Amazon and Lightning Source: The End of an Era?

by Joel Friedlander on September 9, 2011 · 272 comments

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For some years now many small publishers and self-publishers have been using a very effective strategy for distributing their books. This strategy has been widely written about and imitated. It was pioneered, as far as I know, by Aaron Shepard and Morris Rosenthal, both early proponents of print on demand distribution.

Here’s how the strategy works:

  1. Set up as a publisher with Lightning Source
  2. Set your discount to the shortest discount possible, 20%
  3. Have your book supplied to Amazon, where the vast majority of your sales will occur, at a discount that saves at least 20% off what you would have to pay Amazon otherwise.

On my standard book for pricing, here’s how this strategy plays out:
(A 200 page 6 x 9 paperback with no graphics or illustrations and simple formatting.)

Retail $15.00
Wholesale $12.00 ($15.00 less 20%, or $3.00 = $12.00)
Print cost $3.50
Net profit per copy sold $8.50 ($12.00 less $3.50)

This puts tremendous economic leverage in the hands of a self-publisher.

The Party’s Over

Now Amazon has changed the way they deal with books from Lightning Source and other print on demand suppliers—all except their own supplier, CreateSpace.

Perhaps in an effort to trim costs, they have changed the way they drop ship books using the third party vendors, and instead using their own warehousing and fulfillment. Whatever the reason, many books from these vendors are now showing up with an availability of “Ships in 2 to 3 weeks.”

A Self-Publisher's Companion

This is a real sales killer. When I heard about this move earlier this summer, I decided to leave A Self-Publisher’s Companion alone and see what happened.

And what happened was pretty bad. The book went to the dreaded “Ships in 2 to 3 weeks” and its sales rank took a nosedive as sales dried up.

A few weeks later, with the inventory apparently replenished, the book returned to a normal “In Stock. Ships from and sold by Amazon.” But it only lasted a few days until the listing started showing “Only 3 copies left” and eventually went back to “Ships in 2 to 3 weeks.”

Solutions

As the most vocal proponent of the short discount strategy, Aaron Shepard admitted the world had changed, and came up with a “Plan B” to help other publishers facing this challenge.

For about the past decade, the most profitable approach to selling books on Amazon has been to distribute through Lightning Source at a short discount—a strategy I helped introduce in my book Aiming at Amazon and elaborated on in its companion volume, POD for Profit. But now it looks like the days of that strategy may have come to an end. For those of us currently working with Lightning, the question is, what will replace that approach? In other words, what is Plan B?—Aaron Shepard’s Publishing Blog

You can read the whole of Plan B by following the link, but part of the strategy is to make your book available at both CreateSpace and Lightning Source—with the same ISBN—to take advantage of both companies’ strengths.

This is what I’m now recommending to my clients who are at Lightning Source. Others I’m sending directly to CreateSpace.

What’s the impact of this difference? At CreateSpace the “shortest” discount you can set is 40%. Here’s how it works out:

Retail $15.00
Wholesale $9.00 ($15.00 less 40%, or $6.00 = $9.00)
Print cost $3.50
Net profit per copy sold $5.50 ($9.00 less $3.50)

In other words, for every copy you sell at 40% discount instead of 20% discount, you will make $3.00 less. If you sell 100 books, you’ve just lost $300.

Now, it never feels good to lose control of a process that’s at the heart of your business model. But remember that publishing is a lot more than a specific margin per book.

In fact this is a great reminder for all of us that the form we use to send our work, our ideas, our stories and our passions into the world is not the crucial part of our business. What’s crucial—and what people pay for—is the value we create for our readers.

It’s interesting to me that Shepard, in the same article, now recommends new self-publishers skip print books entirely until they’ve tested their works in e-book form.

Let’s be nimble. As the world of books continues to twist and turn into new and startling shapes, let’s keep adapting, coming up with whatever Plan Bs, Plan Cs, Plan Ds we need to in order to continue what we started when we first decided to publish our work.

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    { 260 comments… read them below or add one }

    Vienne November 4, 2013 at 6:30 pm

    Thanks Gary & Joel. I certainly have a lot to learn as a first-time self-publisher, but between my advance research and consulting the vast community of self-published folks online, I’m anticipating being able to answer most questions that arise during the process. Thanks for alleviating some of my fears about the recent LS/Spark developments.

    Reply

    Gary Roberts November 4, 2013 at 6:04 pm

    Vienne, I don’t think you have to worry about being persuasive at this point. Just point out what you’ve detailed here, your immediate plans and my guess is that Lightning Source will approve your application. What they want to know is that you know how to handle the details on your own with at most minimal advice from them.

    Reply

    Gary Roberts November 4, 2013 at 4:01 pm

    Problem is, if you’re a new publisher without any books to your name, Lightning Source historically would not have been very interested in you to begin with. They have always wanted to work with publishers who have published or authored in the past or who have plans for future books. When I signed up I already had authored chapters in books and I indicated that although this was my first independent publishing book, that I would be publishing at least 4 more that year and more in following years. Spark is their service for people who have never published before and may need more assistance. If that’s not the case, you have to make that clear to them from the get go.

    Reply

    Vienne November 4, 2013 at 4:11 pm

    Thanks, Gary. I have one traditionally published book already, one in the final stages and several planned for the coming year, but I was hoping not to have to wait to finish multiple books to get them in print. When the time comes, I suppose I’ll just have to be as persuasive as possible and see what I can negotiate. From what I understand, Spark isn’t even equipped to provide a physical proof at this point. That’s unacceptable.

