Borders hit by Icelandic banking crisis

As print on demand company Lulu make 24 people redundant at the UK site, due to the credit crunch, Amazon seem (unfortunately) to be going from strength to strength with their profits going up with each successive quarter. This has by all accounts, been a highly successful year for them - with the acquisition of social networking site Shelfari, and the launch in the United States, of the Kindle e-reading device. I see now that they have now been awarded a US patent for "creating an incentive to author useful item reviews."

The patent describes a method of "rewarding the authors of reviews found to be useful by their readers, such as by prominently displaying their names and ranks as authors of useful reviews prominently on the web merchant's web site." In practise this means giving customers badges for writing product reviews based on whether or not others found their submission useful. This is I suppose, Amazon's way of saying thank you (pity they didn't think to thank all us authors for writing the books that they sell at such ridiculous discounts and screwing us out of the opportunity to sell them at cheaper than they do - see the Booksurge contract in yesterday's post).

The funny thing is that back in 2000, Jeff Bezos called for "fewer patents, of higher average quality." Exactly what his definition of average is, is obviously different to the rest of us ... Why anyone is surprised by this backtrack is beyond me, for like politicians, it is all he seems to do. He stated not that long ago that Amazon had no plans to implement their POD "service" in the UK, but we all took that with a pinch of salt, and quite rightly so, given my two posts of yesterday. Some time ago, in an interview with the New York Times, he declared that books were like horses, as both were perfect things that were difficult to improve upon. It seems to me that he spends most of his time talking out of that same thing that horses s*** through.

Things may be good for Amazon, but they are far from good for troubled book chain, Borders, which has found itself emboiled in the Icelandic banking crisis. The retailer - which secured a £23 million asset-based loan from Landsbanki Island earlier this year, also has an overdraft facility with the bank, which has been taken over by Iceland's Financial Services Authority. Its links with Landsbanki could have long term implications for Borders UK's access to working capital, although the impact is as yet unclear.

The chain could find their working capital severely restricted during the most critical trading period of the year, while the Icelandic Government decides what to do with the banks international operations. Speculation is rife, with one suggesiton that Borders may be asked to pay back some of the £23 million loan. The problem is that this is secured by the stock that is held in both the company's stores, and its distribution centre (recently closed) in Truro.

At the time that this loan was announced, in February, Mark Raban, who was Borders' Finance Director, said: "Landsbanki were able to offer flexibility and complete the deal quickly. We are confident the deal puts us on a strong footing for future success." I bet he is eating those words now.

While I would hate to see the demise of the chain, and the resultant loss of jobs, it would in many ways be not unexpected. Borders seem to have lost something in recent years - they used to be a good company to deal with and to shop with, but the stores now seem tatty and out of date, with the shelves stocked full of books that no one wants to buy. Whether the closure of the Truro centre will make a difference is difficult to tell, in theory it should, for the smaller presses and self publishers at least, since the staff will no longer be able to fob you off by stating that they only buy stock centrally through Head Office. Some titles no doubt are, but they will no longer be able to use this as an excuse to get rid of the savvy self publishers like me, who will challenge them on this, by pointing out that this is not the case, the stock can and is, also obtained from wholesalers, with deliveries direct to stores.

It is once again a case of wait and see. I hope that they can manage to dig their way out, but I fear that this time, their number may be up, leaving just two major book chains in the UK - WH Smiths and Waterstones.

Amazon UK launches POD service

Around the end of March this year, stories began to circulate around the Internet that Amazon.com were contacting US based print on demand publishers by telephone and telling them that from now on, if they wished their books to be listed directly (i.e have buy now buttons) on Amazon.com, then they would have be printed by Booksurge, Amazon's own printer. This understandably caused a flurry of protests, for various reasons, which I blogged extensively about at the time, and which I will talk more about later on. It culminated in Angela Hoy, proprietor of Booklocker.com together with her husband Richard, filing an anti-trust suit against Amazon, which is due in court at any time.

