This afternoon Amazon once again reminded us that Barnes & Noble doesn’t have a prayer in hell of blocking its way.

But, I hear you saying, today’s announcement from Amazon has nothing to do with ebooks or with publishing.

The press release leads off:

Amazon Web Services (AWS) today announced new managed services for Windows developers with the worldwide launch of Amazon Relational Database Services (Amazon RDS) for Microsoft SQL Server and ASP.NET support for AWS Elastic Beanstalk. Businesses can now take advantage of the managed database and application services to deploy, manage and scale SQL Server databases and ASP.NET applications using familiar Microsoft tools.

My first thought was: of course, Amazon isn’t going to let Barnes & Noble act like it curries any real favor with Microsoft. My second thought: I bet Microsoft is not sponsoring this press release. Nope, no endorsement from Microsoft, but a very strong plug from Adobe Systems.

Oh, and hey, wasn’t that Barnes & Noble deal with Microsoft in part focused on the supposed strengths in Barnes & Noble’s stodgy and stolid College division, which was mysteriously offloaded as part of an otherwise all-digital deal?

So who else strongly endorsed Amazon this afternoon: Apollo Group “one of the world’s largest private education providers (which) has been in the education business for more than 35 years.” Quoth Apollo: “We are already using Amazon RDS for MySQL and are excited… enable us to focus on what makes our educational offerings exceptional.” As of close of trading today, Apollo’s market cap (stock market value) is four times Barnes & Noble’s. Amazon’s stock dropped today in step with the rest of the markets. So it’s trading at merely 100 times the value of Barnes & Noble.

Oh how I wish that Barnes & Noble could pull off its end game. And how I do despair. Amazon is playing for so much higher stakes than that little bookseller from New York.

Amazon’s message is clear. It can forge a much bigger deal for Microsoft products without Microsoft’s cooperation than Barnes & Noble can conjur up even with the full endorsement of Andy “Our Complementary Assets” Lees, Microsoft’s president.

And when it makes such a deal, Amazon will include a company that represents the future of education, not the company that sells crested sweatshirts and used textbooks.

However the sentence in the press release continues “moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents.” That means Barnes & Noble has agreed to pay Microsoft for some or all of its previously disputed patents via this new company (currently called “Newco”). And that means Microsoft managed to gain the upper hand in these negotiations.

For all we know the royalty payment will be only half a penny per item, and have an annual limit of $11.74. Microsoft wasn’t suing only Barnes & Noble over these patents. There were, and still are, many other named firms. Back in January, in announcing a deal with LG for smartphones, Microsoft claimed that “70 percent of all Android smartphones sold in the U.S. are now receiving coverage under Microsoft’s patent portfolio.” So Microsoft has plenty at stake here.

Patents are tossed around a lot in the media these days because tech firms are increasingly involved in playing very high-stakes patent games. If the news media was really honest with readers it would simply admit: The development, filing, defending, financing and litigating of patents is so intricate and complex that for us even to pretend to be offering information on the topic is at best questionable, at worst, irresponsible. When we write “Apple won…” or “Google fought…” or “Microsoft conceded…” we’re using words that supposedly convey meaning. But the fact is we haven’t a clue who’s actually winning the patent wars, or how they’re really being fought. But because we’re a news outlet we have no choice but to pretend to be knowledgeable.

I’m not a lawyer, but I’ve spent a lot of time working as a paid “expert witness” in patent lawsuits, so I have a passing knowledge of the topic, more than most. That knowledge leads me to conclude that I will never understand more than the most basic language and procedures here, and so always tread with great care in this arena. As to whether Amazon, Apple, Facebook Google, IBM, Intel or Microsoft is the strongest contender in the patent wars I haven’t a clue. I keep an eye of developments but read few accounts only because I know that the journalist is almost certainly as clueless as I am.

Just about any other type of litigation can be at least grasped by mere mortals.  Like this one:

Barnes & Noble is fighting a lawsuit with several large shareholders (including the Louisiana Municipal Police Employees Retirement System) over Len Riggio’s sale of Barnes & Noble College. Riggio and his family and friends used to own the College division separately from the retail trade bookstores. Then Barnes & Noble Inc. a company that Len Riggio also more-or-less controlled, agreed to buy the division for $439 million.