    Reply

    Vienne November 4, 2013 at 3:54 pm

    Sorry quite late to this post, but the saga continues…followed your link to Aaron Shepard’s blog to find that not only is Plan B outdated and Plan C uncertain, but that now Lightning Source is refusing new publishers business in an effort to try and get them to go with Ingram Spark which – by the sounds of it – is a bad alternative. As a new publisher looking to get my first book out within the next couple of months, I’m now a little panicked tbh. Are there ANY alternatives to Lightning Source for POD/distribution? I really don’t like the idea of settling for Createspace alone, even if it is just temporarily.

    Reply

    Joel Friedlander November 4, 2013 at 4:48 pm

    Vienne, Gary has given you a good indication of the differences between Spark and Lightning Source. Contrary to what you’ve heard, if you really want to sign up for Lightning Source, they will start the account process for you.

    Reply

    Gary Roberts October 7, 2013 at 3:10 pm

    If you are already contracted with LS, there is a publisher compensation calculator that allows you to play around with pricing and discounts to get the figure you’re happy with. I shoot for a comp of between $4-5 per book in general for the average standard color book. But my books are niche and are not huge sellers.

    That’s the thing: how many you think you’ll sell and how to set your price at the point that will encourage sales. Set your discount under standard trade of 45%-55% and Amazon and B&N may not discount your title at all and you could lose sales. I recently increased all of my prices and increased all trade discounts to 50-55 and across the board sales doubled. For a little niche publisher that meant going from 20 books per month to 40. Not an average number, but every month at a minimum. All of my titles are what you would call back list in any event.

    You have to canvas the market and see what other books in your genre are selling for and hit the sweet spot else you will price yourself out of or under the market. You also have to allow the online retailers room to discount or they will never put your book on sale or feature it, leaving people to skip over it when they look for deals.

    I realize this goes against Aaron’s plan and a lot of the general thinking for independent publishing but you see I’m not an author, I’m a small independent publisher currently carrying 25 titles. Some sell five per year, some sell 10 or more per month. Niche. But it all adds up. If you have one title, you have to maximize your ability to encourage your reader to want to buy the book and that means sales or something else.

    On my personal shop site, I dumped the discount and changed to full retail price with free shipping everywhere in the world. That too seems to work well. It’s not a huge money maker but I find that people often see the title on the site and then look around to find the best deal which is ok with me.

    My three cents.

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    RobRod October 7, 2013 at 1:56 pm

    Please forgive this newbie question if it’s already been adequately answered elsewhere:

    Out of necessity, I will be going through LSI for a particular upcoming title, simply because the production price I was quoted was half what CreateSpace was charging for the same specs (full color). But I want to make the title available on Amazon – that’s where I expect most of the sales to be.

    LSI is quoting me a price of $11.50 per, for a book that will retail at $30. I know that Amazon will be offering it up at a discounted price; what I am trying to figure is what discount to set in order for the book to make a profit. What would make sense for me to do to make this a viable title?

    Thanks in advance for the assist.

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    Joel Friedlander October 7, 2013 at 2:08 pm

    At LSI you can set your discount as low as 20% (“short discount”) and Amazon will still stock your book. Normal retail discount is 40%, at which point you would net $18 per book, and deducting your $11.50 manufacturing cost leaves you with $6.50 net profit per book.

    You might want to check this out: Self-Publisher’s Quick & Easy Guide to Book Distribution and Discounts.

    Reply

    James H. Byrd October 7, 2013 at 2:32 pm

    Hi Rob. You don’t have to worry about how Amazon will discount your book. You’ll get paid the same even if they give it away. Amazon pays LSI the wholesale price for your book regardless of what they choose to sell it for.

    Given a cost of $11.50 and retail price of $30, the only variable you have to play with is your discount. If you set the discount at the LSI-recommended 55%, you will earn $2.00 per book. If you set your discount to the lowest that LSI allows (20%), you’ll earn $12.50 per book.

    Here’s the formula:
    Retail Price – Discount – Print Cost = Earnings

    For example:
    $30 – 55% ($16.50) – $11.50 = $2.00
    $30 – 20% ($6.00) – $11.50 = $12.50

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    Gary Roberts June 28, 2013 at 7:57 am

    I lose not a wink of sleep over the whole Amazon kerfuffle. Amazon always fails to update book covers if I update mine, posts Kindle SITB content instead of mine, mixes up other reviews with mine, etc. I’ld rather put time and effort into producing and promoting my books than in worrying about Amazon or dealing with their seller contacts. Figuring out where to advertise is a better use of time for me.

    I recently increased most of the prices on my current line of books and increased the trade discount accordingly to 50-55%. My cut rose only $1 per book but at the LSI end sales have increased and that’s all I care about.

    Reply

    spencer selby July 6, 2013 at 3:40 pm

    I don’t think you can turn your back on Amazon. At least I’m not going to. I still have my not in stock issue there and have decided it is at least partly the result of the resellers. Because their prices are a few dollars lower than Amazon and because they list the book as in stock. So the few orders so far are through the resellers. So Amazon listing doesn’t change because they are getting no orders. I got a friend to order from Amazon but that had no effect. I don’t know how many orders Amazon must receive to effect the listing. But I’m getting tired of just waiting and so gotta do something.

