:11 pm

No there wasn’t

Hallelujah. Light dawns.


Seth Finkelstein 12.26.08 at 11:13 pm

I don’t want to imply this always works, but there are enough people fanatically interested in getting the lowest price for an item that I’m fairly sure that if there was widespread customer-based price-discrimination on Amazon, people would be trying to reverse-engineer it and to exploit the algorithm. It would certainly be known, not rumored.

I think people get confused by the fine-grained pricing changes Amazon does based on inventory and popularity. That is, at any given moment in time, the price will be the same for all customers. But the price may change in time rapidly enough, and combined with cacheing and time-outs, to cause people to mistakenly think it’s a personal change.


engels 12.26.08 at 11:21 pm

I think people get confused by the fine-grained pricing changes Amazon does based on inventory and popularity. That is, at any given moment in time, the price will be the same for all customers. But the price may change in time rapidly enough, and combined with cacheing and time-outs, to cause people to mistakenly think it’s a personal change.

It seems to me that changing your prices frequently is a form of price discrimination (if done for this reason) as it means that people who spend more time checking the prices (ssumed to be more price-conscious) are likely to end up finding a better price.


Seth Finkelstein 12.27.08 at 12:02 am

But it’s not the individual customer-based price discrimination that people sometimes mistakenly think is done by Amazon.

Yes, people who spend more time checking prices are likely to end up finding a better price.
That’s a general property of a market economy.
And we don’t even have haggling as common in our culture (skill PLUS social class!)


The Raven 12.27.08 at 1:59 am

Looks like an attempt to monopolize the on-line distribution of books to me; I suspect on-line book distribution has economics similar to those of a natural monopoly. Once Amazon has put the competition out of business, I expect they’ll raise their prices. And of course packager/publishers will have to deal with the low-quality output and service levels of Amazon’s POD service. We are talking about the company that has attempted to patent the idea of “push a button, buy a book,” after all. And a company with an anti-union reputation.



Donald A. Coffin 12.27.08 at 2:32 am

For a self-publisher, being locked into a single distribution source has (what seem to me to be) huge potential drawbacks. [I’m assuming that Amazon’s contract with self-pubihshers does not specifically ban using other distribution sources; my–admitedly limited–knowledge of anti-trust law (I’m an economist, not a lawyer) makes me think that such a contract would not be legal.] The primary drawback is that, should Amazon decide to stop distribution self-published books, or decide to quit dealing with your product, your business is dead…


John Holbo 12.27.08 at 3:07 am

You aren’t legally locked in to something like CreateSpace, Donald, but the service is set up to encourage people to stay within Amazon. That is, it’s real easy to do that much. Amazon just won’t help you take the extra step of getting any further. Nothing contractual, merely a cost-and-relative-ease structure. But actually one element of their scheme might fit with a lot of small self-publishers: you can buy cheap copies yourself. If you self-publish a comic and want to go hawk a stack personally from your card table at some ComicCon, or personally convince your local comic store to take some on consignment, I think CreateSpace might not be a bad option.


John Holbo 12.27.08 at 3:11 am

Or rather: if you want to self-publish a comic as collected trade volume. I don’t think Amazon would work for publishing a monthly 22-page comic. But the price is right for books in the 80 page+ zone. (Not that comics are everything. But I don’t want to mislead people into thinking Amazon targets comics self-publishing. It’s just that comics self-publishers are typical sell-it-myself-at-the-con folks. They might be an example of a group for which CreateSpace would work very well, even outside the Amazon orbit.)


Delicious Pundit 12.27.08 at 3:16 am

I heard about CreateSpace from a conservative friend in my hometown, who published his best-of blog with them and was extremely happy with it. He even did a reading at the public library and everything. When I finish my own blog stunt next week, I’m thinking of publishing it with them just so my mom (and I) can have a copy, it will tickle the both of us.


John Holbo 12.27.08 at 3:19 am

“On the other hand, I’d send out more self-published things as presents if they were cheaper than Lulu prices. Has anyone done a comparison?”

I think CreateSpace undercuts Lulu pretty decisively. (If I had noticed that before X-Mas, I probably would have switched from Lulu.)

Amazon’s BookSurge has been plagued by quality issues and bad customer support (allegedly). CreateSpace, however, seems to have worked out the bugs (I’m just reporting stuff I read by lurking on some forums, haven’t tried it myself.) Quality. Good. Price. Reasonable. I think for self-publishing to give away as presents it would be a better option than Lulu at this point. (Unless you have principled objections to Amazon.)