Having noted a “fishy smell” surrounding the deal, Delaware Judge Leo Strine allowed this lawsuit to proceed.

As the New York Times argued back in the fall of 2010: “No good can come of this for Mr. Riggio. Documents may come to light that show this already ‘fishy’ transaction to be actually biased in his favor. Given the criticisms of the transaction at the time, this appears to be something I would bet would occur…settling this matter is going to be yet another cost for Barnes & Noble at a time when it can ill afford it.”

The case is due to go to trial in June of 2012. A hearing as to which Barnes & Noble directors held responsibility led to a March judgment, but the balance of the litigation appears to be moving forward.

The question that troubles me is how the Newco deal with Microsoft will impact this important litigation. Obviously lawyers on all sides are fully aware of what’s been happening (it’s been discussed openly in the press). I can’t imagine Microsoft purchasing assets from Barnes & Noble Inc. that were still subject to major litigation. I’m looking forward to some answers (Barnes & Noble can be reach for comment, but never bothers to comment, so journalists eventually give up seeking comment. There is a comment box immediately below this post).

Worse still it’s a marriage of the Hatfields and the McCoys. They were feuding something nasty, and if they hadn’t exchanged vows they were about to exchange bullets.

OK. Enough of the marriage metaphors.

Let’s get a few easy things out of the way so that we can try to untangle some real stumblers.

$300 million from Microsoft. Spare change, sir? I’ll look at the meaning of the number in more detail tomorrow but it’s essentially meaningless from Microsoft’s perspective. As we get deeper into the details tomorrow you’ll learn that the deal is in fact sort-of worth $600 million, but that’s over several years, so again, inconsequential.

Skip to the end of the official announcement and you find out what $300 million really means to Microsoft. Barnes & Noble gave Microsoft something it desperately needed: an agreement to honor (and pay fees on) Microsoft’s key anti-Android patents.

What does $300 million mean to Barnes & Noble? I can take that in a few directions. I could, for example, mention the $204 million the company received from Liberty Media last August and then point out it’s in worse shape today – by all the usual financial metrics – than it was before it received the investment. The most recently-disclosed financial data from Barnes & Noble shows an operating profit through Q3 of $242 million – before the online operations wiped it out. Will $300 million “save” Barnes & Noble? Of course not.

The next task is to parse this morning’s joint press release. It’s surprisingly sparse. Without the boiler-plate text it’s just 600 words long – $500,000/word.

The deal is a “strategic partnership” – not an acquisition, nor a joint venture. Microsoft is making a $300 million “investment”, but not in the publicly-traded corporation named Barnes & Noble Inc., but in a “new Barnes & Noble subsidiary” with the name “Newco” (“Newco” is a standard placeholder designation for an as-yet-unnamed corporate entity).

“Newco will bring together the digital and College businesses of Barnes & Noble,” the press release continues (emphasis mine). Few if any commentators today could be heard pulling their hats off and scratching their heads and saying: “What’s that you’re saying? You’re taking Barnes & Noble’s most forward-facing division, the online and Nook group, and adding in its dullest, most staid and least digital business, the College group? Um, why are you doing that?”

Oh wait, there’s an explanation in the press release:

The inclusion of Barnes & Noble’s College business is an important component of Newco’s strategic vision. Through the newly formed Newco, Barnes & Noble’s industry leading NOOK Study software will provide students and educators the preeminent technology platform for the distribution and management of digital education materials in the market.

That just doesn’t ring true. Barnes & Noble’s Nook Study ain’t leading any industry, least of all digital education. It’s what we analysts call a dead-in-the-water no-show, for lack of a more straightforward term. And I heard zero today to clue me in as to anything that would change that.

I analyze Barnes & Noble’s college operations in my new book.

The college business essentially consists of long-term management contracts on behalf of colleges and universities around the U.S. – 641 stores (as of January 28, 2012). They operate as college bookstores do: sell and rent textbooks, emblematic apparel and gifts, computer products and convenience and café items. Barnes & Noble College is a well-run operation that competes primarily with Follett, an old family business with lots of history. The two companies are like Macy’s & Gimbels (although Follett manages 50% more locations than Barnes & Noble). The division is profitable, though not dramatically so.