    Reply

    spencer selby June 27, 2013 at 9:54 pm

    Yes, I wouldn’t want to rely entirely on Amazon. My recent launched book is a perfect exampe. This hardback from LSI only has 55% discount. It’s been available for a month and still is not in stock at Amazon, being listed as “usually ships in 9-14 days. The book has 9 resellers already, all of whom say “in stock” This makes no sense to me. You would think Amazon would need to have the book in stock just to match the resellers, some of whom also are offering a slightly lower price.

    Reply

    James H. byrd June 28, 2013 at 5:55 am

    It makes even less sense when you realize that none of the vendors actually need to stock the book. The whole point of POD is that the book is printed *after* the customer orders it. Stocking books defeats the purpose of POD.

    An important element of the LSI business model was that vendors could use them to drop-ship books. The vendor never had to physically touch the book itself. The customer would order it on the vendor’s site, and the vendor would drop-ship the order through LSI. No muss, no fuss, no inventory.

    My guess is that drop shipping is at the heart of the problems we have today between Amazon and LSI. If Amazon shipped through LSI, they’d have to treat LSI like other marketplace vendors (no SuperSaver shipping, separate shipping charges, etc). But other marketplace vendors give Amazon a much larger share of the action than the short discounts offered on many titles from LSI.

    When the problems started, LSI noted that Amazon was shifting their ordering practices from using drop-ship to keeping small quantities of books in inventory. That is when the shipping delays started showing up: Amazon was stocking POD books. To make matters worse, Amazon orders in limited quantities, possibly because many POD books are not returnable. How long the book remains in stock at Amazon depends upon how well the book sells and how many books Amazon orders when stock runs out. Some books spend more time out of stock than in.

    It is worth mentioning that the new “Ingram Spark” program may be an attempt to address some of these issues. Spark clients will not be able to set a short discount (55% is mandatory). I’m not sure about how returns will be handled, but since the big catalogs (B&T and Ingram) are switching to making POD books returnable, I’m guessing that Spark users will also be required to allow returns. Will Spark have any impact on how titles are stocked at Amazon? Time will tell.

    Reply

    Gary Roberts June 11, 2013 at 1:34 pm

    #4 is why I have hesitated to use this system. I sell my books at a 30% discount direct from my site. Amazon should have no say over what I do as I am the publisher. It’s a legal issue they have used to lean on publishers and authors that will, I hope, someday be resolved.

    Reply

    Jane June 10, 2013 at 2:15 pm

    Above on April 14th, 2013, Janet states that she publishes first with LSI (including distribution), then publishes with Create Space WITHOUT using their Distribution since LSI is doing it. Questions:

    1) Am I understanding correctly that this would mean two different ISBN’s, or is it using the same one with simply two different printers?

    2) If I also use Create Space for the same title that I gave to LSI to print, does Amazon simply cease to contact LS for my book?

    3) Since I’m used to getting royalties from LSI, does this mean I’ll now start getting a monthly royalty payment from Create Space as well, but for ONLY the books they sell? Is it once a month like LSI?

    4) And something I’m curious about: I also sell directly from my publishing company, which means there won’t be “free shipping” like massive Amazon does. That’s a negative for buyers. Could I set a slightly higher price for both Create Space and LSI (I’m thinking $3.00 higher), and thus continue selling the same book via the publishing company for the current price, (which would make it cheaper than Amazon and somewhat make up for the high shipping cost)?

    Reply

    Joel Friedlander June 11, 2013 at 12:56 pm

    Jane,

    1. No, since the book is identical, you should use the same ISBN for both.
    2. That’s correct, since they would prefer to get it from CreateSpace
    3. Yes, you’ll get royalties from both. Check the CreateSpace site for details on payment schedules
    4. Amazon discourages pricing your book lower elsewhere, and may well take action if (when) they find the book is priced lower on your site, so I advise against it.

    Reply

    Gary Roberts June 6, 2013 at 5:53 pm

    You’re very welcome Joel. I do think it’s helpful for people to realize that what I’ve gone on about is self taught and specific to the books that I produce. Lots of images, lots of scanning, lots of old books. Which is to say that when applied to other instances there would be other answers. Except for the PDF/x part. There are even more recent PDF/x standards in beta testing that we will see in future versions of Distiller.

    Now to get all these posters to join the IBPA…

    Reply

    Gary Roberts June 5, 2013 at 6:56 pm

    Mr. Shephard and I have differing opinions. Mine are drawn from working in a research archives digitizing documents and books, then setting up my own publishing outfit. His are based on, in my opinion and let the tomatoes fly, selling his book and theories on Amazon, etc. I’ve read his take on LSI color specs, discussed this with LSI reps and chose to ignore it. But then, I’m not producing photo quality books so take that into account.

    I have InDesign but use a strange workflow: images into Pages, text in Pages, Pages final doc saved as PDF, PDF edited in Acrobat Pro, Distilled in Distiller. Book covers done in Book Cover Pro because I don’t have the cash to farm out my covers.

    I tried Indesign but it just didn’t do the job for me and was too cumbersome for my purposes. But, what I do are facsimile reprints of early books with a text introduction so I can’t say this would work for everyone. I simply found InDesign to be overkill for me.

    As for what Mr. Shepard says about the version of PDF/X, I have no clue what he is talking about. PDF/X-3:2002 is preferable for all work so far as I know. It’s simply a matter of what version of Acrobat the standard is compatible with and version 3 begins with a latter version than does 1.

    The earlier version is maintained because some people are still using earlier versions of Acrobat and kicking out out-dated documents. A problem which gave me many headaches when I was working.

