Category: Business Ethics

By Posted on Posted in Business Ethics, Publishing

In the last couple of days, quite a number of “players” in the world of publishing have taken a stand against Amazon’s completely unreasonable demand that digital publishers use their digital printer.

Among those lining up: PMA (formerly known as Publishers Marketing Association, in the process of rebranding as Independent Book Publishers Association–the statement doesn’t seem to be on their website as yet), SPAN (Small Publishers of North America)–in a wonderful more-with-honey-than-with-vinegar letter by Scott Flora, and the Authors Guild, in a very strongly worded statement. I expect my own union, the National Writers Union, to join the fray,but haven’t seen a statement yet.

PMA’s Terry Nathan said,

On behalf of all the small and independent publishers whose businesses are in jeopardy, we urge Amazon to reconsider its position. Over the years, Jeff Bezos and his company have given small and independent publishers a level playing field to compete with the largest of companies. Suddenly, this magnificent playing field has been converted into a ‘members only’ club, to the detriment of those very publishers who have contributed to Amazon’s success. We will continue to monitor developments in the weeks ahead.

The company with the most to lose in this brouhaha, Lightning Source, a/k/a LSI, also had a statement. Here’s a piece of it:

Lightning Source has been following the recent press coverage and discussions about Amazon.com
and BookSurge. We are aware of the concern this is causing the publishing community. The issue centers around Amazon.com tying the availability of your books and terms of sale at Amazon.com to the production of books at the Amazon.com subsidiary BookSurge, specifically requiring you to use BookSurge in order to sell on Amazon.

Like you, we are very concerned about any conduct that would serve to limit a publishers choice in supply chain partners and to negatively impact the cost of your products to consumers. We believe that choice and selection of best of class services are critical to the long term success of publishers and a vibrant book market.

Lightning Source continues to provide the highest quality digital on demand print and distribution services for every one of our customers. All your titles continue to be available to all of our channel partners, including Amazon.com, with immediate availability for shipment within 24 hours.

Oh, and here’s the letter I personally wrote to Amazon CEO Jeff Bezos:

Dear Mr. Bezos:

As a publisher, an affiliate, an author, a client of Infinity, and a customer, and as someone who devotes an entire chapter in my seventh book, Grassroots Marketing for Authors and Publishers to working with Amazon, I am deeply distressed by your decision to channel all digital-printed books through Booksurge. I believe this is both restraint of trade and an undue burden on your publisher vendors.

Please reconsider a move that will tarnish Amazon’s brand:
Severely impact your long-held brand promise of “Earth’s largest selection”
Create an unfriendly reputation among tens of thousands of authors who have chosen subsidy publishing
Diminish Amazon’s standing as the place of first resort for resources along the middle and end of the “long tail”
Encourage customers, affiliates, and vendors to defect

Unless I receive a response that you are changing your policy no later than April 15, I will be directing my assistant to remove all affiliate links to amazon.com from our nine websites, and replace them with links to BN.com and/or BookSense. As someone who writes about business ethics, I cannot in good conscience stand by idly while you do this.

I will also do my best to disseminate my appeal through the publishing community.

In sadness,
_________________________________________________
Shel Horowitz – 413-586-2388 shel@frugalfun.com
–>Join the Business Ethics Pledge – Ten Years to Change the World,
One Signature at a Time (please tell your friends)

Marketing consulting * copywriting * publishing assistance * speaking
_________________________________________________

Amazon’s response is being widely distributed under the names of several different staffers, and which in my mind is more than a little disingenuous (see the Author’s Guild statement, above, for more believable motivations). My copy was signed by Jennifer Bledsoe.

Let’s hope all these statements will help the “swing votes” among the subsidy houses (who are the first to lose their buy buttons if they don’t kowtow) enough spine to resist this.

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By Posted on Posted in Business Ethics, Publishing

Angela Adair-Hoy, co-owner of Booklocker, has posted a number of links on her Writers Weekly blog, including an online petition as well as contacts for Amazon execs. If you want to register your protest about the demand to only print at BookSurge, or if you want to better understand the fallacies of such a move (from her perspective as publisher of some 1500 books, go and visit.

One of the things you’ll see: a public statement by PublishAmerica, which I excerpt here:

Quite some time ago, sir, long before you were born, American soldiers fought the Battle of the Bulge in Europe. When the 101st Airborne Division found itself surrounded by the enemy, the Germans presented U.S. general McAuliffe with a piece of paper that demanded his surrender.

