Amazon's Russ Grandinetti Tries to Brush Off Publishers' Concerns at Digital Book World Conference
Day two of the Digital Book World Conference + Expo is underway, gathering book publishers and providers from all levels of the supply chain to discuss the most pressing issues in the industry. Perhaps today's biggest attention-grabber was the Q&A session with Russ Grandinetti, VP of Kindle content at Amazon. The discussion, moderated by Mike Shatzkin, conference council chair and founder and CEO of The Idea Logical Company, and Michael Cader, founder of Publishers Lunch was wide-ranging, touching on author relationships, subscription, and pricing strategy, in an effort to pin down how this retail giant plans to position itself in an evolving book industry.
Cader began the session with a tough question about the Amazon-Hachette contract dispute, which captured headlines for much of 2014, asking how Amazon plans to rebuild some of the trust the retailer lost with authors. The very public negotiations led many to conclude Amazon cared far more for profit than authors' interests. "From the beginning," countered Grandinetti, "helping authors has been a part of our craft at Amazon." Grandinetti argued that its effort to provide data analytics to authors is a perfect example. The retailer offers BookScan sales data to its authors free of charge so that they can break down their audience geographically. Likewise, its acquisition of Goodreads in 2013 was an effort to help its authors connect directly with their readers and build a platform for their brand.
Grandetti admitted that, although disagreements between publishers and booksellers are not new, the public nature of the Amazon-Hachette contract negotiations was rare. "We want to keep it rare," said Grandinetti, "We want to grow our business with publishers, which will also help authors."
Not afraid to address the sensitive nature of Amazon and publishers' relationship, Shatzkin asked about Amazon's pricing strategy and whether continually pricing books lower is necessarily helping the industry. Grandinetti maintained that Amazon takes into account several factors in their pricing strategy and measures closely how much demand shifts when prices are changed. "There are opportunities for lower prices to yield more revenue," said Grandinetti, "We've created a tool for Kindle Direct Publishing Select authors that help visualize how pricing will affect revenue yield. We share this data with our larger publishers too, some of whom are setting their own prices. Sometimes they use this data and sometimes they don't. We want them to benefit from this."
On a more somber note, Grandetti put Amazon's pricing strategy into context. "In a digital connected world the degree to which books compete with other media is only increasing. We are competing more and more for readers' attention and that is not going away." But Grandinetti offered no solution to this issue, which perhaps is more of an issue for book-centric publishers than The Everything Store.
Subscription models also garnered significant attention during the Q&A and Shatzkin asked whether subscription will ever come to dominate Amazon's retail channel? "It's interesting," said Grandinetti. "In every digital media category subscription is playing a major role -- musics, movies, TV. I don't think books will be immune to this. But the difference is that unlike other industries our a la carte sales are still healthy. We're still getting readers to pay for individual books. So we need to structure it for the right customer, at the right time, and with the right publisher so that it grows the business."
When asked if Kindle Unlimited was growing Amazon's business, Gradinetti didn't have a definitive answer due to the newness of the program. He said that Amazon has observed that Kindle Unlimited subscribers tend to read more frequently the longer they use the subscription service. "Their reading frequency jumps 40% in the 60 days after joining," said Grandinetti, "and the total dollars spent by that group in a la carte purchases and subscription is up 25%"
Grandinetti believes there could be a viable model for subscription that operates similarly to publishers' current hardback and paperback release model. "Most people don't questions that doing both a paperback and hardback release can generate greater revenue for authors and publishers over the lifetime of the book. I think subscription will be another choice for publishers to consider as part of the life of the book."
Despite the concerns of both authors and publishers and obvious ambivalence about Amazon's significant influence over the book market, Grandinetti is eager to work with both parties. "I am hopeful and I want to focus as much as possible on how to grow the book business together."
Whether publishers are as eager to partner with and trust Amazon remains to be seen.