    But, and wait until you hear this, Adobe plans on moving Acrobat updates to the Cloud in which case earlier versions may no longer be supported.

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    Joel Friedlander June 6, 2013 at 12:00 pm

    Gary, I just wanted to thank you for the expert commentary here, I’ve been learning from your explanations along with the original poster. Much appreciated.

    Reply

    spencer selby June 5, 2013 at 6:25 pm

    Thanks. This is very informative. Do you use Indesign for setting up the books? Seems there’s no option for distiller in InDesign. At least that’s what I was told. Am I wrong? We used PDF/X-1a:2001 because Aaron Shephard says that’s still the safest option for black and white printing (which I guess wouldn’t apply in yr case since you are doing standard color.

    Reply

    Gary Roberts June 5, 2013 at 6:08 pm

    Didn’t mean to get carried away! it’s the librarian in me getting pedantic.

    I can’t find the email from my customer service agent on the specs so I have to go from memory. The standard color printer works at, I think, 160 lpi, requires a PDF at 300 dpi CMYK set to PDFX standards (I’ve elected to move to PDF/X-3:2002 for better compatibility and so far everything has worked well, even on 1813 engravings). Line screen or dpi or ppi is not relevant once you run it through the PDF/X process. I use Distiller 11.

    The ‘knowledge’ comes from asking the cust service people enough questions and from knowing how, as a research librarian, to figure out how to ask the right kind of question! At least all that cash for the degree is paying off now that I’m retired…

    So long as you start with a setting of 300 (choose your index) you are within their specs. If you set your images at 600 it just increases the size but at their end the printer will still process down to, I believe, 160 lpi. The customer rep was clear that they need to start with a PDF /X that comes in at 300 irregardless of lpi, dpi or ppi.

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    spencer selby June 5, 2013 at 5:15 pm

    You seem to know alot. I certainly won’t argue. On the contrary, I’d like to pick yr brain more. Could you elaborate on how a local printer could be used to proof for LSI? Do you know the specs of LSI standard color? I assume you do, so just asking. Is the line screen number the main important spec? What is the line screen for standard color?

    Reply

    Gary Roberts June 5, 2013 at 3:00 pm

    Her’s the thing, PS or GF irregardless. LSI commercial printers print from the center out in an expanding format, unlike a desktop laserprinter and many smaller commercial printers. LPI, DPI, PPI doesn’t mean as much here. True halftone images are a problem due to the original having a grid format which is amplified by the printers many print nozzles. The color printers have more nozzles per inch than do the b&w, allowing for more coverage per inch.

    It comes back to the original. There isn’t any algorithm that will accurately replace what wasn’t there in the first place. When you attempt to print on a commercial printer such as LSI uses, the problems begin to show. If you go to Standard Color, the extra print nozzles make up for the problem to some extent but you just can’t get around that a screen grab is a screen grab just as for me a poor tintype will never hold up to image manipulation no matter how hard I try even with software designed to approximate the original image details. That’s just the nature of algorithms and printers.

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    spencer selby June 5, 2013 at 1:20 pm

    The upsampling is not done by Photoshop but by Genuine Fractals, program designed to do that. I use GF with my art and it works great, as long as you don’t try to push it too far. I printed these out with my laserprinter and they look fine. But that is not the way LSI is printing and it is possible that the source coupled with 106 line screen printing is causing trouble.

    Interesting to hear of yr work around for getting samples at local print shop. Has this worked? I mean how do you know the process or result will be same as LSI?

    Reply

    Gary Roberts June 4, 2013 at 9:57 pm

    I suspect the source of your problem is that the originals are screencaps whose resolution was then increased. You can’t add data that didn’t exist in the original. By increasing resolution you have to rely on the algorithms of Photoshop which can only do so much. Your screencap started life at 72 or 96 dpi, was upsized considerably without benefit of the addition of true extra image data. Even when you looked at the PDF, you were viewing at monitor resolution, not print resolution which is why it looked good at that point in the process.

    I too wish LSI would offer samples. I’ve asked about it in the past and the response was that they just don’t have printers available for that service as all of their machines are dedicated to book production (each printer is roughly the size of an 18 wheeler). When I’ve really needed that option, I took the PDF to a local print shop and had pages run off on a small but commercial digital press.

    Reply

    Gary Roberts June 4, 2013 at 7:14 am

    Their white for color is thinner due to the manufacturing process called calendering. It’s pressed through rollers to produce a harder surface which also makes it thinner but tougher.

    I think that the other problem is RGB v CMYK. You’re looking at RGB on your monitor but everything prints in CMYK which is always a little bit darker. Hence it’s difficult to gauge what till happen in print. Halftones are my bane too, older ones in particular.

    Sometimes if you select the Adjust Brightness/Contrast and play around you can bring the tonal levels up. You can also do this with Levels which takes more practice and trial and error in a halftone. I often spend a good amount of time before I hit on the right mix for a given set of halftones in a book. Some halftones do defy all attempts: you can only do so much with lousy originals!

    One hint: Preview on a Mac does a better job of handling final adjustment of tonal details than does Photoshop. Saturation, Exposure, Contrast, etc. are all controls that excel at correcting flaws in early photographs, halftones and engravings which, to tell the truth, are pretty much all that I work in. I have nearly no experience in using Photoshop for anything other than fixing old images! The only downside in Preview is that it handles TIFF files horribly, they increase in size. I do whatever initial processing in Photoshop Elements (I’m cheap), final work in Preview and then batch in PE to return everything to tiff or jpeg before assembling the PDF.