McAuliffe looked at it, borrowed a soldier’s pen, wrote in caps, “NUTS!”, then proceeded to win the battle.

There’s our answer, sir. Couldn’t have said it any better.

Mind you, this is not an endorsement of PA. I am generally not a fan of PublishAmerica and have warned authors away from their standard contract. But on this, they are right on, and I salute them for being early and public and firm in their opposition.

My friend Marion Gropen posted to a discussion list that Amazon’s tactics remind her of Standard OIl; it’s a good analogy. Standard Oil’s monopolistic and bullying practices actually caused a years-long anti-trust action by the federal government.

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By Posted on Posted in Abundance and Prosperity, Business Ethics, General Commentary, Publishing

Amazon wants to force publishers to use its wholly-owned printer, yesterday’s Wall Street Journal reports. If it thinks this is a good idea, amazon.com needs its collective head examined. I think it’s one of the dumbest moves I’ve heard of in a loooong time.

Amazon gets a lot of its books through a company called LightningSource, Inc., or LSI–which is owned by Ingram, the 800-pound gorilla in the U.S. book wholesaling world. LSI prints digitally, which enables production of books as they’re ordered, in runs as small as a single book.

Thousands of publishers, from one-title solopreneurs up to the biggest names in the industry, use LSI for some or all of their printing–in part because it allows flexible inventory management, and in part because the connection with Ingram means any bookstore is automatically set up to special-order those titles.

LSI has many competitors, though it’s the only one to offer the Ingram connection. Amazon owns a competitor to LSI, called Booksurge/Createspace. And it’s going to force all publishers listing digitally printed books on its site to use this company.

The Journal reporter sees this move as rosy for Amazon:

The move will likely generate significant profit for Amazon, which has evolved into a fully vertical book publishing and retail operation.

Well, ummm, I don’t think so. This is what I see happening instead:

  • Publishers, not a bunch that can be bullied easily (what’s that old saying about never getting into an argument with someone who buys ink by the barrel?), will haul Amazon into court for restraint of trade
  • Publishers who control mailing lists totaling hundreds of thousands of names will tell their public about Amazon’s bullying, and encourage them to buy elsewhere (there’s already quite a bit of rumbling from publishers who say they themselves will shop elsewhere)–they may even get customers to write massive numbers of letters to Amazon saying if you want to keep my business, reverse this policy
  • Subsidy publishers, which print perhaps 50,000 titles per year by mostly unknown authors, have promised those authors to get them listed both with Ingram and with Amazon, and are in a position to orchestrate a massive rebellion
  • Publishers will withdraw book titles from Amazon, severely damaging its brand identity as “Earth’s largest selection”–on which they built their business
  • If Ingram sees Amazon as

    • an enemy, and Ingram is a very powerful company, it will not be pretty

    Of course, I may be wrong. Publishers may choose not to fight Amazon and to print non-exclusively with both LSI for Ingram and Booksurge for Amazon. Or they may simple knuckle under as if they’re John Kerry or Michael Dukakis attacked by Swift Boaters. But I’m betting this comes back to bite Amazon, hard.

    Anti-competitive measures have a way of backfiring. There’s already been some backlash against certain independent bookstores that are demanding authors who do events with them don’t include links to Amazon. Amazon joining the fray will be shooting itself in the foot. The Abundance mentality, which I write about regularly, says it’s smarter to network with your competitors and to build alliances with them than to try to cut their throats, and end up cutting your own.

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    By Posted on Posted in Business Ethics

    Writing in Huffington Post, Hale “Bonddad” Stewart makes a compelling case that business practices need immediate attention–NOW.

    From contaminated meat to toxic toys, Stewart attacks multiple industries.

    And the subprime mortgage crisis, he says, could have been avoided easily if regulators had bothered to pay attention to numerous warnings over many years:

    Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

    But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

    In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of “best practices” and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.

    And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.

    Let’s remember the business climate in 2001. A long period of economic growth had crested, business scandals were being exposed everywhere, the economy was heading downward–and plummeted later that year, in the aftermath of 9/11.

    If ever there was a time when it made sense to look at risky lending practices and a baseless assumption of permanent housing price spirals, that would have been the time.

    So why did Greenspan ignore all the warnings?

    –> In my writing, and particularly my award-winning sixth book, Principled Profit: Marketing That Puts People First, I repeatedly demonstrate that business ethics is more profitable. Don’t know why this lesson is so hard for some of the “mainstream” players to learn. Wouldn’t it be nice if they all had a conversion and started signing (and taking seriously) the Business Ethics Pledge, in droves?