To date, I have used Lulu to make annual for-the-grandparents art books, containing all the stuff my kids drew during the year. But I use Blurb for the yearly photobooks. I use it because I am happy with Blurb’s photobook templates; it’s fast and easy to make a photobook using their BookSmart software. I actually haven’t seen a Blurb product but all my relatives report that the quality is good. Lulu makes very good quality, but the cost is through the roof these days.


Keith 12.27.08 at 4:51 am

I published my book through Lulu and it wasn’t that expensive. You do have to buy the ISBN if you want to sell it outside of the Lulu marketplace, but that’s pretty much a universal cost ($100*). Lulu subcontracts the distribution through CreateSource, with the result that my book is available from Lulu. com, Amazon (.com and B& and (because it’s also in the Ingram database). My only gripe with Lulu is they have rather inflexible design specifications (6X9 is a little bigger than I’d like but only by a half inch, so it’s not a big deal).

I’m looking at CreateSpace for my next book since they are more flexible in their design specs. The distribution won’t be as wide but so far, having the book on Powell’s and B&N hasn’t gotten me any more sales, so there won’t be a loss. Also, there’s nothing stopping me from doing multiple POD publishers in order to cover more distributors.

Given the recent implosion of the Big Publishing houses, they aren’t going to be looking for some chancy new author who writes gothic fairy tales and steampunk novels so I’m really counting myself lucky to have discovered POD. If I have to sell my distribution rites to Amazon, is that really much different form Harper Collins? I mean, if I’m going to have to market myself anyway, might as well have more creative control on the production end.

*I sold enough copies through word of mouth that the book bought it’s own ISBN with my creator revenue.


John Holbo 12.27.08 at 5:20 am

Thanks, Keith. One problem with Lulu is the comically exorbitant international shipping – which isn’t an issue for everyone. You are, of course, right about the ISBN issue. It’s annoying that they are so expensive. The price has actually doubled in the last year, I think. Amazon’s use of recycled ISBN’s as internal product codes is a bit shifty but saving $100 off the cost of production of a micro-published item is actually quite significant. I can imagine that there is a large class of micro-publishing projects for which $100 savings-but-its-only-on-Amazon is a deal-making advantage.

Also, maybe I exaggerate the savings, but I ran the numbers for several different sorts of books and it seemed quite significant in each case. It would be easy to raise your profit margins by $4 or so on a lot of product-types. For such a tight-margin business that’s pretty ‘through the roof’. (To do this, you would have to sign up for CreateSpace pro.)


John Holbo 12.27.08 at 5:27 am

I’ve also sort of forgotten to emphasize Shepard’s solution: setting yourself up as a publisher and using Lightning Source. And getting yourself on Amazon that way while getting higher profits. In effect, by doing a perfectly do-able amount of extra work you can cut the likes of CreateSpace and Lulu out of the loop. They are, in effect, just middlemen smoothing your dealings with the likes of Lightning Source, in any case. The short version is: if you want to set yourself up as a publisher and deal with Lightning Source, you have to know the ropes. They won’t hold your hand. But Shepard talks you through all that. If you really want to self-publish novels and sell in significant volumes, Shepard probably has a better model for you than either Lulu or CreateSpace. For smaller projects, and personal projects, and for the congenitally hassle-averse, the POD services provide hassle-free mediation.


The Raven 12.27.08 at 3:05 pm

I wonder if CreateSpace is subsidized by And, hmmm, I think those recycled ISBN’s are going to be a great big headache for librarians down the road a bit.


Keith 12.28.08 at 6:23 am

John: that’s the situation I’m mulling over. Becoming my own publisher might be the way to go, in which case Aaron’s advice will be very useful. Thanks for the link!


Keith 12.28.08 at 6:30 am

Raven, re: recycled ISBNs and librarians– it’s not all that big an issue. They’re recycling ISBNs of books long out of print with defunct publishing rights. Those books aren’t likely to be in high demand. In the rare event that we end up with 2 different books in the same library with the same ISBN, chances are that one is an old book that’s hardly ever been checked out and may be a good candidate for deaccessioning.


dsquared 12.29.08 at 1:19 pm

That is, it’s real easy to do that much. Amazon just won’t help you take the extra step of getting any further. Nothing contractual, merely a cost-and-relative-ease structure.

Exactly such a cost-and-relative-ease structure (with regard to the positioning of the icon for Internet Explorer on the Windows default desktop) was a really big part of the Microsoft EU antitrust suit, so I wouldn’t make any definitive statements about how Amazon’s system might rub up against the relevant law.

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