Nook Study is a digital textbook rental service offered primarily through these 641 college stores. It is a failure, not just because Barnes & Noble created a crummy digital textbook product, but because no one is hitting the jackpot on digital textbook rentals.

More tomorrow. But let me leave you with a inspiring haiku-styled poem, formed from the remainder of this morning’s press release:

With rapid growth
To solidify our position
A leader in an exploding market
Our exciting collaboration
Our world-class technologies
and content

It is the beginning of a journey
For our complementary assets
We’re at the cusp of a revolution

We’ve now had a couple of weeks to try to get our minds around the notion that we live on the same planet with a 27 year old who can buy a 2-year-old company with no revenue and a few dozen staff for the same dollar amount as the Gross National product of Belize or Monaco. So taking out the receding shock value of the scale of the purchase, what’s left to be frightened of?

As John Gapper points out: Everything. While Facebook “will pay $1 billion to neutralize Instagram, how much are Path, Pinterest and others yet to be invented worth?…Instagram was one but there are others, some of which would be even more expensive.”

A very provocative read.

In other breaking Facebook news we learned the unsurprising fact that the cool billion for the fellas at Instagram is in fact just 30% in cash and $700 million in Facebook shares, or to be more exact, 23 million Facebook shares valued at $30.89 each. The Instagram kids may not be the first to rue the day they didn’t hold out for more cash and a lower overall sale price. There were many hearts broken by this form of sale structuring during the last dotcom boom and bust, and there will certainly be more again. Stated another way: in order to help justify a share price of over $30 for Facebook in its upcoming IPO Mark Zuckerberg convinced a company to accept those still imaginary shares at said price in exchange for 70% of their business (at a valuation only twice what the company was worth less than a month before).

And just yesterday Facebook revealed that its rate of sales and profit growth is slowing.

Oh my!

As the old saying goes: “Don’t tell my mother I’m working on the Facebook IPO. She thinks I play piano at the local whorehouse.”

Their ratings code is arcane for the novice. If you’re interested in exploring further, Investopia offers definitions.

Here are the optimists’ ratings:

April 18, Part 2: The Naysayers

I’ve pulled this together for the sole purpose of stimulating thought and discussion on the topic. It’s research: not gospel truth. But the ideas are provocative. Perhaps most provocative is what underlies this posting: that there is an effective way to game Amazon’s book review system without being caught and banned.

For the researchers who I paraphrase here, let me apologize in advance if my summations fail to do justice to your work. That is why I’ve included the bibliographic references and links: so that readers can turn to the source and make their own assessment (some are behind firewalls – you may need to set foot in a library to read them).

I’ve collected 22 papers thus far, so will augment this post when time permits.

1. The Bandwagon Effect of Collaborative Filtering Technology

S. Shyam Sundar, Anne Oeldorf-Hirsch, Qian Xu
CHI 2008, Florence, Italy, ACM 978-1-60558-012-8/08/04

The paper analyses “The Bandwagon Effect” – “if others think that something is good, then I should, too,” using three variables:

1. Star ratings
2. Number of customer reviews
3. Sales rank

The results were unsurprising: these factors make an impact on perceived value.

What I found interesting was a discussion of a paper that compared how readers of a news websites felt about stories that they selected versus those selected for them by a news editor, a computer, or other users. They found that “other users” beat both the computer algorithm and the ‘expert’ news editor.

2. The Effect of Word Of Mouth on Sales: Online Book Reviews

Judith A. Chevalier, Dina Mayzlin, Yale School of Management, September 2005

Our econometric analysis is designed to answer the question: If a cranky consumer posts a negative review of a book on BN.com but not on Amazon.com, would the sales of that book at BN.com fall relative to the sales of that book at Amazon.com?

We analyze reviewing practices at Amazon and BN.com. We find that customer reviews tend to be very positive at both sites and that they are more detailed at Amazon. We find that an improvement in a book’s reviews leads to an increase in relative sales at that site, and the (negative) impact of 1-star reviews is greater than the (positive) impact of 5-star reviews.