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    By Posted on Posted in Business Ethics, Ethics in Government, Politics

    David Patterson, New York’s new governor will never need to stand, ashen-faced, and admit that he cheated on his wife–as his predecessor, Elliot Spitzer did.

    Why? Because, knowing that skeleton was in his closet, Patterson pre-empted it with an act of transparency. He openly admitted, at a time, place, and manner of his own choosing–actually on the very day he was sworn in as governor–hat he and his wife had both had affairs during a difficult time in their relationship. He maintained control of the discourse, and the admission can never be used as a weapon to destroy him, as it would very much do if he’d been suddenly, unexpectedly, “outed.” As Spitzer found out very quickly.

    For all we know, the Pattersons may have even had an agreement that theirs was an open relationship–in which case, the word “cheating” wouldn’t even apply. It’s not cheating if you have permission from the cheatee.

    Transparency is a good strategy whenever there’s an ethics issue. It means you can’t be blackmailed. It means you minimize the hurt to other people. And you stay in control of the situation.

    Almost four years ago, I wrote about a utility company that handled a gas explosion with rare good sense. Like Johnson & Johnson’s handling of the Tylenol poisoning scare years earlier, this company was both transparent and extremely customer-centric, and thus enhanced rather than destroyed its reputation.

    Gay and lesbian activists have understood this for almost 40 years, since the 1969 Stonewall riots. The closest thing to a rational reason for keeping gays out of sensitive jobs (say, those that expose the employee to highly sensitive information) is the fear of blackmail. But when the gay employee is already out of the closet, that weapon fizzles away.

    I’d say that transparency, combined with Nelson Mandela-style reconciliation, creates powerful momentum in favor of the person making the confession, whether in business or politics. Plus, as the Catholics with their confession ritual have understood for centuries, there’s tremendous personal release in not bottling up secrets.

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    By Posted on Posted in Abundance and Prosperity, Business Ethics, Marketing Techniques and Philosophies

    The other day, I got invited to help promote an Internet marketing report. Since I don’t endorse anything I haven’t seen (unless I make it very clear that it’s a favor to a friend, etc., and I haven’t personally evaluated), I asked for a copy–and boy, was I appalled.

    The model these folks were pushing was to steal content, intersperse enough meaningless blather so Google doesn’t think it’s a duplicate page, and build traffic/ad revenues.

    Eeeeeeew!

    I let it simmer for a couple of days, until I could respond with enough politeness to get read, and until I could find a way to talk to the part of these people that wants to be better (with a tip of the hat to my friend Bob Burg, who taught me how to do that), and then responded this morning, thusly:

    “Let me know what you think, good or bad. I appreciate your opinion.”

    OK, you asked. I read it over the weekend.

    I’m sure you have good intentions, but frankly, I find your business model unethical. It is one very small step above splogging; the only difference is you’re adding meaningless content around someone else’s words instead of just presenting someone else’s hard work.

    It devalues the Internet as a useful information medium; I’d hate to see search results be as useless as e-mail, but if people follow your model, they contribute to poor search results.

    And then there’s the matter of making a buck on other people’s hard-earned intellectual property without compensating them in any way, or even asking permission, and doing so in a way that most definitely violates the Fair Use provisions of the copyright law.

    I think with the intelligence and understanding of the Internet that underlies your black hat approach, you could come up with a business model that would be just as profitable and a whole lot more palatable. Come talk to me when you’ve done so.

    Postscript: I got a response, quickly, that basically said, “well, that’s fine, but I disagree.” Needless to say, I won’t become her affiliate any time soon.

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    By Posted on Posted in Business Ethics, Ethics in Government

    The danger in being an ethics warrior is that if you get caught with your own pants down, you’re in trouble. You’ve lost all the credibility you spent all those years building up.

    It happened to John Mackey, CEO of Whole Foods last year. This week it happened to the crusading anti-corruption New York State Governor Elliot Spitzer, who apparently uses a high-end call girl service similar to those he investigated as Attorney General.

    It’s really a shame. There’s been much to admire in the public positions of both men. But if you make your living touting honesty, you should, quite frankly, know better. I’m not trying to sound self-righteous here, really I’m not–but from a marketing point of view, if you stake out your reputation on being the best and then get caught dealing in lousy product, you’re going to fall a lot harder than if no one expected any better from you in the first place.