    I’m a retired research librarian. We’re known for being picky.

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    spencer selby June 4, 2013 at 1:56 pm

    Thanks, Gary I appreciate all yr info. Sure wish I had known this stuff a month ago. Because I already launched the book then revised once. I did know about RGB vs CMYK and don’t think that is my problem. But my situation is tricky because the images were originally screen caps that I processed and reformatted as Tiffs in Photoshop. (Their resolution was greatly increased using Genuine Fractals) These were then placed in book’s Indesign files by someone else. The resulting PDFs have all looked great, but misleading since the source was not prints. I’m sure I could get these to print better using standard color but again that would take work and more expense. Not to mention distribution trouble caused by revising again. I wish LSI offered option to see sample printed pages, so you wouldn’t have to produce a new version of the book and buy a new physical proof each time.

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    spencer selby June 3, 2013 at 10:52 pm

    Thanks for the info Gary. My biggest problem with the images was not moire. They went too dark and lost alot of detail. I was told to reduce the tonal range by 30% Don’t know if you have easy instructions for doing that. I tried to fix using the Shadows/Highlights controls in Photoshop. Had varying degrees of success. As to paper, you’re saying the white paper is different from that used for B&W? That’s good news but also surprising since the book quote I get in standard color for this project is less than B&W. Also, the white paper is still very thin, at least if you believe the LSI spine calculation.

    Reply

    Gary Roberts June 3, 2013 at 9:36 pm

    The white paper for standard is a heavier weight and harder surface. I’ve produced three books, not two (I forgot about one). One is b&W with grayscale engraved plates, Nicholson’s Mechanics Companion from 1850 that defied regular LSI printing but did quite well on the color press and is now one of my better selling books.

    For halftone plates, process in Photoshop or Photoshop Elements with a filter of Gaussian Blur of 1 to offset the halftone moire effect in regular B&W printing. If you print with Standard Color, Gaussian Blur of .25 or .5 will suffice.

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    spencer selby June 3, 2013 at 7:39 pm

    I see standard color is only available in the white paper. I wish I had considered this option when setting up my book that has 65 pages of halftone images. Even though they are black and white, I’ve had trouble getting them formatted because of the 106 line screen used on LSI black and white printing. I assume the line screen for standard color would be better and these would work. I am shocked to learn that my 320 page book would actually cost less to produce in standard color the way I did it in black and white. Only explanation I can figure is that I am using creme paper and standard color requires the lighter white.

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    Gary Roberts June 3, 2013 at 4:29 pm

    Something to keep in mind at LSI: standard color printing. I’ve used it on two books to great effect. It means color printing at an affordable price. It’s not photo quality of course but it’s half the price.

    Also, when printing through CS, you don’t know who the printer is. It may be LSI or someone else. I guess I’m being a stick in the mud but I’ve stayed with LSI for my current 15 titles. I know the quality of the printers which has increased over the past year, I control the percentage, get good market reach and great customer support. Maybe I would get better Amazon sales if I doubled up on CS but then I might sap my LSI sales and more so, I would have no control over quality.

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    Deana June 3, 2013 at 2:59 pm

    Now that every one has pretty much figured out how to use both LS and CS … did you know that Ingram has announced the launch of IngramSpark? (I think it will be launched this month).

    It looks like it’s going to be something simpler, geared more towards authors, and will compete with Createspace (maybe Lightning Source 2.0?). Now, if IngramSpark also eliminates the expensive file upload fees … I’m all in!

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    Danny June 3, 2013 at 2:39 pm

    Last year after considering all the input–some of it differing–from the many commentators on this important subject, I elected to do exactly as Joel suggests with respect to publishing at CreateSpace and LSI using the same ISBN, and everything has gone smoothly. My Amazon book sales increased, and LSI remained about the same. The over-all book quality was better with Create Space.

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    Joel Friedlander June 3, 2013 at 4:10 pm

    Great result, Danny. Quality seems to be up and down, with other authors reporting better quality from LSI, but I don’t think there’s a big difference between the two. Thanks for the report.

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    Yury June 3, 2013 at 7:54 am

    Thanks for the highly informative post and the comments below!

    Could you comment on my thoughts as well?

    What if I want to print and distribute a title with LSI and need to set different discounts to sell on Amazon and to other retailers. Say, 20% for Amazon and 60+% to athers. Can I set this with LSI?
    If not, can I do it if I set two titles in LSI with different ISBNs, but the same covers, contents, etc. For one of which – 20% for Amazon and for the other – 60+% ? I know that this way seles statistics would be broken in two parts and that would result in lower Amazon ratings. But what if Amazon links the two ISBNs? I heared they do such linking ocasionally, maybe after sending some letters to their support… What do you think?

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    Joel Friedlander June 3, 2013 at 2:06 pm

    Yury, no, you can’t set different discounts for different markets at LSI, they will only allow you to set one discount for all buyers. And no, I would not recommend publishing the exact same book with 2 ISBNs, you will create more confusion. You can, however, publish the book at CreateSpace and LSI with the same ISBN and keep CS distribution limited to Amazon, so LSI fulfills all other orders.