3. All Reviews are Not Created Equal: The Disaggregate Impact of Reviews and Reviewers at Amazon.com

Pei-yu Chen, Samita Dhanasobhon and Michael D. Smith, May 2008

Ratings that provide a simple 5-star (or 1-star) review, while having equal weight in the overall average star rating listed on Amazon’s site, do not have as much influence on consumer response as more detailed reviews that have been rated as “helpful” by other members of the community. Moreover, these reviews have a stronger impact on less popular books than on more popular books. We also find evidence that “Spotlight” reviews have a stronger effect on book sales than overall reviews do — which is consistent with the hypothesis that consumers may economize on costly search by focusing their attention on a few highlighted reviews. However, contrary to our expectations, we find no evidence that the reputation of reviewers (i.e. top reviewers) is an important factor in consumers’ purchase decisions.

4. Can Brand Reputation Improve the Odds of Being Reviewed On-Line?

Naveen Amblee and Tung Bui
International Journal of Electronic Commerce / Spring 2008

I found this study a little muddled: based on an analysis of 395 ebooks sold by Amazon over a period of six months, the authors found that goods that “start with a highly rated brand” are more likely to have additional reviews posted than goods with “an initial poorly rated brand”. You’ll have to read the study to understand how they bring “brand” into the mix.

5. Designing Ranking Systems for Consumer Reviews:

The Impact of Review Subjectivity on Product Sales and Review Quality

Anindya Ghose, Panagiotis G. Ipeirotis
Department of Information, Operations, and Management Sciences, Stern School of Business, New York University

This paper is unique in looking at how sentiment in text of a review affects product sales and the extent to which these reviews are informative as gauged by the affect of sentiments on helpfulness of these reviews. We find that reviews which tend to include a mixture of subjective and objective elements are considered more informative (or helpful) by the users.

In terms of subjectivity and effect on helpfulness, we observe that for feature-based goods, such as electronics, users prefer reviews to contain mainly objective information with a few subjective sentences. In other words, the users want the reviews to confirm the validity of the product description, giving a small number of comments (not giving comments decreases the usefulness of the review). For experience goods, such as movies, users prefer a brief description of the “objective” elements of the good (e.g., the plot) and then the users expect to see a personalized, highly sentimental positioning, describing aspects of the good that are not captured by the product description.

The authors (with Nikolay Archak) take their work to the next level with their 2007 paper:

Show me the Money! Deriving the Pricing Power of Product Features by Mining Consumer Reviews

This paper focuses purely on electronics to offer examples “where opinions that would be interpreted as positive by existing opinion mining systems are actually negative within the context of electronic markets.”

Anindya Ghose and Panagiotis G. Ipeirotis are on a roll! Their 2011 paper, Estimating the Helpfulness and Economic Impact of Product Reviews: Mining Text and Reviewer Characteristics (IEEE Transactions On Knowledge and Data Engineering, October 2011) builds on their previous work “by expanding our data to include multiple product categories and multiple textual features such as different readability metrics, information about the reviewer history, different features of reviewer disclosure, and so on. The present paper is unique in looking at how subjectivity levels, readability, and spelling errors in the text of reviews affect product sales and the perceived helpfulness of these reviews.”

They pin down their earlier hypothesis and state clearly: “Reviews that rate products negatively can be associated with increased product sales when the review text is informative and detailed. This is likely to occur when the reviewer clearly outlines the pros and cons of the product, thereby providing sufficient information to the consumer to make a purchase.” (Italics theirs.)

Gem #2: “For experience goods such as DVDs… users prefer to see a brief description of the “objective” elements of the good (e.g., the plot), (and then) a personalized, highly sentimental positioning, describing aspects of the movie that are not captured by the product description provided by the producers.”

Gem #3: “An increase in the readability of reviews has a positive and statistical impact on review helpfulness while an increase in the proportion of spelling errors has a negative and statistically significant impact on review helpfulness for audio-video products and DVDs.”

There’s more, sufficient that the authors can state with confidence that they can identify the most effective reviews.

6. Examining the Relationship Between Reviews and Sales: The Role of Reviewer Identity Disclosure in Electronic Markets

Chris Forman, Anindya Ghose and Batia Wiesenfeld, 2008

“Our findings suggest that in the world of online consumer reviews and sales, we may need a more nuanced understanding of the old adage that “there is no such thing as bad publicity…. Our findings suggest that negative reviews may not necessarily be bad for sales. More likely to have a negative impact on sales is anonymous reviews – those failing to disclose real name or location.”