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    By Posted on Posted in Business Ethics, Politics

    A day after the Texas, Ohio, RI and Vermont primaries, and the Democratic nomination is once again totally unclear. It’s time to ask how social responsibility issues will affect this election.

    Both Obama and Clinton are talking about change, but neither is really putting forward a dramatic change agenda. Clinton has taken heat for her vote for the war, Obama (whom I’ve endorsed, in spite of his shortcomings) for what seems at times like empty rhetoric, and McCain for flip-flopping on torture and on campaign finance reform. And both Clinton and Obama have made some good noises on climate change.

    Meanwhile, I haven’t heard any of them talking about business ethics, a meaningful exit strategy in Iraq, or the questions of poverty raised by the Edwards campaign–to name just a few.

    I think the American people are ready for a candidate who is willing to go beyond rhetoric and propose substantive social change, especially in health care and the war. Unfortunately, the Democrats have driven out the multiple candidates who put forth those positions, the Republicans apparently have no interest, and our system treats third parties as thrown away votes (unlike most of Europe).

    Meanwhile, the mainstream media focuses on “soma” (a word invented by Aldous Huxley in his book, Brave New World) like the shenanigans of Britney Spears.

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    By Posted on Posted in Business Ethics, Marketing Techniques and Philosophies, Marketing Trends/News, People Helping People, Web 2.0/Social Media

    Yeah, I know–viral marketing and all that. And I actually love referral marketing, but not like this.

    But am I the only one offended when someone gives me a tell-your-friends page before I even see the product? It’s happening more and more lately. These unfortunates happened to be the ones to push me into ranting about this trend, but it could have been any number of others.

    At least these guys were smart enough to do a “no, thank you” link where I could still get the download. But I value my reputation and I’m not in the habit of sharing e-mails of my friends with strangers who send bulk mail. Had the only way to get the report been to fill in e-mails, I’d have either given phony names or bailed out.

    Maybe this is one of the factors contributing to the growth of social media at the expense of e-mail. Successful marketers can still be clueless when it comes to human relationships.

    In fact, when I get to all those petition sites (and I confess, I sign a lot of political petitions), the thank-you page invariably asks for addresses of my friends. I never give them. Instead, if I find the petition worthy enough to send, I’ll forward the e-mail, bcc, to my politics list.

    And at least there, I’ve had a chance to see the text, decide if it’s something I want, and pass it on. Why marketers think I’m going to feed their mailing-list fish tank before even seeing the fish… Yuck!

    If you like this rant and want more about how to run and market an ethical, successful business, you may have a look at my award-winning sixth book, Principled Profit: Marketing That Puts People First. You can get the first few chapters as a no-charge download, and you don’t have to fill in a squeeze page OR a tell-a-friend page to get it. So there.

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    By Posted on Posted in Business Ethics, Energy & Sustainability, Ethics in Government

    Lest you think collusion between corrupt government and dubious business interests happens only in the US–read this article on the firing of Linda Keen, until recently the head of the Canadian Nuclear Safety Commission.

    Keen was fired for having the temerity to insist that the 50-year-old Chalk river nuke in Ontario stay closed until safety concerns were fully addressed.

    Now, let me disclose my biases. I’ve been studying about nuclear power going back to a college report I did in 1974–and my first book, in 1980, was an expose of the nuclear power industry. In my mind,

  • there is no such thing as a safe nuke (and a wide swatch of the Ukraine is still uninhabitable, more than two decades after the accident at Chernobyl)
  • waste storage will cause problems for thousands of years
  • counting the entire fuel cycle, nukes are a net consumer of energy–so we’re not actually gaining anything by using them
  • solar, wind, and other nonpolluting, renewable technologies make a lot more sense

    • Why was the plant ordered to stay shut?

    In the inspection process, the CPSC regulators found something at the 50-year-old reactor that was terrifying:

    …the reactor had been operating for 17 months without two cooling pumps hooked up to an additional emergency back-up power system capable of withstanding a severe earthquake.

    And yes, there have been earthquakes in the vicinity. And this plant is only two hours from Ottawa, Canada’s capital city.

    But still…here is a woman who was fired because she didn’t want this ancient and probably crumbling nuke to have an accident! Best of luck, Linda in your wrongful termination court case. And thanks for doing what’s right.

    (my thanks to The Weekly Spin for alerting me to this story).
    Business and government ethics violations that directly put life and property at risk are more than just crooked collusion. They are criminal acts.

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