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    Yury June 3, 2013 at 3:54 pm

    Thanks for the update, Joel!
    I understand that approach and it’s well described in the Plan B. Still I don’t see how to solve a situation, when, for example, I need to sell hardback titles both on Amazon — with as much profit as possible, i.e. with 20% discount — and to variouse outlets that could require up to 70% discount, i.e. some sort of airport stores or display markets, etc.
    As SC won’t automate hardback printing and selling, I think that different market discounts is quite a common issue, which most publishers care of. Well maybe 70% discounted book with a larger list price would have a sound cut off at, say, B&N and then be price-matched by Amazon to finally be sold there at a suitable price with around 20% over the wholesale price, but in that case all other retailers would see that pretty high list price in the Ingram catalog and could reject the title… If only Amazon could link ISBNs for similar titles…

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    Joel Friedlander June 3, 2013 at 4:11 pm

    You’re making it very complicated. Print on demand vendors generally only allow you to set 1 discount. If you need a range of discounts to satisfy different channels, print your book offset and create your own discount schedule.

    Reply

    Viktar Zaitsau May 3, 2013 at 5:22 am

    Great post.

    I have just submitted my first title through Lightning Source and based on the information provided in your post will be watching it closely. Thanks.

    Reply

    Eric Baird April 29, 2013 at 6:16 am

    I did some monitoring a few years ago and thought I’d gotten to the bottom of this “ships in 2-3 weeks” thing.

    What seemed to be happening back then was that Amazon was using existing customer orders on POD titles as “virtual stock”.
    Here’s how it worked … amazon list a POD title and can ship it in a couple of days. But they quote 2-3 weeks. Customer #1 orders a copy, and pays up-front by credit card.
    A couple of days later, the customer’s book arrives at the amazon warehouse. They don’t send it to the customer, but hang onto it for 2-3 weeks, as they’re entitled to do, because that was the agreement with the customer.
    The book then shows up on the amazon site as being “in stock”, because there’s now a physical copy sitting in the warehouse.

    Customer #2 is encouraged by this, and buys a copy. They receive the copy originally ordered for Customer #1 the very next day, and amazon reorders. The title jumps back to “2-3 weeks” for a couple of days until the replacement arrives, and then it shows up as back in stock again.

    This cycle continues, until the original customer’s 2-3 weeks cutoff approaches, at which time amazon finally decides to send them their book (unless yet another customer has nipped in and bought it, first, in which case amazon have to reorder it yet again).

    This system lets amazon keep low-turnover books in stock for immediate dispatch quite a lot of the time without their having to take any risk, or pay to carrying any stock. All of this “virtual” stock is zero-risk, pre-sold, and pre-paid-for by customers. The winners are the customers who can then buy the book for immediate dispatch as a stock item, the losers are the customers who buy a book while it’s flagged as “2-3 weeks”, believing that it can’t /possibly/ take 2-3 weeks to arrive, and then find that … mysteriously … it does.

    If you’re seeing supply dates jumping about on your products, it might not be book industry politics, it might just be the amazon “virtual stock” fluctuating. Yes, that’s right. The POD book industry is governed by the laws of quantum mechanics. :)

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    Rrevisionist July 14, 2013 at 4:09 pm

    Brilliant analysis Eric, if I may say so. You must be more or less right. If there are tens of thousands of small publishers, many of whose books don’t sell much, the stick holding costs must be higher than they’d like. However I’d imagine once a sales pattern is established, their re-order algorithms allow for the potential loss of 2-3 weeks’ delay. But perhaps not; if POD is as efficient as they claim, maybe there’s o need to hold stock?

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    Ian April 13, 2013 at 12:45 pm

    Is there anybody there?

    Reply

    Ian April 5, 2013 at 3:43 am

    Great insight Janet, I like it. I’ve seen similar publishing protocols on the CreateSpace forum, but not as succinct. I’ve also heard of the guys that like to submit their books to Amazon Advantage approx 3-6 months pre-release to get the book in Amazon’s listings and taking pre-orders. Then approx 2 weeks before release they tell Advantage they will be supplying the book via LSI and leave it at that.

    Is this a strategy worth considering as well?

    With the help of experienced pros like yourself, James and Joel I hope to get book two to market a lot faster and more efficiently than book one which took way too long. Coming from retail I was surprised at how antiquated the publishing sign up processes were, with Google being a (55 email exchange to support) nightmare.

    I also first published in print with Lulu and in a size that CreateSpace did not offer, so had to reformat the book again for CreateSpace, once I realised Lulu was a damp squib. Luckily LSI had the same size once I found them. The journey was arduous to say the least, but well worth it when orders started to come in by month 3.

    Reply

    Joel Friedlander April 13, 2013 at 7:15 pm

    There’s an excellent chance that with your plan your book will not be stocked constantly by Amazon, while publishers like Janet will have their books always available on Amazon.

    Reply

    Ian April 4, 2013 at 9:42 am

    Good stuff James. I guess the conclusion is what I initially thought. Because the CreateSpace published ISBN was the first and does the majority of the sales on Amazon. If so, book 2 out soon can be published and globally distributed via LSI only and should be given the Amazon discounts off RRP to get sales from the Amazon site that I’m looking for.

    If CS would start to publish to the trade in the UK (using Ingram’s global distribution) then this would negate the need for LSI. Maybe it won’t happen for this reason.

    And I may as well drop the wholesale discount on book 1 back down to 20% in LSI so I ultimately make more money on the small amount of sales I do make for this ISBN.

    Reply

    Janet April 4, 2013 at 10:20 am

    Ian,
    I keep it really simple. I purchase one print book ISBN from Bowker for the print book (published first with LSI, and then after waiting a few weeks, published with CS), and I purchase one ebook ISBN (ebook published with Apple, Google Play, Kindle, Kobo, and Nook).