The 15 titles listed on the chart above are the top sellers on the Amazon Kindle store as of about midnight PDT on April 12, 2012. I’ve listed the retail price followed by the number of reviews received.

Moving to the right you find the list price for the same title on Barnes & Noble, its position on the Barnes & Noble bestseller list at the same time (around midnight) and the number of reviews received. I’m aware that it’s possible to rate books on Barnes & Noble without writing a review, but aware also that Barnes & Noble doesn’t feature as strong a reviewing ecosystem as does Amazon. Historically this has decreased the number of book reviews on Barnes & Noble relative to Amazon.

The next correlate to bring into the equation is Barnes & Noble’s ostensible ebook market share relative to Amazon. The going guesstimate for Barnes & Noble is a 27% share. Barnes & Noble is the source for that number: CEO William Lynch used it last year in an investor presentation.

Let’s accept that a quarter of ebooks are currently sold through Barnes & Noble. It sounds about right. The tougher number to pin down is Amazon’s share. That’s best calculated deductively. What’s Apple’s share? Google’s? Sony’s? Kobo’s? Apple apparently hit a high point of 13% soon after the iPad was launched but has been dropping steadily since. Just about everyone agrees that Apple is paying little attention to the iBookstore, its neglect rivaled only by Google’s and Sony’s child abuse. Kobo is a scrappy international player generating strong internal sales numbers but since Borders disappeared doesn’t have a doting parent in the U.S. market.

I feel like I’m treading on solid ground when I award Amazon a double over Barnes & Noble, or 54% market share. That leaves 19% for everyone else which these days seems generous.

Now return to the chart at the top of the page. The area of interest is the number of reviews received on each site for the top 15 bestsellers as reported by Amazon (their sales position mapping pretty closely on the B&N list).

On average Barnes & Noble has 25% more reviews per bestseller than Amazon; 38% more overall on the 15 bestselling books.

I was surprised. I’ve been plotting these percentages informally for the past six months and Barnes & Noble’s review totals never approached Amazon’s. Amazon is renowned for its well-evolved book review ecosystem – it’s even the subject of academic study. Amazon turns the mere act of reviewing into an ego boost and a potentially prestigious career move. Reviewers actually compete on Amazon. Authors have been apprehended gaming the system and entering grudge matches. When you review a book across the digital road at Barnes & Noble all you get is an auto-generated “thanks”.

I pulled a representative sample of comparative review counts of older titles:

Using Wikipedia’s listing of bestsellers I extracted ten titles published in the last 30 years and compared the number of reviews on each site. In this sampling Amazon was the clear victor with 171% more reviews than the competition (or a cumulative 39%). I think this is a more representative view, reflecting the kinds of percentages I’ve been familiar with in the past.

The main weakness in my 15 current bestsellers comparison is accommodating ”The Hunger Games Factor”. Barnes & Noble launched a promotion to coincide with the release of the film last month, betting it would be a winner. Barnes & Noble won its bet: the film has already grossed over $300 million while scoring 85% on Rotten Tomatoes. But Amazon has been fighting back in its typically subtle manner, cutting prices by as much as 44% (and free to borrow for Prime Members). Despite the counter-attack, Barnes & Noble is acing the review count.

Also worthy of note is the predominance of romances in this week’s top 15. It’s widely and correctly believed that one of the subject niches where Barnes & Noble has climbed ahead of Amazon is romances. OK, so they have. But it’s not like romance is an obscure category. Barnes & Noble wisely focused on one of the top three or four categories for ebooks (the others include science fiction, mysteries and thrillers) and is reaping the reward. For comparison let’s look at the manly world of business books, or as Halley Suitt once called them, “bodice-rippers for boys“.

This is Amazon’s current top 10 business book bestseller listing with comparative review data on Barnes & Noble: the 32% cumulative figure is the more relevant number.

You can play this game at home by downloading my spreadsheet (.xls) or making your own.

What to conclude? The data tells me that Barnes & Noble is competing more successfully with Amazon than most estimates reflect (my own earlier figures included). If that’s true then let’s try on one of two conclusions:

1. Barnes & Noble has even more to lose from the demise of agency pricing than analysts currently estimate.
2. Barnes & Noble is strong enough to withstand the immense market disruption that this litigation will bring.

