Once again the blogosphere is alive with speculation about the new Amazon policy that POD books to be sold via their main channel must be printed via Booksurge. And once again, the quantity of bad information, false information and ignorance of precisely what a monopoly is and how restraint of trade is defined inflates like the Blob after a meal of theater-goers.

For those who've been on Mars for the last few months--you lucky devils--some months ago Amazon began contacting major vendors who produce print books on-demand and who don't use Amazon's own printing arm, Booksurge, advising them that unless they did start using Booksurge they would no longer have an active Add to Cart button on their merchandise and, thus, said merchandise wouldn't qualify for free shipping.

Let it be said that Amazon has a serious problem with customer relations, and it's unfortunate. They persist in trying to bully people, which is stupid. But I digress.

There are several perfectly valid reasons for the new policy. Many of those contacted utilize Lightning Source, the Ingram-owned on-demand printing service, because it's the only way you can get a POD book into the Ingram database without meeting some extremely difficult criteria. Note that when Ingram made that choice 4-5 years ago nobody said beans. Amazon, to that point, apparently had a contract whereby they would transmit an order to LSI and LSI would package the order in Amazon boxes and drop-ship. This has been utilized by the Amazon-as-ogre crowd as proof there's no good reason for Amazon to want to change things. I can only assume they're under the misapprehension LSI provided this service for free, which I find difficult to believe.

Over the course of the last year or so, Amazon has installed printing equipment identical to that used by both LSI and Booksurge in their main warehouses. The point, of course, is that they can thus print any POD book as needed--the way POD is supposed to work--and ship it almost immediately. Should there be other, warehoused items in the same order, they can ship one package instead of two, saving postage costs. Which, when the customer isn't paying for same, can add up to a considerable amount even using Media Mail.

So, logically, Amazon decided it made more sense to print those books on THEIR machines instead of paying someone else to do it. The trouble is, of course, that unless they could work out a deal with LSI to share files (something LSI arranged with the makers of the Espresso machine the same week as the Amazon flap started), the only option was to have the vendors sign a contract with Booksurge that would then give Amazon legal right to print the books.

The people they first approached were the major users: Authorhouse, Publish America, Lulu...and Booklocker. The first three have since come to an arrangement with Amazon. Likely, they are even saving money by allowing direct printing of their/their clients' books under the Booksurge canopy.

The real crux of the matter, however, has nothing to do with either printing cost or quality, although both have incorrectly been cited as reasons for objecting to Booksurge. We've been using Booksurge since back when they were still Digitz, and have watched the quality of their output improve as the technology has. We've also seen instances where single occasions of some flaw have been made to sound as if they were universally true, have listened to people deliberately looking for reasons to complain claim to have found them and have ourselves had no reason to complain of either the quality of their work or their customer service. We feel the same way about Lightning Source. Both are professional-caliber businesses, and we have nothing but praise for both.

So, to return to my topic, what IS the crux of the matter?

Money. The majority of those screaming the loudest about the new Amazon policy are those who refused to give the standard industry discount on their books. To give bookstores the standard discount of 40% via LSI, you have to agree to a 55% total discount. This, if you price your books competitively, means the return on each sale is quite low. In order to make more money, then, subsidy-published and self-published POD users were only listing discounts of 20-30% with LSI. That means any retailer who ordered that book was getting no more than 5-15% discount.

Which, as an aside, is why Amazon was their main vendor channel. No bookstore is going to even look at ordering a book with that level of discount for shelving.

Amazon routinely discounts books. It's one of their selling points. So, let's say they get an order for a POD book that is listed on their website for $15 retail. Their standard discount is 20%, so they're selling that book for $12. The book is printed at LSI, and the publisher has listed a 30% discount. Half of that goes to LSI/Ingram. So, when Amazon orders a copy, they'll pay retail less 15%, or $12.75.

They've already lost $.75.

But let's say they don't discount that book, and the purchaser pays the full $15. The book costs Amazon $12.75, leaving $2.25 gross profit on the sale. Except that book is the only POD book in the order, which has qualified for free shipping. Again, let's assume the order was all books: four paperbacks weighing a total of three pounds (deducting the weight of the POD book). Amazon pays $2.93 to ship the three-book package from their warehouse...and, presumably, another $2.23 minimum for LSI to ship the fourth book.

So, Amazon has now LOST $2.91 on that sale. If the book was discounted, they've lost $3.66. And even if they were able to ship all four books from their warehouse, they either made mere pennies on the transaction or barely broke even. Which would be fine if they didn't have any expenses for providing this charitable service.

I grant you, all of the above is speculation, and Amazon isn't going to release that kind of information any more than any other company would. The point I've been trying to make since this whole thing started is that the people complaining the loudest, based on what they've said on public forums all over the internet, are the ones who have not only been getting a free ride for the last few years but have, in some cases, been forcing Amazon to subsidize their business. Amazon, which has been losing money because of their various free shipping programs for years, finally decided they weren't going to do that anymore.

And offered a viable alternative that would benefit both parties. And gave the other party the option to choose which of the available channels they would have access to.

None of the publishers and authors who are now screaming Amazon is forcing them out of business are being forced out of business. Forced to make a choice, yes, but that's not the same thing. That's not restraint of trade. No vendor is required by law to carry all the merchandise available to it, no matter how large they are. Nor is it a monopoly, because Amazon hasn't said people must switch to Booksurge and abandon their other printer(s).

And a lawsuit isn't a lawsuit until a court says it is, which means a judge gets to decide whether the one filed by Booklocker and lately supported by SPAN has sufficient evidential merit to become more than a paper complaint. Until then, there's no monopoly, no restraint of trade and no anti-trust behavior, no matter how many people would like it to be so.

Which Amazon is NOT required to do.