    I always publish witht Lightning Source first. Then I wait a few weeks and publish the print book with CreateSpace. I DO NOT pay the $25 for their expanded distribution channel since I choose full distribution with LSI. CreateSpace now automatically includes Amazon..co.uk and lots of other markets without having to pay extra for them.

    For a novel, I choose the price of $12.99 with both LSI and CS because I think that is a reasonable price for a 6 x 9 trim size book of about 300 pages or so.

    I set a 20% wholesale discount with LSI with no returns allowed because I already know that it is rare indeed for most bookstores to purchase self- and indie-published books from LSI anyway due to their own prejudice against us, which hopefully will change in time.

    Most sales of my authors’ books come from Kindle, Google Play, and CreateSpace, in that order.

    Janet :-)

    Reply

    Ian April 4, 2013 at 5:51 am

    Thanks for your responses.

    James:

    I’d like to hear your thoughts on this.

    You say “The discount you set with LSI is the wholesale discount, which controls how much you will receive for your book and little else.” Doesn’t this also determine the price that LSI charge Amazon or do LSI charge a set trade price to Amazon regardless of your discount? This is a key point.

    If the above is true. Like any retailer Amazon have to make a profit per item. So logic would ask, why would Amazon buy a product for £5 and sell it for £3? Surely what you offer by way of discount via LSI determines what room you give Amazon to discount from RRP? I know that Amazon used to sell books as loss leaders to sell you on the back-end, but surely those days are long gone and they now make profits on every trade purchase they make?

    I actually emailed Amazon Author Central late 2012 on why they were holding my book at full RRP when I was giving them 35%. They gave the same reason, that the more discount you give the more they can discount off RRP for customers so advised I increase the discount. It didn’t work. I changed it from 35% to 50% and then to 55% but there was no change in sell price to customers on the Amazon UK website.

    Janet:

    Interesting. Are you using different ISBN’s for both CS and LSI and are feeding amazon UK via the CS Euro distribution?

    Thanks
    Ian

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    James Byrd April 4, 2013 at 8:50 am

    Ian said: “Doesn’t this also determine the price that LSI charge Amazon or do LSI charge a set trade price to Amazon regardless of your discount?”

    Yes, you are right. Discount determines how much you will earn *because* it determines how much Amazon will pay. The higher the discount, the less retailers pay and the less you earn. Sorry if my “and little else” comment was misleading. I was looking at the equation from the perspective of a publisher, not a retailer. ;-)

    Ian said: “Like any retailer Amazon have to make a profit per item. So logic would ask, why would Amazon buy a product for £5 and sell it for £3? Surely what you offer by way of discount via LSI determines what room you give Amazon to discount from RRP?”

    Your questions are logical, but based on two assumptions that I would challenge: (1) RRP means something to retailers, and (2) margin = profit.

    Keep in mind that the first “R” in RRP is for “Recommended.” Yes, LSI uses your retail price and your discount to calculate the wholesale price of your book, but from that point on, RRP means almost nothing. The retailer pays the wholesale price for your book, determines their own desired margin, and prices the book accordingly. Amazon is willing to sell books at a very low margin, so the price they set looks like a discount compared to your RRP. Other retailers may want a higher margin than your RRP offers, so they’ll price your book above RRP.

    The second assumption, that margin = profit, seems logical on the surface. However, Amazon has demonstrated again and again that price is strictly a marketing decision, not a value decision. Retailer profitability is based on the sales of their entire product catalog, not “per item.” They can afford to sell some books at a loss if doing so results in higher profit overall. For example, Amazon still offers free ebooks even though it definitely costs them something to maintain and deliver those ebooks. They know that those free ebooks help sell other books that aren’t free.

    Ian said: “I changed it from 35% to 50% and then to 55% but there was no change in sell price to customers on the Amazon UK website.”

    I can’t pretend to know how Amazon makes discounting decisions, but I’m willing to offer a guess here. First, Amazon manages a huge number of titles, so it isn’t reasonable to think that every title is evaluated on an individual basis. They probably have a set of “standard” rules that apply automatically. However, titles with high sales volumes probably do get individual attention. It doesn’t make sense to do price testing unless you have sales; without before-and-after sales figures, there’s simply no way to evaluate the success of the test.

    So, it could be that your price hasn’t been adjusted because the sales volume is too low to bother, or it could be that Amazon sets the price when the book first appears in its catalog and only updates it periodically from there. It’s possible you just have to wait a while longer for the adjustment to happen.

    Reply

    Ian April 3, 2013 at 12:56 pm

    Getting back to the original subject if I may. I asked a Q a few weeks ago but got no biters. As I have a new book out soon, could anyone give their thoughts on the prices Amazon UK are charging to their customers on the website with books published and distributed with LSI. Are they discounting the price to Amazon customers or holding them at RRP?

    I’ve been following the whole Plan-B debate for a few years. I published my first book with CreateSpace (US Distribution via Ingram and later European Distribution via CS) and set up an account with LSI to do short-run to print and sell my own books. I also subsequently published and distributed to UK only via LSI.

    The reason behind this is somewhat complex. At the time CreateSpace did not offer European Distribution and shipping costs to the UK outweighed profits. So I created a second ISBN for the same title for the UK market and published/printed at LSI using Amazon Advantage to sell to Amazon UK. Subsequently CreateSpace offered European Distribution for the first ISBN to Amazon.co.uk so I quit Advantage but kept open the UK distribution from LSI to Amazon.co.uk for the second ISBN.