The choice is yours!

To learn more about Barnes & Noble’s prospects you can cast your vote by buying my new book, on Amazon, or on Barnes & Noble.

Vote with your dollars : – )

If you read the complaint from the DOJ you’ll see that the issue is not agency pricing, or whether $12.99 is more or less fair than $9.99.

It’s about the conspiracy under 15 USC Chapter 1 – Monopolies And Combinations In Restraint of Trade of the Sherman Act, first passed in 1890.

That’s all. If there wasn’t a conspiracy, then no laws were broken. If there was…

If you’re unfamiliar with the background, Laura Hazard Owen offers an excellent briefing.

April 16: David Carr provides his usual well-informed take in the New York Times.

I’m trying to find a comparison for the Instagram purchase. Adobe’s initial 1989 deal for Photoshop provided a guarantee of $250,000 for two years as distributor for the software. Photoshop 1.0 retailed for $1000. Instagram is free. But it’s worth a billion because, well, just because. Because Facebook will shortly have to pretend to be worth $100 billion. And Instagram’s shiny veneer will encourage fools to buy into the fiction.

The total cash investment in Instagram from VCs was $57.5 million. $50 million arrived just a month ago, valuing the company at $500 million “despite some skepticism” that the company would ever make money. The skeptics may still be proven right. But the investors I would call “righter”.

Microsoft’s deal for AOL’s patents demonstrates once again that patent law designed originally to promote creativity and invention has become the monster destroying creativity and invention. It is a travesty and a tragedy. As an analyst who has earned generous fees over the years as an expert witness in patent litigation I should be thrilled. But I’m sickened. Along with Google’s $12 billion Motorola purchase, Facebook’s IBM patent buy, Google’s IBM patent procurement, and Apple’s endless courtroom combat, America’s patent process is not merely broken, it is now a Godzilla, destroying everything in its path.

Three articles appeared Monday have finally pushed my tolerance for Facebook past the breaking point.

Last night Frédéric Filloux asked “Would you buy Facebook shares?” He continued: “Facebook numbers are both fascinating and frightening. The social network will pass the 1 billion members mark this year.” 1 billion members, one-seventh of the world’s population. Jeez, I thought. That’s the same number of people that practice the Catholic religion. One billion is also the number of people who will go to bed hungry tonight, as they do every night. I wonder what $1 each would buy those people. I wonder what it bought Facebook.

Three days ago the Columbia Journalism Review described Facebook-enabled “creepy and cringeworthy” newsfeeds, unexpectedly revealing to one and all every article you’ve so much as glanced at, including “What Was the Liquid Dripping Down Christina Aguilera’s Leg at the Etta James Tribute?”

And Cory Doctorow’s Boing Boing reported yesterday a Facebook privacy-leak “that’s creepy even by Facebook standards. When you sign up for apps, the app-maker has the power to extract all your friends’ personal info.”

I snapped. What benefit could I possibly be receiving from Facebook to justify these wretched invasions of privacy?

I shut my account tonight. It ain’t easy, of course. I tried to export everything that I’d ever posted on Facebook. There’s an easy way to do this directly from your account settings. The only problem is it doesn’t work. And there’s no one to help you because it’s free and free doesn’t include help.

So I tried to shut my account without my little scrapbook of memories. I was told that friends would miss me. I’m going to send them cheerful greeting cards through the mail. I expect their sorrow will soon pass.

The authoritative Pew Research Center reported that 1 in 5 Americans are reading ebooks. That’s huge. Previous surveys focused on device ownership rather than readers so there are no comparables. But check this Pew stat: e-reader ownership more than tripled in the 14 months from November 2010 (6%) to January 2012 (19%).

Meanwhile Amazon dropped its data bomb: 16 of the top 100 best-selling paid Kindle books in March are exclusive to the Kindle Store.

How are we supposed to read that headline? Try this:

Amazon’s ebooks marketshare is estimated between 55%-70%, at least double its closest rival, Barnes & Noble (I believe it’s closer to triple). So the 100 best-selling paid Kindle books are a fair representation of the 100 most popular books in America. Compare Amazon’s list to the list on USA Today. Very similar.

