Nate Hoffelder at The Digital Reader has put together a great piece about Amazon and some of their affiliate partners. It appears that several ebook discovery sites have had their Amazon affiliate memberships revoked due to violations of the terms of service. The violations aren’t new, but the terminations are. And it all comes after Amazon has launched their own ebook email subscription service, Goodreads Deals.
Some History
A bit of history is in order here, for those who are unfamiliar with any of this. Let’s start with Amazon’s affiliate program. This is an ingenious tool Amazon uses to help drive customers to their storefront. Anyone can apply for and set up an affiliate account at no cost. When you share a link to an Amazon product, and you use your code, Amazon gives you a commission for the sale. I found out about the program when some fellow authors berated me for not using it. They noticed I was already sharing links to my books at Amazon, and pointed out that I could do the same thing but make a little money by using this code. So I started using it. The money made was not inconsequential. I try to use my affiliate code whenever I share a link to anything on Amazon, which is quite frequent when you’re blogging about books all the time.
Many websites subsist almost entirely on this affiliate program. I’m into photography, and I’ve seen reviewers at major photog sites ask that people interested in products to follow links on their page, as it helps them keep the doors open. Free forums like KBoards and their Writers’ Cafe make a profit almost entirely on Amazon’s affiliate program (which is why KBoards will not let you use your own affiliate codes in the books you put in your signatures). The Passive Voice also generates revenue through the affiliate program. There’s nothing underhanded about this. Commissions are common in the retail world.
Ebook Blasters
The next thing to know about is discount ebook blasters. Services like BookBub and websites like Pixel of Ink help drive sales through massive email lists and users who browse their sites. For BookBub, revenue is largely the huge sums that authors pay to get on one of their email blasts (it can run into the thousands of dollars, and there are quite a few blasts going out every day, which really adds up). Pixel of Ink and similar sites rely more on affiliate revenue. Authors vie for promotional slots, and these promotions are linked with affiliate codes, so the website makes a lot of money when readers follow through and purchase something. (I should add here that if the same reader goes on to by a TV during that visit, the commission for that item is also included.)
The discount ebook site Pixel of Ink has now shuttered. According to Nate (who is one of the very few people doing real journalism in the publishing biz these days), the reason for their shuttering is due to Amazon enforcing their TOS with new vigor. Terms that were previously ignored are now being rigorously enforced. Nate writes that this is to squash competing discount ebook sites now that Goodreads Deals is up and about. Other competitors have also had their affiliate memberships revoked and have shut their doors.
So what gives? My first confusion with this is that Amazon profits quite a bit from these email blasts. These blasts drive sales on Amazon.com more than any of their competitors’ websites. Why would Amazon not want to continue with a program that generates traffic and revenue? As always, when trying to puzzle through Amazon’s decisions, I placed myself in their shoes, with a focus on what serves the customer experience. Everything at Amazon is about how to improve the customer experience. So what was the thinking here?
There are a few clues that point me to what I assume were the discussions behind this decision. And make no mistake, the people at Amazon do not make these decisions lightly. They think long and hard about these things. And what I think they are interested in here has very little to do with money. I think it has a lot more to do with those book displays that greet you when you walk into a Barnes & Noble. I think it’s all about merchandising.
Planograms
I worked in a Barnes & Noble while attending college, and it was here that I learned the word “planogram.” I also learned to loathe the things. We’d get these printouts that showed precisely where every book was supposed to be shelved. Little schematics full of little books, faced out or spine-out, and we had to arrange the books just so. Which book faced the door. Which ones go on the top shelves. Which ones are easier or harder to see.
All of these spots are decided by dollars. Publishers pay merchandising fees to get their books featured on these displays. The same thing happens online. Barnes & Noble has been said to amp up the rankings on books for a fee, making it seem like a lower selling book was a bestseller. They also have been known to suppress erotica titles so they wouldn’t appear higher than rank 120 on their website. The idea was and is to curate the bestseller list to drive sales in a certain direction. For Barnes & Noble, that direction was to publishing partners. I think there was also a sense that it would just be good for business for the storefront to look as professional as possible. Rules on cover art from all the online retailers exist for a similar reason.
Free eBooks
Now for a diversion to free ebooks. Nate has done some excellent reporting here as well. A few years ago, Amazon changed their TOS to limit the percentage of free ebooks that affiliate members could drive readers toward. Amazon has always understood the allure of free ebooks for authors, but they’ve never been a fan of free ebooks. They don’t make it easy to offer ebooks for free. It’s important to understand this. The only way to make an ebook free on Amazon is to make it free elsewhere and force Amazon to match the price.
The only reason Amazon allows free ebooks is to not let a competitor undercut them. Authors take advantage of this price matching all the time. It costs Amazon money to host and deliver these files, and it drives readers away from paid content, so Amazon would rather it didn’t happen at all. As a reward for KDP Select membership, Amazon offers a mere 5 freebie days every 90 day period of enrollment. The paucity of freebie days signals not only the buying power that Amazon knows free promotions can have, but their preference for ebooks with prices. There’s also the fact that Amazon’s royalty rate is 35% for ebooks priced below $2.99, while they offer 70% for ebooks priced between $2.99 and $9.99. This demonstrates that Amazon isn’t necessarily for “cheap” ebooks, like many say. They are for what Amazon has decided is a good range of prices for ebooks. Free does not factor in.
In 2013, Amazon tried to influence the number of free ebooks that affiliate partners were driving readers toward. In 2016, Amazon is trying to influence the discounted ebooks that affiliate partners drive readers toward. What’s happening? Again, I don’t think it’s about money. I think it’s about customer experience.