Everyone in the UK breathed a sigh of relief when Amazon confirmed that we were safe - for the moment, but sadly it seems that this moment has passed, for earlier this week The Bookseller ran an article written by Graeme Neill entitled Amazon UK launches POD service.

The article states that Amazon has launched a print on demand programme in the UK, which means that they can rapidly print and ship individual books following a customer order. The service will allow them to bring previously unavailable titles, such as out of print books or foreign language editions, into print in the UK. Publishers who have joined the programme are listed as Faber, John Wiley and Sons, HarperCollins UK, Cambridge University Press and Allen and Unwin Australia. Amazon state that they will be able to print books in both colour and black and white, and that the books will be 'virtually' indistinguishable from traditionally printed (lithographic) titles.

The article goes on to state that for a limited time, Amazon.co.uk will be offering free set up for publishers with POD ready print on demand files. The service will it seems be offered from Amazon's fulfilment centre in Milton Keynes, the exact same town where POD printer Lightning Source are also based.

The more I read this article the more confused I got, as what the article describes is the exact service that Amazon already have through their partnership, if that is the right word to use, with Lightning Source. The similarities are so similar, that I began to wonder if they had come to an agreement with Lightning Source to print books with their name on in their own fulfilment centre - especially since Cambridge University Press are so I am told, Lightning Source' biggest customer by far.

Somewhat suspiciously, Christopher North, Vice President of media at Amazon.co.uk says that "Amazon will be consulting with its US POD company Booksurge for their 'expertise and experience'". He went on to say that Amazon.co.uk would not require publishers to use its POD service exclusively, adding that "We are offering titles that are being produced by other print on demand providers".

The funny thing is that they said the exact same thing in the States, but this turned out to mean that publishers who refused to print with Booksurge would have to join the inappropriately named Amazon Advantage programme instead, which requires publishers to give Amazon 55 percent off the list price (the same terms that wholesalers demand, when they are not a wholesaler), and pay Amazon $29.95 a year, plus all shipping costs to send the books to Amazon. These terms are even worse than the Booksurge contract, and that is saying something.

If this is what Amazon are proposing to bring into the UK then we should all be concerned, as it will cause ripples that will impact across the book industry for years to come.

This will be a lesson for all of us in unity consciousness - what publishers, large and small will need to do is band together and pool their resources, standing up and saying NO, we will not allow you to do this.

Although I reacted with fury to begin with, now that I have had a chance to think, the threat is a bit overplayed. The laws are different in this country, and the Monoplies and Mergers Commission would never let them get away with this. The court case in America with BookLocker is yet to be decided also, and to push ahead with this prior to the verdict would be stupid in the extreme. The fact is that no one, not even Amazon can force anyone to do anything that they don't want to - people like to think otherwise as thay way they can kid themselves that they don't have a choice, and then don't have to take responsibility.

Amazon do not buy books published by the smaller companies and the self publishing outfits direct from them, but through wholesalers. I know this for a fact, as I been told it many times by many different people. It makes sense for them to obtain my book in this way, since it is stocked by Gardners, who give them a far better deal (and higher discount) than Richard would. All books that have both an ISBN and distribution through either Bertrams or Gardners, the UK's two largest wholesalers (all major POD companies have accounts with both) are automatically fed to Amazon's site by the ISBN agency, and there is nothing that Amazon can do to prevent this. It is how the system works. They can in theory remove any book that they like from their site (and I am sure that they would find a way - they did with Hachette Livre) if they really wanted to, but this would entail an awful lot of work, too much even for the mighty Amazon. I mean think about it for a moment, would they really go to the time and trouble of wading through all those books from all those publishers and removing them from their site - of course not, and more to the point, would they really alienate themselves from companies that provide their most lucrative source of income - no - they know which side their bread is buttered.

I don't think we have reason to panic then quite yet.