Bestselling books on Amazon’s Kindle sell a lot of copies: there are now 11 authors in the Kindle Million club. There is no Barnes & Noble million club. No Apple club. No Google club.

Amazon’s message with its 16 exclusives is: Hey, look at us. We’ve got books that no one else has. In fact nearly 1 in 6 of the most popular bestselling books is available only from Amazon.

As far as its retail competition goes, I say ‘Good for Amazon.’ The company has worked very hard to be #1 and is now reaping the rewards from its aggressive and steadfast efforts.

Authors are winning too. Big time. And Amazon sure wants authors to know it. The press release rubs it in. “In March, each time Kindle owners borrowed a KDP Select book from the lending library, the author received $2.18, leading to significant increases in income for independently-published authors.”

After enrolling the book in the Kindle Owners’ Lending Library in February, Martin Crosby earned over $45,000 in one month from paid sales and loans combined – a huge increase from the $100 he earned the prior two months when his book was not enrolled in the program. “Contemporary romance writer” Kathy Dunnehoff earned nearly $9,000 from the KDP Select fund in February; T.R. Ragan earned over $11,000.

Got that you loser authors who are not part of a program with “100,000 books now available”?

Nope, I’m not worried so much about the commercial competition. I’m worried about the competition that doesn’t know how to fight back against the Amazon juggernaut, the competition that cares a lot more about readers than Amazon ever will. I’m worried about public libraries.

I thought I’d take a look at how Amazon’s triumph plays out for the non-paying public. Amazon doesn’t tell us the names of all 16 books, but reveals 10 books by 8 authors, and highlights an additional 5 ’Select’ scribes. I call them “The Amazon 13.” (Three volumes of Michael Wallace’s Righteous series were included on Amazon’s 16, but I counted him once.)

I couldn’t survey every public library, so I choose a representative library system from middle America – the Kansas City Public Library. I logged into the main catalog in Kansas City and checked each title, first for print holdings, then for ebook holdings (via the OverDrive portal).

Only 2 of the titles from The Amazon 13 can be borrowed from the Kansas Public Library in any form: Easily Amused by Karen McQuestion (in paperback) and of course Stephen Covey’s The 7 Habits of Highly Effective People (in paperback, hardcover or audiobook). A total of 8 of the 13 titles are available for purchase in print, but not available in the public library system (3 of the titles are the shorter Kindle Singles).

What about the ebooks, I sense you wondering. Amazon makes its Kindle ebooks available to 11,000 public libraries (including Kansas) via OverDrive. Nope, not The Amazon 13. Not a single title was listed.  Not even the mega-bestselling Stephen Covey book.  The only member of The Amazon 13 with any titles on OverDrive is the late Kurt Vonnegut, and then only three of his books, The Sirens of Titan, Cat’s Cradle and Slaughter-House Five. Surely they offer Player Piano, God Bless You, Mr. Rosewater or Breakfast of Champions? Nope. (NOTE: Some commenters assume this is because the respective publishers aren’t making the books available for library lending, but only one title, the Covey book, falls into that category.)

I’ve been critical of Amazon’s deal with OverDrive for precisely this reason: OverDrive, no matter how well-intentioned, is failing to make ebooks accessible via the public library system. Period.

And what does Amazon have to say to public libraries and their patrons? I asked Amazon. The ever-loquacious Amazon PR folks had no comment. I think we already know what Amazon is telling us: Buy a Kindle. That costs $99 (with no sales tax in 45 states). Buy Amazon Prime: $79/year. The books are then free to borrow; cheap to buy (and probably even cheaper once the Department of Justice metes out justice).

As Amazon 13 author T.R. Ragan says in the press release: “I can’t wait to see what Amazon will think of next!”

Librarians: My new ebook, Stripping Covers off The Hunger Games is available to you DRM-free, free of charge, as many copies as you want in whatever format(s) you would like. Leave a comment below with your contact info or email me at thad@thefutureofpublishing.com and they’ll be on the way to you pronto. I don’t care if every copy loaned leads to 100 stolen copies. I just want my book to be available in every public library and I’ll be dead before OverDrive gets around to listing it.