The Algorithms
Amazon is in a constant battle with those who attempt to understand and maximize their use of Amazon’s rank and sales algorithms. There is a lot of money to be made by people who find chinks in Amazon’s armor. Some of these parties are outright scammers, uploading stolen ebook content in new packaging, taking advantage here of the simplicity of KDP self-publishing. A recent scam involved putting links in ebooks that drove readers to the back of the book, getting credit for an entire read in Amazon’s Kindle Unlimited program. There are much more benign side effects to Amazon’s decisions. Back when they paid the same amount for a full read of a short story and a full novel, it naturally led to the publication of more short stories and fewer novels. Amazon’s every decision has cascading effects, and so they are constantly tweaking their behavior to counter these effects. At times, it’s like watching a time travel film where the protagonists are constantly going back further and further to fix unintended consequences. Or like watching doctors medicate side effects with more medication. But really it’s just an arms race with end users who are looking for areas of weakness to exploit or reacting naturally to financial rewards built into the system.
One of the unintended consequences of Amazon’s affiliate program is how powerful these email blast discounters have become in shaping the Amazon bestseller lists. In a way, these websites have introduced Barnes & Noble style merchandising on a storefront that has prided itself on not having any merchandising dollars or effects whatsoever. Remember, Amazon is maniacally focused on the customer experience. They practically invented the reader review. They rely on also-boughts (books purchased alongside other books) and shopping/browsing histories to recommend titles to readers. The bestseller list, they hope, reflects what readers crave. Their idea is that this will maximize profits in the long run, because readers will more often than not be happy with their purchases, enjoy the read, and so come back for more.
Incidentally, this is where I think Amazon destroyed Barnes & Nobles’ attempts to sell online. Barnes & Noble neglected their reader reviews (which turned into some weird commenting game played by teens. No, really), and they tried to control their bestseller list. Which meant that more readers were finding what people were actually enjoying reading over at Amazon, leading to an erosion of reader engagement at B&N. This was greatly exacerbated by a terrible search engine at B&N.
With BookBub and sites like Pixel of Ink, Amazon was suddenly faced with an outside influence of the bestseller lists not based on actual reader preference. An email blast from BookBub can move an unranked title into the top 100 overall on Amazon. Occasionally into the top 10. I’ve used BookBub, and I’ve seen the power firsthand. Basically, I was paying BookBub merchandising dollars. I was paying my way onto the Planogram. Instead of their bestseller list being controlled by the sales algorithms that take reading, purchasing, and browsing habits into account, the Amazon bestseller lists were being controlled by dollars that came from authors’ pockets and through Amazon’s own affiliate program.
This means the user experience was being tweaked by forces beyond Amazon’s control. Amazon has probably been watching this with concern for years now. They want readers to find what other readers determine to be the best books. I think this is why the Goodreads Deals program does not allow authors to purchase slots. Contrary to rumors that Amazon doesn’t care about books, know about books, or doesn’t have a human approach to selling books, I think all of these are gross simplifications and an attempt to demonize Amazon without thinking clearly: Amazon wants to sell a lot of books. This requires knowing about them and caring about them. It also means using the bright minds at Amazon to promote books that they believe readers will like.
Just as they have editor’s picks, both monthly and yearly, Amazon also has high level meetings all the time on which books they want to promote in their Daily Deals and other promotional blasts. These conversations must generate some very heated debates, due to the power of the promotions. Team members have their own preferences — the books they want to champion due to personal tastes — and also books they had some hand in editing or publishing. Thomas and Mercer reps will vie for as many of their books to get Daily Deals as possible. The KDP team will hype up the latest self-pub book that scored impressive metrics. The teams that work with New York Publishers will try to steer promotional slots that way. This boiling of biases and preferences is no different than the debates I used to have with my boss at our independent bookstore. I would set up a display, only to have Bill alter it. And vice versa. Our sales preferences clashed and combined. As it must with Amazon’s promotional energies.
These promotions shape the bestseller lists. Those bestseller lists ARE Amazon’s storefront. They are the face of their retail efforts. Amazon wants this to be customer-focused, not author-focused. That means limiting our tools to influence their storefront. It means cracking down on the outside promotional forces that have developed huge amounts of influence on their storefront. If this is about money, it’s only in that Amazon thinks they’ll make more money in the long run to have bestseller lists that aren’t altered by those wheeling deals. Unless it’s Amazon’s deals, arrived at through their internal debates, rather than through merchandising dollars, affiliate rewards, or authors paying for promotions.
This Could Change
Of course, all of this could change. It could be that Amazon wants in on the BookBub market. Perhaps they will offer paid promotions to us soon that give us a direct line into the Amazon bestseller lists. Maybe they want to do internally what is now being offered as a service externally. If so, this is all just vertical integration. Time will tell.
A Day Later (More Thoughts)
Having slept on this, I’m more convinced than I was yesterday that this is all about curation and having control over the bestseller list rankings. But I think Amazon’s impetus might’ve been that they were losing control of their promotional abilities. With so many outside promo sources goosing ebooks up the list, it has diluted their ability to promote internally. It’s as if someone was sneaking into a Barnes & Noble and putting books up in the window displays. It goes back to those dreadful planograms.
The money angles just don’t make sense to me. Nor is the idea that you get rid of these promo sites just to get rid of them. They are all funneling sales into Amazon. So it has to be about control. And control of what? Which books are given a jolt on the lists.
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