    On Amazon UK I now have first ISBN at the discounted price I determined via my CreateSpace account, this one is fine. And the second (UK only) ISBN is constantly held at full RRP even though I’ve offered discounts from 35% to 55% via LSI. It never makes any difference.

    Do you think Amazon are holding ISBN 2 at RRP because its a second/duplicate title?

    So, I’m not sure whether to risk it and publish my new book 100% with LSI and give them the full global distribution. I am concerned that Amazon will not list at the price I want them to sell it at and as a result maximize sales. CreateSpace gives you that control but doesn’t offer Global Ingram Distribution and has other cons that we all know.

    Any thoughts greatly appreciated

    Thanks
    Ian

    Reply

    James Byrd April 3, 2013 at 1:30 pm

    The thing I’ve never liked about Plan B is that it depends upon side-effects; there is nothing deterministic about Amazon’s discounting decisions, or if there is, it’s a closely-held secret. On average, Plan B probably works more often than it doesn’t, but on a case-by-case basis, it’s a roll of the dice.

    You probably already know this, but there’s something I’d like to point out for others who may be wondering. When you say you “offer a discount,” that discount has absolutely nothing to do with the price Amazon will charge for your book. The discount you set with LSI is the wholesale discount, which controls how much you will receive for your book and little else.

    Retailers are free to charge whatever price they want for your book, regardless of the wholesale price and regardless of the recommended retail price. They can choose to sell your $20 RRP book for $1 or $100.

    I know nothing about the UK market, but my GUESS is that Amazon does not put much effort into being competitive on their UK site. Perhaps they don’t finesse pricing in the UK to the same degree they do on their US site. They just list your book for the retail price and keep whatever margin your discount of the moment gives them. Or, it could be that they’ve very deliberately kept your price at RRP. You could ask them about it, but I doubt you’d get a very illuminating response. Probably something like, “Amazon reserves the right to control the pricing of the products it sells on its web sites.”

    Reply

    Janet April 3, 2013 at 4:05 pm

    Hi, Ian,
    Thus far all the authors who have published through my company are in the UK even though I am in the US. I publish all my books to LSI first, then wait a few weeks and publish it with CreateSpace. I set the same price with both. I have never seen the price discrepancy that you’re describing.

    For instance, here are the Amazon.com and Amazon.co.uk links for my author Patrick Cox’s book A Baltic Affair:

    http://www.amazon.com/Baltic-Affair-Patrick-G-Cox/dp/0984668594/ref=sr_1_1?s=books&ie=UTF8&qid=1365030181&sr=1-1&keywords=a+baltic+affair

    http://www.amazon.co.uk/s/ref=nb_sb_noss/278-0183874-0754235?url=search-alias%3Dstripbooks&field-keywords=a+baltic+affair

    So I’m not sure what’s happening with your books. I just wanted to post this since my experience is close to yours as a US-based indie publisher working solely (thus far!) with authors in Europe.

    Janet :-)

    Reply

    Janet A. April 3, 2013 at 11:48 am

    James and Robin are correct. You will receive a report from LSI showing your total number of sales. Here is what they state on their website concerning payment on those sales. Notice the last sentence:

    “Publisher Compensation Reports are sent via email at the first of each month for the prior month’s activity. Returns can affect payment amount and will be noted on your sales reports. Publisher Compensation is paid within ninety (90) days from report date, following our month end close schedule. There is a minimum check writing balance of $100.00. Therefore, payments are not sent until sales exceed $100.00.”

    Reaching that $100 threshold is why it is wise to publish your book with an indie publisher who has more than one book published through LSI, because that threshold is likely to be reached faster due to the total sales of all those books, especially an indie publisher who pays the author the greatest percentage of royalties.

    Janet :-)

    Reply

    James Byrd April 3, 2013 at 9:28 am

    Robin is right. Anyone who buys your book from LSI pays the wholesale price for it, and you get your normal share. It’s not so much that LSI doesn’t *care* how the book is promoted (new/used), they don’t even *know* how the book is promoted.

    Some of the “used” book offers you see are a marketing ploy by vendors who have no problem lying to their customers. Likewise, some vendors will mark your book up horrendously in the hope that someone will be foolish enough to pay the inflated price without checking around first. I’ve seen vendors price POD books in the hundreds or even thousands of dollars when the list price is actually something like $20.

    No matter what the retailer does, LSI gets paid the same amount for every sale, and so do you.

    Reply

    Robin April 3, 2013 at 7:20 am

    LSI does pay for every book ordered from them. They don’t know or care how it is sold. There are many Amazon Marketplace sellers who list books that don’t have. I haven’t figured out why they do this – maybe, it’s a form of free advertising to get their seller name on every book title. From what you say it sounds like they DON’T have your book in stock – used or new. If they get an order from a buyer, they will then turn around and order it from LSI. You WILL be paid by LSI.

    Reply

    Ian April 3, 2013 at 5:27 am

    LSI shouldn’t be getting any orders from the ‘Used’ category, period. Even though we know that resellers do sell new books as ‘Used’. So my point is LSI need to pay up on every sale period, regardless of any BS T&C ‘used’ or otherwise.

    It amazes me how the term ‘business’ is used to screw ‘customers’ at any opportunity to make profits by any means possible. Just so the directors can mull over spreadsheets 1 day a month while they eat their prawn sandwiches and play golf for the rest of the month. People just accept it though so that’s how they get away with it.

    It needs to change ASAP.

    Reply

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